Category: Biotech

Categories
Biotech Healthcare Innovation International Law IPPI News Patent Law Patents Pharma

IPPI Cautions that Pharmaceutical Tariffs Would Harm Patients and U.S. Innovation Leadership

IPPI has submitted formal comments to the U.S. Department of Commerce regarding its Section 232 investigation of pharmaceutical imports, cautioning against imposing tariffs on medicines and their ingredients.

In our submission, IPPI scholars Mark Schultz, Emily Michiko Morris, and Joshua Kresh explain that imposing such tariffs would have severe negative consequences for American patients, healthcare affordability, and U.S. pharmaceutical innovation leadership.

Drawing on extensive research, particularly Geneva Network’s 2021 study modeling the effects of a 25% pharmaceutical tariff, our comments highlight five critical concerns:

  1. Higher Drug Prices for Patients: Research demonstrates that pharmaceutical tariffs create a “compounding effect” as each link in the supply chain adds markup to the tariff-inflated price, potentially increasing final costs by up to 80% for consumers.
  2. Drug Shortages Risk: With over 90% of U.S. prescriptions being for generic drugs and 83% of top generics having no domestic source, tariffs would disrupt existing supply chains and potentially force manufacturers to exit certain market segments.
  3. Ineffective for Boosting Domestic Manufacturing: Building pharmaceutical manufacturing facilities in the U.S. requires billions of dollars and 5-10 years to accomplish—making tariffs ineffective for addressing immediate or even medium-term supply concerns.
  4. International Retaliation Threats: Our comments note that major trading partners including China, Brazil, and the EU are already considering pharmaceutical IP rights suspensions and other countermeasures in response to U.S. tariff actions.
  5. Government Cost Implications: Paradoxically, the U.S. government could end up paying 2-6 times more through Medicare and Medicaid for tariff-inflated drugs than it collects in tariff revenue.

“Imposing tariffs on medicines would be counterproductive to U.S. interests,” said Mark Schultz, Faculty Chair of IPPI. “Such measures would ultimately undermine, rather than enhance, American healthcare security while threatening our position as the world leader in pharmaceutical innovation.”

The full text of IPPI’s comments is available here.

Categories
Biotech Healthcare Innovation Patent Law Patents Pharma

What the FTC Gets Wrong About the FDA’s Orange Book

By Emily Michiko Morris & Douglas Park

The high cost of some pharmaceuticals is a complex issue, but the Federal Trade Commission’s (FTC’s) most recent criticism of pharmaceutical patents’ role is misguided. The FTC has criticized the listing of drug product device patents in the FDA’s “Orange Book,” a listing of patents related to various FDA-approved drug products. The FTC claims that listing these device patents serves merely to delay generic market entry, but they overlook key legal and practical details of how generic drugs enter the market and how listing in the Orange Book actually promotes generic competition by informing manufacturers of which patents cover branded drugs. Here’s a breakdown of where the FTC’s reasoning falls short.

30-Month Stays Do Not Delay Generic Market Entry

One of the FTC’s main concerns is the 30-month stay provision under the Drug Price Competition and Patent Term Restoration Act of 1984 (better known as the Hatch-Waxman Act), which temporarily halts FDA approval of a generic drug when a brand-name company sues the generic for patent infringement. The stay applies only to infringement suits over patents listed in the Orange Book. The FTC therefore argues that brand-name companies list device patents in the Orange Book simply to use this stay to delay generic entry into the market. However, this interpretation is outdated and inaccurate.

First, the FTC’s objection to these device patents appears to be based on a 22-year-old FTC study that has since been made obsolete by 2003 changes to the Hatch-Waxman Act. Prior to 2003, brand-name pharmaceutical patent owners could secure a 30-month stay for each patent that they added to their infringement suit. The 2003 modifications to Hatch-Waxman now allow patentees only a single stay.

Second, although even a single 30-month stay could delay generic market entry, the Hatch-Waxman Act already protects against this by expressly giving federal district courts discretion to lengthen or shorten the stay, thus allowing courts to curtail the stay if patent is invalid or clearly not infringed. This likewise curtails a patentee’s ability to abuse the 30-month stay by listing in the Orange Book patents that actually do not cover the drug product for which they are listed.

Third, recent research shows that the 30-month stay has little to no effect in delaying generic market entry. A study by Kannapan et al. found that generics usually take years to enter the market – long after the 30-month stay expired – due  least in small part to the fact that FDA final approval itself on average takes more than 30 months. (Hatch-Waxman’s 30-month stay prevents only final FDA approval, such that the FDA can proceed with review of a generic’s application even during the stay.) Moreover, as the Kannapan study notes, almost 40% of brand-name patentees decline to file suit within that 45-day period, thus failing to trigger any 30-month stay.

Listing Patents in the Orange Book Facilitates Generic Patent Challenges

Perhaps more importantly, the FTC’s focus on the 30-month stay also misses the value of the Orange Book in providing not only a risk-free but often lucrative legal framework for generic drug manufacturers to challenge patents.

First, listing patents in the Orange Book also saves generics the often large costs of searching for and identifying any patents their drug products might infringe. Some commentators lament the fact that biosimilar manufacturers do not have a similar list of patents to help them plan their marketing strategy.

Second, while applying for FDA approval, generic manufacturers can file what are known as Paragraph IV certifications claiming that any patents listed in the Orange Book for the drug product at issue are invalid or uninfringed. These certifications constitute patent “infringement,” allowing brand-name manufacturers to sue the generics. This saves the generic from the risks of damages and other losses they otherwise might incur.

In addition, as an incentive to challenge patents, this system also grants the first successful generic challenger 180 days of market exclusivity as the only generic on the market. These exclusivity periods in some cases can be worth billions of dollars, making Paragraph IV challenges potentially quite lucrative. Not surprisingly, Paragraph IV certifications – even when not sued upon by brand-name patentees – appear to be quite successful in clearing the way generic market entry.

For patents not listed in the Orange Book, however, generics who challenge brand-name drug patents enjoy none of these benefits. When a patent is not listed in the Orange Book listings, a generic loses this risk-free opportunity to challenge patents, making generic entry more dangerous than many can afford. Even if a patent related to a drug product is not listed in the Orange Book, brand-name patentees can sue generic manufacturers for infringement and can do so even after the FDA has approved the generic for marketing. The generic is therefore at risk of liability for not only potentially millions of dollars of infringement damages but also loss of their investments in manufacturing and marketing the drugs at issue.

De-listing device patents would thus deprive potential generic manufacturers not only of notice but also of the protections of Paragraph IV certifications.

Device Patents Are Critical for Drug-Device Products But Are Difficult to Copy

The FTC nonetheless seems to believe that the targeted device patents are merely peripheral in importance and therefore should not be listed. For drug-device products like inhalers or auto-injectors, however, the device is crucial to efficacy and even safety.

For inhalers, for example, some devices are designed for children, while others are suitable only for adults. Some designs are specific to the condition being treated and the area of the throat that they target. Some designs are easier to use than others and therefore more likely to yield consistently sufficient dosages. Some designs also vaporize drugs into smaller particles that travel further and are more easily absorbed, making them more effective for some indications.

Similarly, the auto-injector device design is critical to the safety and operation of the oft-criticized EpiPen. Even small design changes can lead to large differences in safety – indeed, part of the reason why the EpiPen auto-injector device has multiple patents on it is that the design itself has been modified many times to address various safety concerns.

Because small differences in structure can lead to large changes in efficacy and safety, trying to create generic versions of EpiPen or other such complex drug-device products can be immensely difficult, leading to significant delays in market entry. For example, even though Teva had Mylan’s permission to create a generic version of EpiPen, Teva still had difficulty in doing so and received FDA approval only after multiple attempts and a two-year delay. For this reason, the FDA has developed guidelines specifically for generics trying to develop generic epinephrine autoinjectors, as well as specific guidelines for albuterol inhalers and other such drug-device products. 

The FTC’s Strategy Could Backfire

Far from stifling competition, listing patents in the Orange Book helps generic manufacturers challenge patents by reducing the risks of entering the market. Removing these patents would reduce generics’ ability to compete, ultimately harming consumers.

Categories
Biotech Patent Law Patent Licensing Patents Pharma

Pharmaceutical “Nominal Patent Life” Versus “Effective Patent Life,” Revisited

By Emily Michiko Morris and Joshua Kresh

Executive summary: Many critics of pharmaceutical companies argue that they abuse the patent system through “evergreening” or “thickets” to increase the amount of time they can avoid generic competition and keep drug prices high. Those critics have not looked at the real-world effects of pharmaceutical patents on generic entry, however. Our review of actual time to generic entry for more than one hundred of 2012’s top-selling drugs shows that:

    • The average effective patent life, as opposed to nominal patent life, of our dataset is 13.35 years, consistent previous studies on effective patent life;
    • Patents and exclusivities added to the Orange Book after a drug’s market entry does little to extend effective patent life; and
    • The number of patents protecting a brand-name drug has no significant correlation with effective patent life.

Thus, our study suggests that “evergreening” does not stop generic entry and that “thickets”—if they even exist—appear to be rather easy to circumvent.

The topic on everyone’s minds lately is drug prices and the fact that most Americans believe that drug prices in the United States are too high. Drug prices, like other health care costs, are a multifactorial and incredibly complex subject. Most of the current discussion on drug prices focuses on the role of patent protections, however, to the exclusion of almost everything else. In particular, a major criticism of the pharmaceutical industry is that it is abusing the patent system by filing for serial patents to prolong its ability to charge supracompetitive prices for the drugs that it has developed.

