India’s Patent Law is No Model for the United States: Say No to No Combination Drug Patents Act

“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.”

https://depositphotos.com/162644542/stock-photo-hand-showing-thumb-down.htmlThe 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.’”

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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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The Author

Kristina M. L. Acri née Lybecker

Kristina M. L. Acri née Lybecker is an Associate Professor of Economics at Colorado College in Colorado Springs, and Chair of the Department of Economics and Business. She earned a B.A. from Macalester College, with a double major in Economics and Latin American Studies, and received her Ph.D. in Economics in 2000 from the University of California, Berkeley. Dr.Acri's research analyzes the challenges surrounding intellectual property rights protection in innovative industries: incentivizing pharmaceutical research and development especially on neglected diseases, addressing the difficulties of strengthening intellectual property rights protection in developing countries, battling the problems related to pharmaceutical counterfeiting and the unique nature of protection for biotech therapies. Recent publications have also addressed alternatives to the existing patent system, the balance between pharmaceutical patent protection and access to essential medicines, and the markets for jointly produced goods such as blood and blood products. Kristina has testified in more than a dozen states on the economics of pharmaceutical counterfeiting. She has also worked with US Food and Drug Administration, Reconnaissance International, PhRMA, the National Peace Foundation, the OECD, the Fraser Institute, the Macdonald Laurier Institute, and the World Bank, on issues of innovation, international trade, and corruption.

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 21 Comments comments. Join the discussion.

  1. Anon June 26, 2019 8:43 pm

    Hmmm,

    Notwithstanding the various links presented, according to Greg DeLassus, a known Pharma in-house patent attorney, there is no such thing as “country-to country” effects of patent law, so a change by the US to mimic India should have zero overall effect on innovation.

  2. Anju Khanna June 27, 2019 7:24 am

    I totally agree with Dr. Acri’s observations on section 3(d) in India. In fact section 3(d) has killed domestic pharma innovation in India. There is no doubt that the generics’ industry flourished because of, earlier lack of patent protection to drug molecules (product), and post TRIPS due to section 3(d); but then they never turned innovators. And today, when many of them are actually trying to turn innovators, section 3 of the Indian Patent law is a big hindrance. Nothing short of a new molecule can be patented and not many companies (used to easy fruits) have either the patience or the will or may be even the wherewithal to invest the kind of time and money that is required in finding one! We are cutting the branch we are sitting on. And US certainly should not follow this example.

  3. TFCFM June 27, 2019 9:23 am

    From the article: Incremental Inventions are Innovative and Good for Public Health

    No one argues with this. However, this truism simply avoids the question. “The question” is whether patenting is necessary compensation to encourage “merely incremental” (however defined) inventions in pharmaceutical preparations.

    Development of new molecular entities (NMEs, new “lead drugs” in simpler language) nearly always involves substantial investigation — the trouble and expense of which will not be expended absent a substantial reward (like patenting). That is why no serious person argues against patenting of NMEs and their uses, even though such patenting increases costs to patients. Those increased costs are usually pretty clearly justifiable as the ‘reward’ for the arduous task of developing an NME.

    Similarly, once an NME is identified, it becomes somewhat predictable that at least some structurally-similar compounds will exhibit similar activity. However, it is well-known in pharmaceutical circles that even small changes in compound structure can have enormous effects on activity. As a result, even searching among “similar” compounds is a tremendous, arduous and expensive task – again, the sort of development effort deserving of a substantial reward (again, like patenting).

    However, once an efficacious NME or similar compound is identified, there are only a limited number of crystalline forms the compound can take, a limited number of chiral centers the compound has*, and making a salt with substantially any counter-ion, and mixing the compound with various well-known excipients is trivial. It is bog-standard to investigate each of these. Absent extra-ordinary circumstances, compound developers will perform these investigations for substantially every NME. For that reason, this work does not require the “reward” of potentially-decades of patent coverage in order to get the work performed — it will be done regardless.

    (*To be clear, synthesis of enantiomers – compounds differing at chiral centers – can require invention, and such synthetic methods and/or the compositions made using them may well remain ‘patent-worthy,’ even if the idea of looking at the pharmacological activity of the enantiomer for the already-disclosed use is not.)

    To the extent that the proposed language is limited to this will-be-done-regardless-of-patenting work, it seems to me to make sense to exclude such trivial, routine developmental work from patenting, so as to better fit the “reward” of patenting to the activity we seek to encourage. Where, as with such work, the work will be done regardless of patenting, patenting only increases the cost without incentivizing additional work.

    Whether the language to be proposed will carefully achieve this remains to be seen.

