To Make Healthcare More Affordable, Fight Drug Patent Abuse with a Fury

By Arie Michelsohn
March 14, 2018

To Make Healthcare More Affordable, Fight Drug-Patent Abuse with a FuryDrug prices tend to drop precipitously the moment the drug market opens to generic and biosimilar competition—typically by up to 80%.  Drug patents are the linchpin of when that moment occurs.

This is because since the 1980s, the timing of market entry for generic and biosimilar drugs has essentially depended on judicial determinations of patent infringement, validity, and enforceability, pursuant to the Drug Price Competition and Patent Term Restoration Act (better known as the “Hatch-Waxman Act”), and more recently, the Biologic Price Competition and Innovation Act (“BPCIA”).

If we are really going to have an informed discussion about drug pricing, therefore, we had better do it by talking about drug patents—and how to police them, effectively.

As drug prices skyrocket and cause massive public uproar, the essential question in every drug-patent case, is this:  Has the drug-patent owner fulfilled the patent bargain with America?  Is the drug-patent owner a real innovator, entitled to a multi-year bounty of an exclusive market worth billions of dollars per year?

Drug patents are the essential measure of how much value branded pharmaceutical companies bring to the bedside of American patients and consumers. Within the arcane details of their specifications and patent claims are the innovative discoveries brought to us by the inventors, described in sufficient detail that anyone of ordinary skill in the medical arts can practice them successfully—or not.

Only when true innovation is captured in the pages and claims of a patent, is a patent owner entitled to a bounty for the efforts expended in bringing the innovation about.  This can be achieved in a variety of ways, such as by licensing the patent for a royalty, or trading it for something else of value, or—as is generally the case in the market for medicines—keeping the market closed to competition, and charging monopoly pricing during the term of the patents that claim those medicines.

Humira, AbbVie’s best-selling drug to treat arthritis, for example, has annual sales of about $16 billion.  AbbVie’s CEO has touted its 100+ patents to protect the drug franchise.

If a drug company plants a more than 100-patent thicket to protect market exclusivity, then it had better be able to justify why it should deserve the cumulative protection of patent term. Yes, the patent on the original formulation will fall into the public domain and may be capable of being made by generics long before the last of the patents expire, but often-times those follow on “innovations” are the kind of trivial advances that ordinarily shouldn’t support a fresh patent.

Real scrutiny needs to be placed on follow-on patents, and demonstration of real innovation should be required to warrant keeping new formulations or dosing regimens of a previously-existing drug locked-up by a patentee. If the same quantum of proof for novelty and nonobviousness that is required elsewhere in the Patent Office were to be applied to drug patents, many fewer follow-on drug patents would be granted.

The chemical arts have a long history of being considered more “unpredictable” than the mechanical and electrical arts.  But in our modern world of molecular spectroscopy, computational chemistry, and designer-genes, the science of drug development—while highly sophisticated and complex—is not so nearly as filled with hopeless uncertainty and unpredictability as some would-be drug-patent owners would have everyone believe.

Furthermore, adjudicating 100 patents is a significant burden on our Justice system, and that is just for one drug.  If we are going to put our Article I and III courts on the line for American healthcare, we should expect to see raving reviews from the decisions in drug-patent cases, lauding all the marvelous and heroic innovations that the asserted patents represent.  And sometimes, we do.

And sometimes we don’t. It is when drugs are patented without the heroics of real innovation that is the problem, and why drug prices remain artificially high.

Rather than representing true innovation, we find drug patents that emerge through loopholes in our drug-patent system, which artificially extend patent term on rather trivial differences over the original drug. This, in turn, unjustly blocks competition for trivially-modified formulations of drugs or methods of using them that are barely innovative and should be available to generic and biosimilar companies for approval by the FDA. It goes without saying, opening-up those trivial-modification drug patents for all would improve healthcare by allowing a variety of market alternatives for their claimed formulations and uses to be available in generic and biosimilar forms, which would make healthcare more affordable for everyone.

In the coming days I will publish a series of examples to illustrate my concerns. Up first will be a closer look at AbbVie’s blockbuster drug, Humira.

The Author

Arie Michelsohn

Arie Michelsohn consults as counsel in patent law and litigation and related antitrust, and is Founding Principal of LexLaw.Consulting. He founded Lion Legal Products, a legal technology company based in Washington, D.C., in 2013, and has developed LexLab.io, a browser-based, total work space environment for lawyers, on a new platform called LEO. Arie is committed to the melding of law practice and computer science in the generation of what some have called "Centaur Lawyers." We like to think about it as the integral development of uniquely lawyer-driven, technology solutions to optimize efficiency in a manner that is tuned to the ways lawyers think, and work in their actual practice of law. Arie is a Caltech PhD, Order of the Coif graduate of the George Washington University Law School, a former patent examiner at the U.S. Patent & Trademark Office, and a former law clerk to the Honorable Raymond C. Clevenger, III, of the U.S. Court of Appeals for the Federal Circuit.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 32 Comments comments. Join the discussion.

