Category: Pharma

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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 However, this interpretation is outdated and inaccurate.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 Patent Law Patent Licensing Patents Pharma

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

By Emily Michiko Morris and Joshua Kresh

Overlaid images of pills, a gloved hand of someone expecting a pill, and an eyedropperExecutive 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.

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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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Pharma

C-IP2 Statement on Interactions between Courts and the FDA

a gavel lying on a table in front of booksCourts have recently questioned Food and Drug Administration (FDA) determinations. The FDA is the administrative agency whose job is to evaluate scientific data to determine if a drug is safe and effective enough to be approved, and post-approval, to continue to evaluate such data to determine if a drug should remain available.  

Generally, the most expensive part of bringing a drug to market is the clinical trials necessary to obtain FDA approval. Courts substituting their evaluations of scientific data and overruling the FDA would harm innovation, future pharmaceutical research, and funding. While courts can and should review agency policies and decisions under the administrative procedures act, courts should not substitute their opinions for expert agency decisions. 

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Patents Pharma

Policy Brief: The TRIPS Waiver for COVID-19 Vaccines, and Its Potential Expansion: Assessing the Impact on Global IP Protection and Public Health

This policy brief, including the following “Introduction and Executive Summary,” comes from Eric M. Solovy.

CLICK HERE to read the brief in full.

Overlaid images of pills, a gloved hand of someone expecting a pill, and an eyedropperIntroduction and Executive Summary

On June 17, 2022, in the early morning hours of the final day of the World Trade Organization’s (“WTO”) 12th Ministerial Conference, the Members of the WTO adopted a waiver of the Agreement on Trade Related Aspects of Intellectual Property Rights (“the TRIPS Agreement”), commonly known as the “TRIPS Waiver for COVID-19 Vaccines” or the “TRIPS Waiver.”[1]  The TRIPS Waiver, with its primary focus on compulsory licensing of patents (i.e., licensing without the authorization of the patent owner) that are “required for the production and supply of COVID-19 vaccines,” reflected a compromise position among WTO Members.[2]  The initial proposal advanced by India and South Africa, on October 2, 2020, would have gone much further, authorizing WTO Members to waive the substantive and enforcement-related provisions of the TRIPS Agreement not only for patents but also for copyrights, industrial designs, trade secrets, and test data protection; moreover, the original proposal would have gone far beyond COVID-19 vaccines, to cover intellectual property (“IP”) “in relation to prevention, containment or treatment of COVID-19.”[3]

The debate over the TRIPS Waiver began at a time when the development of the first COVID-19 vaccines was already nearing completion.  To wit, the Pfizer-BioNTech COVID-19 Vaccine received emergency use authorization from the U.S. Food & Drug Administration (“FDA”) on December 11, 2020 – i.e., just two months after India and South Africa had submitted their original TRIPS waiver proposal.[4]  Yet, at the same time that certain countries began attacking IP rights as an obstacle to addressing the pandemic, it was already well understood that the rapid development of COVID-19 vaccines, therapeutics, and diagnostics would not have been possible but for the billions of dollars in private investments, over the course of many years, in technologies that were incentivized by strong IP protection.[5]  It is no coincidence that the first COVID-19 vaccines were developed in industrialized countries that offer strong IP protection – protection that provided the incentives necessary for private investors to take the huge risks required when researching revolutionary technologies.[6]

For example, although mRNA was discovered in 1961, it took many years of research, at huge expense and great risk, to create the mRNA-based technology used in COVID-19 vaccines.[7]  BioNTech’s Dr. Sahin and Dr. Tureci, a married couple, had been working on mRNA technology for more than 25 years, without any successful commercial applications prior to developing their COVID-19 vaccine.[8]  To take another example, before going public in 2018 with its mRNA technology, Moderna had raised USD 2.6 billion in investments and partnership funding, along with USD 600 million raised in an IPO.[9]  At the time of its IPO, Moderna was spending hundreds of millions of dollars a year, reporting in September 2018 that it “had an accumulated deficit of $865.2 million.”[10]  This scale of private investment in a venture as risky as these ground-breaking new technologies would simply have been impossible but for the upside potential offered by the promise of IP rights over any resulting therapeutics or vaccines and, in turn, the potential to recoup returns on those investments.  Further, the assurance that IP rights would be honored and, where necessary, enforced, in multiple countries enabled the creators of vaccines to enter into voluntary licensing agreements with enterprises around the world for the manufacture and distribution of the vaccines, making them rapidly available throughout the world.[11]

Since the inception of the TRIPS Agreement nearly thirty years ago, there have been voices calling for its dilution.  The ongoing COVID-19 pandemic amplified some of these voices.  Ignoring the role of IP in the creation of COVID-19 vaccines (and diagnostic and therapeutic products), many governments bought into the narrative claims that protection of IP rights obstructs access to important vaccines and therapeutic products.  In making this argument, they conveniently put to the side the multitude of trade, regulatory and logistical barriers that clearly prevented vaccines from quickly going into arms in a number of developing countries.[12]  At the same time, some have argued that certain countries viewed the pandemic, and a TRIPS waiver in particular, as a strategic opportunity to get access to next generation technologies that would provide benefits to their domestic economies long after the COVID-19 pandemic ends.[13]

Upon the announcement and public release of the terms of the TRIPS Waiver, the reactions were, not surprisingly, mixed.  They were generally aligned with the long-term views of international IP rights that had been consistently expressed by countries, activists, and industry since the inception of the TRIPS Agreement.

For those countries and activists that have long advocated against IP protection for pharmaceutical products, they characterized the TRIPS Waiver as a compromise that did not go far enough but that nevertheless served to validate (in their view) that they had been right all along about the relationship between IP protection and global health.  For example, Médecins Sans Frontières (“MSF”) expressed disappointment that the scope of the TRIPS Waiver was not as broad as the original proposal but then went on to question whether patent protection is ever appropriate for pharmaceutical products, calling “on governments to take concrete steps to rethink and reform the biomedical innovation system to ensure that lifesaving medical tools are developed, produced and supplied equitably where monopoly-based and market-driven principles are not a barrier to access.”[14]

For those who, in record time, created and produced the revolutionary vaccines, diagnostics, and therapeutics that have enabled families and businesses around the world to begin returning to normal, the TRIPS Waiver was understood as a threat to IP rights, to the incentives they create, and ultimately, to innovation itself.  As the U.S. Chamber of Commerce stated in advocating against a TRIPS waiver:

Waiving intellectual property rights would only hobble the innovation that is critical to improving lives and raising living standards globally.  If enacted, this move would set an unfortunate precedent and may limit innovative companies’ ability to devote unprecedented resources to quickly discover and deliver solutions for the next global crisis, be it pandemic, food security, or climate-related.[15]

There are currently calls for a further expansion of this waiver, both in terms of duration and product scope.  As explained below, any expansion of the waiver could deal an additional blow to incentives to biopharmaceutical innovation, which would, in turn, compromise our ability to deal with future public health emergencies (as well as possible future variants of COVID-19).

When WTO Members gather in Geneva, Switzerland, to decide, pursuant to the direction in paragraph 8 of the TRIPS Waiver, whether the waiver should be “extend[ed] to cover the production and supply of COVID-19 diagnostics and therapeutics,” it is important to take a step back from the public rhetoric and evaluate the TRIPS Waiver in view of its actual text, as well as the text of the provisions of the TRIPS Agreement that it waives and/or purports to “clarify.”

In Part II, below, this paper briefly discusses the evolution of global IP protection and why a multilateral treaty such as the TRIPS Agreement is absolutely essential to incentivizing R&D in an increasingly globalized economy.  Part III then offers a summary of the legal content of the TRIPS Waiver.  Part IV places the TRIPS Waiver into its proper context in the WTO system, explaining the legal nature of a waiver as a matter of WTO law.

