Patents, Lock-In and Negative Innovation

by Dennis Crouch

We recently highlighted a WaPo editorial by Prof. Robin Feldman.  Feldman has also just published a short article in Nature Biotechnology titled Negative Innovation: When Patents are Bad for Patients. (Co-authored with Profs. Nicholson Price (Michigan Law), David Hyman (Georgetown Law), and Mark Ratain (Chicago Med)). The article’s thesis:

[Sometimes] patents create incentives to bring a product to market in a way that is relatively harmful to consumers, and the existence of a patent (and the associated rents) discourages the patentee from taking steps to improve the product so as to prevent the adverse health outcomes.

The article uses the cancer drug ibrutinib as a negative innovation case study. Basically, the patentee (Pharmacyclics – AbbVie) discovered that ibrutinib was a useful cancer treatment at a wide range of doses.  However, the patentee erred by publicly disclosing the low dosage idea prior to patenting and thus was only able to obtain patent claims covering the high dosage.  They then pursued FDA approval of only the high dosage approach — even though this cancer drug is known to be somewhat toxic at higher doses. The FDA suggested that AbbVie pursue further research and an application on the lower dosage. But that suggestion has fallen on deaf ears — presumably because the lack of patent coverage eliminates the incentive to pay the $$$$ required to obtain FDA approval.   Since the low dosage approach is in the public domain, no private company has sufficient incentive to seek and obtain FDA approval.

If you go back to the thesis statement, note that the argument is that ibrutinib is “relatively harmful to consumers.”  If it were “absolutely harmful” then the drug presumably should not have been approved and no doctor should prescribe the treatment. (These are perhaps big presumptions given the current state of our system.)  Relative harm is different — and focuses on whether the patent’s existence inhibits the development of a potentially better alternative.  This is essentially a story of lock-in and private rent seeking. It is akin to the apocryphal story that major car manufacturers long shelved  and impeded automotive battery power technology because they were so invested in the combustion engine.  Perhaps they rightly recognized that battery driven cars would be so radically different as to allow upstart entry into an otherwise closed market. See Tesla.

Although the ibrutinib case study was based upon a misstep (pre-filing disclosure at a conference), there are plenty of examples of non-patentable treatments that are not made available because our current system relies upon exclusive patent rights to provide the monetary incentive to seek FDA approval and work out the kinks of manufacturing and supply.  Generally the patent system has treated this is a FDA regulatory problem. But Feldman notes that there are also solutions within the patent system that begins with revitalization of the utility doctrine — evaluating whether the innovation is actually an improvement:

One avenue for reform might be to enforce a more rigorous utility requirement for pharmaceutical patents, demanding that they actually improve social welfare relative to the prior art.

If sufficient evidence is not available because of early filing incentives, an element of this may be a post-patenting requirement showing utility, similar to the working requirement of some countries or the proof of use requirement in trademark law.

I mentioned that part of the problem is that the FDA is relying upon the patent incentive, and that doesn’t work in certain instances.  Feldman suggests that the Patent Office could do more to coordinate with the FDA in developing an understanding of patent coverage and how that is impacting FDA submissions.

Finally, the article suggests further development in linking and coordinating patent coverage in the pharmaceutical area. “The current jumbled system of compound patents, method of treatment patents, formulation patents, new chemical entity exclusivity, pediatric exclusivity, orphan drug exclusivity and other incentives creates limitless opportunities for gaming the system.”  Of course we have a system of coordinating these involving patent families and the various obviousness doctrines (including obviousness type double patenting).  What we have not tried is any sort of product-level coordination.

 

51 thoughts on “Patents, Lock-In and Negative Innovation

  1. 11

    I don’t think it could emphasized enough that we are confronting communist. Feldman’s proposal is a neo-Marxist proposal where Central Government Control of market forces is put within the PTO. Feldman, we can infer, is a communist.

    We need to confront these issues directly. I am a liberal D and have been for many decades. The left are communists. The left wants to have “citizenship scores” based on evaluating every citizens’ behavior and monitoring every citizen 24×7. These people are communists. CRT is a neo-Marxist ideology.

    Feldman is pushing communism. Confront this directly. We are on the razor’s edge of losing all our freedoms.

    1. 11.1

      We need to stand up to the communists before they take any more power and any more of our freedoms. These are communists.

      They work with China indirectly. They know the path to communism in the USA and want to follow it.

      Feldman is pushing communism and, thus, is a communist.

