Tag: FDA

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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

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 Biotech Patents Pharma

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

By Erika Lietzan

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

First, the legal framework.

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

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

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

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

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

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

Second, applying the framework to combination products in particular.

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

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

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

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

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

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

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

Now, the litigation and First Circuit ruling.

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

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

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

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

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

Finally, the implications.

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

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

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

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

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

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

A postscript from the administrative law side of the table.

Consider a counterfactual.

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

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

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

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

Categories
Copyright Innovation Patents Pharma

IP Industries Step Up in This Time of Crisis

the word "inspiration" typed on a typewriterThe global COVID-19 pandemic has challenged multiple aspects of modern society in a short time. Health and public safety, education, commerce, research, arts, and even basic government functions have had to change dramatically in the space of a couple months. Some good news in all this is the response of many companies in the intellectual property (IP) industries: they are stepping up to make sure crucial information and materials are available to speed research and development (R&D) towards vaccines, therapeutics, and medical devices. This blog post gives a sampling of the current initiatives facilitating the best innovative work the world has to offer.

Bio-pharmaceutical companies

Bio-pharmaceutical (bio-pharma) companies have been leading the charge, collaborating with academic and government partners to advance vaccine and therapy candidates on a fast track. While there have been isolated stories of some IP-related issues for rapid deployment and use of medical devices such as ventilators, the overall message is clear that research, development, and deployment have not been hindered by IP rightsholders. In fact, problems for distribution of medicines, personal protective equipment, and medical devices have little to do with IP rights but rather with hoarding and nationalistic impulses by governments.

Examples of rapid response are abundant. In February, the Department of Health and Human Services and its Biomedical Advanced Research and Development Authority (BARDA) partnered with the Janssen Research & Development unit of Johnson & Johnson to investigate a promising vaccine candidate. Janssen also committed to invest in the scale-up of production and manufacturing capacities to produce the vaccine candidate if it succeeds through clinical trials. By mid-March, 50 drugs that might fight the virus had been identified by collaborations of hundreds of scientists. Research continues apace and 80 clinical trials are proceeding, some on fast track status including a potential vaccine.

Beyond its core R&D, regulatory, manufacturing, and distribution mission, the bio-pharma industry is providing direct support to many places in need. This includes donations of medical supplies and personal protective equipment (PPE), existing treatments and medicines, and monetary and in-kind support.

At the same time, private incentives are more important than ever to get novel vaccines, drugs, and devices out to the world in safe, efficacious form and at scale. Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases, has long recognized that exclusive licenses of IP to bio-pharma industry partners are necessary to get innovative vaccines and drugs to the public:

“We always need a pharmaceutical partner,” [Fauci] told CQ Roll Call in October 2017. “I can’t think of a vaccine, even one in which we’ve put substantial intellectual and resource input, that was brought to the goal line without a partnership with industry. So this is a very natural process that we’re doing right now.”

He argued that for vaccines like Zika, which might predominantly be used in low-income countries, drugmakers don’t see a lot of financial incentive to get involved, which is why the NIH needs to grant exclusive licenses. But he argued that the process hasn’t had an impact on vaccine affordability.

“I have not seen in my experience situations in which we were involved in the development of a vaccine, particularly for low- and middle-income countries that really needed it, where the pharmaceutical companies priced it out of their reach,” Fauci said.

Likewise, as noted innovation scholars Daniel J. Hemel and Lisa Larrimore Ouellette point out in a recent article, Innovation Policy Pluralism, multiple vectors of public and private incentives and resources work together to advance pioneering innovation. Even in countries with a national health or single payer system, the government health program does not manufacture vaccines, drugs, or devices. Instead, it relies on private firms that in turn work closely and well with public and academic researchers to identify pressing problems, locate relevant basic science advances, and then translate those into actual vaccines, therapies, or devices.

