Category: Healthcare

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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.

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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.

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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.

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Healthcare International Law

A View from Both Sides: COVID-19, the TRIPS Waiver, IP Rights, and How to Increase the Supply of Vaccines

scientist looking through a microscopeIssue

The United States and other wealthy nations have access to plenty of COVID-19 vaccine doses and thus are beginning to get the pandemic under control, while less affluent countries do not have access to adequate doses and are still struggling with rising cases. In October 2020, India and South Africa proposed addressing this problem by waiving certain portions of the TRIPS Agreement, the most comprehensive agreement on intellectual property (IP) aspects of international trade among the WTO’s 164 member states. The waiver cites “an urgent call for global solidarity, and the unhindered global sharing of technology and know-how in order that rapid responses for the handling of COVID-19 can be put in place on a real time basis.” While this proposal broadly applies to any COVID-19-related technology, much of the conversation is currently focused on vaccines.

The proposal would temporarily suspend patent rights covering COVID-19 vaccines and possibly also be used to compel the transfer of trade secret “know-how” and “show-how.” Proponents say this would allow any manufacturer to begin production—boosting vaccine supply while slashing prices—to end the surge of cases in less developed nations. Critics argue that the reality is more complicated: the waiver will be ineffective, even harmful, and it would have a devastating impact on our readiness for future health crises.

In Support of the Waiver

For supporters of the waiver, the answer is clear: cases are rising in many nations because they still don’t have the vaccines they need. It’s only reasonable to make exceptions to our ordinary system of business incentives during times of global crisis.

The Biden Administration

That is essentially what U.S. Trade Representative Katherine Tai stated when the Biden Administration announced its support for the waiver: “This is a global health crisis, and the extraordinary circumstances of the COVID-19 pandemic call for extraordinary measures. The Administration believes strongly in intellectual property protections, but in service of ending this pandemic, supports the waiver of those protections for COVID-19 vaccines.”

It affects all of us

WHO Director-General Dr. Tedros Adhanom Ghebreyesus says that the “me-first approach” among powerful nations “is self-defeating and will lead to a protracted recovery with trade and travel continuing to suffer.” Under this rationale, even purely self-interested parties should support the waiver, if only because modern commerce is so globally connected.

Dropping IP barriers will facilitate greater collaboration

Many say the threat of IP litigation prevents the kind of collaboration needed to quickly ramp up production and development, and that a waiver can remove that threat. The president of Médecins Sans Frontières, Dr. Christos Christou, says that “[t]he waiver proposal offers all governments opportunities to take action for better collaboration in development, production and supply of COVID medical tools without being restricted by private industry’s interests and actions, and crucially would give governments all available tools to ensure global access.”

Patents were not meant to impede emergency action

A recent editorial in the journal Nature argues that patents are designed to protect ordinary commercial interests, not to hinder global cooperation against a common threat: “A pandemic is not a competition between companies, but a race between humanity and a virus. Instead of competing, countries and companies need to do all they can to cooperate to bring the pandemic to an end.”

It solves an immediate need without setting a troubling precedent

While opponents of the waiver argue that it will weaken future drug patent protection, Imron Aly and Ahmed M.T. Riaz of Schiff Hardin LLP call those concerns “unfounded” in their post at IPWatchdog. Not only is the current proposal limited specifically to COVID-19, but it was also not created carelessly. Instead, it “has taken substantial international efforts and official international law amendments.” Aly and Riaz say this exceptional action is appropriate if it can succeed where our IP system has yet to do so: “The TRIPS waiver simply allows countries the option to suspend patent enforcement to encourage COVID-19 vaccine production, which makes sense for those countries where current investment has not resulted in vaccine access.”