To prove the existence of such “evergreening” through patents, a number of studies focus on nominal patent life, based on the expected expiration date of the last patent on a given set of drugs. The later the expiration date, according to evergreening theory, the longer a brand-name drug can fend off entry by price-lowering generic versions. The most well-known—and certainly the most thorough—study applying this approach is Prof. Robin Feldman’s “Evergreen Drug Patent Database” (often informally referred to as the “Hastings Database,” after UC Law San Francisco’s former name).

The Hastings Database contains an exhaustive list of not only all patents but also any regulatory exclusivities granted by the FDA, both of which can stall generic drug approval and thus market entry as well. The Database then identifies “evergreening” by looking at how many additional patents or exclusivities are added to the “Orange Book,” the FDA’s list of patents and exclusivities that pharmaceutical companies assert cover their brand-name small-molecule drugs (SMDs).[1] Specifically, the Hastings Database counts how many patents and exclusivities are added after what the database labels as the “protection cliff” for each drug, as defined by all patents and exclusivities added to the Orange Book by two months after FDA approval.[2] According to the Hastings Database’s calculations, companies extend the patent lives of their drugs for several years by adding such later filed patents and exclusivities.

This calculation presents merely the nominal patent life of a given drug, however, not the period of time during which patents actually protect a drug from generic market entry. The latter, or effective patent life, is a more accurate and more meaningful measure of how long brand-name drug companies can fend off generic market entry. Unlike nominal patent life, effective patent life (EPL) does not focus on patent terms. Instead, EPL focuses on the time between a brand-name drug’s approval and first market entry and generic market entry because this is the only time in which the brand-name company might be able to charge supracompetitive prices. The differences between nominal patent life and effective patent life can be quite large, as generics often enter the market regardless of whether the brand-name still has patent term remaining.[3] This is a point that many earlier studies have shown.[4]

To reaffirm this point, we did our own study of the nominal patent lives listed in the Hastings Database. For our sample set, we looked at the top-selling small-molecule drug products from 2012, based on the idea that flagship brand-name products are most likely to draw generic market entry and that drugs from 2012 would now have had twelve years in which generics could do so. To select the drug products for our sample, we used the list of the top 200 drugs by total U.S. retail sales in 2012 assembled by the Njardarson Group at the University of Arizona.[5] After we eliminated any biologics, as well as any SMDs not included in the Hastings Database, we had a sample size of 131 drug products.

We then added data from the Hastings Database. These data included each drug product’s FDA approval date, the expiration dates for both the earliest and latest patent or regulatory exclusivity listed in the Orange Book for each drug product, and each product’s “protection cliff” dates. We also included any further time past those protection cliff dates that the Hastings Database identifies added by patents or exclusivities beyond those that comprise each protection cliff. This latter set of data, which the Hastings Database labels as “Additional Prot(ection) Time,” is important because it is how Hastings calculates alleged “evergreening.”

To these data from the Hastings Database we then added data from other resources as well: both the date on which each Reference List Drug (RLD) began marketing (i.e., the date on which the relevant brand name entered the market), and similarly the date on which the first generic for each RLD entered the market. We added these market entry dates from the earliest listed dates included in the National Drug Code Directory’s Structured Product Labeling Resources (SPL) database[6] for the earliest approved New Drug Application (NDA) listed in the Hastings Database. (A large number of drug products have multiple NDAs and multiple market entry dates, so we used the earliest RLD market entry dates for the earliest approved NDAs to err on the side of the longest EPLs for each product.) Based on these dates, we calculated the EPL for each drug product based on the time between the product’s first marketing date and the date on which the first generic for that product entered the market.

Because the Hastings Database defines evergreening as protection beyond its “protection cliff” rather than as nominal patent life, we computed two further datapoints. First, to compare directly with the Hastings Database’s “Additional Prot(ection) Time,” we also calculated EPL based not on RLD market entry dates but on Hastings’ protection cliff dates—that is, we calculated the effective patent life for each drug product beyond its protection cliff. This allowed us to compare what is in effect Hastings’ nominal “Additional Prot(ection) Time” with what is in effect our sample’s effective “Additional Prot(ection) Time.” Second, to make the Hastings Database more comparable with nominal patent life (NPL) determinations in other studies, we also derived the NPL for each drug product based on the time between its RLD market entry date and the latest expiration date of any patent or exclusivity listed in the Hastings Database for the product.

Our analysis of our sample set is ongoing, but some of the initial results are significant. Not surprisingly, the average EPL from our sample—including the 14 drug products for which the FDA currently lists no generic versions—is several years shorter than the average NPL we computed from the Hastings Database. The average NPL from Hastings is 19.14 years (median = 19.20), but the average EPL from our sample is 13.35 years (median = 14.01). Our sample’s average EPL is thus consistent with EPLs from other studies.

More interesting, however, is that our sample’s average effective “Additional Prot(ection) Time”—1.61 years (median = 1.19)—is also much shorter than Hastings’ nominal “Additional Prot(ection) Time”—13.34 years (median = 13.52). In other words, the effective patent life of our sample, on average, extends only 1.61 years past Hastings’ “protection cliff.” This means that most of the mean EPL from our sample stems from the patents and exclusivities that comprise Hastings’ protection cliff (those listed in the Orange Book up to two months after FDA approval). This in turn shows that if, as is frequently claimed, patents and exclusivities are later added for brand-name drug products simply to avoid their protection cliffs, that particular tactic is ineffective.[7]

That being said, many of the drug products in our sample may have had shortened EPLs because generics were able to enter the market early through Paragraph IV certifications contesting either the infringement or validity of the latest expiring patents for those drugs. We therefore looked at the approval letters for as many of the earliest entering generics as we could find on the Drugs@FDA: FDA-Approved Drugs online database. The FDA’s approval letters typically include whether the approved generic has filed a Paragraph IV challenge and which patents it were challenging. We were able to pull up generic approval letters for 87 of the drug products in our sample. Of those products, 16 either faced no Paragraph IV challenges at all or at least none challenging the latest expiring patent. For another 26 of the 87 drug products, their patent owners did not sue the first-to-file generic even though the generic filed a Paragraph IV challenge to the latest expiring patent. This does not mean that the first-to-file generic did not itself then file a declaratory judgment action against the latest expiring or other patents, but it does mean that the patent owner did not think it worthwhile to sue the Paragraph IV generic early enough to obtain a 30-month stay on that generic’s FDA approval. Several of the 87 products, however, had multiple first-to-enter generics entering the market on the same day, but the FDA database did not display the approval letters for all those generics. We may therefore be underestimating the number of products that faced Paragraph IV challenges.

It is also possible that the time needed to resolve Paragraph IV challenges by itself may have delayed generic entry in many cases. Similarly, it is possible that the mere existence of later-expiring patents deterred potential generics from even trying to enter the market early. We therefore used Hastings’ raw data to derive the number of patents protecting each drug product in our sample. We counted all individual patents listed, treating any pediatric extension, patent term restoration, or other patent term extension as a separate patent if it had the potential to extend nominal patent life. We then looked for any correlation between the number of patents per drug product and the effective patent life for each product but found no statistically significant difference from a null hypothesis of zero correlation. This again suggests that simply adding more patents, regardless of whether they are listed in the Orange Book later or earlier, is not an effective tactic for delaying generic market entry.

Perhaps most significantly, our findings suggest once again that looking at only patents and patent terms reveals little to nothing about how long brand-name drug products can stave off generic entry. Nominal patent life, for example, tells us little about the actual effect patents have because nominal patent life fails to consider the scope of each patent. Many patents, especially later-filed patents, on new indications for which a drug patent can be used or new ways of manufacturing a product, can either be carved out of a generic’s FDA application or designed around. Even new dosage patents may not stop generic entry if physicians can simply split or multiply the dosage of a generic to achieve the newly patented dosage. Much the same can be said of new formulation patents as well. And even if other types of patents can be avoided only through Paragraph IV challenges, these challenges may have little effect in extending effective patent life, as suggested by our data.

[1] Small-molecule drugs are small and simple substances that can be synthesized though chemical reactions, unlike “biologics,” which are a relatively new class of therapeutics that are much larger and more complex molecules that are synthesizable only through biological processes.

[2] The Hastings Database also calculates for each drug the length of time between the expiration of its first patent or regulatory exclusivity and the expiration of its last.

[3] See, e.g., C. Scott Hemphill & Bhaven N. Sampat, When Do Generics Challenge Drug Patents?, 8 J. Empirical L. Stud. 613, 643 (2011) (noting that effective patent lives are shorter than nominal patent lives).

[4] See, e.g., Henry G. Grabowski et al., Continuing Trends in U.S. brand-Name and Generic Drug Competition, 24 J. Med. Econ. 908, 916 (2021) (calculating to EPL – or “market exclusivity period” (MEP) – as only 13.0 to 14.1 years for new chemical entities); C. Scott Hemphill & Bhaven M. Sampat, 31 J. Health Econ. 327, 330 (2012) (finding EPL of 12.15 years versus NPL of 15.89 years for new chemical entities).

[5] chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://sites.arizona.edu/njardarson-lab/files/2023/11/Top-200-Pharmaceutical-Products-by-US-Retail-Sales-in-2011_small_0.pdf.

[6] https://www.fda.gov/industry/structured-product-labeling-resources/nsde

[7] The difference between average EPL and NPL for the products in our sample is statistically significant, based on a paired two-tail t-test with p value <<0.01. The same is true of the difference between effective and nominal “Additional Prot(ection) Time” for our sample.

Categories
Biotech Healthcare Patents Pharma

Professors Erika Lietzan and Kristina Acri Argue That Current Data Do Not Support Evergreening Allegations

By Jack Ring

Overlaid images of pills, a gloved hand of someone expecting a pill, and an eyedropperIn their forthcoming paper, Solutions Still Searching for a Problem: A Call for Relevant Data to Support “Evergreening” Allegations,[1] C-IP2 Senior Scholars Erika Lietzan of Mizzou Law and Kristina Acri of Colorado College call for relevant data to support evergreening allegations and accompanying policy proposals. “Evergreening” is often described as brand drug companies securing additional patents and FDA exclusivities, which grant greater market exclusivity than the initial exclusivities.[2] Evergreening has long been the subject of criticism and policy reform.

