Category Archives: Intellectual Property

Supreme Court Decision on FTC v. Actavis paves the way for development of cheaper drugs

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Zachary D Caplan JD, attorney at law firm in Philadelphia that filed amicus brief on behalf of drug wholesalers and pharmacies in FTC v. Actavis

Arthur Caplan PhD, Division of Medical Ethics, NYU Langone Medical Center

Amidst all the news about various Supreme Court decisions there is one that ought not be overlooked for its impact both on public health and healthcare reform—FTC v. Actavis.  Today the Court decided, by a vote of five to three, that Big Pharma companies can be sued over deals with generic companies to not bring generic drugs to market.  In so deciding, the Court endorsed the idea that Big Pharma companies with weak patents on their drugs may not pay off other companies that want to make cheaper generic versions to not do so.  This practice, known as pay-for-delay, has run rampant in the pharmaceutical industry over the last two decades costing American consumers billions and restricting access to cheaper versions of drugs.

In FTC v. Actavis, the Federal Trade Commission had alleged a pay-for-delay arrangement between Solvay Pharmaceuticals and Actavis that was intended to keep Actavis from producing a generic version of Solvay’s blockbuster AndroGel testosterone drug.  A lower court—the Eleventh Circuit Court of Appeals—dismissed the FTC’s complaint.  Now the Supreme Court has reversed that dismissal.

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Supreme Court deals a major blow to reverse-payment settlements.

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The Supreme Court keeps coming out with major opinions in the biotech/pharma area, with today seeing a major blow to reverse-payment settlements wherein brand-name pharma companies pay generic companies to delay their entry into the market.  This type of settlement shows the opposite pattern to that in most patent litigation, where the accused infringer (here, the generic drugmaker) usually pays the patent-holder, rather than the patent-holder paying the infringe, and is a result of the dynamics of generic drug market entry created by the Hatch-Waxman Act.  Since reverse-payment settlements result in the generic agreeing to stay out of the market in return for payment from the patent-holding brand name company, they look like antitrust violations – the question is whether the involvement of a patent (which creates a monopoly) means the settlements are acceptable under antitrust law.

Today, the Supreme Court came down on the side of protecting competition and sticking with traditional antitrust doctrines.  The Court didn’t go so far as to say that all reverse settlements are presumptive unlawful, instead requirings courts to apply a “rule of reason.”  But the Court firmly rejected the idea that a reverse payment settlement is immune from attack as long as it falls within the nominal scope of the patent.  The Court also noted that a large reverse settlement payment may itself provide evidence of a patent’s weakness, avoiding the need for a full determination of patent validity in the context of the antitrust action.  The opinion is here.

Prof. Einer Elhauge and Alex Krueger wrote about the economics of this question last year; their article can be found here.

Art Caplan on the Myriad Decision: Patenting natural DNA never made sense

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Bill of Health contributor Art Caplan weighed in on the Supreme Court’s decision in the Myriad case with an opinion piece at NBC:

“The Supreme Court has finally done what should have been done years ago — declared that genes which naturally exist in all of us cannot be patented.  For years Myriad Genetics, the company that sells the genetic tests used by Angelina Jolie and thousands of other women to assess their risk of breast cancer and ovarian cancer, has held back the development of better tests and access for many women to testing by invoking their patent claims on key genes. Now the Supreme Court has rightly said that kind of patent is not valid.

“Patenting a naturally existing gene never made any sense. Sure, it takes work to figure out what genes do, but the rewards for that are publications, tenure, professional honors and even a Nobel Prize — not a patent. Patents should be given not for discovery, but for inventions: What genes can you change; what test kit can you build; what program can you run to screen genetic risks?

“The implications of the decision could be far broader than Myriad, whose stock price went up after the ruling. Many companies have taken out patents on genes not only those found in humans but in animals, microbes and plants.  All of these are now in question — which may cause some reevaluation of the worth of some companies who have been touting their ownership of genes to Wall Street.”

You can read the full piece here: Patenting natural DNA never made sense.

Eric Lander on the Myriad Decision

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This morning on WBUR, Eric Lander discussed the significance of the Supreme Court’s unanimous decision in Association for Molecular Pathology v. Myriad Genetics that DNA cannot be patented. Lander, the Director of the Broad Institute of MIT and Harvard, filed an amicus brief in the case that was co-authored by Petrie-Flom Center Faculty Co-Director and Bill of Health editor I. Glenn Cohen.