  2. 10

    So, there is no incentive for patentee here to pursue FDA approval of low dose because they do not have patent protection for the low dose (not because they have a patent on the high does).

    And no one else has an incentive to develop and gain approval of low dose because they do not have patent protection for the low dose (not because the patentee here has a patent on the high does).

    I do not see evidence for any patent policy change here.

    1. 10.1

      Exactly. And trying to change the patent policy so that you would have to prove the high dosage is the best or better than the low dosage is trying to put market forces into the PTO. It is communist thinking.

      1. 10.1.1

        slight edit…

        … is trying to put Central Government Control of market forces into the PTO.

  3. 9

    > enforce a more rigorous utility requirement for pharmaceutical patents,
    >presumably because the lack of patent coverage eliminates the incentive to pay the $$$$ required to obtain FDA approval.

    In practice, wouldn’t this combination mean that the high-dose FDA application never gets submitted either? That is, who exactly would “pay the $$$$ required to FDA approval” under this proposal?

  4. 8

    Feldman (if I have understood the Dennis post right) is suggesting a greater emphasis on the requirement for “utility”. But that is already the case in Europe, ever since the EPO got going.

    Under the EPO’s problem-solution approach to patentability, an Applicant can get through to issue only by showing, in the patent application as filed, that the claimed feature combination, and throughout the scope of the claim, plausibly solves the objective technical problem relied upon to demonstrate the presence, at the date of filing, of a technical effect and a step forward from the state of the art that is inventive.

    If that’s not a rigorous enquiry into “utility” I don’t know what is. What does Feldman have to say about that, as a solution to her problem with the patent system?

    Greg, are you there?

    1. 8.1

      No you don’t get it Max. The “professor” is calling for a utility requirement that would require it to be better than the other treatments.

      Already, at the EPO this would qualify as a technical solution to a technical problem as the solution doesn’t have to be the best or even better than another known solution.

      1. 8.1.1

        Ah, I see now. The Feldman idea is to add to the requirements for patentability one for an improvement in “social welfare”. Even though the EPO requires a technical effect, it doesn’t go as far as to examine for a “social welfare” effect. Indeed.

        A famous English IPR judge once dubbed unused but still in force registered trademarks “abandoned vessels in the shipping lanes of trade”. TM regns can be renewed ad infinitum but patents on unused pharmaceutical inventions remain in force (even if their owner pays annuities till the end of their term) only for a short few years after the medicant gets authorised.

        Is this yet another example of an academic inventing a problem and then enhancing their cv by publishing a suggestion how to solve it?

      2. 8.1.2

        The Nature Biotechnology article is far worse (and far more officious) than the WaPo opinion piece.

        The sad thing about an article like that is that it will detract from real discussions on how even – and merely – bringing the sunlight of clarity into the Pharma space could improve a whole host of social concerns.

  5. 7

    >However, the patentee erred by publicly disclosing the low dosage idea prior to patenting and thus was only able to obtain patent claims covering the high dosage.

    I guess I’m missing something, patent system-wise. It sounds like both the drug compound itself and the low dosage treatment are unpatented. If so, why don’t doctors just prescribe the smaller amounts (ala how they do for repurposed drugs)? Why doesn’t a generic mfg make it easy for them to do so?

    1. 7.1

      Prescribe something not yet FDA-approved, you suggest? Would not any such doctor be in danger of being struck off the Register to practice medicine?

      1. 7.1.1

        The high-dose treatment isn’t approved i.e., the drug can be sold??

        >They then pursued FDA approval of only the high dosage approach

        If so, why would this “off-label” use be different (as coined by random media stories over years…which may left out key facts)

        1. 7.1.1.1

          I’m not getting my thought across, Curmudgeon. As I see it, as things stand, the high dose treatment is FDA-approved, the low dose treatment not. But the low dose treatment is known to be the better mode. If doctors prescribe a low dose are they not prescribing something not yet FDA-approved, and therefore risking their career?

          1. 7.1.1.1.1

            If doctors prescribe a… dose… not yet FDA-approved, and therefore risking their career?

            Not really. Blazoski v. Cook, 787 A.2d 910, 920 (N.J. App. Div. 2002) summarizes the common-law on this point: “[T]he FDA does not prohibit off-label use of pedicle screws. In essence, physicians have the right, exercising reasonable medical judgment, to use medical devices for off-label purposes that are not FDA approved… In this case defendant testified, without contradiction, that the use of pedicle screws was generally accepted in the field of spinal surgery in 1990. Of course, a physician who engages in off-label uses has the responsibility to be well informed about the device, and to base the decision to use it on sound medical evidence…” (internal quotations and citations omitted). In other words, it is not a sure and certain road to malpractice to prescribe off-label, so long as the particular practice is based on sound science that other physicians would credit.