The article evaluates empirical data commonly offered to substantiate evergreening and explains that the data, while largely accurate, does not support proposed policy changes. The authors argue that the most relevant data points for policymakers are (1) when brands face competition and (2) what drives the timing of that competition. The authors indicate that no empirical studies answer these questions, so this article concludes by proposing a study designed to properly consider these factors.

I.              Background

Evergreening allegations stem from protections on brand drugs that advocates view as too many patents or FDA exclusivities, which, they claim, improperly extend the drug’s exclusivity.[3] FDA exclusivities include exclusive periods of approval or markets as well as processes for bringing generic drugs to market. Under the Federal Food, Drug, and Cosmetic Act (FDCA), the FDA approves all new drugs before they are sold.[4] However, the FDCA does not define “drug” or “new drug,” which may refer to an active ingredient, a finished product, or both.[5] While the FDCA does not specify, the FDA in practice approves products (finished medicines as they are sold in the market), not active ingredients (active molecules and components of finished products).[6]

The FDCA controls the processes of bringing a generic drug to market.[7] As critics point out, some statutory processes bar generic drugs from entering the market until the patents expire. However, this is not always the true.[8] Moreover, the FDCA provides different forms and lengths of exclusive approval as a reward for drug makers performing the preclinical and clinical research needed to bring a drug to market. These range from six months for performing pediatric studies[9] to seven years for “orphan” drugs intended to treat a rare disease or condition.[10]

Much of the evergreening allegations and outcry focus on exclusivities stemming from continuing innovation. Continuing innovation is common because developing new molecular entities is time- and cash-consuming. Therefore, brand companies benefit from identifying new uses for new molecular entities. Moreover, those new medical uses (indications) may be eligible for new patents and statutory exclusivities. Protections for continuing innovation, however, are narrow and only prevent the approval of generic drugs for that new, specific use.[11]

II.            The Hastings Project and Current Data for Policymakers

The University of California Hastings College of Law hosts a database that (1) identifies the earliest and latest expiring patent or exclusivity for new drugs and (2) calculates the number of months between those dates.[12] The authors undertook a large audit of the Hastings Database. Like the Hastings Database, major empirical studies offered to support the allegation of “evergreening” focused on counting patents and exclusivities.[13] The Hastings Database utilizes three counting metrics: earliest protection end date, latest protection end date, and delta between the two called “months added.” The authors’ audit raised questions regarding the inferences drawn about competition from patent and exclusivity counts generally.

The authors argue that the Hastings Database is insufficient to inform policy debate because it does not provide the most relevant piece of information for policymakers: when new drugs face competition and why. The Hastings Database estimates new drug entry and competition based on the latest protection date for a drug’s applicable exclusivities. However, the exclusivities used to calculate that date do not prohibit all new drug entry. Therefore, because new drugs could enter the market before the latest protection date, that data point does not serve as a relevant data point for policymakers seeking to drive timely generic competition. In the authors’ own data review, every new chemical examined had a generic drug available before the latest expiry date listed in the Hastings Database. The authors’ audit confirmed their skepticism of the “latest protection end date” as a proxy for the likely generic entry date. Actual generic competition date will likely launch at least five years earlier, with nearly 18% launching more than ten years sooner.[14]

III.          Takeaways and the Call for Relevant Data

While the authors audited the Hastings Database and analyzed their own dataset, they recognized their research still did not provide the answers to the most important questions: (1) when do generic drugs reach the market and (2) what drives that timing? A study designed to consider the market entry date of the first generic drug based on any brand product containing a particular new active ingredient would determine the factors driving that market entry date.

The publication closes by describing this better study and calling for this data. At a high level, the study would focus on each new molecular entity approved since 1983 with the relevant dates being the “Initial Protection End Date” and the “NCE Competition Date.” Initial Protection End Date would start with the first approved brand product containing the NCE. NCE Competition Date would be the commercial launch date for the first product, approved on the basis of an abbreviated application (relying on the brand company’s research), to contain that same NCE for the same indication(s). They recommend a database covering all new molecular entities since 1984 to allow policymakers to study these trends. The database would allow policymakers to see exactly how long brand companies with new chemical entities enjoy a market without competition from another company marketing the same chemical entity for the same use on the basis of the brand company’s own research. Where the Generic Competition Date (actual commercial launch date) is later than the Initial Protection End Date, one would need to investigate the reason for its timing. Perhaps the generic company had difficulty making a bioequivalent, the market is too small, or the generic company faced manufacturing issues.

IV.          Policy Implications

As the authors make clear, policymaking based on latest expiration date (the Hastings Database approach) before consideration of actual market entry (the authors’ proposed study) would be premature. The number of patents and exclusivities, and the difference between the earliest and latest expiration date of patents and exclusivities, do not illustrate evergreening. Yet, current policy proposals rely on this counting method used by the Hastings Database to support reforms. This is reliance on data to with no correlation to the purported issue. This article, rather, provides a sketch of how a proper database could be built and a study could be conducted to measure evergreening. Evergreening claims can only be substantiated with proper empirical data. Unless empirical data shows that evergreening is a problem, policy solutions are unnecessary.

[1] Erika Lietzan and Kristina Acri née Lybecker, Solutions Still Searching for a Problem: a Call for Relevant Data to Support “Evergreening” Allegations, 33 Fordham Intell. Prop., Medifa & Ent. L.J. (forthcoming 2023), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4230310#.

[2] For an overview of arguments that drug companies obtain too many patents and too much exclusivity, which raises prices, see Erika Lietzan, The “Evergreening” Metaphor in Intellectual Property Scholarship, 53 Akron L. Rev. 805, 848-851 (2020); see also Erika Lietzan, The Evergreening Myth, Regulation 24, 25 (Fall 2020).

[3] E.g., Robin Feldman & Evan Frondorf, Drug Wars: A New Generation of Generic Pharmaceutical Delay, 53 Harv. J. on Legis. 499, 510 (2016); Michael A. Carrier, A Real-World Analysis of Pharmaceutical Settlements: The Missing Dimension of Product Hopping, 62 Fla. L. Rev. 1009, 1016 (2010).

[4] 21 U.S.C. § 355(a).

[5] The term “drug” is ambiguous at FDA. The FDA approves brand products, not active ingredients, and those products are copied by generic companies. As a result, a brand’s active ingredient may be spread over multiple products. 21 U.S.C. § 321(g).

[6] FDA defines “active ingredient” as “any component that is intended to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease, or to affect the structure or any function of the body of man or other animals.” 21 C.F.R. § 314.3(b). The active ingredient includes the ester, salt, or other noncovalent derivative of the molecule responsible for the physiological or pharmacological action of the drug substance. 21 C.F.R. § 314.3(b). That molecule, in turn, is the “active moiety.”

[7] See 21 U.S.C. §§ 355(j)(2)(A)(vii)–(viii), 355(j)(2)(B)(i).

[8] These circumstances include when (1) the patent claims a method of use for which the generic company does not seek approval, or (2) the brand company does not sue for patent infringement after a paragraph IV certification. 21 U.S.C. §§ 355(j)(2)(A)(vii)(IV); id. § 355(j)(2)(B)(i).

[9] 21 U.S.C. § 355a. Pediatric exclusivity is awarded after the research is complete, when the brand company submits a report to the agency that “fairly” responds to the written request. Id. § 355a(d)(4).

[10] Id. § 360bb(a)(2).

[11] Moreover, generic companies seeking to enter the market can choose not to seek approval for the new indication. 21 C.F.R. § 314.127(a)(7). For example, if a brand drug treats conditions A, B, and C and condition C is still subject to a patent or statutory exclusivity, a generic drug company could still receive approval to sell their drug to treat condition A and B.

[12] See Evergreen Drug Patent Search, https://sites.uchastings.edu/evergreensearch.

[13] This includes pieces by Robin Feldman, a Hastings professor. Robin Feldman, May Your Drug Price be Evergreen, 5 J.L. & Biosci. 590, 590 (2018); Amy Kapczynski et al., Polymorphs and Prodrugs and Salts (Oh My!): An Empirical Analysis of “Secondary” Pharmaceutical Patents, 7 PLOS Online 12 (2012).

[14] Lietzan & Acri, supra note 1, at 44–46.

Categories
Biotech Patents Pharma

Reply and Response to C-IP2’s March 4, 2021, Blogpost on UC Hastings’ Evergreen Drug Patent Search Database

C-IP2’s original post on the UC Hastings’ Evergreen Drug Patent Search Database can be read here.

Reply to Blog Post on UC Hastings’ Evergreen Drug Patent Search Database

Robin Feldman
Arthur J. Goldberg Distinguished Professor of Law
Albert Abramson ’54 Distinguished Professor of Law Chair
Director of the Center for Innovation at University of California Hastings

We would like to thank the author of the blog post for taking the time to look at our work for the Evergreen Drug Patent Database. It is always appreciated when others explore and examine our data. In addition, the benefit of a website is that helpful feedback from visitors can be used to make the information more accessible and easier to navigate.

We would also like to point out that the blog post misunderstands the nature of the project. The project begins with the initial patent protection on the chemical formulation of a drug and then tracks additional protections. Some of these protections increase the amount of time that the drug is protected. Others increase the number of protections that a challenger would have to overcome, without extending the length of time.

One can think of the difference in terms of building a wall of protection. Some protections make the wall higher by extending the total time period. Other protections make the wall thicker, so it is tougher for a competitor to break through.

