Push-Down on Drug Patents and Drug Pricing

by Dennis Crouch

Over the past several months, the USPTO and FDA have been collaborating with the purpose of promoting competition and lower drug prices in the US.   This week (Jan 19), the USPTO is holding a 7-hour joint listening session hosted by USPTO Director Kathy Vidal and FDA Commissioner Robert Califf.  [Register and see the Agenda here]

The session has three key substantive areas:

  1. The extent and impact of pharmaceutical and biotech companies acting in a two-faced manner: Arguing to the USPTO that their treatments represent major changes from what was previously done (and thus patentable); while simultaneously arguing to the FDA that then later arguing that these same treatments are quite similar to what is already on the market (and thus safe for use).
  2. The extent that pharmaceutical and biotech companies are improperly gaming the patent system and then using those games to justify strong protections under Hatch-Waxman and the BPCIA.
  3. How can the Orange Book process be improved to protect innovation while simultaneously improving competition?  Prof. Jay Thomas’s remarks here are on point: “Despite their [extraordinary] impact, Orange Book patent listings receive no FDA oversight.”  PTO-P-2022-0037-0010.

The thrust of this entire gambit from the administration level is to reduce drug prices.  But, once we drop down to the PTO/FDA level, the close industry relationship suggests to me that agency officials will be keenly aware of the potential negative impacts of any action on pharma innovation.

The key leadoff speaker is Hastings Law Professor Robin Feldman whose work argues that the system is broken in myriad ways.  George Mason Prof. Adam Mossoff will provide a high-level counterargument, and several others will talk through complications. In particular, I always learn a lot hearing from Corey Salsberg (Novartis), Sean Tu (WVU), and Jay Thomas (G-Town)

While this is a joint event, both agencies (along with several other federal agencies) are also operating unilaterally to address the high cost of healthcare in America.  In particular, the FTC/DOJ are using antitrust tools to push against monopoly-level pricing even for drug products whose use is protected by patents.

Although no direct action items are expected to come out of this event,  I see all of this as quite a big deal as the various players work to establish their narrative.

 

 

19 thoughts on “Push-Down on Drug Patents and Drug Pricing

  1. 4

    This is a big deal — discussion and debate will get us to better solutions than the posturing and pandering to get reelected that is going on in Congress. Glad to see that this is happening, even if this particular event is not going to immediately result in any improvements.

  2. 3

    I have said it before, but I will say it again: AU, CA, EP, & JP all have lower Rx drug prices than we do, but essentially the same patent laws that we have. To my mind, this suggests that patent law is an unlikely explanation for our higher Rx drug prices.

    1. 3.1

      Greg, while I don’t think the high cost of drugs in the US is attributable to the patent system or to the Orange Book, that conclusion doesn’t necessarily follow from the observation about the similarity of patent systems elsewhere. Canada, at least, has price controls on drugs, and I think some EU countries do too, which could be responsible for the price disparity.

      I would put it differently: as long as US consumers are willing to subsidize the cost of drug development for the rest of the world (in the form of high prices for patented drugs in the US), the rest of the world will be happy for US consumers to continue to do so.

      I don’t know what the effect of, say, drug price controls in the US would be on worldwide drug development. But I’m quite sure that this isn’t something that I think the PTO or FDA should be wading into, let alone something that I trust them to get right.

      Curiously, I don’t see lowered FDA standards on the agenda for the upcoming “listening session”; lowered FDA standards would lower development costs and presumably result in lower drug prices.

      And I’m certain that, all other things being equal, weaker patent protection will lead to less new drug development, unless an alternative system is put in place to protect innovators’ investments in new drugs.

      1. 3.1.1

        Canada, at least, has price controls on drugs, and I think some EU countries do too, which could be responsible for the price disparity.

        Exactly my point. No nation has meaningfully squeezed down Rx drug prices by fiddling with their patent codes. The price effects are achieved elsewhere in the law codes of our peer jurisdictions. Why, then, do U.S. “experts” and government agencies keep focusing on patent law when complaints arise about Rx drug prices?

      2. 3.1.2

        I don’t know what the effect of, say, drug price controls in the US would be on worldwide drug development.

        Pharma is my bread and butter, so this is a subject that I have thought about often. When I game it out, the way that I see it going is that the U.S. instituting Canada-style price controls would totally destroy the business models of most of the large, branded pharma industry (Pfizer, Roche, A-Z, etc). If their profit margins in the U.S. were the same as their margins in (e.g.) AU, CA, DE, FR, GB, IT, JP, & KR, there is no way that they could maintain the operations that they presently run.

        Those companies do not actually do a lot of R&D themselves anymore. Once upon a time, they did, but not so much any more. Instead, most of the R&D is done by small pharma start-ups (e.g., spin-outs from the labs of various faculty in the med chem and cell biology depts of major research universities). Those small companies, however, are doing this research in the hopes that they will eventually be acquired by one of the large industry players (e.g., Pfizer acquiring BioNTech). Therefore, the death of the large players would not grind R&D to an immediate halt, but it would gradually trickle off as word got out to the more entrepreneurial layer of researchers that pharma would no longer be the big pot of money that can fund the pay-off for your start-up.