Even if the waiver doesn’t work, it might work

University of Houston Law Center Professor Sapna Kumar acknowledges a number of functional issues with the waiver approach but notes that it may still have a positive effect on the pandemic: “Overall, the greatest benefit of the Biden Administration’s support for the waiver is that it signals a departure from the prior approach of punishing countries facing health crises and that it might spur pharmaceutical companies to voluntarily increase out-licensing and donations of vaccines.” Her prediction was borne out by a recent pledge to donate 2.3 billion doses by Pfizer/BioNTech, Johnson & Johnson, and Moderna.

Opposed to the Waiver

Opponents of the waiver argue that it will not be effective because it fails to address the real problems. Further, it could actually be detrimental to quality control and supply chains in the present crisis, while quite possibly affecting how pharmaceutical companies choose to allocate investment dollars in the future.

It’s a long process that requires much more than a temporary waiver of licenses

Vaccines are not like other drugs. Writing for Foreign Affairs, Peter J. Hotez, Maria Elena Bottazzi, and Prashant Yadav say that we can’t compare the current situation to similar actions on HIV treatments, and that most nations are not prepared to make use of the patented technology: “Producing vaccines—particularly those as technologically complex as the messenger RNA (mRNA) inoculations against COVID-19—requires not only patents but an entire infrastructure that cannot be transferred overnight.” The authors state that “[t]he effective transfer of such complex technology requires a receiving ecosystem that can take years, sometimes decades, to build.”

We need another way

Professor Yogesh Pai of the National Law University Delhi says that simply waiving trade secret protection won’t automatically disclose everything a manufacturer needs to know. Accessing “hard tacit knowledge of manufacturing/quality control measures for production and clinical data required for regulatory clearances” could require forced technology transfer (FTT) by national governments. He recalls how detrimental such efforts were to India’s economy when it tried FTT with Coca-Cola in the 1970s, prompting the company to leave the country altogether.

Prof. Pai instead recommends efforts to encourage voluntary cooperation: “Where blunt legal instruments don’t work, using track-1 and track-2 diplomacy to place moral coercion on western governments to nudge firms to actively engage in technology licensing may still work wonders.”

“China First” policy?

Sixteen U.S. senators issued a sharply worded letter to the executive branch, questioning the true motives of “China and other countries which regularly steal American intellectual property—like India and South Africa,” and expressing shock that an American president would go along with it: “These nations are falsely claiming that granting such a waiver would speed the development of new vaccine capacity. Nothing could be further from the truth.” Instead, the senators are suggesting that the waiver is being used as a means to unfairly to acquire trade secrets that took massive resources and time to develop.

Reuters reports that “some U.S. officials fear the move would allow China to leapfrog years of research and erode the U.S. advantage in biopharmaceuticals” and quotes a senior U.S. official as saying that the country “‘would want to examine the effect of a waiver on China and Russia before it went into effect to ensure that it’s fit for purpose.’”

IP is not the Issue

A waiver on patent rights, even with the corresponding trade secrets, can only give permission to manufacture. But Eva Bishwal of Fidus Law Chambers writes that the real problems in India “are state inaction, dearth of raw materials and low production capacity.”

According to Patrick Kilbride of the U.S. Chamber of Commerce’s Global Innovation Policy Center, and as cited in Pharmaceutical Technology, “[p]roposals to waive intellectual property rights are misguided and a distraction from the real work of reinforcing supply chains and assisting countries to procure, distribute and administer vaccines to billions of the world’s citizens.”

Low-quality vaccines could do more harm than good

Former USPTO Director Andrei Iancu voiced concern recently at a World IP Day event, asking, “if we waive IP rights, and exclude the original manufacturers, how are we going to control the quality of the vaccines that go into people’s arms? How are we going to control for the fake vaccines? Just last week we saw fake Pfizer vaccines.” And as Philip Thompson points out for IPWatchdog, when investigators are forced to “determine if adverse events or sub-par effectiveness originate from ‘real’ vaccines or fake doses, we should expect global production starts and stops to become much more frequent.”

