Nov 27, 2017

What a lawsuit over fracking equipment means for drug prices

The Supreme Court heard a major patent case today. Photo: J. Scott Applewhite/AP

The Supreme Court was closely divided this morning as it debated whether the federal patent office should be able to cancel patents it has previously granted — a dispute that could put billions of dollars on the line for pharmaceutical companies.

Why it matters: The case before the court on Monday involves patents for a piece of fracking equipment. But drug makers could profit handsomely if the court puts an end to these patent cancellations.

The details: The Patent and Trademark Office can invalidate a company's patents when those patents are challenged by a competitor — and that process is a lot cheaper and easier than challenging a patent in court. The Supreme Court's conservative justices questioned today whether the process is too easy, Reuters reports, while its more liberal bloc said the patent office should be able to correct its own mistakes.

Threat level: Pharmaceutical Research and Manufacturers of America, the drug industry's leading trade group, urged the high court to put a stop to patent cancellations.

  • "The pharmaceutical industry invests hundreds of billions of dollars in researching and developing new treatments to improve the health and welfare of the public across the globe. Those investments make sense only because the resulting intellectual property is respected as property," PhRMA said in a brief.

Some of the industry's leading critics, including AARP, weighed in on the other side. They feared that a more onerous system of patent challenges would help drug makers stave off competition from cheaper generic versions of their products.

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