  6. 6

    This is near brain dead thought.

    So–basically the proposal is to have the USPTO decide whether the “utility” is an improvement or not. So–have the USPTO pick the winners.

    The neo-Marxist zeitgeist is strong in this one.

    The problem is obviously in the FDA and the way treatments are selected by the medical industry. It sounds like a typical monopoly market force problem where the market is not selecting the best solution.

    1. 6.1

      Also to your battery analogy, this isn’t really true. Mercedes Benz, for example, back in the 90’s invested billions in trying to build better batteries for cars.

      Electric cars like Tesla are very much products of innovation in many technologies and needed the incentives from the government and additional research before they could become a significant market force. In fact, it is hard to imagine how a Tesla could have been built in 1995 for anywhere near the price needed.

      The problem of how to transition to clean energy is that the market forces are in favor of using cheap coal and oil, which is in abundance, and the government has not regulated its use strongly enough or provided enough incentives to the electric car and alternative energy sectors.

      Consider that the research spending for the most promising technology is fusion and the R&D for that has been flat for like 40 years.

      Anyway, the neo-Marxist zeitgeist is frighteningly strong in this post.

      1. 6.1.1

        The “transition to clean energy” by way of forcing electric cars is utter lunacy for several reasons.

        The life cycle of batteries is rife with heavy toxic pollutants, from the raw materials, product processing, to end stage.

        Many of the key materials are heavily China-source dependent.

        The energy to put into (and keep putting into) the batteries must come from the power grid. That power into the grid comes predominantly from polluting non-renewable carbon based fuels.

        We (the Royal We of the society), keep on wanting to employ virtue signaling without engaging any sense of critical thinking.

        1. 6.1.1.1

          anon, this is a patent blog so quickly. Some of what you say is correct not all. But the key here is that the path forward should be innovation and R&D. Incentives to buy electric are good as they compensate for the money spent on oil and coal from the government.

          One thing people don’t seem to get is that we have hundreds of years at least of coal in the USA.

          1. 6.1.1.1.1

            Thank Night Writer – I cannot say that I understand what counter point you are trying to make. What part of what I stated is incorrect?

            What part of the mandate to go electric car is (specifically) tied to innovation?

            I have NO problem with directives to foster innovation.

            That is not what is going on. What is going on is nothing more than a political virtue signaling – and, as the points that I provided are in fact correct – that signaling is an utter misfire.

            There is no substitute for critical thinking.

            1. 6.1.1.1.1.1

              >>The energy to put into (and keep putting into) the batteries must come from the power grid. That power into the grid comes predominantly from polluting non-renewable carbon based fuels.

              This is true but it doesn’t account for the fact that it is easier to not pollute at a central station than at each car.

              1. 6.1.1.1.1.1.1

                And the grid is highly diurnal, so nightime charging is using essentially waste electricity in many cases, because big generators and grids require their own power for induction.

                The whole crust of the Earth is full of hydrocarbons. We have all the fuel we need to to burn. We are seriously limited in oxidizer, since we have only one ocean and biomass to supply it.

                1. I have not heard of anyone phrasing things as a lack of oxygen-side (as opposed to a surplus of carbon-side).

              2. 6.1.1.1.1.1.2

                pollution per energy unit would be the proper comparison.

                Such evidence is not present, so we cannot tell whether “at each car” is in fact an improvement.

                Given the advances in scrubbers and carbon capture though at coal plants, you may be correct in that centralized production may be better.

    2. 6.2

      This also has the smell of Prof. Robin Feldman not being a scholar but working for a client and not telling us who is client is.

    3. 6.3

      Utility has always been a low bar, but you always have had to have it AT THE TIME OF FILING.

      Blaming the FDA for requiring proof of the alleged utility is arse-backwards, and the level of items that supposedly have utility that fail to actually have the asserted utility shows MORE that Pharma is filing patents prematurely than anything else.

  7. 5

    At #2, Paul Morgan writes:

    “This sounds like a very rare situation in which the 112 “best mode” had been publicly disclosed before patenting and only an inferior mode was patented.”

    and my eye was caught by the words “very rare”. Paul is right, isn’t he? This is indeed “very rare”, isn’t it?

    Come on folks. Can it be right to demolish our patent system only because of a “once in a blue moon” event?

