You might have heard the phrase “patent trolls” – pirates of the legal world who threaten utterly merit-less intellectual property lawsuits to exact payoffs based on the inevitable cost-benefit calculation from victims that settling is cheaper than fighting.
What if you let patent trolls write their own bill designed to create a new “line of business”? Surprise! It already exists, and it’s called the CREATES Act.
The CREATES Act is the brain child of arch liberal Sen. Patrick Leahy (D-VT) and trial lawyers, a powerful lobby under-appreciated for its role in financing Democratic politics. Above all, the bill would create powerful new incentives to file lawsuits against companies trying to ensure that the generic versions of name-brand drugs are produced under rigorous quality and safety standards.
Under most circumstances, filing a lawsuit under the CREATES Act would actually be more lucrative than selling generic drugs, the activity it is purportedly intended to protect.
This is in part because provides windfall, multiplier-style damages that are linked to the revenues of the company being sued rather than any palpable damages incurred by the alleged victims.
The root issue the bill addresses is a somewhat obscure dispute between the name-brand drug manufacturers and the generic drug manufacturers. When a patent on the name-brand drugs has expired, federal law outlines a process by which would-be generic manufacturers collaborate with the name-brand manufacturers while they develop their process to produce the drugs in question.
Crucially, the name-brand manufacturer faces significant legal liability for the integrity of the generic drugs, a provision designed to ensure consumer safety.
However, modern drug manufacturing can be rather involved and technically difficult, and the process of collaboration between the two companies has become strained in recent years. The generic manufacturers have complained about delays from the name-brand manufacturers, wanting to bring their products to market more quickly, while the name-brand manufacturers are concerned about the legal liability they face in handing off a complicated manufacturing process under severe time constraints.
To you and other reasonable adult human beings, this may sound like a fairly modest problem that could probably be worked out over some meetings between top industry brass. At worst, perhaps a minor tweak in the law would be in store.
Other people apparently heard about this and said, “I smell money!” The result is the most outrageous legislative bazooka in recent memory is being brought to solve this mild dispute by the generic manufacturers and their well-heeled partners, the trial lobby.
The bill would present name-brand manufacturer’s with the “Sophie’s choice” of following the safety requirements in current law or a zero-tolerance 31-day deadline backed by trigger-happy legal lunatics ready to file suit at the drop of a hat.
It has zero protections against abusive lawsuit tactics. The law does not even require companies to have any intention of ever manufacturing generic drugs – they could simply issue demands to name-brand manufacturers en masse as a means of fueling a running pipeline of frivolous lawsuits.
On the one hand, everyone is concerned about the costs of drugs and health care in general. On the other, the most important cost of bringing new drugs to market is the extremely expensive regulatory compliance process, to which this would add billions of dollars in new costs annually.
If this bill were actually designed in good faith to lower drug costs, it would not try to maximize the profits for law firms at every turn.
The CREATES Act is a cunning ploy by lawyers to create a brand new line of business filing thousands of lawsuits against the companies that invent new medicines. For those of us interested in the miracle cures of tomorrow, it seems like there must something short of destroying the R&D pipeline to fix some friction between name-brand and generic manufactures.