It will discourage investment in the most critical areas

Pharmaceutical developers invest unfathomable amounts of money into bringing drugs to market. The path to success is long, expensive, and highly uncertain. But what is certain is that successful drugs can yield a profit that covers the loss from failures. Now critics are deeply worried that this waiver will skew future cost-benefit analyses against important classes of medicine. All other things being equal, a developer has a better chance at a positive return by investing in drugs that pose no risk of seizure during a global emergency. As Amanda Glassman of the Center for Global Development writes, the waiver sends the wrong message to innovators and investors: “don’t bother attacking the most important global problems; instead, throw your investment dollars at the next treatment for erectile disfunction, which will surely earn you a steady return with far less agita.” The scramble amongst pharmaceutical giants to develop a vaccine was an all-out race, with good reason, and that’s exactly how it should be. If those companies believe that forfeiture is waiting at the finish line next time around, we might see fewer contestants.

Even “no-profit” vaccine makers appear to oppose the waiver

Pfizer CEO Albert Bourla laid out everything the company has done to combat the vaccine in an equitable manner and argued that “waiver of IP rights could only derail this progress.” And while Pfizer and Moderna are selling their vaccines at a profit, Johnson & Johnson and AstraZeneca have pledged not to do so during the pandemic.

However, it appears that even those companies oppose the waiver. As reported in The Wall Street Journal, the trade group PhRMA, which represents Johnson & Johnson and AstraZeneca among many others, is “lobbying members of Congress to oppose the Biden administration’s support for the waiver.” Johnson & Johnson’s Chief IP counsel Robert DeBerardine says that patent rights are responsible for the breakneck pace of development and that the drug’s makers are the best-equipped people to continue the fight: “What we’re able to do, because we have control of the IP, is to pick the best companies to help us supply the world. If you were to give everything to everybody, you may see a flood of vaccines, but you would have no idea if they’re safe and effective.”

Conclusion

While we share the concerns of other organizations that effective, affordable, and accessible vaccines be made available to all persons regardless of location or wealth, we do not believe that upending longstanding U.S. patent policy for a solution that will do little if anything to increase the vaccine supply is advisable. Strong IP rights remain the best way to incentivize innovation and ultimately increase the supply of life-saving medicines. The Biden administration’s unprecedented support of the proposed WTO IP waiver, while well intended, is likely to create long-term harm and unlikely to have much of an impact on global vaccine supplies. Ultimately, encouraging companies to license IP and engage in voluntary knowledge transfer, along with the sharing of excess doses that are being produced, are methods far more likely to alleviate the vaccine supply issues than waiving IP rights and would be a better path forward out of the current crisis.

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Healthcare Patents

WTO IP Waiver Too Simplistic: Global Vaccine Tech-Transfer Needs Other Strategies

a scientist looking through a microscopeBy Yogesh Pai

Since October 2020, India and South Africa, joined by two-thirds of the WTO Members (African Group, LDCs and most of developing world) have been actively pursuing other developed country Members to agree to their request to waive global intellectual property (IP) rules. The waiver asserts that by suspending IP protection for COVID-19 technologies, countries will be able to quickly augment production and foster equitable access for COVID-19 related products.

The push for the IP waiver proposal rests on an often simplistic textbook assumption that IP controls exercised through legal rights allow IP owning firms exclusive control on production by reducing output (by restricting competitive copycat entry) and thus increasing prices. Of course, this is something no country wants during a pandemic where equitable access is paramount.

However, truth be told, the IP waiver proposal, even if passed by approval of three-fourths of current WTO Members (a minimum requirement under WTO Rules) or with a consensus, will not enable India or any other country (even with decent production capabilities) to quickly access complex technologies and augment production, particularly in the context of COVID-19 vaccines.

The critical issue surrounding access to COVID-19 vaccine technologies involves an active technology licensing component, which the waiver/suspension of IP laws cannot achieve (e.g. by suspending patents or trade secret protection).