You can hear Lander’s full interview here.

For more about the amicus brief, see Glenn Cohen’s April 17 post at Bill of Health.

Thoughts on Myriad

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While awaiting the torrent of academic commentary on this case that is no doubt forthcoming, for now I thought I’d highlight a few interesting aspects of today’s unanimous Supreme Court decision in Association for Molecular Pathology v. Myriad Genetics, 569 U. S. ____ (2013).

Briefly, this case concerned whether genes can be patented. The company Myriad Genetics held several patents related to two genes: BRCA1 and BRCA2. When mutations of these genes are present, it may indicate that a woman is at a high risk for getting breast or ovarian cancer. Myriad also held patents on a proprietary test to evaluate for the presence of BRCA gene mutations that costs over $3,000. This screening has been in the news recently due to Angelina Jolie’s decision to undergo preventive double mastectomy after testing positive for BRCA mutations.

In today’s case, Myriad’s patents were being challenged because they limited competition from other companies and researchers that could have independently tested for the same gene mutations. The outcome of this case has been critically anticipated for years because of its impact on patient access to medicines and funding medical research and development. Thousands of human genes have been patented in the U.S. over the past 30 years.

Before reaching the Supreme Court, a U.S. District judge in New York invalidated Myriad’s patents in 2010, ruling that genes were ineligible for patent protection as “products of nature.” However, the Court of Appeals for the Federal Circuit disagreed, holding that genes were eligible for patent protection because DNA isolated from the body is “markedly different” in chemical structure than DNA as it exists inside the body. The Supreme Court remanded the decision back to the Federal Circuit in light of its decision in Prometheus, and the Federal Circuit affirmed its decision that DNA was patent eligible.

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India Aggressively Expanding Access to Medicines

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The Indian Federal Department of Pharmaceuticals has released a new Drugs (Prices Control) Order that expands the list of “essential” drugs subject to government price control. Currently, a 1995 order restricts prices on 74 bulk drugs and their formulations; the new order would control prices on a total of 348 medicines that make up 60 percent of domestic drug sales. The price for these drugs will be based on a simple average of all brands with a market share of at least one percent.

The Indian Pharmaceutical Alliance (IPA), which represents major Indian pharmaceutical manufacturers, estimates that prices could fall between 20 and 90 percent. Price controls are certain to improve access to medicines in a country where two-thirds of the citizens have no health insurance and pay health care costs out-of-pocket. India spends less than 1.5 percent of its GDP on public health, ranking among the lowest spenders from developing countries.

Coming soon after India issued compulsory licenses for on-patent medicines, and the recent high-profile Glivec patent case I blogged about in April, expanded price controls reflect a growing willingness to challenge multinational corporations (MNCs). Whether this will result in backlash from MNCs remains to be seen—but they have not historically failed to respond to such challenges.

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Monsanto v. Bowman: Patents on GMO Seeds

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Monsanto has been receiving quite a bit of press recently.  Marchers in over 400 cities protested the company and the GMOs it makes took place a few days ago, arguing that foods should be labeled if they contain GMOs.

More broadly relevant to the biotech industry and GMOs generally, a few weeks ago, the Supreme Court released its 9-0 opinion in Bowman v. Monsanto, No. 11-796.  This case shores up the patent-law foundation for the GMO seed business (as was widely expected), but also takes an interesting turn involving intent and self-replicating technology in general. Continue reading →

Live Blogging from FDA in the 21st Century Conference, Panel 1: FDA in a Changing World

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[This is off-the-cuff live blogging, so apologies for any errors, typos, etc]

Panel 1: FDA in a Changing World: Lewis Grossman, Ted Ruger, Barbara Evans, moderated by Holly Fernandez Lynch

Lewis Grossman, FDA in the Age of the Empowered Consumer

Begins his analysis by comparing a hypothetical consumer in 1960 and today.

Consumer was passive. Today’s consumer is active, more unmediated choice, more direct citizen involvement.

Why the change? 1970 was the decade of advocacy, culminating in 1972 Patient’s Bill of Rights from AMA. Central them was informed consent and thus complete information from physician.

1998 saw disruption of WebMd and now even more disrupted by web search technology which is how most patients get there info.