Next, in Part V, I turn to the potential impact of the TRIPS Waiver.  After first noting that no WTO Member has given notice of an intent to make use of the TRIPS Waiver since its inception over five months ago, I explain (in Part V(A)) that, by creating uncertainty as to the value of pharmaceutical patents, the TRIPS Waiver may serve to decrease the incentives to innovation created by the patent system, to the detriment of global public health.  Part V(B) highlights how, in contrast to the mechanism set out in Article 31bis of the TRIPS Agreement, the failure to include tracking, tracing, and detailed transparency requirements in the TRIPS Waiver could lead to diversion of vaccines, which would be counterproductive to the stated intent of the TRIPS Waiver.

Part V(C) considers the potential harm that may arise if WTO Members rely on one of the so-called “existing good practices,” as referenced by the TRIPS Waiver, for determining remuneration to a patent owner whose patent is compulsorily licensed.  In Part V(D), I consider the potential impact of the provision of the TRIPS Waiver addressing regulatory data protection, a type of IP right distinct from patents which provides important incentives to bring new pharmaceutical technologies to market.  Part V(E) considers the public debate, particularly in the United States, surrounding the possible impact of the TRIPS Waiver on the global competitiveness of certain WTO Members.

Finally, Part VI considers how the proposed expansion of the product scope of the TRIPS Waiver to COVID-19 diagnostics and therapeutics (as not yet defined) could serve to create uncertainty for a much larger group of patent owners and, in turn, further reduce incentives for innovation, to the detriment of global public health.  It would do so at a time when R&D is rapidly progressing in preparation for new variants of COVID-19 and ultimately for the next pandemic.

CLICK HERE to read the brief in full.

[1] See Ministerial Decision on the TRIPS Agreement, WTO Doc. WT/MIN(22)/30 (Jun. 22, 2022), available at: https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/MIN22/30.pdf&Open=True (“TRIPS Waiver”).

[2] Id. at ¶ 1.

[3] TRIPS Council, Communication to the TRIPS Council from India and South Africa, Waiver from Certain Provisions of the TRIPS Agreement for the Prevention, Containment and Treatment of COVID-19, Annex at ¶ 1, WTO Doc. IP/C/W/669 (October 2, 2020).

[4] Press Release, U.S. Food & Drug Admin., FDA Approves First COVID-19 Vaccine(Aug. 23, 2021), available at https://www.fda.gov/news-events/press-announcements/fda-approves-first-covid-19-vaccine#:~:text=The%20first%20EUA%2C%20issued%20Dec,trial%20of%20thousands%20of%20individuals.

[5] Eric M. Solovy, The Doha Declaration at Twenty: Interpretation, Implementation, and Lessons Learned on the Relationship Between the TRIPS Agreement and Global Health, 42 Nw J. Int’l L. & Bus. 253 (2022), at 289-296, available at https://jilb.law.northwestern.edu/issues/?vol=vol%2042%20-%20issue%202.

[6] See Bojan Pancevski & Jared Hopkins, How Pfizer Partner BioNTech Became a Leader in Coronavirus Vaccine Race, Wall Street Journal (Oct. 22, 2020), https://www.wsj.com/articles/how-pfizer-partner-biontech-became-a-leader-in-coronavirus-vaccine-race-11603359015.

[7] See Elie Dolgin, The Tangled History of mRNA Vaccines, Nature (Sept. 14, 2021), https://www.nature.com/articles/d41586-021-02483-w.

[8] See Pancevski & Hopkins, supra note 6; see also David Gelles, The Husband-and-Wife Team Behind the Leading Vaccine to Solve Covid-19, New York Times (Nov. 10, 2020), https://www.nytimes.com/2020/11/10/business/biontech-covid-vaccine.html.

[9] See Moderna, Inc., U.S. Securities and Exchange Commission filing (Amendment No. 1 to Form S-1 Registration Statement), November 28, 2018, at i, 1.

[10] Id. at 20.

[11] See, e.g., Guilherme Cintra, Is an extension of the TRIPS waiver needed for COVID-19 tools?, Global Health Matters, IFPMA (Oct. 15, 2022), available at https://www.ifpma.org/global-health-matters/is-an-extension-of-the-trips-waiver-needed-for-covid-19-tools/; see also COVID-19 vaccines and treatments output continues apace, IFPMA (Apr. 13, 2022), available at https://www.ifpma.org/resource-centre/covid-19-vaccines-and-treatments-output-continues-apace-as-health-systems-and-last-mile-hurdles-remain-collective-stumbling-blocks/ (“The COVID-19 vaccine manufacturing scale-up has seen 372 partnerships forged, of which 88% (329) include technology transfer or fill & finish. 51 manufacturing and production agreements were made in developing countries (LICs and LMICs).”).

[12] See Indicative List of Trade-Related Bottlenecks and Trade-Facilitating Measures on Critical Products to Combat COVID-19, WTO Information Note (July 20, 2021), available at  https://www.wto.org/english/tratop_e/covid19_e/bottlenecks_report_e.pdf.

[13] See Shayerah I. Akhtar, Cong. Rsch. Serv., R47231, World Trade Organization: “TRIPS Waiver” for COVID-19 Vaccines (2022), at 13.

[14] Lack of a real IP waiver on COVID-19 tools is a disappointing failure for people, Médecins Sans Frontières (Jun. 17, 2022), available at https://www.msf.org/lack-real-ip-waiver-covid-19-tools-disappointing-failure-people (asserting that “we are disappointed that a true intellectual property waiver, proposed in October 2020 covering all COVID-19 medical tools and including all countries, could not be agreed upon, even during a pandemic that has claimed more than 15 million people’s lives.”).

[15] Press Release, U.S. Chamber of Commerce, Proposal at WTO to Waive Intellectual Property Would Set Harmful Precedent (Jun. 15, 2022), available at https://www.uschamber.com/intellectual-property/proposal-at-wto-to-waive-intellectual-property-would-set-harmful-precedent; see also, e.g., Press Release, PhRMA, PhRMA Statement on the TRIPS Waiver Agreement (Jun. 17, 2022), available at https://phrma.org/resource-center/Topics/Trade/PhRMA-Statement-on-the-TRIPS-Waiver-Agreement (stating that the COVID-19 TRIPS Waiver “undermine[s] the very intellectual property rights that enabled hundreds of collaborations to produce the COVID-19 vaccines on a global scale.”).

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
Patents Pharma

UC Hastings’ Evergreen Drug Patent Search Database: A Look Behind the Statistics Reveals Problems with this Approach to Identifying and Quantifying So-Called “Evergreening”

Professor Robin Feldman’s reply to this post, and our response, can be read read here.

pharmaceuticalsThe Center for Innovation, housed at the University of California Hastings College of the Law, has created an Evergreen Drug Patent Search Database (the “Evergreening Database,” or “Database”).[1] The Database was created to address the perceived problem of “evergreening,” which the Database defines as “pharmaceutical company actions that artificially extend the protection horizon, or cliff, of their patents.”[2] Its data include patent and non-patent exclusivity information from out-of-date versions of the FDA’s Orange Book.[3] The implication seems to be that these statistics, which include things like the number of “protections” and “extensions” associated with a drug, and the amount of “additional protection time” resulting from these protections and extensions, serve as indicia of evergreening, which the Center for Innovation characterizes as a “problem [that] is growing across time.” The Database’s homepage explains that “[t]he Center for Innovation hopes that policymakers and other stakeholders use this information to identify potential problems with evergreening and develop new solutions so that anyone and everyone can access the life-saving medication that they need.”

Based on our preliminary exploration of the Evergreening Database, we are concerned 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 will be misled by the statistics. While the Database allows the public to access the underlying data, the format in which the data are provided makes the process of accessing and understanding them relatively burdensome.