The myth of patients and the public “paying twice” for bio-pharma innovation arising from public-private partnerships is pernicious. It conflates the distinction between basic science research and drug or vaccine candidates, on the one hand, with compounds that can be produced at scale, distributed safely, and that have passed arduous clinical trials to demonstrate safety and efficacy. In the United States, private companies must foot the entire bill for these clinical trials, which run into hundreds of millions of dollars over three phases that enroll thousands of subjects. Simply stated, publicly funded research does not result in a substance or compound that can be manufactured and distributed as is with no further R&D or clinical trials.

A related myth is that governments should use compulsory licenses and similar mechanisms to bypass IP rights holders in an effort to speed research and delivery of drugs and vaccines—when they emerge—to the public at low to no cost. First, there are important distinctions between compulsory licenses, U.S. Bayh-Dole style march-in rights, and government use under statutory provisions like 28 USC 1498, which we have outlined here. But across all of them, IP rights holders must still be compensated at a fair market license rate. Thus, there are no “savings” of IP royalties that could lower the price of vaccines or drugs. This makes sense as we don’t force manufacturers to produce drugs or vaccines for free. Even the Defense Production Act merely directs production, it does not require manufacturers to produce goods for free.

Finally, even if patents could be disregarded, we should be careful about encouraging “open source” or amateur production of regulated devices like ventilators. While the FDA has authorized some limited modifications of approved ventilators to accommodate the exigencies of COVID-19, this does not create a free-for-all in which wholesale changes or entirely new designs of the device or its components can be used. We need to take care that these modifications or new designs are actually safe and efficacious. Thus, while innovation like that of famed inventor James Dyson is most welcome, it does not actually solve the immediate problem of a shortage of ventilators as national regulators must still test and approve these untested devices for medical use. And at any rate, Dyson is not offering their new ventilators for free, even as they are designed to be produced at lower costs and sell at a lower point price in the market.

Thus, we need the bio-pharma industry more than ever to get through this pandemic. Large established firms and nimble start-ups have the resources and expertise to innovate and produce vaccines, drugs, and devices that will pass regulatory muster for safety and efficacy. Now is not the time to attack the patent system and weaken incentives for full-steam-ahead bio-pharma and medical device R&D.

Scientific publishing

Similar to the bio-pharma companies, publishers have been leading the way in making crucial scientific and technological information widely available in order to help fight the global coronavirus pandemic. An open letter from Kelvin Droegemeier, Director of the White House Office of Science and Technology Policy (OSTP) and member of President Trump’s Coronavirus Task Force, issued the call to arms last month (for example, see here, here, and here). Joined by government science leaders from eleven other countries—Australia, Brazil, Canada, Germany, India, Italy, Japan, Republic of Korea, New Zealand, Singapore, and United Kingdom—the letter called for publishers to make all research and data related to the coronavirus available immediately to the public. Publishers were quick to respond positively to the letter, pointing out that many journals had already been opened up to the public in an effort to support the dissemination of important scientific research and data when it is needed the most.

In the letter, the government science leaders stated: “To assist efforts to contain and mitigate the rapidly evolving COVID-19 pandemic, basic science research and innovation will be vital to addressing this global crisis. Given the urgency of the situation, it is particularly important that scientists and the public can access research outcomes as soon as possible.” The leaders asked the publishers to voluntarily agree to make their coronavirus-related publications, and the data supporting them, immediately accessible in PubMed Central and other public repositories. PubMed Central refers to the digital archive of biomedical and life sciences journal literature at the U.S. National Institutes of Health’s National Library of Medicine. The leaders also requested that the information be made available in both human and machine-readable format to allow for text and data mining using artificial intelligence.

The same day that the government science leaders sent their letter, Maria Pallante, President and CEO of the Association of American Publishers (AAP), issued a statement noting that the organization and its members would be happy to continue doing their part in making the research and data available to the public:

Publishers purposefully and continuously contribute to the advancement of science and medicine by investing billions of dollars in producing and disseminating high-quality, peer-reviewed journal articles. In this urgent and serious environment, we are grateful to the many publishers who are doing their part to communicate valuable discoveries, analyses, and data as quickly as possible, including by making their copyrighted articles pertaining to the virus freely available for public use during this crisis, in both text and machine-readable formats. Many publishers – both commercial companies and nonprofit societies – have been doing so for weeks.