  4. Greg DeLassus June 27, 2019 11:37 am

    The Graham amendment… would turn the United States into India—a country whose own innovators have to leave the country to patent new inventions (see here).

    Argh. Not again with this inane fallacy. This makes no sense. Why would a U.S. researcher leave the U.S. to obtain patent protection in (e.g.) Switzerland? A U.S. inventor can already obtain patent protection in Switzerland, even if s/he does the research in the U.S. Meanwhile, if an Indian scientist chooses to move to the U.S. to do research, that has nothing to do with Indian patent law. After all, if an Indian researcher—working in India—discovers a valuable drug combo, s/he can get a U.S. patent on that drug combo quite regardless of the fact that the work was done in India, and quite regardless of the fact that the combo is not patentable in India.

    The effect of reducing the returns to pharma innovation in the U.S. will be less pharma innovation worldwide. It will not mean that more pharma R&D moves to (e.g.) Switzerland. The choice of where to do R&D work has much more to do with a country’s immigration laws, and tax laws, and physical / human resource infrastructure than with patent law.

    U.S. patent law provides an incentive to pharma researchers world wide. The effects of poor choice in U.S. law are not confined merely to the U.S.

  5. Moocow June 27, 2019 1:10 pm

    TFCFM: To the extent the work you describe is truly trivial, normal patent law should take care of the issue. We don’t grant patents on trivial changes that aren’t new or would have been obvious, so we don’t need new special anti-patent rules.
    But what if the improvement is genuinely patentable, and “trivial” or minor only in a commercial or therapeutic sense? In that case there should be no harm, because the patented improvement provides no real medical value. Generics are free to sell a copy of the original drug and consumers can decide whether the branded improved product is worth a price premium.
    Finally, what if the patented improvement is a genuine advance in safety, stability or convenience? Like a shelf-stable formulation that does not require refrigeration, a tamper-resistant dosage form as an abuse-deterrent, or a nasal spray as an alternative to a capsule? Getting FDA approval for such product modifications isn’t trivial or cheap. I doubt that such work would always be done if we were to declare it off-limits for patenting.

  6. TFCFM June 27, 2019 1:50 pm

    @Moocow: I doubt that such work would always be done if we were to declare it off-limits for patenting.

    This comment gets to the heart of what I’m trying to discuss: Certain work essentially “always” will be done, regardless of patenting. Evaluation of various salt counter-ions and forms, for example. Ordinarily, such work involves no real inventive work, even though the outcome is both unknown (i.e., novel) and not predictable (i.e., non-obvious).

    For example, if one tries out a hundred different counterions for one’s known drug, it’s entirely to be expected that a range of different solubilities, stabilities, and other properties will be observed. Picking the “best mix” of properties is merely routine optimization, even though the ‘optimal’ counterion is usually not known or predictable beforehand.

    Approved drug applications can be altered by their holders (e.g., to switch to a new counterion, as in our example), regardless of whether the patent on the original active is near expiration. Folks hoping to sell generics will have to match the altered application in their ANDA, meaning that the altered-original-drug-formulation gets a new period of patent exclusivity (despite no real inventive work having been done) and can thereby exclude generics for a longer period of time.

    Maneuvers like these are what are commonly referred to as “evergreening” of pharmaceutical patent portfolios and are believed by many to evade the LIMITED exclusivity that our patent system is intended to provide.

    A fuller discussion and links to more can be found here:

    https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3680578/

  7. Anon June 27, 2019 2:45 pm

    TFCFM,

    You appear to be implying that there are “real” inventions and “non-real” inventions that are not the same as those actually controlled by law.

    This may be similar to, but clearly is different than, the problem of Court-induced muckery (noted as the elimination of the Flash of Genius requirement and constrained in the Act of 1952 — albeit, clearly NOT constrained enough).

  8. Greg DeLassus June 27, 2019 4:29 pm

    Despite the nit I pick in #4 above, I agree with Ms Acri’s broader point that Sen Graham’s bill would be poor public policy.

  9. nutmegger June 27, 2019 5:21 pm

    Very tangentially, Senator Coons represents DE, not CT. These are small states, true, but they are proud to be themselves.

  10. Eileen McDermott June 28, 2019 8:44 am

    Thank you for pointing that out nutmegger, that was an editing mistake!

  11. TFCFM June 28, 2019 9:55 am

    Anon: “You appear to be implying that there are “real” inventions and “non-real” inventions that are not the same as those actually controlled by law.

    As many articles on this site discuss, courts and the USPTO are already distinguishing between “real” (read patent-eligible) and “non-real” inventions under the current law.

