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Toomey, Bipartisan Group of Senators Introduce PACED Act

March 8, 2018

Washington, D.C. - U.S. Senator Pat Toomey (R-Pa.) joined Senators Tom Cotton (R-Ark.) and Claire McCaskill (D-Mo.) in introducing the Preserving Access to Cost Effective Drugs (PACED) Act, which restores the power of the Patent and Trade Office and federal courts, and the International Trade Commission to review patents regardless of sovereign immunity claims made as part of sham transactions.

Under current law patent holders can pay Indian tribes to take "ownership" of their patents, which allows the tribes to claim sovereign immunity and avoid review in the case of a dispute. This could lead to widespread patent abuse and increases costs for consumers.

"Sham transactions involving the transfer of patent ownership from a pharmaceutical company to a tribe for the sole purpose of shielding the patent from challenges are a clear abuse of our patent system and set a dangerous precedent for other consumer products. The PACED Act will improve our patent system and protect patients and consumers from higher drug prices by eliminating this egregious loophole," said Senator Toomey.

"It's far past time that we crack down on patent abuse, which is raising costs for our seniors. This bill will make sure unscrupulous patent holders can't game the system and block their competitors from entering the market. That'll go a long way to help seniors get the drugs they need," said Senator Cotton.

"We watched a company brazenly try to exploit a potential legal loophole to game the system in an effort to protect their bottom line-and keep Missourians from access to cheaper generic drug options in the process. That should be illegal, and our bipartisan bill would make it so by ending this astounding assertion of sovereign immunity to avoid patent review, before any other companies follow suit," said Senator McCaskill.

The PACED Act is also co-sponsored by Senators Joni Ernst (R-Iowa) and David Perdue (R-Ga.).


• By avoiding review, pharmaceutical firms can prevent generics from coming to market and raise the cost of drugs.
• Similarly, if non-practicing entities, often referred to as "patent trolls," can skirt a review or use a tribe as a straw plaintiff, it becomes harder for businesses to defend themselves against dubious patent claims.
• This legislation would do nothing to prevent pharmaceutical firms from partnering with Indian tribes for research, development, and licensing of drugs.

The PACED Act is supported by the following organizations which represent hundreds of companies across the U.S.: R Street, The Electronic Frontier Foundation, Engine, American Consumer Institute Center for Citizen Research, Public Knowledge, America's Health Insurance Plans (AHIP), Association for Accessible Medicines, United for Patent Reform, High Tech Industry Alliance, Patients for Affordable Drugs Now, BlueCross BlueShield Association, Blue Shield of California.