Food: 1966, recipe standards. Relatively little variety and consumer choice. Very little info on  nutrition, “batman white bread.” Turning point was 1969 White House conference that led to more choice and more info.

Health clams as the portal where 1st Amendment law entered into FDA law. The image of the intelligent consumer who need not be shielded from information.

Changes in standard by which FDA decided if something was misleading. Until 2002 unsure if reasonable or gullible consumer standard. In 2002 for food FDA chose the reasonable consumer standard.

Liberal and conservatives got scrambled on these matters in interesting ways.

Also a revolution in advertising, leading to revolution of patient’s relationship to his or her drugs.

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4/25: Boston-Wide Forum on Global Access Licensing of Biomedically Relevant Technologies

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by Adriana Benedict

Universities Allied for Essential Medicines (UAEM)
Boston-Wide Forum on Global Access Licensing of Biomedically Relevant Technologies

Thursday, April 25th, 3-5pm
Coffee and refreshments at 2:45pm; reception following the event
Harvard Medical School New Research Building – 77 Avenue Louis Pasteur
Seminar Room 1031

How do innovative medical technologies make their way to a global population, including patients in resource-limited settings? As centers of medical innovation, universities are well-placed to influence the global dissemination of the fruits of biomedical research and enhance access to advances in drug, vaccine, diagnostic and device technologies. In the past five years, several institutions in Boston and beyond have acknowledged this fact and taken bold steps to encourage the transfer of medical technologies to the developing world. Licensing provisions such as tiered, reduced and zero royalties for products sold in developing countries; march-in rights; agreements to agree; agreements not to patent or not to enforce patents in developing countries; and humanitarian licensing exceptions are just some of the strategies used to implement global access licensing of medical technologies.  Others can be found in UAEM’s Global Access Licensing Framework, as well as the multi-institution Statement of Principles and Strategies for the Equitable Dissemination of Medical Technologies.

In this Forum, technology transfer officials and academic research leaders from Harvard, MIT, Tufts, BU, Northeastern, Children’s Hospital and Partners Healthcare (MGH/BWH) will speak to their institutions’ philosophy and experience with global access licensing strategies. In an hour-long Q&A, the audience – including invited experts with significant experience in medical technology development – will contribute to the discussion. The Forum is open to the public; and researchers, entrepreneurs, university leaders and students are highly encouraged to attend.

UAEM is an international interdisciplinary student organization that works with universities to leverage academic research for global health. Since our founding in 2001, we have worked towards illuminating the poorly understood process that brings discoveries from the laboratory to widely accessible products and services meant to improve human health.

Registration through this link is appreciated, but not required.

This event is co-sponsored by grants from the Harvard Global Health Institute (HGHI), the HMS Division of Medical Sciences, and Harvard Law School Advocates for Human Rights.

Beyond the Patents-Prizes Debate

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In Beyond the Patents-Prizes Debate (forthcoming in the Texas Law Review), Daniel Hemel and Lisa Larrimore Ouellette articulate a new theoretical framework for thinking about R&D funding mechanisms. They note that patents, prizes, government grants, and tax credits for research all play an important role in facilitating innovation, although academic literature has disproportionately focused on the role of patents and prizes—this is the first detailed analysis of how tax credits compare as an incentive mechanism.

The Orphan Drug Act (ODA) illustrates how patents, grants, and tax credits can all be used to achieve similar goals. The ODA was passed in 1982 to incentivize R&D on rare diseases. It incorporates several different types of incentives, including direct government grants for research, a patent-like market exclusivity period for approved drugs, and tax credits for half of the cost of clinical research. The ODA has been widely acknowledged as successful. From 1973–1983, U.S. pharmaceutical companies only brought 10 orphan drugs to market. In the twenty-five years since the Act’s passage, 326 new drugs were approved for rare diseases. The ODA was also the model I proposed in an article last year for a new system to boost R&D for evidence-based complementary and alternative medicine (CAM).

Given that all these mechanisms can accomplish the same goal, possibly even with the same costs, and no single mechanism is always more efficient than the others, a framework is needed for determining which incentive is most appropriate for a given goal. The authors do this by providing a structure for balancing the benefits and detriments of each incentive on the basis of who should determine the reward size, when the reward should be provided, and who should pay.