    Even ignoring that reality, though, this article discusses a proposed change to our patent laws. Just as the patent statute (by itself or as interpreted by the courts) already differentiates ‘stuff’ that is and is not eligible for patenting, it surely makes sense to consider how that differentiation can/should be tweaked when such changes are proposed. Here, that differentiation is a central issue in the proposed change.

    Patent-eligible subject matter isn’t specified in the Constitution. Instead, it’s specified by Congress, trying to fulfill its constitutionally-authorized power to “promote the progress of science and useful arts” by fashioning a sensible patent system. When Congress does that, it should not close its eyes to our long history of application of our past and present patent statutes. Thus, to the extent that one agrees that “evergreening” has been a problem in the pharmaceutical sphere, Congress ought to consider (carefully, as always) proposals to continue our patent system in a way that reduces (preferably eliminates) “problems,” while continuing/expanding the parts of our patent system that are working well.

    Tying this back to my original comment, (nearly?) everyone agrees that new pharmaceuticals and methods of treatment are greatly beneficial, won’t be nearly as vigorously developed without patent-based rewards, and that patenting should therefore continue for this subject matter.

    My original comment contends that much of the trivial work that results in “evergreening” will be done regardless of whether patent-based rewards are available, is of relatively small value, and adds substantially to the costs of health care in the US. If Congress agrees with those contentions, then it would be sensible for Congress to consider amending the patent statutes in a way that withdraws patent-eligibility for that subject matter (whether through a broad-based rule or an industry-specific exception).

  12. Anon June 28, 2019 11:12 am

    Thus, to the extent that one agrees that “evergreening” has been a problem in the pharmaceutical sphere, Congress ought to consider (carefully, as always) proposals to continue our patent system in a way that reduces (preferably eliminates) “problems,” while continuing/expanding the parts of our patent system that are working well.

    Sounds great – on its face, but when one considers that there is NO such agreement as to even a problem with evergreening (as defined in the articles that you present), then you are tending more to advocate based on a desired position than any type of accepted norm.

    My original comment contends that much of the trivial work that results in “evergreening” will be done regardless of whether patent-based rewards are available, is of relatively small value, and adds substantially to the costs of health care in the US.

    All assertions that are without merit, much less anything other than your humbly stated (or mis-stated, depending on the level of critical thinking applied) opinions.

    The articles YOU present show that options to the as-described “evergreening” ARE present and thus do not (and cannot) provide that “add substantially to the costs of health care in the US.”

    You present your opinion as established fact and then want to move on from there.

    I say thee neigh.

    Further, you venture into a “solution” of “it would be sensible for Congress to consider amending the patent statutes in a way that withdraws patent-eligibility for that subject matter” when you have NOT shown that you understand the very concept of patent eligibility, or the rather “atom bomb” nature of limiting eligibility when perhaps other FAR less intrusive and FAR more pinpoint measures should perhaps be entertained first.

  13. TFCFM June 28, 2019 12:19 pm

    Anon: “I say thee neigh.

    Mr. Ed (the talking horse), is that you? 🙂
    (I realize that Mr. Ed meant, “nay.”)

    More substantively, knowing your ‘sensitivities’ (as regularly triggered here), I believe I was careful to state my opinions as opinions and contentions, and to specify that “If Congress agrees with these contentions….”

    Section 101 eligibility can be used by Congress to limit the scope of patent rights as readily as can any other section of the patent statutes (or a new section, should Congress so choose).

  14. Anon June 28, 2019 4:35 pm

    You misapprehend my “sensitives,” TFCFM.

    It is your proselytizing with an incorrect view of just what 35 USC 101 covers that I am “sensitive” to. This is NOT a matter of being “triggered” (another of your subtle put-downs), and IS a matter of getting the law correct. Getting that law correct is ALSO not a matter of “opinions and contentions.” Anyone may surely have an opinion, but having one does NOT make that an informed opinion. You are more than welcome to continue in your errant ways (just as I am free to correct any such errant views).

    As to what Congress may choose to do – yes, I do recognize that Congress may do a lot of things (including eliminating having ANY patent system). Such is clearly not the point here.

  15. TFCFM June 28, 2019 6:43 pm

    Anon: “This … IS a matter of getting the law correct.

    ???

    I am discussing a proposed change to the law — a topic which clearly does not depend directly on what the “correct” interpretation of current law is.

    I am sorry that opinions not aligned with your own offend you so and cause you to react so caustically. Perhaps you ought to avoid the Internet if you find so offensive the views of others.

  16. Anon June 28, 2019 9:45 pm

    It is not that “a” change is being discussed — again, you are incorrect in assessing my “sensitivities.”

