“Economically, incremental innovation in the pharmaceutical industry delivers cost savings. Incremental innovations are usually launched at a discount and the resulting competition across drugs in a therapeutic class results in lower prices.”
The United States is on the brink of making changes to the U.S. patent law that would be modeled on India’s Patent Law. At a Senate Judiciary Committee markup scheduled for tomorrow, June 27, Senator Lindsey Graham (R-SC) reportedly plans to offer language as an amendment in the form of the No Combination Drug Patents Act. The language of the bill would prohibit the patenting of new forms, new uses and new methods of administration of new medicines unless the patent applicant can show “a statistically significant increase in efficacy”.
India’s Section 3(d)
This language is oddly similar to India’s Section 3(d), something the Trump Administration’s U.S. Trade Representative has complained “restricts patent eligible subject matter in a way that poses a major obstacle to innovators” (see here, page 49). Other Senators have also weighed in against “a generally deteriorating environment for intellectual property” in India (see here), including Judiciary Committee ranking member Dianne Feinstein (D-CA) and Judiciary Committee members Mike Crapo (R-ID), Amy Klobuchar (D-MN) and Chris Coons (D-DE).
As described in a recent Geneva Network study (see here), section 3(d) of the Indian Patent Act requires a pharmaceutical invention related to a known substance to demonstrate heightened therapeutic efficacy in order to be eligible for a patent, a requirement that is inconsistent with India’s international obligations. “This heightened requirement for patentability specifically precludes many categories of invention that allow follow-on innovation, including ‘salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substances.’”
A Blow to Innovation and a Violation of TRIPS
The Graham amendment would deal a devastating blow to medicines innovation in the United States, harming patients in this country and around the world. It would turn the United States into India—a country whose own innovators have to leave the country to patent new inventions (see here). In addition, the proposed amendment appears to violate basic provisions of international trade agreements the United States was instrumental in forging, including TRIPS Article 27.1.
Innovation, and pharmaceutical innovation in particular, is an inherently dynamic process; innovations build on one another and improvements draw from a long history of earlier technological advances. Sir Isaac Newton famously stated, “If I have seen far, it is by standing on the shoulders of giants.” In her classic paper on innovation (see here), Suzanne Scotchmer cites this quote and emphasizes that virtually all technical progress builds on a foundation provided by earlier innovators. Innovation is an undeniably cumulative event, and progress happens both in leaps and bounds (radical innovation) and in small steps (incremental innovation). In the context of the pharmaceutical industry, radical innovations encompass breakthrough discoveries of the ‘first-in-class’ medicine with a new mechanism of action. In contrast, incremental innovations may expand an existing therapeutic class through the development of a new drug based on differences in adverse effects, delivery systems, dosing schedules, or heat stability. All innovation is valuable and we reap the rewards – through health dividends – from both small steps and large leaps.
Cumulative innovation enriches our lives, improves our health, and is critical to successful innovative industries and thriving economies. Importantly, the majority of existing therapies currently in use are incremental innovations. As evidence of their therapeutic value, a recent study finds that 63% of the drugs on the World Health Organization’s Essential Drug Lists are follow-on drugs, and close to one-quarter of the therapeutic indications described are treated by drugs initially indicated to treat a different disease or condition (see here).
Incremental Inventions are Innovative and Good for Public Health
The proposed Graham amendment is misguided from a legal perspective as well as from public health and economic standpoints. Legally, improvement innovations must meet all patentability standards. All patents require advances that are novel, useful and non-obvious, characteristics that may describe both incremental innovations as well as groundbreaking advances. From a public health perspective, incremental innovation ensures a variety of drugs are available within a therapeutic class, which provides physicians with the ability to treat the individual needs of diverse patients with precision. Innovative improvements have the potential to: increase the number of available dosing options, uncover new physiological interactions of known medicines, allow for reformulations to encourage children’s compliance, increase the shelf-life or heat-stability of a given medicine to secure effectiveness in diverse environments, eliminate treatment-limiting drug reactions or side effects, enhance patient administration and improve patient compliance. According to Wertheimer, Levy and O’Connor (see here), drugs within a single therapeutic class differ in their therapeutic profile, metabolism, adverse effects, dosing schedules, delivery systems, and other features. These differences increase a patient’s probability of finding a treatment that is both effective and tolerated. Moreover, multiple therapies ensure an uninterrupted supply and availability of vital medications if the initial drug fails in the development stage, in the market, or suffers from manufacturing interruptions. Finally, economically, incremental innovation in the pharmaceutical industry delivers cost savings. Incremental innovations are usually launched at a discount and the resulting competition across drugs in a therapeutic class results in lower prices. In a 2000 study (see here), DiMasi examines 20 new drugs, accounting for half of U.S. sales, launched between 1995 and 1999. The study shows that all but one of the follow-on drugs were discounted and sold at prices up to 70% lower than the pioneer drug. Incremental innovation does not stymie competition; instead it has the potential to enhance it.
Sacrificing the Future of Innovation
In 2018, the U.S. Food and Drug Administration (FDA) set an all-time record for new drug approvals with 59 novel drugs and biologics approved by the agency’s Center for Drug Evaluation and Research (CDER). (see here) The number of new molecular entities (NMEs) and biologics approved by CDER surpassed the agency’s previous record of 53 approvals in 1996 and is a significant jump over the 46 new drugs approved in 2017. The scientific and financial resources required for these advances are an investment worth making and an important precedent for global health. Patents encourage those innovations, making cutting-edge treatments a reality. Current efforts to “fix” the patent system by amending existing intellectual property legislation governing pharmaceutical inventions will only undermine the incentives that encourage innovation. All innovation, both breakthrough discoveries and incremental improvements, is valuable and should be protected and rewarded. It is essential to recognize the importance of these treatments and those that will build upon them in the future. If we reshape our patent laws based on India’s distorted system, we will sacrifice future innovation and the global public health benefits that would result. This is not a model for a healthy pharmaceutical industry or a vibrant economy.
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