 

Likewise, Elsevier, which specializes in publishing global information on science and health, has taken the lead in ensuring that relevant scientific information is available to the public. Back in January, Elsevier set up its Novel Coronavirus Information Center, offering free health and medical research information on the coronavirus and COVID-19, the disease that is causes. The Information Center is updated daily with the latest research information, including links to nearly 20,000 peer-reviewed journal articles on its ScienceDirect platform that are curated by clinicians and other experts. The information is intended for use by practitioners, such as nurses and doctors, as well by patients and their families. In response to the letter from the government science leaders, Elsevier announced in a press release that same day that the information would be made available to PubMed Central and other publicly funded repositories, including in machine-readable format that could be used for full text and data mining.

Kumsal Bayazit, the CEO of Elsevier, also released a statement that day underscoring Elsevier’s continued leadership on this front and concluding:

In working with the White House to improve the discoverability and utility of this important body of knowledge, we are now making it available to PubMed Central and other publicly funded repositories such as the WHO COVID database for full text and data mining and without any limitations for as long as needed while the public health emergency is ongoing. Through this partnership we hope to help researchers to keep up with the rapidly growing body of literature and identify trends as countries around the world address this global health crisis.

 

Numerous other publishers have stepped up as well. Wiley announced that it “is making all current and future research content and data on the COVID-19 Resource Site available to PubMed Central” and “other publicly funded repositories, such as the World Health Organization (WHO) COVID-19 database and Wellcome Trust.” The Resource Site was set up by Wiley in February in order to ensure rapid, public access to COVID-19 research, and in response to the request of the government science leaders, Wiley is now inputting that information into PubMed Central and other publicly-accessible databases. Likewise, Springer Nature stated: “We have made available, for free, all relevant research we have published and continue to publish, [and] are strongly urging our authors submitting articles related to this emergency to share underlying datasets relating to the outbreak as rapidly and widely as possible.” Other publishers, such as American Chemical Society, PLOS, STM Publishing, IOP Publishing, Emerald Group Publishing, F1000 Research, and eLife Research, have committed themselves to the cause of making their coronavirus research and data available publicly.

It is not just scientific research that is being freely shared by publishers. Textbooks for students affected by the pandemic have been made available as well. Wiley recognized the need “to ensure instructors who need to teach remotely have the necessary tools to help their students,” and it opened up its online textbooks so that instructors “can receive free access for their students for the remainder of the Spring 2020 term.” Barnes & Noble announced that it was joining VitalSource and other leading publishers to provide free online textbooks for students at schools where it operates a campus bookstore. Michael P. Huseby, CEO and Chairman of Barnes & Noble Education, said: “Our top priority remains providing schools and students with solutions during this time of unprecedented disruption, while simultaneously protecting the health and safety of our employees and customers.” Other textbook publishers, including Cengage, Gale, Cambridge University Press, among many others, have done the same in order to make the transition to online learning as smooth as possible by ensuring that students have online access to the textbooks that they need.

Categories
Healthcare Pharma

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

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

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

Premarket Approval

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

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

The traditional approach involves three phases of testing.

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

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

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

The Tradeoff Involved

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

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

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

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

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

Evolution in the Gatekeeping Model

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

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

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

Earlier Access … Expanded Access

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

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

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

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

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

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

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

Right to Try

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

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

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

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

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

Comparing Expanded Access and Right-To-Try

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

Categories
Patent Law

CPIP Affiliate Scholar Erika Lietzan Testifies at HJC Hearing on FDA Approval Process

U.S. Capitol buildingOn July 27, 2017, CPIP Affiliate Scholar and Associate Professor of Law at the University of Missouri–Columbia Erika Lietzan testified before the House Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law in a hearing on Antitrust Concerns and the FDA Approval Process. The hearing was an attempt by lawmakers to better understand the sometimes complex pharmaceutical development and approval process and to consider legislative tactics that could help curb regulatory abuses in the drug marketplace. Professor Lietzan’s testimony provides her perspective and recommendations on three aspects of the regulatory paradigm of particular interest to the Committee: citizen petitions, use and distribution restrictions, and FDA’s unapproved drugs initiative.

