NOTICE OF EXEMPT SOLICITATION
NAME OF REGISTRANT: Pfizer, Inc.
NAME OF PERSON RELYING ON EXEMPTION: Trinity
Health
ADDRESS OF PERSON RELYING ON EXEMPTION: Catherine
Rowan
<rowancm@trinity-health.org>
Dear Fellow Pfizer Shareholder,
Trinity Health and co-filers
Adrian Dominican Sisters, CommonSpirit Health, Mercy Investment Services, Peace Health, Sisters of Charity of St. Elizabeth, Sisters of
St. Francis of Dubuque Charitable Trust and Sisters of St. Francis of Philadelphia (“the Proponents”), write to urge you to
vote FOR Item 8, “Impact of Extended Patent Exclusivities on Product Access Report” (the “Proposal”), at
the upcoming Pfizer, Inc. (“Pfizer” or “the Company”) annual shareholders’ meeting on April 27, 2023. The
Proposal asks the Company to adopt and report on a policy (the “Policy”) by which the impact on patient access to medicines
is considered when deciding whether to apply for secondary or tertiary patents. We believe that the Policy would be beneficial to Pfizer
because extended exclusivity periods gained from secondary patents, and the resulting delay in generic entry, limit patient access, create
regulatory and reputational risk, and saddle the health care system with unsustainable costs.
Prescription drugs have assumed
an increasingly important role in American health care, and that trend is likely to continue: One study estimates that “[p]rescription
drug spending on retail and non-retail drugs is poised to grow 63% from 2020 to 2030, reaching $917 billion dollars.”1
Prescription drugs—and branded specialty medicines in particular—are costly in the U.S. The rise in spending on prescription
drugs outpaces increases in health care spending more generally,2 and three in 10 Americans on a prescription drug report not
taking their medicine as prescribed due to cost.3 A poll asking respondents to identify their top priority issue appearing
in the Build Back Better bill found that allowing the federal government to negotiate drug prices topped
the list.4
_____________________________
1
https://www.i-mak.org/wp-content/uploads/2022/09/Overpatented-Overpriced-2022-FINAL.pdf,
at 2 (citing Charles Roehrig and Ani Turner, Projections of the Non-Retail Prescription Drug Share of National Health Expenditures Report,
Altarum, July 2022).
2 https://sgp.fas.org/crs/misc/R46221.pdf,
at 2.
3 https://www.kff.org/health-costs/poll-finding/public-opinion-on-prescription-drugs-and-their-prices/
4 https://www.politico.com/news/2021/10/01/drug-price-negotiation-poll-harvard-514831
This communication is not a solicitation of proxy
authority and no proxy cards will be accepted. Vote your proxies in accordance with the Company’s instructions.
Federal law tries to strike
a balance between incentivizing innovation and promoting affordability. Obtaining a patent for a new drug gives the manufacturer a period
of exclusive marketing rights, generally for 20 years.5 Once the patent expires, manufacturers are free to make generic versions
of the drug—or in the case of a biologic, a biosimilar version—which drives down prices.6 An academic commentator
described the balance struck by this regulatory regime:
On the one hand, originators
play an important role in developing new and improved medicines for the benefit of society. On the other hand, generic companies benefit
society by supplying cheaper equivalents of the originators’ medicines, which leads to the reduction of drug prices and facilitates
access to affordable medicines. When the interests of these two players are kept in balance, benefits are maximized for society, which
receives innovative and improved medicines, as well as timely access to generic drugs.7
We believe that balance is now
out of whack. Given the high prices their drugs command absent competition, branded drug makers have strong incentives to delay generic
competition as long as possible. One strategy they use is creating so-called “patent thickets,” numerous overlapping patents
on a drug filed after the primary patent has been granted and the drug approved by the Food and Drug Administration (“FDA”)
that would be expensive and time-consuming for a potential generic manufacturer to challenge.8 This strategy can allow branded
drug makers to hold off generic (or biosimilar, in the case of a biologic medicine) competition for several years or more.
These later-filed patents, which
are referred to as secondary and tertiary9 patents, relate to properties of the drug other than the active ingredient, such
as methods of administration, manufacturing processes, dosing regimens, and additional indications.10 Critics of the practice
argue that secondary patents tend to be low quality, as they are invalidated in litigation at a higher rate than primary patents, and
that they allow drug makers to benefit from extended exclusivity periods without engaging in additional innovation.11
Secondary patents have a significant
impact on health care spending, exacerbating inequalities in access to medicines and straining both public and private sector budgets.
One study analyzed the 12 best-selling drugs, which had been on the market for an average of 15 years, and found large numbers of secondary
patents providing an average exclusivity period of 38 years.12 That study called patent abuse
the “root cause” of unsustainably high drug prices.
_____________________________
5 https://sgp.fas.org/crs/misc/R46221.pdf,
at 1.
6
https://www.fda.gov/files/drugs/published/Exclusivity-and-Generic-Drugs--What-Does-It-Mean-.pdf;
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6534750/
(“Prices can drop
as much as 20% when the first generic enters the market; with multiple generics, the prices may eventually drop by 80–85%.”)