Most complex technologies such as vaccines and other biological products contain two major knowledge components. One component is the knowledge that can be copied by competitors and hence patented to legally prevent copying for at least 20 years in India. Another component involves any undisclosed information such as a trade secret or know-how, including hard tacit knowledge of manufacturing/quality control measures for production and clinical data required for regulatory clearances.

IP waiver simply can’t achieve access to tacit knowledge components which are in the exclusive possession of a firm in the form of trade secrets or any other undisclosed information. Any IP lawyer with an understanding of IP intensive industries would confirm that trade secrets do not require any ‘exclusivity’ type of legal protection (e.g. like patents). Trade secret laws provide defensive protection to a firm that already has exclusive possession of some undisclosed information against industrial espionage, breach of confidence/contracts by its employees or by connected parties who benefit from such misappropriation. Of course, unconnected parties (i.e. competitors) are always free to come out with their own products/processes through capital intensive and time consuming (months/years) reverse-engineering or independent innovation, which the law on trade secrets does not prohibit.

So even if the WTO IP waiver will allow countries like India to suspend legal protection for trade secrets/undisclosed information, it means nothing in the real-world unless the law  (and often a draconian criminal measure) is used against a firm and its employees physically located in its territory to engage in forced technology transfer (FTT). Such FTT requirements have never worked in practice without other social and economic costs. India has already had a taste of it in its unsuccessful bid to get Coca-Cola to reveal its know-how under foreign exchange laws in the late 1970s. It led to Coke’s exit from India and return in the post-liberalisation era in the early 1990s.

Realising such complexities and the potential futility of blunt legal instruments early on, the Serum Institute of India (SII) actively collaborated with AstraZeneca/Oxford for obtaining a technology licence involving a reported fee of Rs. 75/- per jab. This allowed SII access to AstraZeneca’s tacit knowledge (trade secrets/other undisclosed information) and clinical trial data to engage in quality-controlled production. Scaling-up is a different challenge altogether as it requires both time and investment in heavily quality-controlled production facilities.

Similarly, India’s Council of Scientific & Industrial Research (CSIR) – Centre for Cellular and Molecular Biology (CCMB), which already has certain expertise in mRNA technologies, is pursuing Moderna to engage in vaccine technology licensing. Although Moderna has allowed free access to its mRNA patents for COVID-19 vaccine production, the crux lies in active technology licensing.

In fact, even in case of an indigenously developed vaccine technology by Bharat Biotech with an early-stage lab support from the publicly-funded Indian Council of Medical Research (ICMR) – National Institute of Virology (NIV), the Department of Biotechnology had to recently nudge Bharat Biotech to engage in talks with Panacea Biotech (the only other company in India which is currently equipped to produce Covaxin) to scale-up production.

So, a WTO IP Waiver to suspend IP obligations domestically will not help unless India engages in FTT – a recipe for complete disaster, particularly when we have finally decided to open-up to more foreign players. The Government of India must not waste its valuable energy in pursuing the waiver proposal in trying to look for solutions that are far removed from the real-world complexities and constraints posed by economics of vaccine technologies and production, and an equally complex IP ecosystem in the context of global tech-transfers. Where blunt legal instruments don’t work, using track-1 and track-2 diplomacy to place moral coercion on western governments to nudge firms to actively engage in technology licensing may still work wonders.

Allowing manufacturers to strike early deals with tech players to facilitate risk-sharing and exploration of synergies driven by a predictable and transparent entry-enabled regulatory environment is a pre-requisite for sustainable vaccine production. Securing cheap upfront volume discounts for state-sponsored distribution and allowing private players to cross-subsidise through differential pricing in private sales will help in meeting the demand. This will facilitate scaling-up of production and pave the way towards healthy competition by driving down vaccine prices in order to attain vaccine equity.

Dr. Yogesh Pai is an assistant professor and the DPIIT, Ministry of Commerce and Industry IPR Chair at National Law University Delhi. He has served as a legal member of the Ministry of Health and Family Welfare’s Committee on Invoking Provisions of Compulsory Licensing under the Patents Act, 1970 in the Context of Affordable Healthcare (2013). Views are personal.