We do have a separate tab that allows one to calculate only the months of added protection, for those who wish to view the data in that manner. We also offer tabs to view the number of unique patents and the number of patent extensions. Our goal is to allow the user to examine the information through different lenses, so that one can understand the many ways a patent holder can extend or toughen protection. If we like certain aspects, we should keep them; if we don’t like certain aspects, we should amend them. Either way, it is important to understand the system in which we live.

In addition, the blog post also may have misunderstood the database’s starting point. Specifically, the post asks why the database “allot[s] ranolazine less than four months of ‘earliest’ protection time” and suggests that such a short period of protection “seems suspect.” The answer is simple. The Evergreen Drug Patent Database begins in 2005. Thus, drugs whose original patents were around a long time have little protection left when the database begins. (The blog post itself notes this history of the drug.)

Finally, the blog post questions the database’s treatment of different strengths of the drug, questioning the fact that when patents and exclusivities apply to multiple strengths of a drug, they are counted once for each instance. We chose this approach because the law prevents automatic substitution at the pharmacy counter among different strengths. In fact, shifting the market to a new strength can create a powerful method of product-hopping by blocking generic substitution. Try asking your pharmacist the cost to fill your prescription with two 25 mg tablets rather than one 50 mg tablet. The cost variations can be odd and economically irrational. In short, creating multiple strengths of a drug can provide a form of protection in and of itself. Our goal is to report as many of these aspects as possible.

In the same vein, if the brand company has shifted the market to a different strength or formulation of the original drug, delisting the original drug can be used as an evergreening technique. It can prevent generic hopefuls from obtaining samples of a brand drug, when having samples is essential for FDA approval. It also can lead health plans to reimburse the generic at the disfavored rate of brand drugs, because the generic is now the only drug on the market at that precise dosage and formulation. One could argue that a delisting request should be characterized as something other than a protection; the argument would not be unreasonable. Nevertheless, the database chronicles the Orange Book history of each drug, based on all changes recorded. We consider any delisting information to be part of a complete picture of that history.

In closing, we note that it is highly unusual for legal academics to publicly release their data, let alone at this level of excruciating detail. We do so in the spirit of academic exchange and full disclosure, and we hope that those who write for this blog, as well as those who read it, will be motivated to follow suit.

Response to Professor Feldman’s “Reply to Blog Post on UC Hastings’ Evergreen Drug Patent Search Database”

C-IP2 appreciates Professor Feldman taking time to respond to our March 4, 2021, blogpost describing some of the problems we have identified with the UC Hastings’ Evergreen Drug Patent Search Database. We have posted her response in full, in the spirit of academic inquiry and collegiality that C-IP2 strives to foster. At the same time, we want to emphasize that we do not believe that her response in fact undercuts the observations in our original post. While we agree with Professor Feldman that legal academics should release for public scrutiny the data upon which they have based their conclusions—particularly when those conclusions are intended to have some bearing on important public policy considerations—we stand by our original statement “that—because of limitations in the methodology used and given the inadequate transparency with respect to the underlying data—policymakers and others who consult the Database [could] be misled by the statistics.”

C-IP2 disagrees with Professor Feldman’s suggestion that our post “misunderstands” Hasting’s database and its starting point. The post’s description of the database as a resource that UC Hastings had created “to address the perceived problem of ‘evergreening’” reflects UC Hasting’s own description of the database. See, for example, statements on the database’s “About” page.[1] Indeed, the database is explicitly referred to on that page as “Evergreen Drug Patent Search.” One might easily be confused into thinking that the database provides information reflecting the actual period of exclusivity experienced by FDA-approved drugs, which it clearly does not.

With all due respect, Professor Feldman seems to misunderstand some aspects of the original post. For example, at one point she states that the reason the database “allot[s] ranolazine less than four months of ‘earliest’ protection time” is because the database “begins in 2005.” But the starting point of the database is irrelevant. The database reports the drug’s “Approval Date” as January 27, 2006, and the “Earliest Prot[ection] Date” as May 18, 2006, which is a little less than four months. The database goes on to report that May 27, 2019, is the drug’s “Latest Prot[ection] Date,” leading the database to conclude that the drug had received 156 “Months Add[itional] Prot[ection] Time.” C-IP2 continues to find “suspect” the database’s implied assertion that a drug that has been on the market less than four months is already benefitting from “additional protection time,” particularly when the context of the database might lead one to believe that “additional protection time” equates with “evergreening.”

 

[1] https://sites.uchastings.edu/evergreensearch/about/#.YS_g6o5KhM1

Categories
Biotech C-IP2 News International Law Patents

Panel Discussion: Vaccines, Intellectual Property, and Global Equity

scientist looking through a microscopeThe following post comes from Colin Kreutzer, a 2E at Scalia Law and a Research Assistant at C-IP2. 

The COVID-19 pandemic has shined a spotlight on the role of intellectual property in modern medicine and on the complex social questions surrounding a system that grants exclusive rights over life-or-death products. On the one hand, there is clearly a difference between public access to lifesaving medicines and other patented goods, such as consumer electronics. However, creating these drugs required billion-dollar investments and enormous risk, made feasible only by that promise of IP rights. Wouldn’t taking that promise away harm future development of new medicines? As the world considers a waiver of IP rights over COVID-19 vaccines and other technologies, experts are analyzing not only what’s right and what’s wrong, but also what works and what doesn’t.

On June 10, 2021, C-IP2 and the Smithsonian’s Lemelson Center for the Study of Invention and Innovation held a panel discussion on vaccines, intellectual property, and global equity. With opening remarks by Lemelson Director Arthur Daemmrich, and moderated by C-IP2 Faculty Director Professor Sean O’Connor, the panel featured Dan Laster, Director of the Washington State COVID-19 Vaccine Action Command and Coordination System (VACCS) Center; Professor Arti K. Rai, Elvin R. Latty Professor of Law and Co-Director of the Duke Law Center for Innovation Policy; and Eric Aaronson, Senior Vice President and Chief Counsel, Corporate Affairs, Intellectual Property and Intellectual Property Enforcement, Pfizer Inc.

Opening Remarks

Mr. Daemmrich began with a historical perspective of medical developments in this country, as well as the social, economic, and regulatory issues that would invariably be tangled up within them. His tale foretold many of the conflicts we see today—going from a time when most modern medicines didn’t exist, and high mortality was a fact of life, to a time when vaccines and other treatments existed, but access depended partly on wealth. In between those two periods, we saw rapid growth in IP protection that helped move society from one to the other. But whether in the form of religious opposition to smallpox inoculation, regulatory reforms after tragedies from bad medicine, or protests from a marginalized community during the AIDS crisis, legal and social issues have always played a prominent role in the story of medical science.

Building on this historical base, Mr. Daemmrich posed the problem now facing us: compared to other medicines, there are relatively few vaccines. On a grand scale, the entire field of vaccination is still in a stage of early development, and there exists great potential for growth in the future. The question is how to best stimulate that growth, or rather, how to ensure the greatest access to already-developed vaccines without stifling the creation of new ones?

Prof. O’Connor then led the panel with a series of questions. He began by asking about the difference between two classes of medicine. Vaccines are generally thought of as biologics—treatments that are derived from live cells­—whereas pharmaceuticals belong to the class of “small-molecule” drugs. They are primarily chemical compounds rather than a biological product.

Q: From an IP perspective, are vaccines different from small molecule pharmaceuticals? What role does IP play in making vaccines available?

 Prof. Rai responded that vaccines are indeed very different from small molecule drugs. From an IP perspective, the two classes derive their greatest protection from different sources.

Small molecule drugs can be produced without the need for company trade secrets. All the most critical information can be found within the text of the patent. So, the greatest protection comes from the patent itself, which grants its owner the right to exclude others from making or using the drug, and from data exclusivity, which prevents other companies from using the original developer’s clinical data to obtain regulatory approval of its own product.

Vaccines, on the other hand, cannot be quickly copied solely by reading the patent. There is a great deal of “know-how” involved in the manufacturing process. Because of this, trade secrets can be just as important to vaccine protection as the patent.

The role of IP in vaccine access, she said, is an interesting question. While public funding exists in the world of small molecule drugs, it has a “heavier footprint” in vaccine development, which then has some impact on the incentive model as it applies to vaccines.

Mr. Laster said the role of public funding was critical to his prior work at PATH, an organization devoted advancing global healthcare equity through public-private partnerships and other initiatives. Public funding has a “de-risking” effect in that the high costs and uncertainty of clinical trials are not borne entirely by the private sector. And because vaccine development typically requires cooperation among many parties, it is valuable to have different types of incentives in play (i.e., “pull”-type incentives, such as patent grants, as well as “push”-types, such as public funding). But from an IP perspective, exclusivity can pose a challenge to those cooperative efforts.

Additionally, he said that the detailed know-how involved with vaccines makes technology transfer incredibly difficult. If the intended receiver in a developing nation lacks the capacity to utilize the technology, how can effective tech transfer work in real-world practice? The question is less about whether we should be transferring vaccine technology to developing nations than it is about whether we can.

Mr. Aaronson said that a key piece of our IP system is that it does allow for greater cooperation by providing a means of transferring technology among partners while preventing that technology from being used for unauthorized purposes. He credits that cooperative system for enabling Pfizer to partner with BioNTech, producing a vaccine in record time. He added that this vaccine is currently supplied in 116 countries and counting, that they have committed to supplying at least 2.5 billion doses, and that they have just struck a purchase agreement with the United States for 500 million doses to supply lower-middle income nations. The required research, discovery, and development would not have been possible without a strong IP system that provides the right incentives and enables secure technology sharing among a large host of players.

Q: While we don’t know what final form the waiver might take, do you see it playing a necessary role in actually increasing vaccine supply and access in the coming year or two? Are there potential downsides to an IP waiver that should be considered?

