The More Things Change: Improvement Patents, Drug Modifications, and the FDA

• Author: Dmitry Karshtedt
• Position: Associate Professor, The George Washington University Law School. J.D., Stanford Law School. Ph.D., Chemistry, U.C. Berkeley
• Pages: 1129-1222

1129

The More Things Change: Improvement

Patents, Drug Modifications, and the FDA

Dmitry Karshtedt*

ABSTRACT: Pharmaceutical companies often replace prescription drugs that

are already on the market with modified versions that have the same active

pharmaceutical ingredient. On the surface, such activity seems benign and

perhaps even salutary. Nonetheless, antitrust litigation has revealed that

*

Associate Professor, The George Washington University Law School . J.D., Stanford Law

School. Ph.D., Chemistry, U.C. Berkeley. I acknowledge Ashley Cade, Qi Yu, and Kevin Zhang for

excellent research assistance, the Center for the Protection of Intellectual Property (“CPIP”) for

generous funding, and the readers of prior drafts and commenters on presentations of this

Article for helpful feedback. In particular, I thank Michael Abramowicz, Jonas Anderson,

Jonathan Bachand, Stephanie Plamondon Bair, Jonathan Barnett, Brigid DeCoursey Bondoc,

Bruce Boyden, Melissa Brand, Michael Carrier, Bernard Chao, Tun-Jen Chiang, Eric Claeys,

Kevin Collins, James Czaban, Jonathan Darrow, Aashita Dawer, Gregory Dolin, Rochelle Dreyfuss,

Nona Durham, Rachel Elsby, Wendy Epstein, Robin Feldman, Carol Findling, Janet Freilich,

Mark Graber, Lewis Grossman, Rishi Gupta, Yaniv Heled, Cynthia Ho, Timothy Holbrook, Sam

Halabi, Ian Holloway, Christopher Holman, Camilla Hrdy, Cathy Hwang, Seema Kakade, Jay

Kesan, Scott Kieff, Megan La Belle, Anna Laakmann, Christa Laser, Mark Lemley, Myrisha Lewis,

Erika Lietzan, Brian Malkin, Alan Morrison, Alexandra Moss, Adam Mossoff, Kali Murray, Craig

Nard, John Newman, Janewa Osei-Tutu, Lisa Larrimore Ouellette, Michael Pappas, Efthimios

Parasidis, Eda-Margaret Paulsen, Laura Pedraza-Fariña, Nicholson Price, Anya Prince, Arti Rai,

Greg Reilly, Michael Risch, Michael Rosen, Ana Santos Rutschman, Rachel Sachs, Mark Schultz,

William Schultz, Christopher Seaman, Sean Seymore, Jacob Sherkow, Ted Sichelman, Norman

Siebrasse, Brenda Simon, Matthew Sipe, Noah Smith-Drelich, John Thomas, Hannibal Travis,

Sunita Tripathy, Melissa Wasserman, Rebecca Wolitz, Stephen Yelderman, and Patricia Zettler

for feedback on prior drafts; participants in the faculty workshops at the Florida International

University College of Law and Jindal Global Law School, th e FDA Conference at the at the

American University Washington College of Law, 40th and 41st Annual Health Law Professors

Conferences, 10th Annual Junior Scholars in Intellectual Property Workshop, Mid-Atlantic

Junior Faculty Forum, Regulation and Innovation in the Biosciences Workshop at the

Washington University in St. Louis School of Law, BioLawPalooza 2017 at Stanford Law School,

Marquette University Law School Intellectual Property Colloquium, PatCons 7 and 8, Patent

Scholars Roundtable III, UM/UB Junior Faculty Workshop, the 2017 Wiet Life Science Law

Scholars Conference, the 17th Annual Intellectual Property Scholars Conference, the 2017

Southeastern Association of Law Schools Conference, Junior IP Scholars Association Workshop

at the Gonzaga University School of Law, the 2017 Gruter Conference, and the CPIP Thomas

Edison Innovation Fellowship meetings for presentation comments; and James Czaban (the FDA

Conference), Megan La Belle and Mark Lemley (Patent Scholars Roundtable), Ted Sichelman

and Melissa Wasserman (Junior Scholars in Intellectual Property Workshop), and Ian Holloway

(Southeastern Association of Law Schools Conference) for providing public commentaries on

this Article.

1130 IOWA LAW REVIEW [Vol. 104:1129

firms sometimes modify existing drugs not because new formulations would

demonstrably improve health outcomes, but principally because so-called

secondary patents covering the new version of the drug enable them to

maintain some effective market power over the active ingredient for which

original, primary patent protection has expired. This “product hopping”

strategy runs counter to the goal of the legislative framework for regulating

branded and generic drug approvals, which is to create appropriate incentives

for discoveries that elevate the quality of patient care and human health by

providing a period of reward for the brand followed by timely and effectual

generic entry.