Citizen Petitions

Addressing the first topic, Lietzan praises the development of the citizen petition process, which was initiated in the late 1970s in order to allow any person to request that the FDA issue, amend, or revoke a regulation or order. Though citizen petitions were meant to move the administrative agency towards an “open government” philosophy and embrace transparency, access, and accountability, critics argue that they’ve enabled some innovative drug makers to intentionally delay the approval of generics through frivolous petitions. But as Lietzan points out, many critics’ concerns over meritless innovator petitions are based on inferences and not factual findings.

Professor Erika LietzanLietzan explains that there is scant factual evidence of delay in the approval of generic drugs due to petitions, noting that of 175 petitions related to pending applications over a recent eight-year period, only five resulted in delays not necessary to protect the public health. Additionally, while two of the most relied upon studies track denied petitions, neither of them evaluate the strength or contents of the petitions. As Lietzan notes, “[t]he claim that petitions are frequently frivolous appears based on the timing of petitions and denial rate, not the substance, of the petitions.”

In her recommendations to the Committee, Professor Lietzan suggests enhancing existing empirical work with a robust examination of the agency’s disposition of the issues presented in the petitions, rather than a cursory look at the requests stated in the petitions. In order to help conduct this research, Lietzan recommends providing the agency with additional resources and incentivizing petitioners to include more comprehensive data as part of their submissions.

Use and Distribution Restrictions

Of particular focus during the hearing was the proposed Creating and Restoring Equal Access to Equivalent Samples Act of 2017 (CREATES Act), which aims to prevent drug innovators from using FDA-required risk evaluation and mitigation strategies (REMS)—required for potentially high-risk drugs—to obstruct generic competition. Again, Lietzan points out that the studies relied upon to promote the CREATES Act often involve unclear methodology and weak empirical support.

When dealing with new drugs that may pose great risk to the public, innovators have legitimate concerns about the sale of their products to another company, regardless of a competitive relationship. As Lietzan explains, these innovators have a special responsibility to the public, and the CREATES Act lacks meaningful protections in the event their products lead to toxicity or other harm to patients.

Lietzan then challenges the CREATES Act as “flatly inconsistent with fundamental patent law.” She explains that by requiring a company to practice its patent for the benefit of a competitor, the Act contradicts a central principle of patent law which guarantees that a patent owner has no duty to practice their invention. After she warns that “[e]nacting this provision will inherently devalue patents” and “harm incentives to innovate,” Lietzan asserts that the FDA simply lacks the authority to require a company to practice their patent or sell their product to a competitor.

In lieu of enacting the flawed CREATES Act, Lietzan recommends that robust liability protections be implemented for innovative companies providing products to third parties, and that the agency examine ways to incentivize innovators to manufacture and sell patented drugs, as well as agree to shared access systems.

Unapproved Drugs Initiative

Addressing concerns over recent sharp increases in the price of drugs that have long been available at a low cost, Professor Lietzan explains that—despite public outrage—these  price hikes are a direct result of the FDA’s “unapproved drugs initiative” and represent a system working directly as designed. The reality is that there are several thousands of unapproved drugs marketed in the US, which Lietzan explains are the result of piecemeal evolution of drug approval mechanisms throughout the 20th century.

The FDA has adopted a risk-based approach to combating unapproved drugs, prioritizing those that pose the biggest threats to public health while also providing a grace period for some companies to try to bring their products into compliance. But Professor Lietzan notes that in order for many established medicines to obtain approval, companies must generate substantial data and perform research that will inevitably cost a significant amount of money. And while there may not be a way to bring these drugs into compliance without price disruptions, Lietzan recommends the creation of programs in which companies involved with specific ingredients pool resources and collaborate on research, allowing the FDA to save time and money by approving a group of applications at the same time.