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Myriad (Gene Patent) Oral Argument and the “Lander Brief”

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First, and unrelated to this post, I wanted to say that like everyone here in Boston (and it seems throughout the U.S.) my heart goes out to the folks injured by Monday’s blast and their friends and family.

Now on to the substance. I have participated in a number of Supreme Court amicus briefs  both in my life as a litigator and as an academic. In big name cases the Court is often inundated with them, and one can only hope that the brief is read, let alone put to good use. This is why I was incredibly happy and honored that the Supreme Court devoted a significant chunk of its oral argument time on Monday in the Association for Molecular Pathology v. Myriad Genetics, No. 12-398, the gene patent case,  to discussing the brief I authored with Gideon Schor and Vern Noviel on behalf of Dr. Eric S. Lander. As Nature reported on the argument:

“The justices seemed to have been heavily influenced by a friend-of-the-court brief filed by Eric Lander, genomics whiz and founding director of the Broad Institute in Cambridge, Massachusetts. The brief argued against a lower court’s ruling that a snippet of DNA isolated from its chromosome does not occur in nature and is therefore patentable. To the contrary, wrote Lander, isolated DNA fragments do exist and are found circulating free in the blood. Indeed, a search of two public databases of DNA sequence data obtained from fetal DNA circulating in maternal blood revealed fragments that contained the BRCA1 and BRCA2 genes. “I think that raised a whole new ‘oops’,” said Robert Cook-Deegan, a policy researcher who has studied the case at Duke University in Durham, North Carolina. The justices never heard a proper response to Lander’s argument from Myriad’s attorney, who seemed to have either misunderstood the Lander brief or confused it with another when questioned.”

I reproduce some snippets from the actual transcript below the fold discussing our brief and its significance for how the Court rules.

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Of Evergreening and Efficacy, Part III

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This is the last in a three-part series (Part I, Part II) of posts I’ve written about the case between Novartis and the Union of India, in which the Supreme Court of India denied Novartis a patent for its anti-cancer drug Glivec. Today I’m continuing the discussion of the practical outcome of the case. What effect is the Glivec patent decision going to have on access to medicines in India and other developing countries?

Beyond issues specific to the transition period, the Supreme Court was considering challenges to Section 3(d) of its patent act, which prohibits patents for a new form of an existing drug without a change in therapeutic efficacy. It is designed to prevent evergreening, a term used to label practices where a small change is made to an existing product and claimed as a new invention. When Section 3(d) was enacted in 2005, it was unique to India—there was no analogous provision in any other country.

Novartis had at one point tried to argue that Section 3(d) was unconstitutional under the Indian constitution and non-compliant with TRIPS, but those arguments were rejected by the High Court at Madras in 2007. Novartis did not appeal those decisions. The High Court rejected the TRIPS claim because in India private plaintiffs may not challenge a national law based on its compatibility with an international agreement. However, the court also referred to the Doha Declaration, which affirms that “the TRIPS Agreement can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all.” This means that WTO members can set their own standards for patent protection within the bounds of TRIPS. Section 3(d) establishes a higher standard for an inventive step, which means that drugs patentable in other countries won’t necessarily be patentable in India.

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Of Evergreening and Efficacy, Part II

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I wrote earlier this month about the case between Novartis and the Union of India, in which the Supreme Court of India affirmed denying a patent for Novartis’ anti-cancer drug Glivec. Adriana Benedict added an insightful post about the case last week.

In my last post, I talked about the theory behind the decision and what it means for a drug to be therapeutically efficacious. Today and tomorrow, I thought it would be interesting to focus on the practical outcome of the case. In other words, what does this case mean for the access to medicines more generally, both in India and around the world?

Judging by recent public comments, this will be a landmark case. On the Novartis website, where the company is hosting an impressive array of resources devoted to the Glivec patent case, it states that this “decision discourages innovative drug discovery essential to advancing medical science for patients.” Eric Althoff, a Novaris spokesman said, if “innovation is rewarded, there is a clear business case to move forward. If it isn’t rewarded and protected, there isn’t.” On the opposite side of the spectrum, Indian Trade Minister Anand Sharma called the ruling “a historic judgment” that reaffirmed the position of Indian law requiring substantive innovation for patent protection. The Supreme Court itself noted that the “debate took place within a very broad framework. The Court was urged to strike a balance between the need to promote research and development in science and technology and to keep private monopoly (called an ‘aberration’ under our constitutional scheme) at a minimum.”