Prof. Rai said that the biggest effect of a waiver would likely be its “symbolic” value, as other factors will have a much greater impact on vaccine access. But even if there were no substantive effect, it would be good for high-income nations to demonstrate an interest in global health issues. However, she considered the waiver issue “a little bit of a sideshow,” saying it likely would be “neither as bad as opponents fear nor as good as proponents hope.”

Prof. O’Connor noted that this is a particularly difficult question to answer when nobody knows what form any potential waiver would eventually take.

Mr. Laster based his perspective on his ten years of negotiating vaccine development and distribution efforts with PATH, saying he is “not sure [the waiver] aligns well” with what’s needed. Recognizing the importance of trade secrets and the complexity of the partnerships involved, he says a successful system must encourage willing cooperation. Simply waiving IP rights won’t necessarily do that. He also cautioned against taking a “static view” of the problem by taking for granted that the vaccine already exists rather than considering the IP system that helped create it, and failing to ensure that the same system is incentivizing new vaccines in the future. That said, the threat of a waiver might provide enough encouragement to bring about voluntary participation before an actual waiver becomes a reality. He credits this threat with already having a noticeable effect on pricing and other strategies.

Mr. Aaronson added that we are dealing with multiple vaccines based on very different technologies. Concentrating “a little more on the practical versus the theoretical,” he noted that the impacts of an IP waiver can vary greatly from one technology to another. The mRNA vaccine is the first drug of its type to ever receive approval. Much of the necessary tech transfer would not be limited to COVID-19, but could apply to the entire mRNA technology platform, drastically impacting its value. Waiving the rights to a groundbreaking technology could reduce the incentive to explore uncharted technological fields.

He also said it’s not certain that waiving IP rights would yield a net increase in the number of doses produced. The existing developers are producing large amounts of the vaccine. Opening the supply chain up to new entrants who may not be able to effectively utilize those supplies could yield a net decrease in production.

Prof. O’Connor also took audience questions for the panel. Some are listed below, starting with a “great foundational question.”

Q: How would it be ethical to allow lifesaving medicines and vaccines to be patented?

Prof. O’Connor began by addressing the purely legal perspective—that such patents are allowed under U.S. law, although there have been exceptions in some other countries at certain times because of this complex ethical question.

Mr. Aaronson said it’s important to think about patents as a part of a broader incentive structure. Are we putting the incentives in place to get someone to get up every morning and put in the work, money, and risk to create a product? We need an incentive structure, or there won’t be anyone making those lifesaving medicines. A patent system is one way to achieve this.

Q: If patent disclosures cannot teach producers how to make a vaccine without also getting corresponding know-how, how can they satisfy the disclosure requirement for patentability?

Prof. Rai has written multiple articles about this question (see one here) and offered several reasons. Some of the know-how is not easily written down. The need for shared know-how could possibly be satisfied by depositing biological materials with the Patent Office, but this is unlikely to happen. Another reason is that the final product that emerges from a years-long regulatory approval process is not always identical to the product described in the patent. There is also a mistaken view that patents and trade secrets cannot protect the same product. It is true that a singular feature cannot be both patented and kept as a trade secret, but a single product may have different features that are protected under one regime or the other.

Mr. Aaronson also pointed out that a single drug may be protected by many patents. Some of the know-how simply involves knowing how to properly combine the patented technologies.

Q: If most of the medical innovations occur in wealthy nations, IP laws will lock developing nations out, at least initially. Is there a way to include developing nations earlier in the innovation process?

All panelists agreed on the importance of this issue, as well as on the fact that it’s much easier said than done. Prof. Rai said that every nation must begin to create its own manufacturing capacity to avoid reliance on others, but this requires large amounts of human capital and infrastructure. The problem really goes beyond medicine to the balance of rich and poor nations generally. Mr. Laster said this is the sort of thing he was working on with PATH, which has created some networks, but there is a long way to go. Building the required skillsets and infrastructure locally takes time, but public-private partnerships can help. Mr. Aaronson said that it’s essentially like asking a nation to stop being a low-income country. It’s a somewhat circular issue, in which money is required to build infrastructure, but infrastructure is required to make money. However, this is where IP is not the problem; it is the solution. A strong IP system can create the necessary investment incentives to begin building a better future in any nation.

Closing Remarks

In closing, Prof. Rai said that “regrettably, the public debate on the . . . waiver has been very simplistic.” She hoped that the panel had “shed some light” on the issue and thanked her fellow panelists for a respectful and productive dialogue. Mr. Last er agreed that “it is a complex topic” but said that “it’s not about the waiver;  I do think there are mechanisms that can lead more likely to the outcomes we want.” Mr. Aaronson finished by saying that “we all have the same goal, to figure out ways to bring medicines and vaccines to patients, no matter where they are in the world. We’re fortunate and thrilled that our vaccine has had that potential to change lives, and our goal is to continue . . . to ensure access” to both this and to future vaccines.

A recording of the panel is available here.

Categories
Biotech Patent Law

Forty Years Since Diamond v. Chakrabarty: Legal Underpinnings and its Impact on the Biotechnology Industry and Society

U.S. Supreme Court buildingCPIP has published a new policy brief celebrating the fortieth anniversary of the Diamond v. Chakrabarty decision, where the Supreme Court in 1980 held that a genetically modified bacteria was patentable subject matter. The brief, entitled Forty Years Since Diamond v. Chakrabarty: Legal Underpinnings and its Impact on the Biotechnology Industry and Society and written by Matthew Jordan, Neil Davey, Maheshkumar P. Joshi, and Raj Davé, is dedicated to the late Dr. Ananda Chakrabarty, a pioneer in the biotechnology world, who passed away in July 2020.

Chakrabarty had a great impact on the biotechnology revolution, ushering in a new era of technological advances that have benefited humankind. Through interviews with Randall Rader, former Chief Judge of the Federal Circuit, and Dr. Chakrabarty himself, as well as case studies on genetically modified seeds, polymerase chain reactions, and monoclonal antibody therapies, the policy brief explores the importance and enduring implications for society of the Chakrabarty decision.

The introduction and conclusion sections are copied below:

***

I. Introduction: The Diamond v. Chakrabarty (1980) Supreme Court Decision

In 1972, Ananda Chakrabarty—a genetic engineer at General Electric—filed a patent application for genetically modified bacteria capable of breaking down crude oil. Dr. Chakrabarty introduced genetic fragments into the Pseudomonas bacterium, altering the bacteria to decompose hydrocarbon components of crude oil. Dr. Chakrabarty intended the bacteria to assist in cleaning up oil spills. The engineered bacteria were especially suited for bioremediation given their resistance to adverse environments and safety as a non-pathogen.

The examiner rejected the application under Section 101 of the Patent Act, which covers patentable subject matter, because living things were not patentable. The Board of Patent Appeals and Interferences (now known as the Patent Trial and Appeal Board) affirmed the examiner’s decision, however, the U.S. Court of Customs and Patent Appeals (now part of the U.S. Court of Appeals for the Federal Circuit) sided with Dr. Chakrabarty. The Court of Customs, in an opinion by Judge Giles Rich, reasoned that only naturally occurring articles, not all living things, were ineligible for patenting. Importantly, the court said, “the fact that microorganisms are alive is a distinction without legal significance” for purposes of the patent law. Then, U.S. Patent and Trademark Office (USPTO) Commissioner Sidney Diamond appealed the case to the Supreme Court.

The Supreme Court of the United States held that Dr. Chakrabarty’s invention consisted of patentable subject matter. Section 101 states: “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” The Court ruled in a landmark 5-4 decision that Dr. Chakrabarty’s invention was a patentable, manmade, “composition of matter” or “manufacture.” Chief Justice Warren Burger famously quoted a Senate Report that was part of the legislative history for the Patent Act of 1952: patentable subject matter included “anything under the sun that is made by man.”

This decision had immense implications for biotechnology. It resulted in patents for genetically modified seeds, DNA amplification technology, and monoclonal antibody therapy. The rise of biotechnology has impacted many technological fields and society as a whole. The Supreme Court’s distinction between manmade and naturally occurring phenomena was clarified in Mayo v. Prometheus and AMP v. Myriad. The Court found that naturally occurring biological relationships and isolated DNA sequences were not eligible for patenting.

***

V. Conclusion

Diamond v. Chakrabarty revolutionized the biotechnology industry in the United States by incentivizing the advancement of inventions that are beneficial to human life. However, as noted by Judge Randall Rader: “This whole patent eligibility question—which was so clear and well-defined, was practically implementable and understandable, and gave life to our whole biotech industry after Chakrabarty—now has had a heavy cloud cast over it in recent jurisprudence such as Myriad.”

When asked if our legislature should take action to clear up the confusion, Judge Rader stated: “If the statute was the written law that was being interpreted by the Supreme Court, we wouldn’t need legislative change. But the sad truth is that the Supreme Court has created a whole overlay of doctrine that makes the statute almost irrelevant. And now we don’t look at whether there’s a process, a machine, an article of manufacture, or a composition of matter. Instead, we look at whether there’s something more beyond the conventional and the routine and the well-known. We argue over what is something and what is more, and what is an inventive concept. And so in that state of confusion, yes, we’re probably going to need legislation.”

Within the dire context of the COVID-19 pandemic and other countries racing past the United States in biotechnology, it is crucial for Congress to clarify what currently qualifies as patentable subject matter.

***

To read the policy brief, please click here.