This piece first appeared on April 28, 2021, in the Express Pharma edition of the Indian Express.

Categories
Healthcare Pharma

The Tradeoffs Involved in New Drug Approval, Expanded Access, and Right to Try

The following post comes from CPIP Senior Fellow for Life Sciences Erika Lietzan, and it is cross-posted here from the Objective Intent blog with permission.

enlarged picture of a moleculeThis note explains some of the concepts swirling around in the media right now, relating to medicine approval. Much of what follows appears (or will appear) in an article on the U.S. “right to try” law, which I recently wrote with a colleague at the University of Bourgogne in Dijon, France. Some of the background discussion will be useful here.

Premarket Approval

A new medicine must be approved by FDA before it can be shipped in interstate commerce (effectively, before it can be sold commercially for use by patients). There are two pathways to market in the United States: a biologics license application for a biological drug and a new drug application for any other type of drug. FDA requires proof of safety and effectiveness, which takes the form of data from laboratory and animal (“preclinical” or “nonclinical”) testing as well as human (“clinical”) trials.

A variety of legal, scientific, and ethical considerations mean that developing the safety and effectiveness data for premarket approval of a medicine is iterative. That is, after trials in relevant animals show that it would be safe to begin testing in humans, the applicant begins with small safety tests (often in healthy volunteers) and moves gradually to larger and larger trials. During this time the medicine is considered “investigational” or “experimental.” And it can’t be introduced into interstate commerce.

The traditional approach involves three phases of testing.

  • Phase 1 trials entail the initial introduction of the investigational medicine in humans and focus on how the body reacts to the medicine — questions of absorption, distribution, metabolism, excretion, and side effects of increasing dose. These trials sometimes also generate early evidence of effectiveness, if the subjects are patients rather than healthy volunteers.
  • Phase 2 trials are usually controlled and assess the effectiveness of the medicine in patients, as well as common short-term side effects and risks. In a “controlled” trial, each subject is randomly assigned to one of two groups — one group receives the experimental medicine, and the other receives a “control” (typically either a placebo or a medicine that treats the condition) for comparison.
  • The pivotal trials proving statistically robust proof of effectiveness — phase 3 trials — often involve thousands of patients and clinical trial sites around the country or world.

The gold standard for proof of effectiveness is a prospective, randomized, controlled, double-blinded trial. Although randomized, controlled trials aren’t perfect, the design minimizes the potential for bias (which might happen, for example, if the patient or doctor knows who is receiving the test drug and who is receiving the control) as well as the problem of confounding variables. This form of evidence is superior to real world evidence and superior to personal experience and anecdotal information.

It’s possible for a trial to combine elements of phase 1 and 2, or phase 2 and 3 … there’s no law requiring companies to proceed through three discrete and sequential sets of trials. But the basic principle applies: you start small, you generate an adequate database in humans to characterize the drug’s safety profile, and you complete trials designed to support a statistically robust conclusion that the drug is effective (causes the result you observe).

The Tradeoff Involved

In theory, a new medicine must be shown safe and effective before it may be marketed. In reality, no medicine is perfectly safe or always effective in the patients for whom it is labeled. Patients are heterogeneous, and clinical responses vary. Side effects are inevitable; medicines are biologically active, and the relationship between a patient’s body and the chemical can be complex. As a result, when approving a new medicine for the market, the most a regulator can ask for is proof that the medicine’s benefits outweigh its risks for most people most of the time.

The challenge is that it is impossible to be certain about this. No premarket research and development program can generate complete information about a medicine’s clinical profile. Approval really means only that the medicine’s benefits outweigh its risks based on the data generated to date. Requiring premarket approval therefore always entails deciding when to make the call on benefit and risk — how much data must be generated before FDA makes this call.