  1. xtian March 14, 2018 11:34 am

    “If a drug company plants a more than 100-patent thicket to protect market exclusivity, then it had better be able to justify why it should deserve the ‘cumulative’ protection of patent term. ” No patent is cumulative. Each patent has to be novel and unobvious in view of the prior art. If this sentence were taken as true, then 100 patents, each having a 20 year term would mean Humira would be protected by a patent for 2000 years.

    “Yes, the patent on the original formulation will fall into the public domain and may be capable of being made by generics long before the last of the patents expire, but often-times those follow on “innovations” are the kind of trivial advances that ordinarily shouldn’t support a fresh patent.” If they are such trivial advances and they are embodied in the product, then the “new” product would sell (or the insurance companies wouldn’t reimburse) and the generic drug would dominate the market.

    When the author spins and uses buzz phases like “loop holes in the patent system” one has to question his motives.

  2. Gene Quinn March 14, 2018 11:44 am

    xtian-

    You say: “Each patent has to be novel and unobvious in view of the prior art.”

    While that is a perfectly accurate and true statement, those who hold the beliefs of the author always point to a problem with the USPTO issuing patents on marginal, even trivial, improvements in the pharma space. I am not an expert in this scientific area, but I do know there is great variety of what qualifies as new and nonobvious within the USPTO. For example, the level required to establish something is new and nonobvious in the software arts is very high, while the level required if you invent something like a kitchen gadget that might qualify for “As Seen on TV” is very low.

    I’d be interested in publishing articles by those who understand the law and science and that speak to this issue.

    -Gene

  3. xtian March 14, 2018 12:25 pm

    Gene,

    OK, lets say a composition of matter patent on the molecule is issued. The composition of matter patent claims the drug product in a tablet taken twice a day. The product is called PILLIR. Nothing special about the tablet.

    Now, that the pharma company, for patient compliance and convenience, formulates the twice-a-day PILLIR into a controlled release product. Call this PILLXR. This new XR formulation is patentable. Some in the industry don’t think this is a value-added innovation. The article may even say this is an example of a trivial improvement. That’s a topic for another discussion.

    The pharma company realizes that patient compliance is higher and pill burden is lower with PILLXR. So, pharma company stops promoting (doesn’t withdraw from the market, just stops advertising) PILLIR. Now, the composition of matter patent on the drug expires, any nothing prevents the generic from marketing a generic version of PILLIR. However, a generic version of PILLIR is only sold if a MD writes a prescription for PILLIR. (When filling a prescription at Walmart, the pharmacy will most times automatically switch the brand for the generic.) But because the MDs are writing scripts for PILLXR, no generic PILLIRs are sold.

    So – in the above scenario, did the patent on the XR formulation (a patent the author calls trivial) actually prevent generics from coming on the market and inflating the price of the drug?

  4. Josh Malone March 14, 2018 12:57 pm

    Yes, the patent on the original formulation will fall into the public domain and may be capable of being made by generics long before the last of the patents expire

    This is a very important and overlooked point. Even if a patent is granted for a trivial improvement, it is harmless. If is truly is trivial, then the public does not need it and can stick with the prior art. If it is so important and necessary that competitors feel compelled to challenge the validity of the patent, then it must not have been obvious.

    This point is relevant to the entire Restasis tribal sovereign immunity controversy. Allergan disclosed several formulas for dry eye treatment in their 1995 patent, which is now in the public domain. Formulas of 0.10% cyclosporine with 12.5% castor oil and 0.05% cyclosporine with 6.25% castor oil were proven effective and are now in the public domain. Teva and Mylan allege (and I would tend to agree) that the 2003 Restasis formula using 0.05% cyclosporine with 12.5% castor oil was obvious in light of the 1995 combinations. But who cares?

    Mylan and Teva insist on knocking off Restasis instead of using the other equally effective prior art formulas. The reason – it is cheaper and easier to free load off of the Restasis approvals and branding than to use the prior art.

    Patents on “obvious” improvements are no barrier to legitimate competition. Whining about patent thickets and “bad patents”, lobbying to destabilize the patent system and revoke tribal sovereign immunity is more profitable than developing and qualifying their own drugs.