    I recall another sad story of an inventor with a blockbuster medical invention failing to get a level of compensaton approprite to the size of their contribution to the art: Julio Palmaz, inventor of the NITINOL stent. He was another one who told the world of his invention before he told the Patent Office.

    The part of the patent system that needs scrapping is the grace period. So many dreams of Midas-ian wealth are destroyed by the false supposition amongst inventors that they can rely on the grace period. I suspect it was that false supposition which is at the root of the ibrutinib story. Who can prove me wrong?

      1. 5.1.1

        For all the whining about ‘impoliteness,’ when one asks polite questions and receives no response, the fake umbrage over “you hurt my feelings” shines through.

    1. 5.2

      Paul is right, isn’t he? This is indeed “very rare”, isn’t it?

      Regrettably, the scenario that concerns Prof. Feldman here is not only not that rare, it is getting more, not less common.

      Once upon a time, most early-stage R&D was done in-house by large pharma companies. For various complicated reasons, this is no longer the case (I am happy to get into the details here, but they are irrelevant to the question above). Now, instead, the usual way that pharma R&D happens at the early stages is that a small pharma start-up gets a little capital together, assembles a team of scientists, and studies one drug for one indication.

      The small start-up desperately needs capital to keep going. Therefore, they (1) skimp on the IP budget, and (2) publicize every little bit of progress they make early on, in order to create the sort of buzz necessary to attract more capital to keep the lights on.

      If the early stage development works (in other words, the drug shows promise for the indication on which the start-up team was first working), then a large pharma company buys them out, and takes the drug forward the rest of the way (ideally to market). By this point in the process, the earliest IP is usually 8 to 10 years old.

      The problem is, however, that (as noted above) the original IP was done hastily and the original start-up team are often not that IP-savvy, so they do not even recognize the flaws. Also, often as the not the start-up team will have taken government small-business grants, but will have neglected to make the necessary Bayh-Dole disclosures and elections. The upshot of all this is that the original IP will often be of dubious reliability.

      The good news is that if the new drug is a biological, then the acquirer can still get 12 years of data exclusivity in the U.S. and 10 years in the E.U. If the drug is a small molecule, however, then you are basically helpless. At that point, you will have a perfectly good drug that will never come to market, because the companies that have the expertise and infrastructure necessary to bring it to market know that they cannot make money by the time they reach market launch. It is a dead-weight loss scenario.

      Prof. Feldman describes a situation in which the pharma acquirer found away around this dead-weight loss problem by taking the drug forward for a distinctly second-best utility. Obviously, it would be better to take it forward for the first-best utility, but second-best is better than not-at-all. Worse still are the many examples of cases where there is a perfectly good drug that will never come to market.

      Strangely, though, Prof. Feldman talks about this problem as if it were caused by patents, when really it is caused by lack of patents (or at least lack of a mechanism for market exclusivity). Ideally, the solution here would be to create a mechanism to extend patent life for new drugs, or to provide some mechanism for data exclusivity for these dead-weight-loss market-failure drugs.

  8. 4

    “One avenue for reform might be to enforce a more rigorous utility requirement for pharmaceutical patents, demanding that they actually improve social welfare relative to the prior art.”

    But presumably there are at least *some* people for whom the “higher” dose would still indeed be beneficial (relative to available alternatives). Otherwise, it would not have a risk-benefit profile to warrant FDA approval – or to ever be prescribed by doctors. So the target population is key.

    The issue here, however, is that if it’s only approved at the higher doses, then the company has an incentive to *stretch* the case for using that dose level in as broad of a target population as they can…even for those whom it’s not optimal.

    (Notably, doctors always still have discretion to prescribe at lower/unapproved dose levels, on an “off label” basis case by case – but companies cannot actively promote that.)

    1. 4.1

      Just using the term ‘social welfare’ in the context of the patent right – is the slippery slope to commie-vill. I want to guy or gal that finds the cure for cancer to be rewarded beyond the dreams of facebook and google.

      1. 4.1.1

        Adam Smith and the aspects of providing a full bundle of alienable property rights are — and always have been — the best lever.