Conclusion

Professor Lietzan’s testimony and recommendations reflect the core values of public health and open government embodied in the FDA’s mission of ensuring that pharmaceuticals are safe and effective. In addition, her testimony stresses the importance of maintaining effective patent property rights and promoting evidence-based policymaking—two fundamental principles that are unfortunately often overlooked.

Video of the full hearing can be found here.

Categories
Innovate4Health Innovation

Innovate4Health: Meeting the Needs of Rural Africa with Fyodor’s Point-of-Care Testing for Malaria

This post is one of a series in the #Innovate4Health policy research initiative.

Innovate4HealthBy Jaci Arthur

Every year, more than 200 million cases of malaria are reported worldwide. It can often be mistaken for a less serious malady, as symptoms include “fever, chills, and flu-like illness.” If quickly identified, the disease is treatable. Yet more than 655,000 people, mostly children in sub-Saharan Africa, died from malaria in 2016.

Expeditious diagnosis of the disease can result in faster treatment and lower mortality rates. The patented Urine Malaria Test (UMT) developed by Dr. David Sullivan, a Johns Hopkins Bloomberg School of Public Health professor and microbiologist, addresses this global challenge by offering a rapid, accurate, more convenient, and less expensive alternative to traditional laboratory testing. The UMT is also the first point-of-care (POC) test for malaria that does not require the use of trained personnel or a blood sample.

90% of all malaria-related deaths in 2015 occurred on the African continent. Much of this can be attributed to a lack of access to health services and personnel due to poverty, remoteness, and a general lack of healthcare infrastructure. According to a 2011 report, about 31% of Ethiopians live on less than $1.25 a day. Even when health services are free of charge, trips to medical facilities are quite costly for the average, rural African because patients will often have to take an entire day off from work to travel.

In Niger, a patient may have to walk more than four hours to receive medical treatment at an overcrowded, ill-equipped facility. Many people turn to presumptive diagnosis or self-medication at the first sign of a fever, resulting in widespread drug resistance and more expensive treatments. Meanwhile, others gamble on the chance it is simply a virus that will pass, never seeking diagnosis or treatment.

On average, there are 1.15 health workers for every 1,000 people in sub-Saharan Africa, with numbers as low as 0.4 physicians for every 10,000 people in countries like Chad. The few laboratories in rural areas that can identify diseases such as malaria are underfunded, short-staffed, and ill-equipped. Although there are several POC tests for malaria, most of them require trained personnel taking a blood sample. Having a proper diagnosis within twenty-four hours of the onset of symptoms can reduce the mortality rate, but such diagnosis is difficult for most Africans. All these factors lead to a deadly combination, especially for those in rural Africa.

Maryland-based Fyodor Biotechnologies was founded in 2008 by Nigerian biotechnologist Eddy Agbo specifically to address these problems. In 2009, the company was granted an exclusive worldwide license from Johns Hopkins University to research, develop, and commercialize the UMT.

As its name suggests, the UMT tests a patient’s urine, rather than blood, for “novel Plasmodium proteins,” and it provides results in less than twenty-five minutes, thus abating fears, eliminating the need for presumptive diagnosis, and reducing costly, lengthy, and unnecessary trips. Unlike other tests for malaria, the UMT can be taken at home and is as easy to use as an at-home pregnancy test. The UMT is currently priced at about two dollars each; however, Dr. Agbo intends for the price to be reduced once production increases.

Preclinical studies were conducted by researchers at Johns Hopkins University, and the UMT is currently in clinical validation. Fyodor intends to seek concurrent regulatory clearance from both the Nigerian National Agency for Food and Drug Administration and Control (NAFDAC) and the US Food and Drug Administration (FDA).