The problems we have identified with the statistics provided by the Evergreening Database are numerous and multifaceted, and it would be beyond the scope of a single blog post to try to address them all. Instead, we have decided to focus on a single drug, ranolazine, which is used to treat angina and marketed by Gilead under the tradename Ranexa. There is nothing particularly unique about ranolazine—the problems with its statistics are representative of what we have generally observed to be pervasive throughout the Database. The ranolazine entry caught our attention because it purports to show that the drug was a subject of a relatively large number of “protections” (24 of them) and 13 years of “additional protection time,” even though the total time between the approval of the drug and expiration of all associated patents and exclusivities was only a little more than 13 years—about five years less than the average term of a U.S. patent.

We will start with an initial explanation of the methodology underlying the Evergreening Database. As mentioned above, the statistics are derived from out-of-date versions of the FDA’s Orange Book, which is published on the FDA’s website and provides information on patents and “exclusivities” associated with FDA-approved drugs. The exclusivities can be any of a variety of non-patent regulatory exclusivities that Congress created to reward innovators that have achieved certain outcomes that Congress sought to incentivize. Examples include the “NCE exclusivity”—five years of data exclusivity awarded for the initial approval of a new active ingredient, i.e., a “new chemical entity”—and the seven years of orphan drug exclusivity awarded to an innovator that develops a drug for a rare disease or condition. The Orange Book provides a listing of these exclusivities, as well as a list of patents relating to the approved drug (i.e., patents claiming the drug’s active ingredient, formulations of the drug, and methods of using the drug). It also provides expiration dates for the patent and exclusivities. The FDA periodically revises the Orange Book, and when it does, it removes from the lists any patents and exclusivities that have expired.

The creators of the Evergreening Database compiled this historical data in a Comma Separated Values file (“the CSV file”). The Database uses the patents and exclusivities derived from the CSV file to generate various statistics for each drug, including a total number of “protections” and “extensions,” as well as the “earliest protection date,” “latest protection date,” and the number of “months of additional protection” (which is the time between the earliest protection date and the latest protection date). Presumably, these statistics are intended to shed some light on the purported evergreening practices of pharmaceutical companies.

Now let us turn to ranolazine. The Evergreening Database entry for ranolazine provides the New Drug Application (“NDA”) number for the drug (21526), the branded product name (Ranexa), the name of the innovator company associated with the branded drug (Gilead), and the date of FDA approval (January 27, 2006). The ranolazine entry also provides various statistics derived from the raw data, including the number of “protections” (26) and the amount of “additional protection time” (156 months, i.e., 13 years). This seems to provide an example of evergreening. The statistics appear to show that Gilead gamed the system to “artificially extend the protection horizon of its patents” by 13 years. However, a closer examination of the raw data tells a quite different story.

First, what are the 26 purported “protections” that Gilead has apparently secured with respect to Ranexa? Eleven of them are patents that were once listed in the Orange Book for the drug. All the listed patents have expired, so none appear in the current Orange Book. While the Database lists the patents, it does not include expiration dates, which are necessary to understand the “protection time” statistics. Worse, the Database provides no information with respect to the other 15 “protections,” i.e., non-patent exclusivities.

With some effort, the missing information can be found in the CSV file. The following step-by-step instructions will hopefully make it easier for others interested in following this path.

Beginning on the homepage for the Evergreening Database, click on the “About the Data” hyperlink, which will take you to another page which states:

To download the original dataset, that was used to develop the results for the article May Your Drug Price Be Evergreen, along with information about researching the FDA’s Orange Book, please see:

Robin Feldman, Identifying Extensions of Protection in Prescription Drugs: Navigating the Data Landscape for Large-Scale Analysis, ANN ARBOR, MI: INTER-UNIVERSITY CONSORTIUM FOR POLITICAL AND SOCIAL RESEARCH (2018), https://doi.org/10.3886/E104781V2.

Clicking on the “doi.org” link leads to a webpage of “openICPSR,” which describes itself as “a self-publishing repository for social, behavioral, and health sciences research data” and a “service of the Inter-university Consortium for Political and Social Research (ICPSR).”

There are several files posted on this webpage, including one entitled Orange_Book.csv. Users can download this file after registering with openICPSR.

The CSV file includes 26 entries for ranolazine that presumably correspond to the 26 “protections” reported in the Database. All 26 protections were based either on the eleven patents or on the NCE exclusivity granted by FDA for the first approval of a new active ingredient. How does that add to 26 protections? Each of the 11 patents was counted twice, once for each approved strength of the drug (which comes in dosages of 500 mg and 1 g). However, marketing approval for two strengths of a drug does not extend the duration of the patents, and it is problematic that the methodology underlying the database results in a doubling of the number of “protections,” with the implication that this constitutes evidence of possible evergreening.

One of the patents (U.S. patent number 4,567,264) was counted as three protections, because the duration of that patent was extended by patent term extension (PTE) pursuant to Section 156 of the Patent Act. Congress enacted Section 156 in 1984 as part of the Hatch-Waxman Act for the express purpose of addressing the “distortion” of the patent term experienced by pharmaceutical innovators owing to the lengthy process of achieving FDA marketing approval. Often, by the time a drug has been approved, much (if not all) of the patent term will have elapsed. To compensate for this distortion, Section 156 allows pharmaceutical innovators to extend the duration of one patent covering the drug by a length of time equal to one half of the time between the filing of the Investigational New Drug (IND) application and the submission of an NDA, plus all the time between the submission of the New Drug Application (NDA) and approval of the drug. Pursuant to statute, the maximum amount of PTE that can be awarded under Section 156 is five years, and the amount of PTE awarded can extend the duration of the patent for no longer than 14 years after the drug’s approval date.

Five years of PTE was added to U.S. patent number 4,567,264, which claims ranolazine as a composition of matter. Notably, the original expiration date of this patent was in 2003, three years prior to the drug’s initial approval. With the addition of five years of PTE, the patent term was extended to 2008, a little more than two years after the drug was approved for marketing. But since the patent term (including PTE) runs concurrently with the five-year NCE data exclusivity (discussed below), the patent provided no additional exclusivity beyond that already provided by NCE exclusivity. The Database is misleading to the extent that it implies that the award of PTE constitutes an “artificial” extension exclusivity for ranolazine—PTE was created by Congress for this express purpose, and it is available to all innovators who make a new drug available to patients.

One of the 26 “protections” was simply a request to delist a patent from the Orange Book. It makes no sense to consider a request to delist a patent as an additional “protection” for the drug, but for some reason that is how it is tallied in the CSV file and Database.

To summarize, 24 of the 26 “protections” are accounted for by the 11 patents, including the award of PTE and the request to delist a patent. The remaining two “protections” result from the fact that Gilead received five years of NCE data exclusivity. Like the patents, the NCE exclusivity period was counted twice, once for each approved strength of the drug. Congress created NCE exclusivity as an incentive for pharmaceutical companies to engage in the costly and beneficial activity of securing FDA approval for new pharmaceutical active ingredients, thereby ensuring that innovators receive a minimum of at least five years of exclusivity before any generic company can file an abbreviated NDA (ANDA) seeking approval to market a generic version of the drug. All innovators who succeed in providing a new active ingredient to patients are awarded five years of NCE exclusivity, which runs concurrently with patents. Again, it is misleading for the Database to tally the NCE exclusivity as two additional “protections” for the drug. NCE exclusivity provides a minimum floor of protection for innovators.