In this Article, I explain that the rules and institutions involved in

determining the validity of patents on chemical inventions, certain features

of drug regulation under the Federal Food, Drug, and Cosmetic Act, and

unique market forces in the pharmaceutical sector combine to allow strategic

product hopping. To address this problem, I propose a novel regulatory scheme

that would empower the Food and Drug Administration (“FDA”) to induce

pharmaceutical companies to generate comparative data indicative of

therapeutic distinctiveness between related forms of small-molecule drugs. I

explain that the FDA is institutionally well-positioned to serve as an

information intermediary that can help increase transparency with respect to

drug changes, and show that the relevant disclosures can be presented in a

manner that is useful to patients, prescribers, and payers. The proposed

framework would then enable these market participants to identify and reject

strategic drug product changes, reducing the manufacturer’s incentive to

pursue such modifications. Ultimately, the FDA’s new authority for

comparative data development could lead to improvements in patient care

and promote downstream clinical research based on scientific evidence

gathered under the directives of the proposed scheme.

I.INTRODUCTION ........................................................................... 1131

II.THE FEDERAL HATCH-WAXMAN REGIME AND STATE-LAW

GENERIC SUBSTITUTION ............................................................. 1146

III.DRUGS, PATENTS, AND PRODUCT CHANGES ............................... 1152

A.PRIMARY AND SECONDARY PATENTS ....................................... 1152

B.PHARMACEUTICAL PATENTING AND PRODUCT CHANGES ......... 1159

1.The Sponsor’s Non-Obviousness Challenge and

“Unexpected Results” ................................................. 1159

2.Non-Obviousness in the Namenda XR Patent

Prosecution .................................................................. 1168

3.Beyond Namenda ........................................................ 1172

2019] IMPROVEMENT PATENTS, DRUG MODIFICATIONS, AND THE FDA 1131

IV.PRODUCT HOPPING AND PHARMACEUTICAL MARKET

DEFECTS ...................................................................................... 1178

A.ECONOMIC INCENTIVES .......................................................... 1179

B.STRUCTURAL LIMITATIONS .................................................... 1183

C.COGNITIVE CONSTRAINTS ...................................................... 1187

V.INDUCING SUBMISSION OF DRUG-COMPARISON DATA

TO THE FDA ................................................................................ 1191

A.THE THRESHOLD STANDARD AND THE FDA’S TASK ................ 1192

1.Theorizing Drug Comparisons................................... 1192

2.The Proposed Standard and How to Meet It ............ 1194

B.THE PROMISE OF CLEAR LABELING, AND A FURTHER

POTENTIAL STICK ................................................................. 1198

1.Possible Benefits of Clear Labeling............................ 1198

2.The Orange Book Variation .......................................... 1202

C.CATEGORIES OF QUALIFYING DRUG CHANGES ......................... 1205

D.IMPLEMENTATION MECHANICS .............................................. 1210

VI.OBJECTIONS ................................................................................ 1216

VII. CONCLUSION .............................................................................. 1222

I. INTRODUCTION

Polarized views engulf the pharmaceutical industry. “Big pharma,” as the

sector is often called, has drawn both praise for supplying the world with life-

saving drugs and scorn for keeping the prices of some of those drugs high and

occasionally engaging in questionable business practices.1 As one

commentator noted, “despite the undisputed fact that for over a century the

industry has made a major contribution to human wellbeing and the

reduction of ill health and suffering, it is still regularly identified by the public

in opinion surveys as one of the least trusted industries.”2 Although the

pharmaceutical industry continues to make remarkable advancements in the

field of drug development,3 controversies ranging from the behavior of the

1. For examples of recent leading works on the two sides of the debate, see generally DAVID

HEALY, PHARMAGEDDON (2012); THOMAS P. STOSSEL, PHARMAPHOBIA: HOW THE CONFLICT OF

INTEREST MYTH UNDERMINES AMERICAN MEDICAL INNOVATION (2015). Even the titles are telling.

2. David Taylor, The Pharmaceutical Industry and the Future of Drug Development, in

PHARMACEUTICALS IN THE ENVIRONMENT 1, 1 (R.E. Hester & R.M. Harrison eds., 2015).

3. See, e.g., Sarah Knapton, First Migraine Drug in 20 Years Can Half Number of Attacks, Stu dy

Shows, TELEGRAPH (Nov. 30, 2017, 12:01 AM), http://www.telegraph.co.uk/science/2017/11/

30/first-migraine-drug-20-years-can-half-number-attacks-study-shows.