  9. 3

    So why not approach the ‘problem’ at its’ source? The high cost of FDA approval (regulatory capture – its’ a King’s game – where have we seen that before?). Here, one solution is the same as the ‘biologics’ compromise that got the AIA to pass. Simply give 7 year ‘orange book’ exclusivity for an approved treatment. Which is akin to the orphan drug act. That’s better than ANY patent exclusivity, since it’s a true regulatory monopoly grant. To be sure, disclosing the low dose but getting a patent grant on a high dose treatment? Not a pharma guy, but sounds rather obvious prior art as to treatment claims (sans the ‘discovery’ that some, I assume off patent compound, was discovered to be a cancer treatment). And what would it even do, (the high dose patent) if a Dr were to administer the treatment at the (off script?) low dose anyways? Something smells fishy or conflated here. BTW, I wouldn’t trust an ‘academic’ to report ‘honestly’ on market forces; one they don’t have a clue, and two probably paid advocacy by some cut out NGO, i.e., they don’t know what they are saying and they don’t know who they are working for.

  10. 2

    This sounds like a very rare situation in which the 112 “best mode” had been publicly disclosed before patenting and only an inferior mode was patented. Especially for any products not also requiring FDA approval, as otherwise why would anyone need to make and use the inferior mode patented?

    Why does not the FDA, with its far more expensive and extensive drug examinations, require a best mode disclosure? That is a whole lot more practical and realistic idea than requiring patent examiners to examine for a utility of “improv[ed] social welfare relative to the prior art.” [Can you just imagine “social welfare” [whatever that might arguably mean at the moment] classes and examinations for patent examiners?]
    As for “the apocryphal story that major car manufacturers long shelved and impeded automotive battery power technology because they were so invested in the combustion engine.” At the very start of the automobile revolution there were actually more electric cars that combustion engine cars, and they lost out for reasons including range, recharging stations, high weight to power ratios, recharging times, etc. Only fairly recently were sufficiently light weight rechargeable batteries even available, and even now the vast majority of Americans not living on college campuses are still mostly buying big gas sucking pickup trucks and other such non-electric macho machines.

    1. 2.1

      The better story of innovation suppression is the electric generation companies suppressing the florescent light bulb – at least that has the virtue of being a true story – and the electric companies had every incentive to do that (we’re in the business of selling electricity! Oh!, the good old days of capitalism). Gas vs. electrics, meh not so much, more a story of parts and the economics of large scale manufacturing.

      1. 2.1.1

        Meh, google shows nothing on the electric generation companies using market power and blocking patents to stop the fluorescent bulb – figures. No one has every used market power to block innovative better, fast, cheaper products. LOL.

    2. 2.2

      “Why does not the FDA, with its far more expensive and extensive drug examinations, require a best mode disclosure?”

      Clinical trials tend to be so lengthy and expensive that developers at some point just need to make their best call and commit to certain things – like dose levels, target populations, etc. Then whatever doses/circumstances/etc. passes those trials is what is deemed safe and effective. Changing that requires new trials, which sometimes isn’t worth it – thus leaving us with suboptimal dosing/labeling/targeting/etc.

      (Since you mentioned “FDA” I was addressing *their* standard – not that of the USPTO, which has a *much* lower bar for applying…)

  11. 1

    solutions within the patent system that begins with revitalization of the utility doctrine

    Or, merely asserting the existing requirement that utility be actually possessed at the time of filing – see comments on how many items fail the FDA process for lacking the asserted utility.

    1. 1.1

      It’s true that the USPTO has a much lower bar for “utility” than the FDA has for “efficacy.” Perhaps that USPTO bar is *too* low, at least for drugs…

      However, it would seem unfair to raise that bar to the *FDA’s* level…after all, proving “efficacy” by their standards is far more demanding than what “utility” has ever meant in any patent context…

      1. 1.1.1

        Nothing at all unfair as to what is being blocked form others though, eh?

        (can’t have it both ways)

        1. 1.1.1.1

          The thing to remember is that actually proving efficacy will likely create multiple 102 bar events e.g., by running a large trial.

          Maybe we could pretend to solve this with CDAs (e.g., no scientific publications) and free samples, but its going to make drug development orders-of-magnitude slower and more expensive.

          1. 1.1.1.1.1

            The thing to remember is that actually proving efficacy will likely create multiple 102 bar events e.g., by running a large trial.

            Sorry but that is NO excuse (or exemption) for the requirement of possessing utility at the time of filing.

            Your admission makes my case.

      2. 1.1.2

        I was denied, and I think the USPTO bar was a bit too high. The examiner told me that since I did not have FDA approval, I had zero utility, even if there were a few people who might accept my whacko intuition. I was claiming that the prior art was enough proof for utility, to no avail. “Summary of the invention: From the prior art I deduced that using fluoride during early pregnancy will prevent birth defects and disclosed it on Nov 15, 1989.”
        Here is the spec that was shot down: link to dropbox.com

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