Categories
Biotech Patents

(Patented) Life Begins at Forty: CPIP Celebrates the Ongoing Legacy of Diamond v. Chakrabarty

The following post comes from Colin Kreutzer, a rising 2E at Scalia Law and a Research Assistant at CPIP.

gloved hand assembling or dissembling a model of DNABy Colin Kreutzer

It’s been forty years since the Supreme Court ruled in favor of patentability for a GE scientist and the oil-eating bacterium he’d created, greatly expanding the scope of living matter that was eligible to be patented. Previously, patents on living things were limited to botanical inventions such as novel plant varieties, but the Court in Diamond v. Chakrabarty opened the door to genetically modified living matter. Writing for the majority, Chief Justice Burger held that because the bacteria were human-made and did not exist in nature, they fell under both the “manufacture” and “composition of matter” categories of invention per 35 U.S.C. § 101. The promise of IP protection for engineered microbial life gave a secure path to returns on investments, and it opened the floodgates to R&D in everything from life-saving drugs and cancer-screening tests, to Flavr Savr tomatoes and crop yields that promised to keep pace with a growing human population. The impact of this decision on biotech and related industries cannot be overstated.

But the legacy of Chakrabarty is still going strong. On Wednesday, June 17, CPIP and the Smithsonian’s Lemelson Center for the Study of Invention and Innovation jointly hosted a panel of experts to discuss the landmark ruling. Moderated by Lemelson Director Arthur Daemmrich and with closing remarks by CPIP Executive Director Sean O’Connor, the panel featured: Dan Charles, science writer, National Public Radio food and agriculture correspondent; Daniel Kevles, Stanley Woodward Professor Emeritus of History, History of Medicine & American Studies, Yale University; Jennie Schmidt, farmer, registered dietitian nutritionist, and blogger at The Foodie Farmer; and the inventor, Dr. Ananda Chakrabarty, now a distinguished professor of microbiology and immunology at the University of Illinois College of Medicine. The panel reflected on how the ruling in Chakrabarty has affected intellectual property and the biotech industry, and some of the issues that leave room for improvement. See the full video here.

History

In the early 1970s, Dr. Chakrabarty was working with several strains of naturally occurring Pseudomonas bacteria, known for their potential in cleaning oil spills. Each strain was able to break down one of the various hydrocarbon types found within crude oil. In theory, combining them could break down all the major components of an oil spill and convert them into benign materials, such as food for aquatic life. But there was a problem: simply mixing different bacterial strains did not achieve a complete oil consumption profile. Some strains would dominate the mixture because every strain thrived under slightly different environmental conditions, and much of the oil would be untouched.

Dr. Chakrabarty determined that the key elements in each bacterium were sets of extra DNA called plasmids. Each bacterial strain had different plasmids that would break down different hydrocarbons. He used a UV radiation technique to transfer plasmids from one strain to another until he had a single bacterial strain with a preferred set of plasmids. This unified strain could consume a wide hydrocarbon profile without developing a plasmid imbalance. The end product was distinct from any naturally occurring bacterium, and GE filed a patent application for the invention on June 7, 1972.

The USPTO examiner allowed some of the patent claims: namely, a method of producing the bacteria; along with, an inoculum having the bacteria as one component. But claims directed solely to the bacterium were rejected on the grounds that 35 U.S.C. § 101 does not allow pure living matter to be patented. Protections for plants, while alive, are granted under different statutes: the 1930 Plant Patent Act deals with asexually-reproduced novel plants, and the 1970 Plant Variety Protection Act grants similar rights on other selectively bred species. Following affirmation at the BPAI and a reversal at the Court of Customs and Patent Appeals, the Supreme Court granted certiorari. It heard the case on March 17, 1980, and issued an opinion on June 16, 1980.

Chief Justice Burger took issue with the Patent Office’s arguments that Congress, in drafting § 101, never gave express authorization to patent living things, and he didn’t see the plant exceptions as evidence that it never intended to. He countered that Congress had deliberately created a very expansive scope in § 101, and the Court was obliged to interpret it that way. The language was as clear as it was broad, and if the judiciary were going too far in its interpretation, the legislature would be free to correct the mistake. Further arguments, directed to the existential perils of genetic engineering, were met with similar skepticism.

Ultimately, the Chief Justice settled the argument in rather simple terms: that § 101 broadly covers a process, machine, manufacture, composition of matter, or collectively, “anything under the sun that is made by man.” Since Dr. Chakrabarty’s work fell within those boundaries, the subject matter was patent eligible­—living or not.

Microbial Research

Dr. Chakrabarty and Daniel Kevles kicked off the discussion with a review of the scientific and legal history of the case. There was broad agreement among panelists that for microbial research, medicine, and the pharmaceutical industry, the ruling was a game-changer. Forty years ago, USPTO officials weren’t the only ones who believed that microbial lifeforms couldn’t be patented. Prof. Kevles, recounting a prior conversation with Dr. Chakrabarty, wondered if GE’s “patent everything” attitude and relative lack of biotech experience made it more willing to even attempt such a thing in an industry where many assumed it wasn’t allowed. Prof. Kevles also pointed to the precedential effect on contemporary developments, such as Stanford’s Cohen-Boyer recombinant DNA patents, which weren’t granted until after the Chakrabarty decision. And while the nation used the ruling to fuel an emerging industry, Dr. Chakrabarty (then a university professor) expanded his Pseudomonas research into treatments of cystic fibrosis and cancer cells.

Agriculture

Discussions of the state of agriculture were more mixed. Jennie Schmidt began with a big thanks for including a farmer’s voice on the panel. She spoke about several advancements that genetic engineering has brought to agriculture, and how they factored into her family business’ comprehensive farming approach, which include conventional and organic farming along with biotech. The adoption of biotech seeds has spread far more rapidly than the previous technological leap of hybridization in the 1920s and 1930s, and she deemed it essential to the survival of family farms in modern America. Biotech seeds are more resistant to herbicides, allow for the use of softer chemicals, and are better suited to no-till practices. Tillage, Ms. Schmidt noted, was a major cause of erosion and loss of sediment, phosphorus, and other nutrients to the nearby Chesapeake Bay. She also mentioned engineered products such as Bt-corn, which can reduce the need for pesticides that kill far more species than they target.

Dan Charles expressed concerns about the number of useable innovations in agriculture, compared to what had been promised in exchange for the added intrusion of corporate control into farming. He questioned how transformative GMOs have truly been by boiling the developments down to two major traits—herbicide resistance and pest resistance—and noting that pests already appear to be overcoming the latter. National Academy of Sciences studies, he said, had failed to identify any major difference in the crop yield trends between the pre- and post-GMO eras (likely referencing this study; see for example the summary at p.14).

Prof. Kevles conceded that he’d rather see more developments focused on increasing the vitamin and nutrient content of crops, rather than on sheer yields. To date, the bulk of the technological benefits have gone to reducing costs rather than to increasing consumer health. But he tempered this observation by putting it into the greater context of all genetic applications and emphasized the unquestionable impact that the Chakrabarty decision had on technology as a whole.

Ms. Schmidt also acknowledged Mr. Charles’s concerns and felt that things might be very different if the first GMO breakthroughs had been consumer-facing, rather than farm-facing, developments. She noted that IP issues have affected traditional farming practices such as seed saving, but she added that proprietary issues span the range of farming technologies and are not limited to biotech. She also pointed out that IP isn’t the only reason that seed-saving is a threatened practice: hybrid seeds, a long-established technology, are generally unsuitable for saving regardless of whether farmers may legally do so. Her farm still practices seed-saving when possible.

Mr. Charles agreed that the proprietary issues extend beyond biotech, and indeed pose problems for researchers wishing to access to the latest generation of seed technology, even for scholarly purposes. Further, he noted that decreasing access has led to problems of international agricultural cooperation.

On the subject of international issues, Dr. Chakrabarty stressed the importance of IP to developing countries in bringing their products to the market. He has been active for many years in advancing both biotech and IP as a means for less-developed nations to build wealth.

The State of R&D, Post-Chakrabarty

Another avenue of the discussion centered on the state of R&D then and now, in terms of large corporate laboratories versus the multitude of start-ups we often see today. Prof. Kevles was quick to point out that there is still a lot of research coming from the big firms, not only in chemistry and biotech, but also in the worlds of information technology and others. As far as the emergence of start-ups was concerned, credit also went appropriately to the Bayh-Dole Act. This helped universities retain IP rights to inventions that came from federally funded research and stimulated further growth of university tech transfer offices. The Chakrabarty decision and Bayh-Dole are both credited as significant events in the strengthening of America’s IP system.

Closing

Prof. O’Connor concluded with an in-depth explanation of the legal and scientific theories that separated the Chakrabarty decision from plant patents. He also addressed some of the fears that arise when discussing property rights on genetically engineered lifeforms. He emphasized that patent laws don’t grant the right to make or use something, but rather the right to exclude others from making or using it. As such, patent law can easily be superseded by other laws, such as those barring indentured servitude or the ownership of “all or part” of a human being. A more common example came from pharmaceuticals—a patent on a new drug is no good if the FDA won’t approve it.

Dr. Chakrabarty knows these problems all too well. Attendees asked him why his invention, the subject of the landmark ruling, didn’t itself go to market. It seems that IP wasn’t the only legal hurdle standing in the way of commercialization. Regulators were fearful of what might happen to the natural order if genetically modified bacteria were introduced into the ocean. Without sufficient data to prove that, for example, the engineered traits wouldn’t be acquired by harmful pathogens, they were unwilling to let it go forward.

The panel closed with a virtual exhibit presented by Smithsonian curator Peter Liebhold. He took panelists and attendees on a walk through the history of agricultural and genetic research, using a series of photos and artifacts that would have been shown in-person if COVID-19 hadn’t moved the program online. Hopefully, the biotech world, buoyed by a strong IP framework, will soon develop vaccines and treatments that can get us all back to normal.

The Chakrabarty case is a prime example of the vital role IP protection plays in fostering innovation and growth. It also serves as a reminder of why Congress intentionally granted such an expansive scope in 35 U.S.C. § 101: because it knew it wouldn’t be possible to envision the technology of the future, and it declined to stand in the way of whatever strange new wonders awaited the human imagination. CPIP is thrilled to have shared the stage with the Lemelson Center and the distinguished panelists as we observed the 40th birthday of this landmark ruling, and we wish to give a special thanks to Dr. Chakrabarty for joining us.