Despite the controversy, this case won’t necessarily have a wide ranging impact. It involved some unusual elements, which require historical background in India’s patent system to understand.

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Caplan on the Myriad Patent Case

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[Posted on behalf of Art Caplan]

On January 7, 1610 Galileo Galilei, the Italian physicist and astronomer, aimed his new invention, the telescope, at the sky and became the first human to observe three of the moons orbiting the planet Jupiter.  His discovery created a sensation since he had shown that there were objects in the universe that were not circling the Earth – throwing into doubt the view that his church, the Roman Catholic church, taught that the Earth was the center of the universe.

If Galileo had been alive today he might have been working for a private science company.  If so there is little doubt that they would have insisted he seek a patent for the marvelous telescope that revealed amazing secrets about the world.  If that company had been Myriad genetics they might have insisted that he not only patent the telescope but also everything he found when he looked through it, including Jupiter and its moons.  In a way, that is what Myriad did when in 1994 it, along with the University of Utah, sought a patent on an association scientists had discovered between a set of genetic mutations and a high risk of developing breast cancer.

The patents Myriad received have earned the company a pretty penny.  They have had a monopoly over all genetic testing for breast cancer for nearly two decades.  Doctors and patients have complained bitterly that Myriad’s high priced tests have limited access for many women and hindered efforts to conduct research that might have more rapidly improved the accuracy of testing.

I think the Myriad patents should not have been awarded.  Nor should any patent that relies solely on looking at genes as they exist in nature and finding associations with the risk of getting a disease.  The standard for a patent is not discovery but making something useful out of a discovery.  Patenting genes is too close to trying to patent the moons of Jupiter which Galileo discovered but did not create.  Myriad’s early patent arguably hindered the willingness of others to aggressively explore better tests for a terrible disease.  Other patents on other gene sequences could have the same effect.

If Myriad discoveries the equivalent of the genetic testing telescope then great—let them have their patent.  But finding what is out there in nature be it Jupiter, the moon, or a sequence of genes gets you a place in history but not a patent.

If Novartis’s “improved” version of Glivec is not more therapeutically efficacious, why is the Novartis decision such a big deal?

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By Adriana Benedict

Last week, Ryan Abbot blogged here about the Novartis case decided last Monday by the Supreme Court of India.  Since then, there have been a broad range of reactions to the case, but many of them appear to have left a lurking elephant in the room.

I’d like to attempt to provide some clarity to a question that seems to have created a lot of confusion surrounding the impact of the Novartis decision: If the older alpha crystalline form of imatinib mesylate (generic Glivec) is already available in India, and the newer beta crystalline form is not more therapeutically efficacious, then why does it matter whether or not Novartis can get a patent on the newer version of Glivec?  The simple answer is that for the most part, it doesn’t really, in terms of the availability of generic Glivec.  At most, it may make a difference for some Indian patients who will do better with the beta crystalline form.  And it will make some difference for Novartis, which will now forego a potential market of these Indian patients who would prefer to take (and can afford to pay for) the beta crystalline version.  But the alpha crystalline form of imatinib mesylate was already available in generic form in India, and it would have continued to be available in generic form in India regardless of the outcome of this case.  So why all the commotion?

First, the Novartis decision means that Indian generic manufacturers can now produce the beta crystalline form of imatinib mesylate with impunity.  This means that Novartis is likely to face competition in its production of the beta crystalline form, over which it would otherwise have held a global monopoly.  Indian generic manufacturers may now produce and export the beta crystalline form to other countries, which means that many more cancer patients in developing countries will have access to it.  Novartis’s markets in these countries may be disrupted through parallel importation of cheaper generics.

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Of Evergreening and Efficacy

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An important case was decided yesterday that may have a significant impact on access to medicines for patients in developing countries. India’s high court rejected an appeal by the pharmaceutical company Novartis to grant a patent for its cancer drug Glivec.

The case involved a challenge to Section 3(d) of the Indian Patents Act which was designed to prevent patent holders from extending the duration of their patents by making minor changes to existing formulations—a practice referred to as “evergreening.” Section 3(d) stipulates that “the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance” is not eligible for patent protection.