7 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7592140/
8 See ncbi.nlm.nih.gov/pmc/articles/PMC7592140/(“
The denser the web of secondary patents, the more difficult it is for generics to develop their generic equivalents,
even if they know that only a few patents of a large portfolio would, in fact, be valid and infringed by their products.”);
https://sgp.fas.org/crs/misc/R46221.pdf, at 1-2.
9 A secondary patent relates to “peripheral
features” of a drug, while a tertiary patent applies to a drug-device combination, such
as the EpiPen. https://blog.petrieflom.law.harvard.edu/2018/04/30/tertiary-patents-an-emerging-phenomenon/
10 https://sgp.fas.org/crs/misc/R46221.pdf,
at 9.
11 E.g.,
Editorial Board, “Save America’s Patent System,” The New York Times, Apr. 17, 202211 (“Twelve
of the drugs that Medicare spends the most on are protected by more than 600 patents in total, according to the committee. Many of those
patents contain little that's truly new. But the thickets they create have the potential to extend product monopolies for decades. In
so doing, they promise to add billions to the nation's soaring health care costs -- and to pharmaceutical coffers.”); https://www.cnbc.com/2018/06/25/high-drug-prices-caused-by-us-patent-system.html;
https://www.i-mak.org/wp-content/uploads/2018/08/I-MAK-Overpatented-Overpriced-Report.pdf;
Robin Feldman, “Our patent system is broken. And it could be stifling innovation,” The
Washington Post, Aug. 8, 202111
12 https://www.i-mak.org/wp-content/uploads/2018/08/I-MAK-Overpatented-Overpriced-Report.pdf
We are not asking for
authority to vote your proxy and no proxy cards will be accepted. Please vote your proxy according to the instructions in [company’s]
proxy statement.
Another study by the same organization
found “questionable – and likely unmerited” secondary patents on three blockbuster drugs and estimated that the U.S.
healthcare system would bear approximately $55 billion in excess costs for those three drugs during the extended exclusivity periods facilitated
by the drugs’ secondary patents.13 (Studies show that the introduction of generic versions of a drug lead to significantly
lower prices.14)
The role of secondary and tertiary
patents in keeping prescription drug prices high has received increasing amounts of media and regulatory scrutiny. For example, the editorial
boards of The New York Times15 and USA Today published editorials decrying the proliferation of such patents
and their impact on the health care system. Patent thickets are often depicted as ‘gaming” or “abusing” the U.S.
patent system. 16
Rising
pressures to contain specialty drug costs, combined with a perception that branded drug firms are engaged in anti-competitive behavior,
could lead to increased regulation. Indeed, President Biden issued an Executive Order (the “E.O.”) in 2021 directing the
Secretary of Health and Human Services to “promote generic drug and biosimilar competition.”17 Pursuant
to the E.O., the FDA and Patent and Trademark Office (“PTO”) are collaborating to implement strategies to lower drug prices.18
The
relationship between extended exclusivity periods and high drug prices is addressed in several bills that have been introduced, as well
as in congressional hearings.19 In June 2022, a bipartisan group of Senators wrote
to the director of the PTO about patent thickets. The letter stated: “In the drug industry, with the most minor, even cosmetic,
tweaks to delivery mechanisms, dosages, and formulations, companies are able to obtain dozens or hundreds of patents for a single drug.
This practice impedes generic drugs’ production, hurts competition, and can even extend exclusivity beyond the congressionally mandated
patent term.” It closed by asking the PTO to “consider changes to your regulations and practices to address [overpatenting]
problems where they start, during examination.”20
_____________________________
13 https://www.i-mak.org/americas-overspend/
14 https://www.fda.gov/media/133509/download,
at 2; https://www.fda.gov/media/161540/download, at 6; https://pubmed.ncbi.nlm.nih.gov/34904207/; https://www.cbo.gov/sites/default/files/105th-congress-1997-1998/reports/pharm.pdf;
https://www.cbo.gov/publication/57772
15 https://www.nytimes.com/2022/04/16/opinion/patents-reform-drug-prices.html
16 See, e.g., https://www.reuters.com/business/healthcare-pharmaceuticals/consumer-group-says-drugmakers-abuse-us-patent-system-keep-prices-high-2022-09-16/;
https://www.cnn.com/2019/09/12/perspectives/drug-patents-abuse/index.html;
https://www.chicagotribune.com/opinion/commentary/ct-perspec-drugs-health-care-pharm-1024-20171023-story.html;
https://www.nbcnews.com/health/health-news/gaming-us-patent-system-keeping-drug-prices-sky-high-report-says-rcna47507
17 https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/,
at section 5(p)(vi).
