Drugmaker exploits safety requirement to protect its profits, loses in court

In case you missed it, the New York Times recently published a stunning report about Jazz Pharmaceuticals, which manufactures and markets a medication used to treat the sleep disorder narcolepsy.

Jazz Pharmaceuticals holds a patent on the drug’s formulation. The drug, sold under the brand name Xyrem and Xywav, is used by thousands of patients to combat excessive daytime sleepiness, loss of muscle control and interrupted sleep. According to the New York Times, the drug has generated more than $13 billion in revenue for Jazz Pharmaceuticals since 2005. The list price is calculated to be more than $200,000 a year.

But the drug also has serious side effects and has been illegally abused as a date rape drug. Because of these factors, federal regulators have required the drugmaker to come up with a plan to ensure the drug was safely distributed to patients. Jazz Pharmaceuticals developed a program in which a single pharmacy nationwide would send the medication directly to patients.

Because it could, the company patented not just the formula but also its safety program. Under an obscure federal rule, if a drug company accuses an emerging rival company of infringing on its patents in certain circumstances, federal regulators would be barred for more than two years from approving the would-be competitor’s product.

That’s just what kept a competitor from introducing its own, improved version of the drug. In fact, nine companies have tried and been blocked by the rules. The chief executive of Jazz is even reported to have bragged to investors how its strategy to manipulate patents has protected billions in profits.

That is…until late February, when a U.S. Appeals Court upheld a federal court in Delaware, which found Jazz had inappropriately used the patent system to block its rivals. On March 1, U.S. Sen. Maggie Hassan, D-New Hampshire and Sen. Mike Braun, R-Indiana, introduced legislation aimed at closing the loophole Jazz exploited so long. What do you think? Should federal rules protect patients over profits? Share your thoughts with Voices for Affordable Health.