        Of course, those researchers would not magically cease to exist just because the pharma industry declines. When Roche/Merck/Pfizer go under, they would dump a lot of top talent onto the market, so the world would be flooded with a bunch of very smart chemists and molecular biologists whose days are no longer taken up in finding solutions to pharma‘s problems.

        So what would those folks do with their time, if they are not spending it on pharma research? I expect that clean energy and materials science would be good fits for their particular talents. In other words, a decline pharma might well lead to a boom in clean energy and materials science.

        Right now, most of pharma’s efforts are directed at chronic diseases (cancer, diabetes, heart disease, etc). That is to say, a lot of work is going into helping elderly people. More abundant clean energy would help not only the elderly, but people of all ages. Better smart materials would likewise be a boon to all age demographics.

        In other words, one can spin a story in which the decline of pharma leads to a better world for everyone. Still and all, there is no free lunch. There almost certainly will be a decline in healthcare innovation worldwide if the U.S. were to institute the sorts of price controls that our peer nations have.

        1. 3.1.2.1

          Ah Johny, your post does show some thought – and is quite interesting.

          I agree – concerns here may well be to BUSINESS MODELS.

          And not just the large branded pharma that you mention – there is a whole industry invested in certain business models (and why the notion of sunshine is so fought against – even by the generics!)

          I also found your comment of, “Those companies do not actually do a lot of R&D themselves anymore. Once upon a time, they did, but not so much any more. Instead, most of the R&D is done by small pharma start-ups…

          In case Greg doesn’t tell you – this is exactly why Greg’s posts are filled with Big Pharma bias.

          So what would those folks do with their time, if they are not spending it on pharma research? I expect that clean energy and materials science would be good fits for their particular talents.

          Not likely (even though your words sound in the old “get those people OUT of carbon energy and let them code”). By the way, “clean” is as serious misnomer. Take a look at begin and end cycle concerns of the so-called green energy modes. Not only is it not pretty, where do you think the ‘economical’ processing takes place? That’s right, places where the laws don’t bother with niceties like ecological protection or disallow slave and/or child labor.

          Right now, most of pharma’s efforts are directed at chronic diseases (cancer, diabetes, heart disease, etc). That is to say, a lot of work is going into helping elderly people.

          Meh – this is mixed. While elderly are helped, the driver is LESS concerned about age, and more concerned about simple profit.

          More abundant clean energy would help not only the elderly, but people of all ages. Better smart materials would likewise be a boon to all age demographics.

          Maybe.

          Maybe not.

          Still and all, there is no free lunch.” – absolutely – it is the US citizen that pays for that lunch – for the rest of the world, pretty much.

    2. 3.2

      Sunshine.

      And if that be “too vague” for some folk, the adage of “follow the money” should sharpen the lines of the (necessary) inquisition.

      It is the entire ecosystem of Big Pharma that should be dragged into the sunlight.

      Just who is making what, when AND where.

      I’ve been inside the belly of that beast — there is simply too much money (which attracts too much power, not to mention too much ego) to do anything less than understand the full money flow.

      This includes (predatory) transnational pricing.
      This includes government “sponsorships.”
      This includes BOTH insurance and distribution rackets (including pharmacy networks).

      And (still) implicitly throughout, this includes stopping the mindset that (expensive) failures are “ok” to be subsidized by the less frequent blockbuster successes.

  3. 2

    “The extent and impact of pharmaceutical and biotech companies acting in a two-faced manner: Arguing to the USPTO that their treatments represent major changes from what was previously done (and thus patentable); while simultaneously arguing to the FDA that then later arguing that these same treatments are quite similar to what is already on the market (and thus safe for use).”

    Is this really two-faced? Patent Law and FDA law are two different bodies of law, with two different purposes and standards. Is it not possible that (a) a new drug represents a patentable invention but (b) is biologically sufficiently similar to what is known to be safe as to merit FDA approval?
    I suspect this question is more rhetoric than reality.

    1. 2.1

      The Patent Statute does not require that “major changes” be shown for patentability, just that a difference be shown that is nonobvious. The invention does not even have to be better. So, it is not inconceivable that the treatment is sufficiently different to be patentable, yet sufficiently similar to be safe.

      1. 2.1.2

        PM nails the aspect that innovation at a level that earns patent protection NEED NOT be an improvement.

        The mere ability of “another way” is enough to promote progress.

        I have discussed this previously many times as a bit of “colloquial fallacy” that the uninitiated sometimes has in view of patents.

        In fact (as those that have studied innovation well know), often a brand new way that becomes a market disruption starts off worse than known state of the art.

    2. 2.2

      It may be *possible* for a drug to be a patentable invention yet be similar enough to previously approved drugs to merit FDA approval, but it shouldn’t be as common as it is.

      If this difference in standards is driven by current patent law being ignorant of the real challenges of drug development (it is), then that’s a problem with patent law. The law on patentability of drugs should be revised with the explicit goal of maximizing the number of first-in-class candidates being advanced to late-stage clinical trials, where theories of disease can actually be tested.