Now, what about the 11 patents? Are they evidence of evergreening, i.e., artificial extensions of patent protection? In assessing these patents, it is useful to consider the context from which they arose. Ranolazine was initially identified as a drug target by Syntex in the 1980s, and throughout much of the 1980s and 1990s that company conducted extensive studies of the compound for a variety of indications, including Phase II clinical trials testing its safety and efficacy in humans. Unfortunately, these studies failed to result in an approved drug, due at least in part to the fact that ranolazine is rapidly metabolized once ingested, which resulted in inadequate plasma concentrations of the drug in human subjects. Syntex filed a patent application disclosing ranolazine in 1983 that resulted in the issuance of a patent in 1986 claiming the molecule. This is the composition of matter patent mentioned above, the original term of which expired in 2003 but was extended by PTE to 2008.

In 1996, Syntex (then a subsidiary of Roche) licensed its rights in ranolazine to another drug company, CV Therapeutics. Researchers at CV Therapeutics succeeded in overcoming the problem of rapid metabolism by developing a sustained-released version of the drug. In 1999, the company filed a patent application disclosing sustained-release ranolazine formulations and methods of using them to treat patients. This application resulted in the issuance of a patent in 2001 claiming methods of using the sustained-release formulation of ranolazine to treat patients suffering from angina (U.S. patent number 6,306,607, the “method of treatment patent.”, which expired in 2019). Note that the method of treatment patent was issued years before the initial FDA approval of ranolazine in 2006, and the initial approval was for the sustained-release ranolazine. Generic versions of ranolazine began entering the market in 2019, shortly before the expiration of the method of treatment patent.

What about the other nine? All nine of these patents arose out of continuation applications claiming priority to the original 1999 application and therefore expired on the same day as the method of treatment patent, i.e., 20 years after the filing date of the original parent application. The nine additional patents reflect the fact that the 1999 patent application filed by CV Therapeutics disclosed multiple inventions, addressing different aspects of the company’s discovery of sustained-release ranolazine formulations and their use as therapeutic agents. Patent law’s prohibition against “double patenting” required CV Therapeutics to divide the inventions up into multiple patents, and the PTO examined the various inventions and determined that each merited its own patent. Significantly, because the patents all ran concurrently, and all expired on the same day, they did not extend the period of exclusivity beyond that provided by the initial method of treatment patent.

Finally, what of the Database’s assertion that Gilead benefited from 13 years of “additional” protection time for Ranexa? Presumably, this is time gained from “evergreening”; however, the statistics provided by the Database seem suspect, because they report that Ranexa was approved on January 27, 2006 (which is correct), that its “earliest protection date” was May 18, 2006 (less than four months later), and that its “latest protection date” was May 27, 2019 (which is the expiration date for the method of treatment patent). In other words, the total period of exclusivity reported by the Database was a little less than 13 years and four months, almost all of which the Database characterized as “additional protection time.”

Why did the Evergreening Database allot ranolazine less than four months of “earliest” protection time? There is no explanation in the Database itself, but the CSV file provides the answer. As mentioned earlier, the CSV file includes three entries for the composition of matter patent, accounting for three of the 26 “protections.” One of those entries lists the “expiration date” for the patent as May 18, 2006. It is this entry in the CSV file that resulted in the Database reporting an “earliest protection date” of May 18, 2006, less than four months after the drug was approved. The latest protection date of May 27, 2019 is the expiration date for the method of treatment patent. The 13 years of “additional protection time” is simply the amount of time between these two dates.

There are numerous problems with the methodology used to calculate “additional protection time.” For one thing, the May 18, 2006, expiration date for the composition of matter patent reported in the CSV file is incorrect. The expiration date for the patent was May 18, 2003, and the term was extended by five years of PTE to May 18, 2008 (see the PTO’s Patent Terms Extended Under 35 USC §156, available at https://www.uspto.gov/patent/laws-and-regulations/patent-term-extension/patent-terms-extended-under-35-usc-156, last visited Nov. 29, 2020). The two other entries in the CSV file for the composition of matter patent provide expiration dates of May 18, 2007. We assume that the creators of the Database intended to populate the CSV file with the original expiration date of the patent and the PTE-extended expiration date, but for some reason they got the years wrong—i.e., the actual years were 2003 and 2008, and the creators of the Database erroneously reported them as 2006 and 2007.

However, because they used the erroneous May 18, 2006 expiration date as the “earliest protection date” for ranolazine, the Database allows for less than four months of “earliest” protection time and counted the remaining 13 years of protection provided by the method of treatment patent as “additional.” In fact, if they had used the correct original expiration date for the composition of matter patent, the result would have been an “earliest protection date” that preceded the approval date of the drug, resulting in zero days of initial protection. This illustrates how misleading it would be to assume there is any connection between the “additional protection time” reported in the Database and evergreening activity.

In short, when we look at the raw data underlying the misleading statistics presented by the Database, we see that the innovator enjoyed a little over 13 years of patent protection, based on patents that arose out of the critical inventive activity that enabled CV Therapeutics to transform a failed drug candidate into a successful human therapeutic. Is 13 years of patent protection excessive for ranolazine? We would argue that it is not, particularly when one considers the huge investment and risk that was involved in bringing the drug to market. And Congress did not think so when it enacted Section 156, explicitly allowing pharmaceutical companies to extend the expiration date of their patents up to a maximum of 14 years after initial approval of the drug. The patent system appears to have worked exactly as Congress intended, with all patents and exclusivities expiring and generic versions of the drug entering the market approximately 13 years after the initial approval of Ranexa.

There may be real value in the underlying data that were used to generate the database; however, as it stands, the underlying data are both difficult to access and incomplete. As Ranolazine shows, there are serious flaws in the database and its interpretation of the underlying data that create unwarranted implications of improper evergreening activity.

[1] https://sites.uchastings.edu/evergreensearch/#.X6qg-mhKhM0

[2] https://sites.uchastings.edu/evergreensearch/about/#.X8UdwmhKhM0

[3] In proper context, use of these data from old Orange Book editions is of course fine. But care must be taken to not create misleading implications.

Categories
Patent Law Patents Pharma

Professors Erika Lietzan and Kristina Acri on “Distorted Drug Patents”

The following post comes from Austin Shaffer, a 2L at Scalia Law and a Research Assistant at CPIP.

pharmaceuticalsBy Austin Shaffer

In their new paper, Distorted Drug Patents, CPIP Senior Scholar Erika Lietzan of Mizzou Law and Kristina Acri of Colorado College explore a paradox in our patent system: Innovators are less motivated to work on drugs that take more time to develop as drug research incentives are being skewed away from the harder problems (e.g., Alzheimer’s disease and interventions at the early stages of cancer). The paper, which was published in the Washington Law Review in late 2020, was supported in part by a CPIP Leonardo da Vinci Fellowship Research Grant.

Although many condemn later-issued drug patents as “insidious,” Profs. Lietzan and Acri argue that those conceptions should be recalibrated, since the use of such patents is fully consistent with the intent of Congress when the Patent Act was amended in 1984 to restore some of the patent term lost to premarket R&D and FDA review. While a few scholars have considered the implications of patent term restoration from an empirical perspective, none have done so to the same extent as Profs. Lietzan and Acri. By using an expansive dataset and including a temporal dimension in the analysis, the scholars offer a fresh assessment of patent restoration and its implications.

How Can Drug Patents be “Distorted”?

Drug research is notoriously risky—investors allocate massive amounts of time and money to a project without knowing whether the drug will succeed in trials or how long the trials could last. Even if trials are successful, the Public Health Service Act and the Federal Food, Drug, and Cosmetic Act require premarket approval of new drugs before they can be commercialized. Starting in the 1960s, federal regulatory requirements grew more demanding, and the FDA’s expectations became more rigorous to obtain premarket approval. Given that the FDA approves only finished products, not mere active moieties, drug research is not only expensive but also uncertain. While this process drags out, the clock on the patent continues to run. By the time all is said and done, the effective life of the patent is distorted, an unfortunate reality that further disincentivizes complex drug research. By the 1980s, Congress had addressed this problem by amending the Patent Act to allow entities to apply for patent term restoration.