Initial commercialization efforts will be focused in Dr. Agbo’s home country of Nigeria before expanding to other areas significantly affected by malaria. Nigeria accounts “for 25% of all malaria cases in the African region.” Testing is also currently underway at Fyodor Biotechnologies for a “second generation broad-based Urine Malaria Test (UMT-Broad),” which will be useful for detecting other types of infection.

Fyodor Biotechnologies stepped onto the global market specifically to meet the needs of people in malaria endemic regions and reduce the mortality rate associated with this treatable disease. The company relies heavily on its exclusive license to Johns Hopkins University’s patent, as research, development, and production of the UMT are currently its sole function.

Fyodor’s two-dollar, at-home test is the perfect counter to claims that intellectual property rights, specifically patents, result in expensive healthcare and a lack of access to necessary medical services. Intellectual property rights have made quick, efficient, low-cost, and convenient testing for malaria a reality.

The UMT provides an ideal example of how patented innovation can conquer global challenges. It is a reasonable, rapid, efficient, convenient, economical alternative to a system that cannot meet the needs of the rural poor. And it is a reminder that innovation and intellectual property rights can work together for the common good.

#Innovate4Health is a joint research project by the Center for the Protection of Intellectual Property (CPIP) and the Information Technology & Innovation Foundation (ITIF). This project highlights how intellectual property-driven innovation can address global health challenges. If you have questions, comments, or a suggestion for a story we should highlight, we’d love to hear from you. Please contact Devlin Hartline at jhartli2@gmu.edu.

Categories
Biotech Innovation Patent Law Uncategorized

Proposed CREATES Act Threatens Patent Owners’ Rights

By Erika Lietzan, Kevin Madigan, & Mark Schultz

scientist looking through a microscopeEarlier this month, a bipartisan group of Senators introduced the Creating and Restoring Equal Access to Equivalent Samples Act (or CREATES Act). The proposed bill is aimed at deterring what the bill’s author, Sen. Patrick Leahy, claimed were “inappropriate delay tactics that are used by some brand-name drug manufacturers to block competition from more affordable generic drugs.” Whether the bill would produce the intended consequences is the subject of some debate, but we thought it important to point out some (hopefully) unintended consequences: The CREATES Act would impose vague standards and draconian remedy provisions to force innovators to surrender their intellectual property rights for the benefit of generic competitors.

The CREATES Act

It’s no surprise that the legislation might generate unintended consequences, as it would add further complexity to an already challenging regulatory scheme for approving drugs.

As a general rule, for a generic drug manufacturer to get permission to market a duplicate of an already approved drug, it usually[1] must have access to samples of the already approved drug. The generic drug company uses these samples in the bioequivalence studies required in its abbreviated new drug application. The same general principle applies to companies developing biosimilar versions of already approved biological medicines; they conduct comparative trials for approval of their abbreviated applications, and these trials generally require samples of the “reference” product. In addition, FDA sometimes[2] requires drug and biologic manufacturers to develop risk evaluation and mitigations strategies (REMS) if safety measures beyond standard labeling are needed to ensure that the product’s benefits outweigh its risks. These REMS can include elements to assure safe use (ETASU)—essentially, a system of use or distribution restrictions—if necessary to mitigate a specific serious risk. A generic or biosimilar manufacturer seeking to distribute its version of a product that is subject to a risk management distribution program must generally develop its own system or negotiate to share the existing system.

The CREATES Act is spurred by concerns that innovators are hampering competition by strategically exploiting these regulatory requirements imposed on their generic and biosimilar competitors. That is, critics contend that innovators are raising barriers that prevent their generic and biosimilar competitors from obtaining samples of the reference drug and from participating in existing distribution programs.

While the FTC and members of Congress have raised these concerns before, the concerns are particularly topical because of the controversy surrounding Turing Pharmaceuticals and its notorious former CEO Martin Shkreli (described by one publication as the most-hated man in America). Turing is a small company that acquired the only license to market the off-patent drug Daraprim and raised the price by over 5000%, meanwhile preventing potential competitors from obtaining samples for use in developing a competing supply. While Turing is a small company marketing an off-patent drug, its actions have been misattributed (through confusion or purposeful obfuscation) to mainstream, R&D-intensive innovative drug companies.

