The War on Drugs: How KSR v. Teleflex and Merck v. Integra Continue the Erosion of Pharmaceutical Patent Protection
| Author | Christopher M. Jackson |
| Position | J.D. Candidate, Capital University Law School, May 2009 |
| Pages | 1029-1063 |
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THE WAR ON DRUGS: HOW KSR v. TELEFLEX AND MERCK v. INTEGRA CONTINUE THE EROSION OF PHARMACEUTICAL PATENT PROTECTION
CHRISTOPHER M. JACKSON*
I. INTRODUCTION
Build a better mousetrap and the world will beat a path to your door,
or so the old axiom goes. This statement summarizes one of the basic pillars of capitalism; that a person who fills an important need for society will (and perhaps more importantly should) be rewarded for his ingenuity, and for his contribution to society. There are important steps that must occur, however, before the world can beat that path to your door. In modern society commercialization of innovations requires a great deal of investment, from building factories and hiring employees to finding a way to advertise your improved mousetrap.
The founders of our republic understood that technological innovation was an important driver for a strong economy, and they understood the important link between securing the financial rights of inventors and the investment necessary to fund innovative research. This is evident by the language of the Constitution which states that Congress has the power to grant patents (and also copyrights) “[t]o promote the progress of Science
Copyright © 2008, Chris Jackson.
* J.D. Candidate, Capital University Law School, May 2009. M.S. Wright State University, 1999. B.S. Wright State University, 1997. As an initial point, I would like to thank my wife Leslie and my children Riley and Sophia for providing unconditional support, much needed levity, and a break from the general insanity of law school as we brave this strange journey together.
Prior to law school I worked in the pharmaceutical industry as a medicinal chemist for several years. I point this out not because I have an ax to grind regarding the relatively short patent lives of prescription drugs, but rather because after having worked in the industry I have a perspective that is unique amongst law students, and patent attorneys (who tend to treat most types of patents as relatively interchangeable). While working as a scientist I was always confused and disheartened by the negative perception of the industry and the desire to curtail any profits that manufacturers of prescription drugs generate. It seemed counterintuitive. To phrase it another way; who deserves to make a profit more than a corporation that employs people in one of the most productive sectors of the U.S. economy, and produces a much needed products that help to both prolong and enrich the lives of millions?
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and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”1
The pharmaceutical-drug industry is especially dependant on patents for protection of their investment in research. In pharmaceuticals, unlike disciplines such as the computer hardware industry, the patent is, more often than not, for the ultimate product.2To illustrate the difference, imagine all of the parts of a printer attached to your home computer, every motor, every wheel, even the exterior design of the printer itself is probably patented, but it is unlikely that the whole finished product is patented. Contrast that with a pharmaceutical product. The patent is not for the pill shape, or the fillers that are inevitably part of the production process, no, the patent is for the active ingredient (and most likely to structurally similar analogs as well). The illustration points out why patents are so much more valuable to the pharmaceutical industry. Without a patent, a competitor can reverse engineer your drug and then sell the exact same product, thus, making the investment in discovering the therapy worthless.
Another reason why patent protection is so important to the pharmaceutical industry is the large amount of time and dollars spent discovering new therapies and acquiring the data necessary for obtaining U.S. Food and Drug Administration (FDA) approval. The pharmaceutical industry spent $51.3 billion dollars in 2005 on research and development.3
Current estimates per new FDA-approved therapy include 10–15 years of research,4$800 million dollars,5and between 5,000 and 10,000 compounds tested.6The time required to obtain FDA approval has also risen, from 3.1 years on average in the 1960s to 8.6 years in the 1990s.7And, while the costs and time required to bring a new therapy to market continue to grow, the effective lifetime of a pharmaceutical patent has shrunk to 11.5 years.8
Perhaps most surprising, only about three out of every ten marketed drugs
1U.S. CONST. art. 1, § 8, cl. 8.
2BRUCE LEHMAN, THE PHARMACEUTICAL INDUSTRY AND THE PATENT SYSTEM 7 (2003), http://www.earth.columbia.edu/cgsd/documents/lehman.pdf.
3PHARMACEUTICAL RESEARCH AND MANUFACTURERS OF AMERICA, PHARMACEUTICAL
INDUSTRY PROFILE 2006 2 (March 2006), available at http://www.phrma.org/files/
Profile2006.pdf.