35 U.S.C. § 156 authorizes the PTO to restore the life of a patent lost to clinical trials and FDA review. However, the PTO has restricted the practicality of these restorations, making them subject to stringent limitations. It restores only half of the testing period after patent issuance and caps restoration at five years, and the effective patent life post-restoration cannot exceed fourteen years. Additionally, the PTO must deny restoration if the FDA has already approved the active ingredient. Only one patent can be extended per regulatory review period, and patents can only be extended under Section 156 once. After a certain point, premarket R&D simply and unavoidably equates to lost patent life. But despite the limitations and restraints on this process, it is widely agreed that the 1984 amendment was a step in the right direction.

The value of patent restoration was complicated, however, by the Uruguay Round Agreements Act (URAA), which revised Section 154 of the Patent Act and altered the length of patent terms. To say the least, the relationship between the URAA extension and patent term restoration was initially muddled, particularly in the context of parent/child applications. Ultimately, it played out that drugs approved since the enactment of Section 156 have been protected by patents subject to three different regimes: (1) the pre-URAA regime, in which patents lasted for seventeen years from issuance; (2) the post-URAA regime, in which patents lasted for twenty years from application or parent application; and (3) the transition regime, in which patents lasted for twenty years post-application or seventeen years post-issuance, whichever came first.

Profs. Lietzan and Acri were motivated to delve deeper into the data behind patent restorations, operating under the hypotheses that longer R&D programs should distort drug patents (even after term restoration), and that restoring a child patent should be associated with longer final effective life if the patent is subject to the seventeen-year term (pre-URAA regime).

Testing the Hypotheses

Profs. Lietzan and Acri generated an unprecedented dataset containing information on 642 approved drugs for which part of the patent life was restored—every instance between the enactment of Section 156 and April 1, 2017. Regulatory information—such as the start of clinical trials, FDA approval date, the length of testing, and the length of the FDA review period—was collected for each drug. On the patent side, the dataset included, among other data points, the following information: (1) the date on which the inventor filed the patent application that led to issuance of the patent; (2) the date that would control calculation of a twenty-year patent term under current law; (3) the date on which the patent issued (or the date on which the original patent issued, in the case of a reissued patent); (4) the type of term the patent enjoyed (seventeen-year, twenty-year, or transitional); (5) the number of days restored by the PTO; and (6) the final patent expiry date after restoration.

The data analysis produced some interesting findings. The average effective patent life without restoration—meaning the time from FDA approval to the original expiration date of the patent—was 8.71 years (median 9.49 years). And while the average clinical development program was 6.04 years, the average amount of patent life restored was only 2.87 years. Seeking to dig deeper into the findings, Profs. Lietzan and Acri performed various regression analyses to assess which variables explain effective patent life before the award of patent term restoration. Thought-provoking graphs and tables are included in the Appendix of the paper for those interested in the data science aspect of the research.

Policy Implications

As expected, Profs. Lietzan and Acri found that our legal system not only distorts drug patents but also provides less effective patent life for drugs that take longer to develop. The current scheme further disincentivizes investors and inventors from undertaking critical drug research because of the associated costs and risks of doing so. By the time our government allows the patent owner to commercialize, much of the patent term has already lapsed. And while the 1984 amendment made positive progress to combat this issue by authorizing patent restoration, that power has not been used to its fullest extent. This means that cures and treatments for a wide range of diseases and illnesses are largely under-researched and under-developed.

To add to the quandary, the changes made in 1994 by the URAA mean that a drug company may need to select a later-issued original patent to achieve fourteen full years of effective patent life. These patents are arguably less valuable to the drug’s inventor because it may be possible for generic and biosimilar applicants to develop versions that satisfy regulatory requirements and yet do not infringe the patent. Policymakers have essentially nullified the original purpose of the 1984 amendment to the Patent Act without meaningful discussion of the implications for drug innovation.

In a society begging for more involved research into complex diseases that affect millions of people, such as Alzheimer’s and various cancers, the current setup of our patent system operates as a hindrance and a deterrent against innovation. The argument can be made that drugs requiring more premarket research and investment should receive longer effective patent lives, but at the very least, they should not receive less because of a burdensome regulatory scheme.

Patent life is essential to innovation in the pharmaceutical industry, perhaps more so than any other industry, and Congress recognized that notion by adopting Section 156 to the Patent Act. The fact that the PTO uses its promulgated authority so selectively, combined with further complications stemming from Congress’s changes to the way patent terms are calculated in 1994, leaves drug companies in a predicament. While some policymakers and scholars complain when those companies secure later-expiring patents, the extensive research and analysis by Profs. Lietzan and Acri suggest that those patents may be necessary to accomplish the intentions of the Congress with the 1984 amendment.

Categories
Antitrust Patent Law Pharma

USPTO-DOJ Workshop on Promoting Innovation in the Life Science Sector: Day Two Recap

The following post comes from Austin Shaffer, a 2L at Scalia Law and a Research Assistant at CPIP. 

night view of Washington, D.C.By Austin Shaffer

This past fall, the Department of Justice (DOJ) and U.S. Patent and Trademark Office (USPTO) hosted day two of their public workshop to discuss the importance of intellectual property rights and pro-competitive collaborations for life sciences companies, research institutions, and American consumers. While day one focused on how patents and copyrights impact collaboration and innovation for business development in life science technologies, day two concentrated on competition, collaboration, and licensing, and how those tools can promote access to therapeutics, diagnostics, and vaccines. Video of day two of the workshop is available here, and our summary of day one is available here.

Welcome Remarks, Fireside Chat, and Program Overview

Makan Delrahim, Assistant Attorney General for the DOJ Antitrust Division, kicked off day two with some opening remarks, emphasizing the significant role that IP and antitrust play to encourage innovation and healthy competition as entities around the globe race to find a COVID vaccine.

Mr. Delrahim was then joined by USPTO Director Andrei Iancu for a fireside chat, moderated by Judge Kathleen O’Malley of the U.S. Court of Appeals for the Federal Circuit. Mr. Iancu spoke to the critical pro-competitive role of patents at this time, as they incentivize innovation and disclosure and create transferrable financial instruments. Indeed, obtaining a patent boosts viability and employment growth, particularly for small companies. Additionally, Mr. Iancu highlighted some of the measures that the USPTO is taking to foster innovation and collaboration in the life science sector. One such measure, the Patents 4 Partnerships program, provides the public with a user-friendly, searchable repository of patents and published applications related to the COVID pandemic that are available for licensing. Additionally, the USPTO has extended deadlines and discounted application fees pursuant to the CARES Act.

Following the fireside chat, David Lawrence, Chief, Competition Policy & Advocacy Section at the DOJ, gave a brief overview of the day’s program. Mr. Lawrence noted that the life science sector relies on both competition and collaboration—the key question throughout the upcoming panels is where to draw the line at the cross-section of those factors to promote efficiency and effectiveness.

Session V: Collaboration and Licensing Strategies

Partnerships can serve as a key tool in the development of therapeutics and vaccines from initial research, through product development and clinical trials, and into the market-ready stage. These partnerships and various licensing strategies are particularly relevant to addressing the current pandemic. This panel focused on public-private partnerships, private partnerships, exclusive versus non-exclusive licensing, ownership rights, and information pooling.

The panel included Laura Coruzzi of Regenxbio, Lauren Foster from MIT, Prof. Sheridan Miyamoto from Penn State University, Mita Mukherjee of Emergent BioSolutions, Mark Rohrbaugh of the NIH, and Dick Wilder of the Coalition for Epidemic Preparedness Innovations, and it was moderated by DOJ Deputy Associate Attorney General Brian Pandya.