    It is in how you are discussing the nature of law. You continue to not “get” just what 35 USC 101 is about, even as you want to change the law.

    And yet again, you spin and misstate things: it is NOT that an opinion offends me “because it does not align with mine.” Why would you say such a thing? Nowhere do I state or suggest that MY opinion is the only opinion to be had. I speak of the law rather than my opinion of the law. Perhaps you think it coy or cute to again suggest that the law is not as I provide, that I merely provide “my” opinion, and thus downgrade what I say as being merely an “opinion.”

    What I find offensive are your tactics – as if you think that your spin alone can change fact to non-fact. What I find offensive is your desire to hide and couch your own desired state as “naturally” given or that ANY opinion is just as good as an informed view of the actuality of what the law IS. What I find offensive is that you care not at all about the history or development of innovation protection, and merely deign that your feelings about what is “really inventive” is what only should be allowed to be patented. What I find offensive is the falsity and double-speak of someone who states that they want to talk about substantive matters, and then hides in a flurry of hand-waving and insults, and is unwilling to address let alone acknowledge the points for which you have been called out upon.

  17. Anon June 29, 2019 9:43 am

    … or, TFCFM, are my actual “sensitivities” too “typed out” or “peripheral” for you to treat on their actual terms?

    Mind you, on the larger topic of the intersection of innovation protection and the business methods of the Big Pharma ‘machine,’ you will NOT find me to be a blanket apologist for “whatever the industry wants.” We might have some (small?) common ground, but I will call out cheap rhetorical tricks of position manipulation, so your writing (feelings, opinions and contentions) will be debunked and spin-removed as we progress in our conversation. May I suggest that you focus on buttressing your position rather than focusing on denigrating mine, and when you do look to my position, that you do so on the merits.

  18. TFCFM June 29, 2019 10:18 am

    Anon: “It is not that a change is being discussed…

    Perhaps you ought to pay better attention. Your assertion is belied by the sub-title of the very article we (or, at least, I) am commenting upon:

    Say No to No Combination Drug Patents Act

    Briefly summarized, the article argues “don’t change the law” (especially to make it more like India’s).

    My comments suggest that some changes in that direction may be beneficial. To wit:

    TFCFM: “The question is whether patenting is necessary compensation to encourage “merely incremental” (however defined) inventions in pharmaceutical preparations.
    * * *
    To the extent that the proposed language is limited to this …, it seems to me to make sense to exclude such trivial, routine developmental work from patenting, so as to better fit the “reward” of patenting to the activity we seek to encourage….Whether the language to be proposed will carefully achieve this remains to be seen.

    If you want to claim to possess a greater understanding of the “real” meaning of patent law than I and/or others, knock yourself out – it’s no skin off my nose. However, you should be aware that such claims tend to be viewed by many as self-serving and lacking in credibility/objectivity.

    Should you wish to discuss some issue, I’d appreciate it if you’d do your best to explain:
    – how your comments relates to something I actually said (rather than, as it has seemed, something you fear I am thinking) and
    – make some substantive point to which it is possible to respond. (“You’re stoopid and I’m smarter!” for instance, doesn’t lend itself to interesting conversational exchange.)

  19. Anon June 29, 2019 1:01 pm

    TFCFM,

    I “get” your suggestions, and it is not I that should “Perhaps [ ] ought to pay better attention.”

    However, you should be aware that such claims tend to be viewed by many as self-serving and lacking in credibility/objectivity.

    As you say: knock yourself out. Of course, if you decide to actually engage on the merits of the points that I have presented (instead of whining first of glossing then of ‘typing too much’ or subtly calling anything that you do not want to address as “peripheral,” then what becomes clearly self-serving and lacking in credibility/objectivity are your writings, not mine.

    I “should I wish to discuss some issue” YOU should pay attention to the words already in front of you (and stop trying to spin them to be something else). There are already quite enough “substantive points to which it is possible to respond” already on the table. Yet again, this last comment from you is disingenuous and duplicitous.

  20. St. John Mountbatten June 29, 2019 1:40 pm

    Strawberries!

  21. AJ July 5, 2019 7:24 am

    This is what happens when someone from Economics background access situation purely based on numbers. Section 3(d) may look like an hindrance to certain pharmaceutical companies, but when you look at other side, it has paved a way to recognize true innovations and inventions, which are not largely designed to protect certain financial interests.
    One bigger picture is growth of generic companies and affordable drugs for a large population in whole south Asian region, which western population has been kept away from. Remember, the basic premise of innovation/invention is “for human”, when you take out human factor, all is vain.

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