4Id.
5Id.
6Id. at 4.
7Id. at 5.
8Id. at 8.
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produce revenue that exceeds the average cost of research and development.9
An additional factor in patent value is the average time that a drug enjoys market exclusivity, that is, the time that a pioneer drug (one that is the first of its kind to treat a particular disease state) enjoys a monopoly in the market. For while a patent grants the patentee the exclusive right to make, use, or sell their product, it does not guarantee a monopoly or even a profit. On this point, “[a] recent study from Tufts University researchers showed that the amount of time between the entry of the first and second drug in a class has fallen by about 78 percent since 1970.”10The researchers attribute this to competition in the pharmaceutical industry.11
This highlights the pressure that pioneer firms have to maximize the lifetime of their patents. All of these statistics illustrate the point that without patent protection; why would anyone engage in the costly research necessary to discover new treatments (not to mention the expense and time required to gain FDA approval), when they could just wait for a competitor to do the heavy lifting and come in when the process of commercialization is beginning and steal the ultimate product?
The exclusive right that is given to inventors via the grant of a patent is the classic property right—the right to exclude.12This right is enforceable through the courts when another has infringed the patent. Generally, it is an act of patent infringement to “mak[e], us[e], offe[r] to sell, or sell any patented invention . . . during the term of the patent therefor.”13
9Henry G. Grabowski, John Vernon & Joseph A. Dimasi, Returns on Research and Development for 1990s New Drug Introductions, 20 PHARMACOECONOMICS SUPP. III 11, 27
(Dec. 2002).
10PHARMACEUTICAL INDUSTRY PROFILE, supra note 3, at 8–9 (citing J. A. DiMasi and
C. Paquette, The Economics of Follow-on Drug Research and Development: Trends in Entry Rates and the Timing of Development, 22 PHARMACOECONOMICS, SUPP. II 1–14
(2004)).
11Id.
12See, e.g., Roche Prods., Inc. v. Bolar Pharm. Co., 733 F.2d 858, 863 (Fed. Cir.), cert. denied, 469 U.S. 856 (1984) (“[U]nlicensed experiments conducted with a view to the adaption of the patented invention to the experimentor’s business is a violation of the rights of the patentee to exclude others from using his patented invention.”).
13Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 195 (2005) (quoting 35 U.S.C. § 271(a)).
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A patent thus confers the right14to exclude others by providing a civil action against an alleged-infringer for making, using, or selling a patented invention without permission.15That is in every industry but one—the pharmaceutical industry. In 1984, Congress signed into law the Hatch-Waxman Act.16The Act provides a safe harbor from otherwise infringing activity to some types of pharmaceutical research.17
This portion of the Act was Congress’ attempt to deal with back end distortions of the lifetime of pharmaceutical patents.18The Act had two other significant provisions that are pertinent to this Comment; the Act provides for an accelerated approval process (Abbreviated New Drug Application) for generic manufacturers of pharmaceutical products,19and it provides an incentive for generic manufacturers to challenge an innovator drug company’s patent.20The latter provision will be discussed as it provides the backdrop for a discussion of the Supreme Court’s 2007 decision in KSR International Co. v. Teleflex Inc.21and how it may likely impact pharmaceutical patent life.
II. THE HISTORY OF FDA REGULATION OF DRUGS
The Hatch-Waxman Act is unique when placed in the category of legislative acts that increased the influence of the FDA. The Act undoubtedly expanded FDA influence as it has provisions that, among other things: allow for a safe harbor from patent infringement, it allows the FDA to use safety and efficacy data of pioneer drugs to expedite generic drug approval, it allows the FDA to grant a limited period of generic exclusivity for the first generic to challenge a pioneer’s patent, and it provides for a patent term extension for pioneer firms whose FDA approval process takes longer than usual.22All but the last of these have a
14“This right commences on the date that the patent issues and ends twenty years from the date the application for the patent was filed in the United States . . . .” Anna McMinn, Comment, 16 ALB. L.J. SCI. & TECH. 195, 199–200 (2006).
1535 U.S.C. § 281 (2000).
16Drug Price Competition and Patent Term Restoration Act of 1984, § 202, 98 Stat. 1585 (codified as amended at 21 U.S.C. § 355).
1735 U.S.C. § 271(e)(1) (2000).
18See infra note 87 and accompanying text.
1921 U.S.C....
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