Each panelist took a turn discussing the role of collaboration in the development of therapeutics and vaccines. Ms. Coruzzi said that while collaboration is important throughout product development, it is particularly critical in the early research stage. Gene therapy research is precariously risky, and investors tend to stay away from those endeavors. Collaboration between multiple entities leads to a higher success rate, thereby providing a greater incentive for investors to get on board. Ms. Mukherjee explained that while big pharma has the expertise in researching and developing a marketable product, the initial work is often more appropriate for smaller, niche companies.

Ms. Foster explained that at MIT, the mission is to make technology broadly available, and by prudently engaging in a collaborative relationship, they can better ensure advancement. While the NIH approaches licensing in a similar manner to MIT, Mr. Rohrbaugh noted some of the statutory requirements and regulations that govern the NIH’s ability to license, such as the requirement to post on the Federal Register for comment. Mr. Wilder argued that the key to successful collaboration is to manage projects on a collective basis to ensuring that the resulting IP is used properly.

Turning to recent developments in licensing structures, Mr. Pandya noted the recent increase in invalidation of IP rights and posed the question: How has this negatively impacted licensing? Ms. Coruzzi cited Mayo v. Prometheus, a 2012 Supreme Court case which held that a natural phenomenon must be sufficiently added upon or transformed in order to make an idea, formula, mechanism, or test patentable. That decision, she argued, has squandered tax-funded university research and placed the U.S. at a competitive disadvantage with other countries that protect purified or engineered natural products. She called on the legislature to fix a decision that “knocked the legs out of patents.”

Session VI: How do Regulation and Antitrust Enforcement Impact Competition and Incentives for Innovation?

The extent to which regulation and antitrust enforcement are necessary to maintain competition is a contested issue, and the answer can have a significant impact on the incentives for innovation. The panelists in this session considered the tradeoffs between the two and the resulting consequences, especially within the context of a pandemic.

The panel included Alden Abbott of the FTC, Prof. Ernst Berndt from MIT, David Kappos of Cravath, Swaine & Moore, Prof. William Kovacic from George Washington University Law School, and Dick Wilder of the Coalition for Epidemic Preparedness Innovations, and it was moderated by Deputy Assistant Attorney General Alexander Okuliar.

Mr. Kappos argued that the patent system has been disabled and marginalized in its role of incentivizing innovation and bringing ideas from the university level to the marketplace for a variety of reasons. Mentioning a host of companies that agree, Mr. Kappos deemed the patent system broken, calling on congressional reform of 35 U.S.C. § 101. From his observations, our restricted statutory scheme has caused investment to flee elsewhere, recent Supreme Court decisions have resulted in decreased overall investment, and venture capital funding is decreasing in patent-reliant sectors.

Pertinent to regulation and antitrust enforcement concerns, several of the panelists pointed to the March 2020 FTC-DOJ Joint Statement as a positive step forward. The statement outlined ways that firms, including competitors, can engage in collaboration for the purpose of public health and safety protection without violating the antitrust laws. Mr. Kovacic called on further FTC and DOJ action, explicating that those agencies have the capacity to analyze the effects of previous policymaking on the life science sector that can provide useful guidance moving forward.

Session VII: Competition and Collaboration: Examining Competitive Effects and Antitrust Risks Associated with Collaborations

In this session, the panelists discussed what makes a collaboration or partnership successful and procompetitive, antitrust concerns that can arise, and potential safeguards that can reduce antitrust risk.

The panel included William Diaz of Amgen, Andrew Finch of Paul Weiss, Prof. Luba Greenwood from Harvard University, and Chuck Loughlin of Hogan Lovells, and it was moderated by the DOJ’s Jennifer Dixton, Special Counsel for Policy & Intellectual Property, Antitrust Division.

Mr. Finch started off the penultimate panel by identifying the hallmarks of a successful joint venture: mechanisms that enable participants in the venture to increase output, clear boundaries as to the scope of the venture, and safeguards to make sure the venture stays “on the rails.” He proposed a “red-yellow-green” system that lawyers can articulate to business clients to let them know what can and cannot be shared, and when to seek advice from counsel for further guidance. Mr. Diaz echoed those sentiments, adding that ventures need a clear charter from the onset of the relationship that provides comprehensive plans for what to do in a variety of scenarios. Also, he continued, it is imperative to keep detailed meeting agendas to avoid members straying into discussions that might raise antitrust concerns.

The panelists went on to commend the usefulness of the DOJ’s Business Review Letters, which provide unusually expedited advisory guidance to firms wondering whether their collaborations will pass antitrust muster. Ms. Dixton, fielding those comments as moderator and in her capacity at the DOJ, then posed a final question to the panel: What else could the Department be doing? The panelists called for updates to the FTC-DOJ Antitrust Guidelines for Collaborations Among Competitors. While still useful, the Guidelines have not been updated in twenty years, leaving many gray areas in today’s world.

Keynote Speech

The keynote speech was delivered by Dr. Elias Zerhouni, Emeritus Professor of Radiology and Biomedical Engineering and Senior Advisor at Johns Hopkins Medicine.

Dr. Zerhouni shared his wealth of life science knowledge and experience in the day’s keynote speech. He made a key point when it comes to the need for collaboration to combat COVID: no single university, single company, or even single country is able to address modern biological issues by themselves—the amount of data generated in the life science sector is simply beyond the capabilities of one player.

Dr. Zerhouni agreed with some of the previous panelists that developments in the patent system have changed the structure of innovation and created a difficult market to negotiate in. He argued for statutory reform that will allow US innovators to pool their IP together to operate more effectively. Although there are many contributing factors to the current state of the patent system, Dr. Zerhouni referred to the Federal Circuit’s 2002 decision in Madey v. Duke University as an inhibitor to pre-competitive innovation. (Madey held that the experimental use defense applied only to acts taken for amusement, to satisfy curiosity, or for strictly philosophical inquiry).

Session VIII: Academics’ and Economists’ Views on Collaboration and Competition

The final panel featured the perspectives of experts from academia and the field of economics, including Prof. Rena Conti from Boston University, Prof. Scott Hemphill from NYU School of Law, Richard Manning of Bates White Economic Consulting, and Prof. Joanna Shepherd from Emory Law School, and it was moderated by Patrick Greenlee, Economist with the DOJ’s Antitrust Division.

Mr. Greenlee asked one question of the final panel: Are the current prices for life sector IP too high? That question fielded diverse opinions and evaluations. Mr. Manning said there is no cause for worry because the profit margins “aren’t that big.” Prof. Shepherd agreed, citing historically low lifetime revenues for new drugs, resulting in decreasing returns on R&D for pharmaceutical companies. Prof. Hemphill took a step back, arguing that our economic knowledge is still too limited to know the optimal level for the collaboration-competition tradeoff. Prof. Conti contended that we may be looking at the system entirely wrong—when evaluating mergers and the value of IP assets, the value of labor and manufacturing assets and access to raw materials is often overlooked.

Conclusion

Overall, the second day of the DOJ-USPTO workshop on promoting innovation in the life science sector left us with a lot to consider in the coming months as COVID vaccinations continue to be developed and distributed. What is the optimal level of antitrust enforcement? How can firms effectively, and legally, take advantage of licensing strategies and collaboration to expedite development? Does our patent system need to be reformed in the wake of the pandemic? These are questions of the upmost importance for our industry leaders and policymakers to consider and solve.

Categories
Copyright Patent Law Pharma

USPTO-DOJ Workshop on Promoting Innovation in the Life Science Sector: Day One Recap

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

night view of Washington, D.C.By Colin Kreutzer

This past fall, the United States Patent and Trademark Office (USPTO) hosted a joint workshop with the Department of Justice (DOJ) entitled Promoting Innovation in the Life Sciences Sector and Supporting Pro-Competitive Collaborations: The Role of Intellectual Property. Nyeemah Grazier and Brian Yeh (USPTO Office of Policy and International Affairs (OPIA)) emceed the day’s events, which focused on the impact of patents and copyrights on collaboration and innovation in the life sciences sector. The goal was to promote dialogue between members of the innovation and legal communities working in the life sciences sector to combat the COVID-19 pandemic. Video of day one of the workshop is available here, and our summary of day two is available here.