18 https://www.uspto.gov/sites/default/files/documents/PTO-FDA-nextsteps-7-6-2022.pdf
19
See https://www.durbin.senate.gov/newsroom/press-releases/durbin-cassidy-introduce-remedy-act-to-lower-drug-prices-by-curbing-patent-manipulation-promoting-generic-competition#:~:text=The%20REMEDY%20Act%20amends%20FDA,that%20delay%20generic%20market%20entry;
https://www.congress.gov/bill/117th-congress/house-bill/2873;
https://www.judiciary.senate.gov/imo/media/doc/Testimony%20-%20July%2013%202021_Rachel_Moodie.pdf;
https://oversight.house.gov/news/press-releases/house-judiciary-antitrust-subcommittee-to-hold-hearing-on-anticompetitive;
https://energycommerce.house.gov/committee-activity/hearings/hearing-on-lowering-the-cost-of-prescription-drugs-reducing-barriers-to;
https://www.finance.senate.gov/hearings/drug-pricing-in-america-a-prescription-for-change-part-i
20 www.leahy.senate.gov/imo/media/doc/20220608%20Letter%20to%20PTO%20on%20repetitive%20patents.pdf
We are not asking for
authority to vote your proxy and no proxy cards will be accepted. Please vote your proxy according to the instructions in [company’s]
proxy statement.
Pharmaceutical firms argue that
secondary and tertiary patents are necessary to incentivize continued innovation related to a drug. But the Proposal does not seek to
prohibit the Company from applying for secondary and tertiary patents on its medicines, only for the impact on patient access to be part
of the mix of considerations. There is evidence that companies delay marketing an innovation on an existing drug by filing for secondary
patents strategically, close to the primary patent’s expiration, in order to provide the longest exclusivity extension.21
This timing suggests that patient benefit is not always the sole motivation for such innovations on approved medicines.
Pfizer notes in its Statement
of Opposition (“Statement”) to the Proposal, that the Company offers “patient assistance and donation programs to eligible
patients when insurance or reimbursement systems fail to provide affordable access to medicines.” Such programs, while facilitating
access for certain patients do not promote affordability more generally, as the introduction of a generic drug would. Helping a relatively
small number of patients does not address systemic issues, such as the strain placed on the health care system by extended exclusivity
periods and the societal impact of undertreatment of disease, which can include lower labor force participation and productivity, increased
social services costs, poorer patient quality of life, and higher health care costs later on in a patient’s life when the impact
of undertreatment may be more difficult to remedy.22
More generally, reliance on patent
thickets may actually diminish branded drug manufacturers’ incentives to continue developing innovative medicines. If a manufacturer
can obtain a longer period of exclusivity for a top-selling drug, it has a reduced motivation to develop new drugs.23 As one
academic study put it: “Rather than creating new medicines—sallying
forth into new frontiers for the benefit of society—drug companies are focusing their time and effort extending the patent life
of old products. This, of course, is not the innovation one would hope for. The greatest creativity at pharmaceutical companies should
be in the lab, not in the legal department.”24
In
its Statement, Pfizer notes its alignment with the IP Principles for Advancing Cures and Therapies (IP-PACT).25 However, the
Principles do not address what the Proponents are seeking to understand: whether the impact on patient access is considered in secondary
and/or tertiary patenting strategies.
_____________________________
21 See ncbi.nlm.nih.gov/pmc/articles/PMC7592140/
22 See, e.g., https://www.oecd.org/els/health-systems/Focus-on-Health-Making-Mental-Health-Count.pdf;
https://www.lse.ac.uk/business/consulting/assets/documents/the-value-of-early-diagnosis-and-treatment-in-parkinsons-disease.pdf;
https://www2.deloitte.com/us/en/insights/industry/health-care/economic-cost-of-health-disparities.html;
https://www.mathematica.org/news/new-study-uncovers-the-heavy-financial-toll-of-untreated-maternal-mental-health-conditions.
23 ncbi.nlm.nih.gov/pmc/articles/PMC7592140/
24 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6534750/
25 https://www.interpat.org/ip-pact/
We are not asking for
authority to vote your proxy and no proxy cards will be accepted. Please vote your proxy according to the instructions in [company’s]
proxy statement.
Finally,
the existence of disclosure on a company’s pricing and/or access programs is sometimes held up as a reason the Proposal is unnecessary.
Disclosures, standing alone, are insufficient because they do not effect a change in policy like the one
sought by the Proposal. The policy change is the Proposal’s core element, and the reporting component is designed to ensure that
shareholders are apprised of Pfizer’s adoption of the Policy.
We
recognize the value created by pharmaceutical innovation, and the Proposal would not limit in any way the Company’s ability to obtain
so-called primary patents covering drugs’ active ingredients or require a particular outcome when the Company analyzes whether to
pursue secondary and tertiary patents. The Proposal simply asks the Company to take the impact on
patient access into account when making decisions about applying for such patents. It would not impose a specific weighting for access
considerations, nor would it dictate how access should be measured. The Company would have total discretion over those and other details.
We therefore urge shareholders to vote FOR Item
8.
For more information, please contact Catherine Rowan,
Director, Socially Responsible Investments, Trinity Health rowancm@trinity-health.org
We are not asking for
authority to vote your proxy and no proxy cards will be accepted. Please vote your proxy according to the instructions in [company’s]
proxy statement.
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