Categories
Antitrust Biotech Patents Pharma

Recent Developments in the Life Sciences: The Continuing Assault on Innovation by Antitrust Plaintiffs in Lantus

By Erika Lietzan

dictionary entry for the word "innovate"In February, the U.S. Court of Appeals for the First Circuit held, in a direct purchaser antitrust action, that an innovative pharmaceutical company marketing an injectable drug product had “improperly listed” in FDA’s Orange Book a patent claiming a mechanism used in the drug’s delivery device. As I explain below, the ruling creates the specter of antitrust liability for steps taken in good faith to comply with a complex regulatory framework that overlaps in part with patent law. I explain below how the ruling puts biopharmaceutical innovators in a tough spot.

First, the legal framework.

Federal law requires each company that submits a new drug application to identify the patents that claim the drug or a method of using the drug (if a claim of patent infringement could reasonably be asserted against someone who made, used, or sold the drug without a license). The application cannot be approved, if the company fails to submit the required information on a patent that satisfies the listing standard. (See section 505(d)(6) of the drug statute, here.) FDA publishes the patent numbers and expiration dates in the “Orange Book,” which takes the form of a PDF and electronic database.

Federal law also requires a generic drug applicant to take a position with respect to every patent that claims the drug or a method of using the drug — effectively, every patent listed in the Orange Book. For every unexpired patent, the generic applicant has two choices, which dictate when its application can be approved. (There’s a third option for a patent claiming a method of using the drug, which isn’t relevant here.)

It can choose to wait for patent expiry, which means filing a “paragraph 3 certification.” In this scenario, FDA cannot approve its generic drug for market entry until expiry of the patent.

Or it can say that it plans to market right away, because its product doesn’t infringe the patent or because it thinks the patent invalid, which means filing a “paragraph 4 certification.” In this scenario, it must notify the innovator (and patent owner, if different). (I’ll just say “innovator,” going forward.) As far as this patent is concerned, FDA can approve the generic drug for market entry as soon as its review is complete and assuming the generic drug is otherwise approvable with one important exception. If the patent was listed before the generic drug company submitted its application, and if the innovator files a patent infringement suit within 45 days of receiving notice, then final approval of the generic application is stayed for 30 months or until a district court ruling in the generic company’s favor (whichever happens first). The paragraph 4 certification is considered an act of infringement, which creates federal court jurisdiction.

The patent listing mechanism is intended to facilitate litigation of patent issues before market entry, which both industries wanted. The generic companies wanted a way to litigate these issues before launching, for example, because doing so avoids the risk of damages (for more information, see my article on the history and political economy of the legislation). The scheme encourages generic companies to participate by offering 180-day exclusivity in the market for the first to file a (true) generic application with paragraph 4 certification, and it encourages innovators to participate by offering the 30-month stay that makes it possible for the patent to be litigated before the generic drug launches.

These rules apply to companies that file true generic applications, for exact copies of the innovator’s drug. And with one exception they also apply to companies that file a different type kind of abbreviated application known as a 505(b)(2) application. The distinction between the types of application isn’t critical here. The one exception is that companies filing 505(b)(2) applications with paragraph 4 certifications aren’t eligible for 180-day exclusivity.

Second, applying the framework to combination products in particular.

The listing standard — “any patent which claims the drug for which the applicant submitted the application or which claims a method of using such” — has proved vexing to interpret.

In 1994, FDA published its first regulation interpreting this provision, stating that it meant “drug substance (ingredient) patents, drug product (formulation and composition) patents, and method of use patents,” but not “process patents.” But there have been questions about a variety of patent types over the years, and in 2003 — responding in part to requests for elaboration — the agency revised its regulations to provide more details about what it required to be listed and what was not to be listed.

At issue here: what to do with combination products. These products combine two regulated components, such as a device and a drug. Two discrete products packaged together for use together are, together, considered a “combination product.” But the phrase also means a single finished product that comprises two regulated components — thus a drug and device produced as a single entity. Combination products thus include prefilled drug delivery devices — such as a prefilled drug syringe, an auto-injector, or an metered dose inhaler (see here).

The question is whether the statute requires companies to list patents associated with the device component of these products.

FDA considered this in the 2003 rulemaking. The final regulation is 21 C.F.R. § 314.53, but the agency’s explanation of the regulation in the Federal Register — which has the formal status of an “advisory opinion” — is just as important.

The agency decided that “patents claiming a package or container must not be submitted.” Packaging and containers are “distinct from the drug product.”

Several commenters also argued that patents claiming devices that are “integral” to the drug product or require approval should be listed. FDA offered what it labeled as a “response.” The agency didn’t write that these patents “should” be listed, or that they “should not” be listed. Instead it said that a “drug product” is the drug in its “finished dosage form” — meaning the form administered to patients. And, it added, the current list of “dosage forms for approved products” — which appears in an appendix to the Orange Book — includes “aerosols, capsules, metered sprays, gels, and pre-filled drug delivery systems.” Elsewhere it wrote that a patent claiming the finished dosage form “must be submitted for listing.”

Now, the litigation and First Circuit ruling.

Sanofi-Aventis holds the approved marketing application for Lantus (insulin glargine recombinant), a long-acting human insulin analog used in treating diabetes. At first the company sold Lantus in multiple dose vials and in cartridges for use with a (separate) insulin delivery device. In 2007, however, FDA approved a supplemental application for sale of Lantus in a single-patient-use prefilled injector pen.

Sanofi has listed several patents in connection with Lantus. In connection with the prefilled pen, the company listed U.S. Patent No. 8,556,864 (drive mechanisms suitable for use in drug delivery devices), which issued in October 2013 and expires in March 2024. The parties agree that the ’864 patent claims the drive mechanism used in the Lantus pens, and FDA would not have approved the prefilled pens without a showing that the pen (including the drive mechanism) ensures patients safely receive accurate doses. But — and this turned out to be critical in the end — the patent doesn’t mention insulin glargine. Nevertheless, according to the agency, an insulin injector pen is a prefilled drug delivery system. And this makes it a dosage form. And patents claiming dosage forms must be listed.

In 2013, Eli Lilly submitted a 505(b)(2) application for a copy of Lantus, which it planned to market as Basaglar. It included a paragraph 4 certification to the ’864 patent and to various other patents as well. Sanofi brought suit. The case settled on the morning trial was scheduled to begin, with Lilly agreeing to pay for a license to launch in December 2016, seven years before patent expiry.

The plaintiffs in this antitrust litigation are drug wholesalers. They claim, among other things, that Sanofi improperly listed the ’864 patent. (As far as I can tell, Lilly didn’t raise the issue.) The district court dismissed their first amended complaint, pointing out that FDA has interpreted “drug products” to include “prefilled drug delivery systems” and that patents claiming drug products must be listed. The plaintiffs amended their complaint, but the district court dismissed again on largely the same grounds. Under a “reasonable interpretation” of the agency’s regulations, Sanofi had to submit the patent for listing. So, it couldn’t have been improper conduct to list the patent.

The First Circuit’s ruling came as a shock. In a unanimous decision, Judge Kayatta wrote that Sanofi had improperly listed the patent. He reasoned as follows. First, the statute and regulations call for listing of patents that claim the drug, and the patent doesn’t even mention the drug. Second, in 2003 FDA didn’t adopt the proposal that devices “integral” to the product should be listed. Instead, the agency said that companies should list patents that claim the finished dosage form. And this patent doesn’t, the court wrote; it claims a device that can be combined with other components to produce the finished dosage form.

Finally, the implications.

The innovative pharmaceutical industry has asked FDA repeatedly since 2003 — at least four times, including in citizen petitions — to clarify whether patents directed to drug delivery systems are supposed to be listed, if they don’t recite the drug’s active ingredient or formulation. The agency never answered these requests.

Although FDA’s failure to respond has been frustrating, it is my understanding that most companies — consulting with patent and regulatory counsel — have concluded these patents should be listed and that, in fact, they list them, and FDA publishes them. I have always thought this was the best reading of what FDA wrote in 2003. At the very least, it is a reasonable reading of what FDA wrote. It is deeply concerning that the First Circuit now purports to answer this question for the agency — no, these patents do not satisfy the listing standard — in litigation to which FDA was not a party and could not explain its interpretation of the statute or its expectations.

The decision is also fundamentally hostile to pharmaceutical innovators. The Hatch-Waxman scheme — statute, regulations, guidance, and precedent — is complex, and figuring out how it applies in any particular situation can be tricky. There are other unresolved listing issues, which companies and their counsel work through in good faith. The lesson here seems to be that an innovator trying to navigate uncertainty about the listing requirements does so at its peril.

On the one hand, failing to list a patent that satisfies the criteria has serious consequences. Listing is not voluntary; the statute requires it. The company must declare (“under penalty of perjury”) that its patent submission is “accurate and complete.” The patent submission form reminds the company that “a willfully and knowingly false statement is a criminal offense” under 18 U.S.C. § 1001. (And at least in theory, FDA would reject an application that lacked the required patent information, though I don’t know if this has ever happened or if it would happen.) Most importantly, failing to list a patent means there is no paragraph 4 certification, and thus no artificial act of infringement, and no opportunity to enforce the patent before generic market launch. Failing to list also passes up the benefit of the 30-month stay. And there may be concern that failure to list a patent is some sort of admission against the innovator’s interests in litigation.