Opening Remarks

In his opening remarks, Andrei Iancu (USPTO Director and Under Secretary of Commerce for Intellectual Property ) discussed the main purpose of the workshop—to find ways of accelerating American innovation in the life sciences. “Our goal is to enhance collaboration among innovative companies and researchers to solve one of the most vexing health problems we have faced as a country in the past century.” He highlighted the ongoing collaboration between the USPTO and DOJ as “truly innovative.”

Director Iancu also emphasized the positive impact of the patent system on our economy and quality of life throughout American history. He cited the discovery and development of insulin treatments as an example of how innovations have alleviated suffering and helped treat diseases. As an economic example, he noted the massive biopharmaceutical company Amgen, whose co-founder Dr. Marvin Caruthers had once told him that patents are so critical to life sciences development that, without them, the U.S. “would not have a serious biotechnology industry.” Finally, Director Iancu pointed out a number of pandemic-era efforts that the USPTO has undertaken to keep innovation moving forward.

Session I: The role of patents in research and development of therapeutics, diagnostics, and vaccines, particularly during pandemics

In the first session of the day, Ms. Genia Long (Senior Advisor, Analysis Group) gave a presentation on the relationship between patents and innovation, and the value of innovation in improving the diagnostic and therapeutic arena of public health.

Ms. Long explained that technological innovation is a key determinant of economic and public health progress. Disease and morbidity rates have consistently declined over the last thirty years for many serious illnesses such as heart disease, cancer, HIV, and hepatitis. Much of the overall increase in life expectancy in the United States is attributable to pharmaceutical developments. These sorts of improvements are expected to continue into the future, so long as we continue to incentivize and support development in cutting-edge technologies such as gene and cell therapies.

Ms. Long built on Director Iancu’s comments about the core reason that patents are essential in drug development. The cost of developing a drug is extremely high, while the cost of copying a successful drug is very low. Without granting pharmaceutical companies a limited period of exclusivity in which their costs may be recovered, those massive R&D investments are guaranteed to be a losing bet. Realizing this in advance, of course, companies would choose not to make such investments in the first place. And we would have to do without many of the life-enhancing treatments that we now enjoy.

Ms. Long also discussed the importance of collaboration between all government actors who play a role in this innovation ecosystem. In addition to the patenting process, FDA approval takes a large part of the time and money in bringing a drug to market. The Hatch-Waxman Act provided a patent restoration period, adding time to the end of a patent life to compensate for time lost while seeking approval. But the market exclusivity period has remained steady at about 12 to 13 years. Meanwhile, patent challenges from generic drug makers have increased dramatically. Collaboration is important because pharmaceutical patents are “embedded within a larger and somewhat complex system of rules and incentives which act together to yield market results.”

Session II: Update on USPTO guidance on patentability of life science inventions

Next, Ali R. Salimi (Senior Legal Advisor, Office of Patent Legal Administration (OPLA), USPTO) gave an overview of the most recent USPTO guidance to examiners on disclosure and subject matter eligibility analysis.

Mr. Salimi first discussed the rather convoluted history of patent eligibility under 35 U.S.C. § 101. In brief, the Supreme Court has developed a set of judicial exceptions to the four statutory categories of patent-eligible subject matter: process, machine, manufacture, and composition of matter. The Court views these exceptions as necessary to prevent the basic tools of scientific and technical work from becoming inaccessible. As currently written, those exceptions are laws of nature, natural phenomena, and abstract ideas.

Mr. Salimi outlined the 2012-2014 decisions in Mayo v. Prometheus, AMP v. Myriad Genetics, and Alice Corp. v. CLS Bank, as well as the responses by the USPTO in updating its guidance to examiners. The final result was the 2019 updated patent eligibility guidance (PEG) version of the Alice-Mayo test.

The current form of the test is given in a flow chart shown at 42:50 of the video presentation. Step One of the test asks whether the claim is directed to a statutory category. If so, Step Two then asks if a judicial exception renders the claim ineligible—if the claim does recite a judicial exception, it will still satisfy §101 so long as it integrates the exception into a practical application and recites “additional elements that amount to significantly more” than the exception.

Mr. Salimi finished by briefly discussing the three disclosure requirements under § 112: written description (whether the disclosure demonstrates that the inventor actually had possession of the invention), enablement (whether the description enables a person of ordinary skill to make and use the invention), and best mode (whether the inventor knows and discloses the best mode of carrying out the invention).

Overall, he says the 2019 PEG has been well received by both examiners and practitioners, and it has done much to further the goals of clarity and certainty in patent prosecution.

Session III: Life science patents in practice

In this session, two speakers shared their own experiences with how the patent system protects inventions in the life sciences, promotes innovation and facilitates collaboration in life sciences.

David E. Korn (VP of Intellectual Property and Law at PhRMA) spoke first. As a representative of a trade association of leading biotech firms, he elaborated on the concerns about recovering large investments made in the prior remarks of Director Iancu and Ms. Long.

Mr. Korn explained that not only is the drug development process lengthy and costly, but it is also uncertain. Discovery of an active compound is just the beginning. It is followed by initial laboratory and animal testing. If successful, the developer may file an Investigational New Drug (IND) application and begin phase I and phase II clinical trials. This is followed by larger and longer phase III trials involving thousands of patients. If that is successful, the developer may file a new drug application (NDA) to the FDA and seek approval. Only after this process is the drug ready, and drugs can fail at every step along the way. Mr. Korn said the cost of developing a successful drug can be as much as $2.6 billion when accounting for unsuccessful candidates. He likened the process to a rocket mission in which “everything needs to work perfectly at each stage.”

Moreover, Mr. Korn continued, R&D doesn’t stop after FDA approval. There is ongoing research into new forms, new indications, methods of delivery, and multiple therapies. All of these innovations require additional investment and further FDA approval. He credited a number of laws with supporting pharma innovation and collaboration, including the Hatch-Waxman Act, the Orphan Drug Act, and the Bayh-Dole Act.

Next, Dr. Gaby Longsworth (Director, Sterne Kessler Goldstein & Fox) discussed life sciences patents from the perspective of a practicing patent attorney. Patents do more than allow drug developers to recoup their investments. By offering an alternative to holding information as a trade secret, they allow for more open collaboration and licensing in order to “build a common innovation instead of battling it out in litigation.” Patents can also be sold or used as collateral for a bank loan, providing research incentives and support to smaller companies.

First, Dr. Longsworth gave an overview of the three main forms of small molecule drug applications under the Federal Food, Drug, and Cosmetic Act. An NDA can be filed under § 505(b)(1) for new drug compounds, as well as new formulations or indications of an existing drug. A second type is found under § 505(b)(2), known as the paper NDA, for modifications of previously approved drugs based on safety and effectiveness data of the prior drug. Finally, there is the Abbreviated NDA (ANDA) under § 505(j). This is a duplicate application used by generic manufacturers, and it relies on studies provided in the NDA for the original drug.

Next, Dr. Longsworth discussed the general protection strategies of drug innovators. One goal is to build a strong blocking patent. She explained the importance of understanding the different types of patents available when drafting the application in order to obtain claims that will not be easily designed around. Another goal is to create a patent thicket to deter competition. It can become very difficult and expensive for generic competitors to file an ANDA when there are many patents to analyze, and it becomes more difficult for competing innovators to mount successful attacks at the Patent Trial and Appeal Board.

Panel Discussion I: Are changes to U.S. patent law needed to better support innovation in life sciences and the development of COVID-19 solutions?