This creates a tradeoff. On the one hand, while it is impossible to eliminate all uncertainty about the clinical profile of a proposed new medicine, more testing will always provide more certainty. On the other hand, testing delays the regulatory decision (and thus market entry), and requiring more testing delays the decision even longer. If the regulator still approves the medicine, the testing delayed access to a medicine that had a positive benefit-risk ratio the whole time. Patients who could have benefitted from the medicine had to wait. And if the medicine treated a serious or life-threatening disease, some patients — hundreds, thousands, or more — may have never had the chance to use the medicine. They may have died waiting.

How much information is enough for a decision on the risk-benefit profile of a new medicine depends on the relative weight given to two values — earlier (rather than later) release of new medicines to patients, on the one hand, and reduction of uncertainty about the effects of those medicines, on the other hand. Doctors, patients, regulators, and policymakers may disagree about the relative importance of avoiding errors (rejecting good medicines and approving bad medicines) and the cost of delay, just as they may disagree about the weight to be placed on particular benefits and particular risks.

Our legal framework give these calls to a regulator. A medicine may not be sold for use by a patient — even if the benefits exceed the risks from the perspective of the patient, even if avoiding delay is more important to the patient than knowing more about the drug — until a regulator agrees, based on its own assessment of benefits and risks. And it considers these at the population level, not the individual level.

Evolution in the Gatekeeping Model

Over the last half century, however, the regulatory gatekeeping model has evolved, as the broader relationship between the individual and state on matters of personal health has evolved. Our article explores this evolution in France and the United States, considering scientific developments, sociocultural changes, and broader legal pressures that contributed to the evolution. And we describe two innovations in the gatekeeping model: early decision mechanisms and early access mechanisms.

Earlier Decisions … e.g., Fast Track and Accelerated Approval

An early decision mechanism shifts the timing of the regulator’s benefit-risk judgment call to an earlier moment in time (and possibly an earlier moment in the process of generating evidence). Some early decision mechanisms are designed to accelerate premarket research and development, or regulatory review, with no change in the standard for approval. For example, in the United States, “fast track” designation entitles a company to more frequent meetings with FDA to discuss trial design and data needed for approval. It is available for a drug intended to treat a serious or life-threatening disease or condition, if it demonstrates the potential to address unmet medical needs for that disease or condition. Other early decision mechanisms permit approval on a different evidentiary basis. For example, U.S. law permits accelerated approval of a medicine intended for treatment of serious or life-threatening illness, based on data that do not show clinical benefit but rather are thought to predict it.

Earlier Access … Expanded Access

Early access mechanisms emerged during the worst years of the AIDS crisis and responded to the fact that better informed and newly empowered patients were willing to take greater risks in exchange for earlier access to new medicines. (But, to be clear, even before the AIDS crisis, FDA had permitted seriously ill patients access to experimental drugs.) Our article explores this history — in France and the United States — but I am just going to summarize current law here. Current law is reflected in the statutory provisions and regulation governing expanded access to investigational drugs and devices.

With expanded access, FDA still plays a gatekeeping role. Expanded access requires a showing that (1) the patient has a serious or immediately life-threatening disease or condition for which there is no comparable or satisfactory alternative therapy, (2) the potential benefit for the patient or patients justifies the potential risks, and the potential risks are not unreasonable in the context of the disease being treated, and (3) providing the drug will not interfere with clinical trials that could support marketing approval.

FDA will permit expanded access for individual patients as well as for groups of patients.

For an individual patient, the general criteria for expanded access must be satisfied, and (1) the treating doctor must determine that the probable risk to the patient from the drug is not greater than the probable risk from the disease, and (2) FDA must determine that the patient cannot obtain the drug any other way (for instance, by enrolling in a clinical trial). The agency ordinarily looks for completed phase 1 trials at doses similar to those proposed for the patient, together with preliminary evidence suggesting effectiveness. In some cases, however, FDA will permit a single patient access based on preclinical (animal) data or even mechanism of action.

In addition, the U.S. permits expanded access for groups of patients.