The CREATES Act proposes to prevent strategic exploitation of regulatory requirements by giving generic and biosimilar manufacturers their own strategic advantage in their negotiations with competitors – the threat of a lawsuit. The Act would give these follow–on developers the ability to sue their competitors to obtain samples of any drugs that they wish to use as references in testing for approval of generic and biosimilar versions. Follow–on drug developers could also sue their competitors to be allowed to share in existing distribution systems.

Although the Act contemplates that the parties will negotiate with respect to purchase of samples and sharing of any distribution system already in place, it would decisively shift bargaining power in favor of follow-on competitors. To begin with, it imposes unreasonable deadlines on innovators—for instance, one month to manufacture and provide samples, after which the follow–on applicant may sue. Also, it creates enormous liability exposure. If the plaintiff proves its case, the court will order the innovator to provide “sufficient” quantities of its product for testing and, if applicable, to share its REMS distribution system with its follow–on competitor. Further, the court must award not only reasonable attorney fees and costs, but also a “monetary amount sufficient to deter” the innovator from failing to provide other applicants with sufficient quantities, or failing to share its risk management system, as applicable. The “maximum” award—which will surely be taken as a suggestion at least of the magnitude envisioned—is the total revenue on the product for every day that the innovator failed to provide samples or to agree to share its developed risk management system. It bears no rational relationship to any harm suffered by the follow–on applicant and is functionally punitive.

The CREATES Act Creates Potential Intellectual Property Problems

The CREATES Act raises two significant intellectual property issues. Essentially, it would create a mechanism to force innovators and patent owners to supply their products and intellectual property to their competitors.

First, it would require an intellectual property owner to make its product for the benefit of a competitor. The Act allows a generic or biosimilar applicant to sue for drug samples to use in testing. In many instances, those drugs will still be under patent. While the so-called Bolar provision permits a generic or biosimilar applicant to conduct tests during the patent term, the CREATES Act turns the Bolar shield into a sword by empowering a court to order a company to provide its patented drug to a potential competitor. This, in turn, will require the company to manufacture the drug for that competitor. Whether it makes a small or large supply for the market, it will need to adjust its production to ensure supplies for its competitor as well, and indeed as many competitors as want samples. This conflicts directly with a basic and valued tenet of the patent system in the United States: we do not require a patent owner to practice his or her invention. In short, the CREATES Act directs courts to order patent owners to practice their patents for the benefit of others.

Second, it would require a drug company with intellectual property rights in a REMS distribution system to forego those rights for the benefit of a competitor. The Act allows a generic or biosimilar applicant to sue the innovator in order to use the specific risk management system that the innovator developed. Although current law creates a default rule that generic drug companies and drug innovators should use a single shared system, there is no such default rule for biosimilar companies and biologic innovators. And the default for generic drugs is simply a default; FDA may waive the default if, for instance, some aspect of the system is claimed by a patent or subject to trade secret protection. This bill would authorize the court to order the innovator to share its system, regardless of any unexpired patent or trade secret protection. It short, it permits courts to order intellectual property holders to surrender their intellectual property or face the threat of monetary penalties.

An innovator may have lawful and legitimate reasons for declining to manufacture its patented product for its competitors and for declining to share its patented risk management system with those competitors. Yet, the unreasonable deadlines and punitive liability provisions of the CREATES Act mean that it will have little scope to resist the demands of its competitors. This essentially nullifies the innovator’s intellectual property—which will discourage future investment and innovation in the pharmaceutical industry.