After hearing several presentations on the effect of economic incentives on innovation, a panel discussion addressed the question of whether changes are needed to improve innovation, collaboration, or access to medicines. Moderated by Director Iancu, the panel featured: The Honorable Paul R. Michel (Chief Judge, U.S. Court of Appeals for the Federal Circuit (CAFC) (Ret.)), Steven Caltrider (VP and General Patent Counsel, Eli Lilly & Co.), Karin Hessler (Assistant General Counsel, Association for Accessible Medicines (AAM)), Arti Rai (Elvin R. Latty Professor of Law and Director, Center for Innovation Policy, Duke University School of Law), Corey Salsberg (VP, Global Head IP Affairs, Novartis), Hans Sauer (Deputy General Counsel and VP, Biotechnology Innovation Organization), and Hiba Zarour (Head of IP Department, Hikma Pharmaceuticals).

Judge Michel noted the problems with uncertainty in § 101 eligibility of patent claims, which he referred to as a “systemic failure” of the courts. If businesses and venture capitalists cannot reliably predict whether a claim will survive § 101, there is less appetite for investment in R&D, less commercialization, and ultimately fewer new medicines. He credited the 2019 USPTO guidance as an improvement but lamented that the Federal Circuit had not gone along with it. The best hope for clarity would not come from the courts, he said, but through new legislation.

Mr. Salsberg noted that from a medical standpoint, the two most important elements for getting through the pandemic are innovation and collaboration. He said the patent system is the reason we entered this pandemic with “libraries of millions of novel compounds that are ready to test right now.” Likewise, it is why we have the tools to sort through these compounds and identify those that can help with COVID-19.

Speaking for generic manufacturers, Ms. Zarour argued that innovation is not solely dependent upon IP protection: “Innovation will happen.” And while previous speakers had argued that it increases innovation, she cited a study from the Swiss Federal Institute of Intellectual Property that found an upper limit on the benefits of patent protection. At a certain point, the stifling effects of IP protection outweigh the benefits of incentivizing investments. She proposed a solution in which the initial patent for a drug would grant the inventor a period of exclusivity (e.g., 15 years) but subsequent or ancillary patents to the same drug would go into a pool that could be voluntarily licensed. This would strike a balance between the need for innovation with the need for access, and it could prevent the “evergreening” of drug patents.

Ms. Hessler also advocated for such a balance. She agreed that strong innovation incentives are responsible for the thousands of COVID-19 compounds that are already in late-stage clinical trials. At the same time, she used an example previously cited by Dr. Longsworth—a 1,000-patent thicket for a biologic manufacturing process—to argue that excessive protection can unduly impede medical access. She mentioned a proposal to cap the number of patents that can be inserted into the biologics patent dance as being a potential solution.

Ms. Hessler also said that settlement of patent litigation is becoming increasingly difficult due to “a patchwork of inconsistent regulations” and disagreement between state and federal laws. Legal settlements can expedite access of generic and biosimilar drugs by over a decade. Mr. Caltrider agreed that the settlement issue is of great importance, and that states such as California are creating laws that interfere with the federal world of patents.

Mr. Sauer said that collaboration is important in biotech because many companies in that field are small. Licensing and technology transfer are critical to the proper function of our biotech ecosystem. The small innovators must have a secure means of profitably transferring their technology to the larger manufacturers who are better equipped to fully develop and deliver the product to the public.

Mr. Caltrider pointed out that the USPTO has remained open for business since the very beginning of the COVID pandemic. Touching on the initiatives that Director Iancu had mentioned in the opening remarks, he praised the certainty and reliability of our patent system as essential to keep “the machinery working” to promote collaboration and innovation.

Prof. Rai pointed to a recent DOJ business review letter which declined to raise antitrust issues over a collaboration between large manufacturers of monoclonal antibodies. She said that from a COVID perspective, the patent system has been doing great. But she echoed Judge Michel’s remarks about § 101, calling the situation a “mess that needs to be fixed.” Finally, she described a forthcoming study on biologics litigation and a proposal regarding manufacturing process patents that are filed after FDA approval.

Session IV: Copyright and innovation in the life sciences

The final sessions of the day shifted to the role of copyright law in the life sciences. Session IV include three short presentations from: Michael W. Carroll (Professor of Law and Faculty Director, Program on Information Justice and Intellectual Property (PIJIP), American University Washington College of Law (WCL)), Mark Seeley (Consultant, SciPubLaw LLC and Adjunct Faculty, Suffolk University Law School), and Bhamati Viswanathan (Affiliate Professor, Emerson College).

Ms. Viswanathan began with a brief overview of copyright law and the balancing act it performs. Most people think of copyrights in terms of music and literature, but it can also protect software, databases, and other compilations of information. Like the patent system, one goal of copyright law is to promote innovations and investment in copyrightable works. And like patents, there exists an issue of balancing the incentive of ownership rights with access to those works. In the scientific community, copyright law seeks to balance the tendency for sharing and collaboration with the rights of the creators of original works.

Mr. Seely discussed two areas of scientific interest that are protected by copyright: scientific journals and searchable data repositories. He says that scientific knowledge is most valuable “when it is organized, standardized, updated, and indexed.” Publishers of scientific data are a crucial component of the current effort against COVID-19 because they provide useable data about known drugs, potential reactions, and other adverse events. By combining “published content, patents, with tactical mining capabilities and analytics,” these works support the pipeline of new treatments.

Prof. Carroll talked about the manner of distributing research outputs within the copyright system. The internet age has brought opportunities for vast dissemination of information. The challenge presented by open access movements has been in finding ways to utilize the internet’s potential while still protecting the IP rights of authors. Open access promotes innovation because it increases exposure of publications to readers beyond those within the narrow discipline from which the publications come, sparking new ideas in an interdisciplinary environment. It also provides information to under-resourced readers in low-income areas or developing nations. Prof. Carroll presented the standardized copyright licenses he helped develop with the Creative Commons organization, which allow authors to choose the particular terms and conditions under which their works are reused or distributed.

Panel Discussion II: Copyright discussion: Enhancing access to life science: How copyright can create incentives or barriers to building data or information pools, and related licensing

Session IV led immediately to a panel discussion by the presenters. Moderator Susan Allen (Attorney-Advisor, OPIA, USPTO) led a discussion of the role of copyright in disseminating information and supporting licensing models.

COVID-19 has resulted in many publishers voluntarily releasing relevant copyrighted information. Asked how this would affect publishing systems long term, Mr. Seeley was doubtful of any major impact. But he noted that downloads of information were much higher due to this change. If society decides, after the fact, that the emergency release was highly beneficial, it could impact future decisions about information sharing.

Prof. Carroll took the increase as an affirmation that open access systems are helping to fill an unmet need. He added that the pandemic has accelerated another trend towards the growth of pre-print servers—publication vehicles for preliminary results and yet unreviewed materials—but noted the growing pains associated with a public that is not accustomed to this type of early information sharing: “clinically actionable unreviewed results that then make it into the media can actually be harmful.”

Asked what role the government can play in supporting copyrights and information sharing, each panelist weighed in. Mr. Seeley said it’s important that governments do more than mandate certain types of publication and sharing—it should be coupled with funding to help make it happen. Prof. Carroll pointed to the recommendations he and others presented as part of the National Academies of Science, Engineering, and Medicine. He echoed Mr. Seely’s call for better funding of information infrastructure such as repositories, as well as better standardization. Ms. Viswanathan voiced support for initiatives like the Open Science Policy Platform (OSPP) and said she would like to see more empirical research on the impact that it has on business models of various stakeholders.

Closing Remarks

In closing, Mr. Yeh thanked the participants and encouraged all to tune in for day two of the conference, which would “explore different ways to expedite the development and use of therapeutics, diagnostics, and vaccines through competition, collaboration, and licensing.”