First, it permits widespread use. The ordinary standards for expanded access apply. If the medicine is intended to treat a serious disease or condition, FDA will look for data from phase 3 trials showing safety and effectiveness, but in some cases it will accept compelling data from phase 2 trials. If the medicine is intended to treat an immediately life-threatening disease, FDA will consider whether “the available scientific evidence, taken as a whole, provides a reasonable basis to conclude that the investigational drug may be effective for the expanded access use and would not expose patients to an unreasonable and significant risk of illness or injury.” This will “ordinarily consist of clinical data from phase 3 or phase 2 trials,” but it could comprise “more preliminary clinical evidence.”

Second, it permits use by “intermediate-size” groups. This is appropriate if patients cannot participate in the ongoing trials — because they do not meet enrollment criteria, because enrollment has ended, or even because the trial site is not geographically accessible. The agency’s regulations also describe use of this arrangement when a drug is not under development at all — for instance, because it is so rare that the sponsor cannot recruit patients for trials. For intermediate-size groups to enjoy early access, the ordinary standards for expanded access must be met. In addition, there must be (1) enough evidence of safety to justify a clinical trial at the same dose and duration in the same number of people, and (2) preliminary clinical evidence of effectiveness, or of a plausible pharmacologic effect, sufficient to make use a reasonable therapeutic option for the patients in question.

Right to Try

In 2018, the U.S. Congress passed a law that takes a different approach to the challenge of balancing the desire for robust data about new medicines, on the one hand, and the desire to allow individual patients access to incompletely tested but potentially beneficial compounds at their own discretion, on the other.

The new right-to-try law permits early access without a regulator’s involvement. Congress added a new section to the U.S. drug statute, which — when its terms are met — exempts certain drugs provided to certain patients from the gatekeeping provisions of that statute and from FDA’s regulations implementing those gatekeeping provisions. The patient in question must be diagnosed with a life-threatening disease or condition — generally meaning the likelihood of death is high unless the course of disease is interrupted. And the patient must have exhausted approved treatment options and must be unable to participate in a clinical trial involving the drug. The drug itself must be the subject of a pending marketing application or a clinical trial intended to form the primary basis of a claim of effectiveness in support of marketing approval, and it must have completed phase 1 trials. If these things are true, the drug may be provided to the patient.

The federal government does not play a role in determining whether these things are true. Neither the company nor the doctor seeks permission from FDA. If anyone plays a gatekeeping role, it is state-licensed doctors. Before the drug can be provided to the patient, a physician in good standing with the appropriate licensing board must determine that the patient has exhausted approved treatment options and cannot participate in a clinical trial. The right-to-try law specifies no actor to enforce the other two threshold eligibility requirements — that the patient’s disease is life-threatening and that the patient provided informed consent.

FDA’s role here is, at best, after the fact. The agency would have to learn of the procedure in the first instance and then, believing that the patient had not provided informed consent or did not suffer from a life-threatening disease, claim that the patient had not been eligible for right-to-try access. If true, the drug was not exempt from FDA’s gatekeeping authorities, and FDA could take enforcement action. But the agency will not learn about right-to-try treatments until the company’s annual summary of right-to-try uses, and the statute does not require identification of the investigators or patients. So these limitations may turn out to be a sham. To be fair, though, state law will usually impose its own informed consent obligation on treating doctors. And it may require that access proceed through the same kind of ethics review as FDA would have required.

Although the primary feature of the right-to-try law is its removal of FDA as a gatekeeper, the law also addresses two grounds on which companies supposedly decline to provide their medicines before approval. First, the law limits their liability exposure. A company faces no liability arising out of any act or omission with respect to medicine provided to patients under right-to-try. Second, the law limits FDA’s use of the data arising out of the patient’s use of the medicine. The agency cannot use a clinical outcome from right-to-try to delay approval of the medicine unless the sponsor requests that use or the agency finds that using the clinical outcome is critical to determining the medicine’s safety. (But it is not clear these are the real reasons companies decline to provide expanded access. Recent scholarship suggests that concerns about adverse regulatory outcomes and liability exposure would not have been well-founded.)