On the other hand, listing a patent that doesn’t satisfy the criteria attracts antitrust scrutiny, presumably because the listing places an administrative burden on generic applicants and might trigger a stay of approval. And this case shows that a hostile court may disagree with the company’s reading of the statute, regulations, Federal Register, and precedent. Even if a company adopts what appears to many to be a reasonable interpretation of the patent listing requirements, a court might interpret the listing requirements on its own — without the benefits of FDA’s views — and force the company into expensive and time-consuming antitrust litigation. Indeed, two bloggers recently praised the decision, recommending that generic companies “examine the Orange Book listings,” as they may contain a “rich vein” for antitrust claims.

To be sure, as the court wrote, Sanofi can try to show, on remand, that its submission was “the result of a reasonable, good-faith attempt to comply with the Hatch-Waxman scheme.” This would provide a defense to any liability under the Sherman Act for “antitrust injury caused by” the submission. But the burden has shifted to the company, and much of the language in the court’s opinion suggests that this will be an uphill battle. (E.g., “The statute and regulations clearly require that only patents that claim the drug for which the NDA is submitted should be listed in the Orange Book. The ’864 patent … does not fit the bill.”)

A postscript from the administrative law side of the table.

Consider a counterfactual.

As a preliminary matter, recall that FDA’s regulations require companies to list patents on drug products. These regulations also state that the phrase “drug product” refers to a drug in its “finished dosage form.” FDA has said, for years, that a patent claiming a finished dosage form “must be submitted for listing.” Finally, it has listed prefilled drug delivery systems as a type of “dosage form” in the Orange Book.

Now suppose that FDA had responded to the industry requests for clarification and stated definitively — given what I just wrote — that a patent claiming any component of a prefilled syringe must be listed? In my view, this would be a defensible position for the agency to have taken, given the statute, the regulations, and what it has written to date.

What would have happened if this hypothetical FDA decision had gone to the First Circuit for review, in a totally different kind of lawsuit? Would the First Circuit really conclude that the agency’s interpretation of the statute was unreasonable or impermissible (Chevron)? Would it really conclude that the agency’s interpretation of its regulation was “plainly erroneous or inconsistent with the regulation” (Auer)? And if we think that the courts would (or should) defer to FDA in this hypothetical case, how can Sanofi’s decision possibly have been unreasonable?

In the end, the First Circuit’s ruling contains a troubling lesson for pharmaceutical innovators. When navigating uncertainty about a patent’s status under the patent listing requirements, even if it seems reasonable to conclude that FDA would require listing and even if the agency won’t answer the question, listing the patent in good faith creates a serious risk of facing antitrust litigation. The alternative, equally unappealing, is to relinquish the opportunity to enforce the patent before generic market entry, which conflicts with the purpose and design of the Hatch-Waxman Amendments and undermines the value of the patent.

Categories
Biotech Patents Pharma

“No Combination Drug Patents Act” Stalls, but Threats to Innovation Remain

superimposed images from a chemistry labBy Kevin Madigan & Sean O’Connor

This week, the Senate Judiciary Committee was to mark up a bill limiting patent eligibility for combination drug patents—new forms, uses, and administrations of FDA approved medicines. While the impetus was to curb so-called “evergreening” of drug patents, the effect would have been to stifle life-saving therapeutic innovations. Though the “No Combination Drug Patents Act”—reportedly to be introduced by Senator Lindsey Graham (R-SC)—was wisely withdrawn at the last minute, it’s likely not the last time that such a misconceived legislative effort will be introduced.

An Exaggerated Response to a Disputed Theory

The bill would have established a presumption of obviousness for drug or biologic patent applications whose invention was a new: dosing regimen, method of delivery, method of treatment, or formulation. While there was a rebuttal provision where the claim covered a new treatment for a new indication or “increase[d] . . . efficacy,” the latter was almost certain to introduce years of uncertainty and litigation. Further, the bill would have covered a broader class than true combination drug patents, in which one active ingredient is combined with another or with a non-drug.

Like many recent legislative efforts, the amendment sought to address a perceived lack of affordability of prescription drugs. After praising the America Invents Act of 2011 and subsequent Supreme Court rulings for strengthening the US patent system, the bill claimed that rising drug prices have outpaced “spending on research and development with respect to those drugs.” In addition to applauding Supreme Court decisions that have injected unquestionable uncertainty into patentable subject matter standards, the amendment went on to blame high drug prices on continually overstated issues related to advanced drug patents.

According to critics, combination drug patents have granted drug makers unearned and extended protection over existing drugs or biological products. But, quite simply, when properly issued by the USPTO under existing patentability standards, these are new patents for new products or processes.

Combination patents have been maligned as anticompetitive, resulting in a “thicket” of patents that impedes innovation through transaction costs and other inefficiencies. Unfortunately, notwithstanding a lack of empirical evidence validating the harm of follow-on innovation patents, patent thicket rhetoric is now being echoed by the media, the academy, courts, and policy makers in a fraught attempt to fix drug pricing.

Reports (see here, here, here, and here) from leading antitrust experts and intellectual property scholars have detailed the value of incremental innovation and challenged the notion that patent thickets are a true threat to competition and innovation. These studies have exposed patent thicket claims—much like the “troll” narrative that for years infected patent law debates—as an empty strawman theory, the repetition of which has led to undue confidence in its accuracy. The reality is that what critics point to as problematic cases of combination patents are in fact infrequent outliers, strategically highlighted to discount evidence of the value of new and innovative drug uses and administrations.

A similar claim by those promoting the patent thicket narrative is that combination patents extend exclusivity on a drug for years beyond an initial patent term, thereby blocking generic entry in the market. But if an underlying drug has gone off patent, no follow-on or combination patent will prevent a generic drug company from producing the underlying formulation—it’s only the new formulation, use, or administration that is protected.

Vague, Yet Oddly Familiar Standards

The language of the Graham amendment asserted that because “numerous” combination patents “contain obvious product developments,” a restructuring of 35 USC 103 is necessary to combat patent thickets and achieve optimal drug pricing. Suggesting that 103 obvious standards for advanced drug development should include a presumption that the covered claimed invention and the prior art to which it relates would have been obvious, the legislation would have undermined a unitary system of patent law in favor of different standards for different fields of technology. It was a bold proposal, and it’s one that ignored the proven value of new drug formulations and methods of treatment.

While the amendment provided for a rebuttal to the presumption of obviousness, the language was ambiguous and likely to render the patent system even more unreliable than it already is. The proposed statute said that an applicant may rebut the presumption of obviousness if the covered claimed invention “results in a statistically significant increase in the efficacy of the drug or biological product that the covered claimed invention contains or uses.” It is unclear what would qualify as “statistically significant,” and proving this vague standard would be nearly impossible.

In order to show a “statistically significant increase in efficacy,” long and costly head-to-head clinical trials would be necessary. To be clear, this is not a standard required by the FDA for new drug approval, let alone patentability.

As if that wasn’t enough reason to reject the Graham amendment, the language was alarmingly similar to that of an Indian patent law statute that has been recognized by the US Trade Representative as a “major obstacle to innovators.” In 2005, in order to comply with the WTO’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, India adopted for the first time patent protection for pharmaceuticals. Despite its recognition of IP rights in pharmaceuticals, India’s Act contains a troubling ambiguity in its Section 3(d), which requires an “enhanced efficacy” for known drugs in addition to the standard novelty, inventive step, and industrial applicability requirements.

India’s Section 3(d) has been invoked to reject patent protection for life-saving drug innovations, including Novartis’ landmark leukemia drug, Gleevec. Drug companies, government agencies, and policy makers have all recognized the threat to innovation that India’s patent law poses. In 2013, not long after the Novartis ruling, a bipartisan group of 40 Senators signed a letter to then Secretary of State John Kerry urging the state department to take action against India’s “deteriorating IP environment,” citing its willingness to “break or revoke patents for nearly a dozen lifesaving medications.”

Despite the widespread condemnation of India’s Section 3(d), the Graham amendment proposed adopting similarly indefinable standards to US patent law. While the language differed slightly—replacing “enhanced efficacy” with “increase in the efficacy”—it was no clearer, and implementation of this type of standard would only cause more confusion.

Protecting and Incentivizing Medical Innovation

Like most forms of innovation, the development of medicines and therapeutics is a process by which one builds and improves upon previous discoveries and breakthroughs. Sometimes those improvements are major advancements, but often they are incremental steps forward. In the pharmaceutical field, incremental or follow-on innovation frequently results in new therapeutic uses for existing drugs, which address serious challenges related to adverse effects, delivery systems, and dosing schedules. While they might not sound like medical breakthroughs on par with the discovery of penicillin, these advancements in the administration and use of pharmaceuticals improve public health and save lives.

Additionally, follow-on innovations are—and should remain—subject to the same patentability standards as any other technologies. Patents reward advancements that are novel, useful, and nonobvious, and our patent system has long recognized that patent claims are to be presumed patentable and nonobvious. The Graham amendment would have turned this established standard on its head, creating a separate and ill-defined hurdle for certain advancements in medicine.

The benefits of incremental innovation to public health and patients cannot be overstated. New formulations of malaria drugs, dosing regimens and delivery systems for AIDS patients, more efficient administrations of insulin for the treatment of diabetes, and developments in the treatment of cognitive heart disease have all been possible because of incremental innovation.

Imposing unjustified restrictions on the patentability of advancements like these would be disastrous for drug development, as the incentives that come with patent protection would be all but eliminated. Without the assurance that their innovative labor would be supported by intellectual property protection, pioneering drug developers would shift resources away from improving drug formulations and uses. The development of more effective treatments of some of the most devastating diseases would stall, as innovators would be unable to commercialize their products, recoup losses, or fund future research and development.

As critics continue to target myopically the patent system for a broader issue of drug prices in the American health care system, it’s likely not the last time that language like this will be proposed. In order to avoid the implementation of such ill-conceived standards into our patent laws, understanding what’s at stake is critical. The future of medical innovation depends on it.