  5. Gene Quinn March 14, 2018 1:01 pm

    xtian-

    You ask: “did the patent on the XR formulation (a patent the author calls trivial) actually prevent generics from coming on the market and inflating the price of the drug?”

    No, absolutely not. The underlying drug falls into the public domain and can be used by generics. I get that. I do think in this discussion that basic fact is too often lost.

    And if what follows on is an improvement I think a patent ought to be allowed. For example, when Version 1 of a drug works but produces some undesirable side effect. If Version 2 of the drug works but reduces or eliminates that undesirable side effect V2 should be patentable (at least it seems to me).

    Now the question I don’t have enough scientific knowledge to answer is where is that novel/nonobvious line, and do some Art Units and patent examiners allow things that have a small (or even insignificant) quantum of uniqueness. I know that is the case in certain Art Units. Just look at some of the gadgets that get patented. Are they unique? Technically, but in many areas of the Office there are substantially different levels of uniqueness required. Is that happening in the pharma area? I have no idea, but would love for those who have the scientific knowledge to write about that issue.

  6. Arie Michelsohn March 14, 2018 2:36 pm

    The potential advantages of extended-release formulations and how to make and use them have long-been in the prior art. That is not to say that in particular cases there may be some unusual circumstances that could warrant an XR formulation of a drug being patentable over the original drug formulation–but more often than not, such product extensions are within ordinary skill and should not represent patentable inventions.

  7. Anon March 14, 2018 3:00 pm

    It is when drugs are patented without the heroics of real innovation that is the problem,

    A little lesson from history: the Supreme Court desire for Flash of Genius was expressly rejected by Congress.

    Innovation (your “real” innovation) need NOT involve heroics, and to think otherwise is pure error.

  8. Arie Michelsohn March 14, 2018 3:37 pm

    Patentability may not require “flash of genius,” but it does require that an invention not be an obvious or trivial advancement that one of ordinary skill in the art would have been motivated to do in any event, and would reasonably have expected to work, in light of the scope and content of the prior art and the level of skill in the art, balanced by secondary considerations. Thus has 35 U.S.C. 103 been constructed, to distinguish real accomplishment–an heroic thing–from trivialities that might otherwise block market competition, for years.

  9. Anon March 14, 2018 4:15 pm

    real accomplishment–an heroic thing

    Again – NO heroics necessary.

    That you think otherwise in any way, shape or form is pure error.

  10. Arie Michelsohn March 14, 2018 4:48 pm

    Whether real accomplishment is heroic, or not, is of no moment to the legal analysis that distinguishes a real accomplishment (a patentable invention), from obvious and trivial modifications of the prior art. To my mind, true inventors are heroes. Those that attempt to overstate their accomplishments in an attempt to foreclose others from practicing obvious and trivial variations of the prior art, are not.

  11. Anon March 14, 2018 5:02 pm

    The insertion of “in my mind” (of your comment) is in direct contradiction to your leadin statement of “is of no moment to the legal analysis.”

    Not sure why you are having difficulty grasping this rather evident point.

    Maybe stop and think about why you want to “feel” that somehow heroics are in play…

    (They are not.)

  12. Anon2 March 14, 2018 5:26 pm

    Certainly fighting to claim and protect property which is rightfully yours and to profit therefrom to your utmost ability possible with solemn conviction in the sanctity of your right to do so, and through uncoerced voluntary exchange of values is indeed “heroic”.

    Such heroism is not to be confused with that exemplified by the duty-laden so-called heroes (of the current self-entitled millennial pop-culture, and who we can see in any of the many movies of the last decade) whose self-abasement and inexplicable zealotry in their rush toward utter self-sacrifice, (a sacrifice not for any person of particular personal value, but for someone, anyone, other than themselves) which is astonishingly met at once by the twittering masses with both tears and cries of approval (rather than simply disgust).

    Without any knowledge of the type of hero of which you approve or of the notion of “heroics” Anon @9 judges as irrelevant, it is clear to me that when the individual right of property is as stake, particularly in the realm of the exchange of values for medicinal/health goods and services, in today’s modern culture of a Constitution bendy to the “will-trends” of the “public”, just who is permitted to keep their rights to their property (and in what kinds of property) and who gets to take those rights from them (to what degree) and why, depends greatly on the prevailing “feelings” of the public about who the hero (and the villain) happen to be at the moment.

  13. Anon March 14, 2018 5:32 pm

    As to the notion of keeping others from practicing “obvious and trivial variations” of something to which patent rights have inured, I suggest that you read (anew) the KSR decision with an open mind as to the stronger protections to prior inventions that the legal hurdle of 103 was thought to provide.

