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FTC warns pharma companies on excessive drug patenting

The Federal Trade Commission (FTC) issued warning letters to several pharmaceutical companies, including AbbVie (ABBV) AstraZeneca (AZN), and Teva (TEVA), over excessive patenting of medications as Medicare negotiates drug costs with the pharma industry.

Yahoo Finance Health Reporter Anjalee Khemlani explains the Biden administration's ideas to license patents to lower drug costs for patients.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript


- It's been a tough year for the pharma industry, starting with the Medicare drug price negotiations; then the FTC sending warning letters to stop excessive patents to pharma companies; and just this week, the White House deciding it has the authority to license the patents of certain medications to lower patient costs. Well, for more on this, Yahoo Finance reporter Anjalee Khemlani is here. A bit-- a very busy season, indeed, for pharma.

ANJALEE KHEMLANI: It certainly has, Rachelle. And it's important to point out that these are, you know, actions by the government that have been discussed for quite some time. Medicare drug pricing negotiations first to hit the industry with those 10 selected drugs followed by the FTC calling out certain companies for their asthma inhalers and other devices as well as EpiPens.

So that has been another area of focus for the FTC in addition to what we've seen with, you know, challenging some of the M&A activity that we saw, notably Amgen and Horizon as well as Pfizer and ScieGen deals this year. So again, big focus for the FTC to kind of curb what they see as pharma's powers.

Then this week, the White House announcing that it's going to look into what was an older act that put into place what is known as marching rights. That's from the Bayh-Dole Act of 1980, which allowed basically any inventor or a holder of inventions the right to do-- with development of federal dollars the right to grant licenses for the inventions to a third party. And that's basically what the White House is looking to do through the NIH.

Now, it's important to point out that the White House is looking at this because of the cost of drugs. They cited that in what their guidance would be. And that is an interesting point to some experts. Because for the longest time, there has been discussion about whether or not price could be used as justification to look at licensing. That's something that the prior administration had looked to try and block from happening. Clearly, this administration is taking a completely different stance.

So all told, a really rough year for the industry with the government trying to curb their power and costs for Americans. It's important to point out that a lot of these are sort of limited in impact. They do involve some of the largest companies. And in some cases, Medicare drug pricing hitting some at the same time as the FTC action.

So some of these companies are sort of hitting it from multiple-- getting hit from multiple sides. But in order for the government to sort move forward, there definitely has to be more focus on these smaller attempts. That's the only way that they can do it.

The screen you just saw was a list of some of the drugs that have been developed with public funding, most notably, if you recall, Moderna's COVID vaccine. That was one that really started this conversation back during the pandemic times. But there's also other examples like HIV drugs from Gilead. So all told, an interesting time to kind of watch how many of these actions pan out.