Comparing Expanded Access and Right-To-Try

The essence of the right-to-try law is elimination of the regulator’s role. Compassionate use under the right-to-try law is a matter for the company, doctor, and patient. FDA receives no information, has no review authority, and as a practical matter has no role. The right-to-try law also strips the agency of the authority to impose conditions on access. Ordinarily, even in expanded access situations, the sponsor of the trial (usually the drug company) notifies FDA of any serious and unexpected adverse reaction within 15 days. It also notifies investigators working with the drug. These rules do not apply. Nor do FDA’s rules relating to maintaining control of the investigational medicine or recordkeeping. And the agency has no power to call a halt to the process when patients are subject to unreasonable risk of injury or when the doctors lack the training and experience necessary to administer the drug. Only three FDA regulations relating to investigational medicines will apply: a regulation governing labeling, a regulation prohibiting promotion, and the regulation limiting how much the company can charge (only the direct costs of making the medicine available). And the agency will have to enforce these rules after the fact, when it receives the company’s annual summary.

Categories
FTC Healthcare

CPIP Scholars Join Comments to FTC on How Antitrust Overreach is Threatening Healthcare Innovation

dictionary entry for the word "innovate"On December 21, 2018, CPIP Senior Scholars Adam Mossoff and Kristen Osenga joined former Federal Circuit Chief Judge Randall Rader and SIU Law’s Mark Schultz in comments submitted to the FTC as part of its ongoing Competition and Consumer Protection in the 21st Century Hearings. Through the hearings, the FTC is examining whether recent economic or technological changes warrant adjustments to competition or consumer protection laws. The comments submitted to the FTC explain how the FTC itself is harming innovation in the health sciences by meddling in patent disputes between branded and generic drug companies.

The introduction is copied below, and the comments can be downloaded here.

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How Antitrust Overreach is Threatening Healthcare Innovation

Imagine passing a rigorous test with flying colors, only to be told that you need to start over because you weren’t wearing the right clothing or you wrote your answers in the wrong color. Does that sound silly? Unfair? That scenario is happening to the American pharmaceutical industry thanks to regulators at the Federal Trade Commission who aren’t content to let the Food & Drug Administration (the experts in pharmaceutical safety and regulation) and federal courts (which referee disputes between branded and generic drug companies) decide when new drugs are ready to come to market. The consequences of these regulatory actions impact people’s lives.

The development and widespread availability of safe and effective pharmaceutical products has helped people live longer and better lives. The pharmaceutical industry invests billions each year in research and infrastructure and employs millions of Americans. The industry is closely regulated by many agencies, most notably the FDA, which requires extensive testing for safety and effectiveness before new drugs enter the market. Many thoughtful proposals have been advanced to improve and modernize the FDA’s review and approval of new drugs, but there is broad agreement that the FDA’s basic role in drug approval serves valid ends.

In recent years, however, other government agencies have played an increasingly intrusive role in deciding whether and when new drugs can enter the market. One such agency is the Federal Trade Commission, which has recently taken steps to block branded drug companies from settling patent litigation with generic drug makers. The FTC substitutes its own judgment for the business judgment of sophisticated parties, simultaneously weakening the patent rights of branded drug companies that spend billions in drug discovery and development and delaying generic drug companies from bringing consumers low cost alternatives to branded drugs. This example of government agencies picking winners and losers—indeed, deciding there should be no winners and losers—harms consumers in the short run by slowing access to drugs and in the long run by weakening innovation.

This paper describes the role of patents in protecting drugs and the special patent litigation regime Congress enacted in the 1980s to carefully balance the needs of branded drug companies, generic competitors, and consumers. Although these systems are not perfect, the FTC’s overreach in its regulatory powers in this area of the innovation economy results in a net loss for American consumers, as described below.

To read the comments, please click here.