Important IP Rights in Safety Systems: The Example of Celgene

The IP problems unleashed by the CREATES Act are illustrated by their effect on the IP rights and incentives of a company such as the Celgene Corporation (which submitted a statement on the bill to the Senate Judiciary Committee). Celgene is an innovative biopharmaceutical company that focuses on treatments for cancer and immune–inflammatory related diseases in patients with limited treatment options. The company’s first approved drug was Thalomid, initially approved by FDA for leprosy and then approved for its primary indication—multiple myeloma, a particularly pernicious form of blood and bone marrow cancer. The active ingredient of Celgene’s product, thalidomide, is a powerful teratogen, causing severe disfiguring birth defects. It was marketed in other parts of the world in the late 1950s and early 1960s as a treatment for morning sickness in women, and FDA has estimated that more than 10,000 children in 46 countries were born with severe birth defects attributable to thalidomide. As a result of this history and the special risks associated with this life–saving medicine, Celgene developed an extremely detailed and meticulous protocol dedicated to ensure safe distribution, prescription, and use. Essentially, Celgene’s innovative contribution was inventing a safe way to use an otherwise dangerous drug to fight cancer. The company’s special system for managing the risk of thalidomide is formalized at FDA as the “elements to assure safe use” portion of a REMS. It is also subject to patent protection.

The CREATES Act would force companies such as Celgene to share the proprietary elements of their REMS programs. It would give the company the choice: share its patent system or face a lawsuit that might result in catastrophic damages and mandatory sharing anyway. This functionally nullifies the patent. This, in turn, would discourage innovation and investment in the programs. The essence of thalidomide, and other drugs subject to use and distribution restrictions, is that these drugs require special programs. Their benefits do not outweigh their risks, without these special programs in place. If functionally nullifying the innovator’s patent protection means the innovator will not invest in creative solutions to difficult safety risks, then the products that require these solutions cannot be approved—and will never reach patients.

Conclusion

The CREATES Act has been presented as a panacea for the suspect activity of a few bad actors. But while it might force those companies to share their products and safety systems, it would also affect—and penalize—the much larger group of innovators that have legitimate reasons for withholding the fruits of their labors. By imposing unreasonable deadlines for action, failing to consider legitimate explanations for the choices made by innovative drug manufacturers, and imposing draconian penalties, it tramples the intellectual property rights of drug innovators. Yet, this industry is deeply reliant on intellectual property rights; they provide the incentive for research into tomorrow’s cures. The CREATES Act should be laid aside, if Congress truly wants to promote innovation and investment in life-saving medicines for future generations of Americans.

Erika Lietzan is an Associate Professor at University of Missouri School of Law and is participating in CPIP’s 2016-2017 Thomas Edison Innovation Fellowship Program.

[1]In fact, the situation is more complicated than proponents of this bill have stated. In instances where samples of an already-approved drug are unavailable for any reason, FDA has several regulatory options at its disposal. After all, if a brand company withdraws its product from the market, that doesn’t preclude generic companies from seeking approval, even years later. So long as the Reference Listed Drug (RLD) was not withdrawn for safety or efficacy reasons, it can be cited in a generic application. In that situation, one thing FDA can do is designate another generic to be the RLD for bioequivalence testing. The statute says only that the ANDA must demonstrate bioequivalence; it does not expressly require that the generic applicant use the innovator’s product in the testing.

Even if there aren’t other generics, it might be possible to obtain ANDA approval based on a showing of bioavailability and the same therapeutic effect. FDA has repeatedly noted, when finding that a particular RLD was not withdrawn for safety or efficacy reasons, that the agency may approve an ANDA for a generic version of a withdrawn product even if the withdrawn product is not commercially available. These Federal Register notices state that if the RLD is not available for bioequivalence testing, the applicant should contact the FDA’s Office of Generic Drugs to determine what showing would be required to satisfy the approval requirements of the statute.

[2]Despite the controversy around this issue, there are relatively few REMS, and even fewer with ETASU. The FDA maintains a downloadable list on its website, with the ETASU marked. As of this writing (July 2016) there are 75 REMS listed, only 40 of which have ETASU. Of these, 6 already have approved generics that share in an approved risk management system. More than a dozen of the remaining products are still under regulatory exclusivity.