      As it stands, patent law is excessively favorable to follow-on molecules because a novel molecule of any kind is almost automatically patentable yet they often breeze through FDA trials because the disease theory is already validated. That leaves a lot of time on a very strong patent.

      Straightening this out would require junking a lot of unreflective things the Federal Circuit and CCPA have said about pharma patents, so I’m not holding my breath.

      1. 2.2.1

        Jay, Jay, Jay,

        It may be *possible* for a drug to be a patentable invention yet be similar enough to previously approved drugs to merit FDA approval, but it shouldn’t be as common as it is.

        I am sorry, but who are you and why should your view of what “should be” carry any weight?

        driven by current patent law being ignorant of the real challenges of drug development (it is)

        As opposed to your obvious ignorance that patents are NOT a factor (nor have dependence upon) actual product development…?

        You seem to want patent law to be something that it is not.

        Maybe before you get all bent out of shape, you first understand the thing that you want to be upset with?

        explicit goal of maximizing the number of first-in-class candidates being advanced to late-stage clinical trials, where theories of disease can actually be tested.

        Great, but never (even remotely) an object of patent law.

        That leaves a lot of time on a very strong patent.

        Your being off on patent law continues – here, you seem to think that patent law TERM should be variable (maybe?)….?

        so I’m not holding my breath.

        So, you have that going for you. At 1:13 link to youtube.com

    3. 2.3

      The “two-faced” part of the conversation probably relates to the Federal Circuit decision in Belcher Pharmaceuticals, LLC v Hospira, Inc. (Case 2020-1799, decided September 1, 2021), wherein an applicant made inconsistent representations before the USPTO and the U.S. Food and Drug Administration.

      As Jordan noted below in comment #1, this is an issue that litigation would resolve, perhaps to the detriment of the patent owner as in Belcher, but the PTO could extend the duty of disclosure to also include those persons associated with a patent applicant or assignee who are involved in seeking regulatory review and approval of a corresponding product to reveal any potentially inconsistent positions taken before the regulatory agency and the Office. The listening session is one forum that could provide an opportunity to discuss such potential “fixes” and any drawbacks (such as the different standards).

  4. 1

    If a patentee is making inconsistent statements about a product, those statements will likely be raised in litigation. There really is little need in the USPTO/FDA spending resources trying to figure this out for themselves during prosecution. Also, there are different standards for patentability and drug approval (i.e. safety, efficacy, and purity). Trying to conflate the two is going to be problematic for the USPTO & FDA.

    1. 1.1

      This!
      Patentable does not mean FDA-approvable, and vice-versa. A patentable drug, for instance, does not necessarily have to meet stringent FDA efficacy standards to have basic ‘utility’ from a patent standpoint. It also des not necessarily need to have a wide therapeutic window, or outperform a different, non-related treatment for the same condition, in order to be patentable. (Example – a small molecule that treats a form of cancer may be readily patentable if it is novel and non-obvious, but perhaps that form of cancer is actually already fairly treatable by a different therapy, and the head-to-head clinical trial would be unethical).

      FDA and the PTO are two different beasts – of course different representations are made. The FDA does not care that a new molecule is an improvement over ‘the closest prior art’ because it can be made in 4 steps, rather than 104 steps. The PTO does not care that the same new molecule has the same mechanisms of action and toxicity profile as the its market predecessor.

      1. 1.1.1

        Apart from patent law and FDA law being different creatures, there’s also a timing issue: a patent application is filed long before the data to support an NDA before FDA have been collected. What was non-obvious at the time of patent filing may (with impermissible hindsight) seem a lot closer to the prior drug products as clinical trials proceed.

        And even then, doesn’t the FDA demand that follow-on drugs show some improvement in some way over existing drugs?

      2. 1.1.2

        Patentable does not mean FDA-approvable, and vice-versa.

        Fair enough.

        A patentable drug, for instance, does not necessarily have to meet stringent FDA efficacy standards to have basic ‘utility’ from a patent standpoint.

        Well – you DO use the word “necessarily,” and the caveat must be employed as to the Claims are the Name of the Game, but to then use this AS IF utility from a patent standpoint is NOT spoken to from the FDA ‘test’ (your stringent efficacy standards) is quite a leap, seeing as MANY Pharma claims DO

        F

        A

        I

        L

        in the post-filing test phase. Remember, the patent utility IS necessary to be there AT filing.

        So you do not get full credit here.

        It also des not necessarily need to have a wide therapeutic window, or outperform a different, non-related treatment for the same condition, in order to be patentable.

        Meh, again the claims are the name of the game, and wide therapeutic windows certainly are more typically claimed than otherwise. As to “outperform [some different thing],” I agree with you.

        Partial credit here.

        FDA and the PTO are two different beasts – of course different representations are made.

        While certainly true, the issue is NOT that different representations – per se – are made, but rather when those representations are in conflict with each other.

        This is a miss.

        But overall, you don’t miss by much.

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