    It may be difficult to apply this different mindset, as most people will only see the NEGATIVE view of KSR (as we have been conditioned to view anything coming from the Supreme Court as necessarily only weakening patent rights).

    You make an assumption about “overstatements” that is not in line with the writing of the Supreme Court.

  14. Tom Lanni March 15, 2018 3:32 am

    I think the author is off base on this one. He seems to be railing against the idea that an inventor can file for multiple patents centered around the same body of work. We are always faced with the choice of filing a continuation in part vs a new application. The choice is wether to claim an earlier filing date and maintain continuity of disclosure for claims that find support in the parent application or to file a new application and get the full term for the new invention. As an example let’s say inventor A files for and is granted a patent for a widget. Inventor B takes inventor A’s widget and makes an improvement to the widget. Inventor B can file for a patent on the improved widget as long as the improvements meet the requirements for non obviousness. Of course anyone making such improved widget would require a license from both inventors under both patents. It stands to reason then that inventor A should be no less entitled to file for a new patent for a improvements to his own widget than inventor B. In either case there must be a non obvious improvement to the widget.

  15. Benny March 15, 2018 5:19 am

    Josh @4,
    quote, “Patents on “obvious” improvements are no barrier to legitimate competition.”
    Dude, you don’t get out of the house enough. The day is too short for me to provide you with all the examples I have to disprove that statement.

  16. Curious March 15, 2018 8:27 am

    If a drug company plants a more than 100-patent thicket to protect market exclusivity, then it had better be able to justify why it should deserve the cumulative protection of patent term.
    The question that begs to be answered, for which no answer has been provided so far, is when do these patents respectively expire? It’s one thing to have a “100-patent thicket” that all expire over a period of a couple years (because of continuations, terminal disclaimers, and the like). It’s another thing altogether to have valuable patents that expire 10 or 15 years apart.

    If the patents expire at essentially the same time, this isn’t a problem. However, until somebody actually looks at them and explains the relative patent terms, any criticism of the portfolio is unjustified.

  17. Paul Morgan March 15, 2018 9:57 am

    It would be interesting to see actual statistics. This certainly used to be a major problem before divisional and continuation applications got the same 20 year+ terms as their parent applications, and before 18 month publications of all applications with foreign equivalents [which major drugs have] impacted double patenting rejections. So it is now a lot harder to get actually enforceable patents that would extend patent terms even for the claimed improvements and survive D.C. or IPR challenges
    As for corporate claims of “hundreds” of patents on a product, that might be counting all the foreign equivalents?
    Those in the industry have also sometimes admitted that FDA approval is as important or more important than patents. Lately we have seem some of the most extreme price increases for sole source pharmaceutical products not covered by any patents.

  18. Josh Malone March 15, 2018 9:58 am

    Benny, I have dry eyes and don’t want to pay for Restasis. Instead I will use the 2X concentrate version which is off patent.

    Revoking tribal sovereign immunity and destroying property rights to obtain the diluted Restasis treatment is ignorant mob mentality.

    No need to find me other examples – feel free to engage with the Restasis case.

  19. Josh Malone March 15, 2018 10:09 am

    It doesn’t matter when the patents in the so-called thicket expire. All embodiments disclosed 20 years ago are public. The improvements are not yours or mine. If that bothers you, then make do with the old art. Or prove with clear and convincing evidence that the improvement is trivial. Or hold off on burning down the patent system while competitors thin out the thicket with cross licensing like they did in the old days when patents and inventors had respect. Plenty of options better than revoking sovereign immunity and destabilizing all property rights.

  20. Benny March 15, 2018 10:40 am

    Josh @ 17,
    I’m not knowledgeable enough to discuss pharma patents with you, but pulling a patent out of the bag at random, take a look at US8950882, which is typical of the kind of low quality, no-innovation-required, nuisance patents which merely repeat what is screamingly obvious to any second year engineering student or even spare-room hobbyist, and serves only to stymie the competition. This is what I meant.

  21. Josh Malone March 15, 2018 11:12 am

    Benny, that LED light guide for a washing machine control panel appears to be non-obvious. The reason I can tell is that it was issued and one of the requirements the patent office examines and certifies before issuing a patent is compliance with section 103 of the Patent Act.

    If you are in the washing machine business, then you should stick with one of the old styles of LED illumination, since you consider this only a trivial improvement.

  22. Benny March 15, 2018 11:22 am

    Josh,
    Light pipes have been around for decades. Using a light pipe to guide light from a board mounted LED to a panel in the 21st century is only slightly less obvious than using a wheel on a wheelbarrow. You are over-reliant on the competence of USPTO examiners and maybe naive regarding the honesty of patent prosecution attorneys.

  23. Josh Malone March 15, 2018 11:35 am

    Benny, I don’t see the harm. As a consumer I have plenty of choices of washing machines. I can’t afford a Samsung with the bells, whistles, and fancy lightpipes. My Maytag is serving me just fine.

  24. Patrick Kilbride March 15, 2018 11:41 am

    If the author had his way, pharmaceutical innovation would amount to a tree that bears no fruit. You get the original patented product and little in the way of follow-on innovation that improves delivery, side effects, efficacy, and so on. The legalistic argument regarding novelty and non-obviousness is just that – legalistic. From a societal and economic perspective the outcome we want is more innovation. It costs money – often lots and lots of money – to discover and bring new uses and indications to market. They still have to be proven safe and effective to regulators at the expense of the innovator and the necessary investments don’t happen absent proprietary rights.

    Patrick Kilbride
    Global Innovation Policy Center
    U.S. Chamber of Commerce

  25. Benny March 15, 2018 11:43 am

    Josh,
    As a consumer you should see the harm in nuisance patents restricting your choice. As a manufacturer you would recognize the harm in a patent which effectively blocks you from plugging an off-the-shelf component directly into your product. If you look at the prosecution history you will note that, in typical fashion, the examiner relied only on patent documents for prior art, but if you were to look at the component (light pipe) manufacturer’s public documentation, you would find more than you need for a 103 rejection.

  26. Josh Malone March 15, 2018 12:06 pm

    Benny, your concerns are purely theoretical. Even now the PTAB is ready and willing to kill off this patent, yet it is apparently not even worth the $15,500 (only $9,000 until recently) cost of a petition. It is not significantly blocking competition. This sort of hypothetical handwringing has led to actual total destruction of patent rights, and threatens Native American rights and all property rights under the Amici and government arguments put forth in Oil States

  27. Benny March 15, 2018 12:18 pm

    Josh,
    If you can teach me how to kill improperly examined patents for 15.5K, I’ll see if I can arrange your air-fare, hotel, dinner etc so you can do it in person. None of our attorneys ever suggested less than a 6 figure invoice.
    Even if it is just 50K, that’s money. Shareholders money, which means it could be part of your pension fund. We don’t throw money around thoughtlessly here.

  28. Josh Malone March 15, 2018 12:20 pm

    We probably should return to the subject of the article. I have already explained how the Restasis patent is not preventing dry eye treatments using cyclosporin.

    As for Humira, the active ingredient adalimumab is also off patent. Why can’t Crohn’s patients be treated with the original adalimumab instead of the $4k/month Humira?

  29. Paul Morgan March 15, 2018 1:15 pm

    Re Benny at 25 – yes indeed. Even if a drug improvement patent was that easy to kill in an IPR with prior patents or publications,* only insurance companies, hospitals and others actually absorbing the large drug cost differences will have the motivation and means for paying the six figure costs for IPRs. [Plus some generic drug companies.]
    I’m surprised the article author did not ask why more of the law firms suffering from the decline in D.C. patent suits going to trial these days have not done a more effective job of recruiting such potentially lucrative IPR clients?
    *[But presumably one cannot raise obviousness type double patenting issues in an IPR, as has occurred in a surprising number of pharmaceutical infringement suits,]

  30. Josh Malone March 15, 2018 1:59 pm

    Paul, we were talking about washing machines at comment 25. Which ailment are you concerned about – dry eyes are Crohn’s Disease? There are off patent treatments for both. No need to copy the expensive name brand drugs. No need to attack Native American rights or annihilate patent property rights..

  31. Anon2 March 16, 2018 9:54 am

    Patrick@24

    Well said and although obvious, by no means could it be said that in today’s culture is it not necessary sometimes to state, and restate the obvious.

    What remains “not so obvious” in today’s culture, and what might be necessary also to state, is that the “good” of living in a society (and having a government) does not flow from the procurement of “goodies” by any means, that the goal of “having” the drugs made, is not justified by any means which “work”… Freedom and rights are not justified by pointing to the resulting drugs produced thereby.

    The actual “good” of living in a society consists in its (the government’s role) protection of individuals rights (which include property), the freedom to pursue happiness and benefit from the fruits of one’s effort. So “patents” are not “good” in some round about way because they bring about drugs (the goodies), they are good because they represent the ultimate good each and every person in a proper society should expect from a government, the protection of individual rights and freedoms.

  32. Anon March 16, 2018 10:32 am

    Anon2 – well stated.

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