The drug Glivec was initially invented and patented as a compound in its free base form. Novartis subsequently obtained a patent in the U.S. and Europe on a beta crystal version of the compound, which was found to possess 30% greater bioavailability. In yesterday’s case, one of the central questions before the court was whether the “new” drug form qualified for a new patent under Section 3(d). The court ruled that it did not.

To arrive at this conclusion, one of the more interesting issues the court had to resolve was how to define efficacy. It elected to define efficacy as therapeutic efficacy, but even within that definition the court was presented with multiple visions.

On the one hand, efficacy could be thought of as the capacity of a drug to produce an effect. That is, the property of a drug that causes a stimulus at a receptor site, as distinct from characteristics such as affinity, potency, and bioavailability. A broader conception of efficacy would include considerations such as improved safety or reduced toxicity.

Theoretically, I suspect a more holistic approach is justified.

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Oral Arguments in FTC v. Actavis (SC pay for delay case)

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By Adriana Benedict

As Jonathan Darrow notes below, on Monday, the Supreme Court heard oral arguments in Federal Trade Commission (FTC) v. Actavis, the “pay for delay” case questioning whether or not reverse payment settlements in Hatch-Waxman litigation should be presumptively anticompetitive, a question on which the Circuit Courts are divided.  This particular case involves Solvay Chemicals Inc., whose patent on AndroGel cream, a synthetic testosterone formulation (set to expire in 2020) was challenged by three generic pharmaceutical companies that filed ANDA applications in 2003 for generic version of AndroGel (which is 1/6 the cost of the branded version).  Following a 30-month stay triggered by Solvay’s subsequent infringement lawsuit, the FDA approved the generic version of Androgel in 2006, at which point the generic companies’ motion for summary judgment on the validity of Solvay’s patent was ready for decision.  Instead of risking the judgment, the parties settled, with the generic companies agreeing to stay out of the market until 2015 in return for an estimated $186 – 252 million from Solvay over the course of six years.  The FTC, expressing concern that consumers would ultimately bear the costs of delayed generic entry, unsuccessfully challenged this settlement as presumptively unlawful restraints of trade.  The Eleventh Circuit affirmed the District Court’s decision in 2012, which rejected the FTC’s approach in favor of a “scope of the patent” test.  Several months later, though, the Third Circuit reached the opposite verdict in a similar case, accepting the FTC’s position that reverse payment settlements are presumptively unlawful agreements not to compete. The Supreme Court granted cert to resolve this conflict.

I found a couple features of yesterday’s oral arguments particularly striking.  First was Justice Breyer’s statement that he thought one of the four briefed scenarios in which a reverse payment settlement may rebut an anticompetitive presumption was “neutral”:

JUSTIC BREYER: [B]the person’s already in the market thinks that the next year or two or three years is worth $100 million a year, and the person who’s suing thinks it’s worth 30 million a year. And so he says, hey, I have a great idea, I’ll give him the 30 million and keep the 70. And — and that, I don’t see why that’s anticompetitive if that’s what’s going on.

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Branded Drugs and Generics: Reverse Payment Settlement Agreements

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By Jonathan J. Darrow

Earlier this week the Supreme Court heard oral arguments in FTC v. Actavis, in which the Federal Trade Commission is asserting that it is impermissible for a brand name drug company to pay a generic drug company to stay out of the market. Normally, such collusive behavior would constitute a clear violation of antitrust laws, because it reduces competition and thereby has the potential to raise prices to the detriment of consumers. But a complication arises in the case of branded and generic drugs because a patent is involved, giving the patent holder the lawful right to exclude competitors from the marketplace.

In a typical “reverse payment” case, the scenario unfolds as follows: First, the branded company enters the market with a new drug product that is covered by a patent. Some time later, but before the expiration of the patent, a generic drug company seeks to market a generic version of a drug, asserting that the patent is either invalid or not infringed (the assertion takes the form of a Paragraph IV certification, named for the section of the U.S. statute under which the certification arises, see 21 U.S.C. 355(j)(2)(A)(vii)(IV)).  Rather than litigate the case to completion, however, the two firms settle, with the patent holder agreeing to pay the generic company to stay off the market until some future date, such as the date that the patent is set to expire. The “monopoly” profits are thus shared between the two companies, to the detriment of consumers.

Defenders of reverse payment settlements argue that such agreements should be legal so long as they are “within the scope of the patent,” that is, so long as the restrictive agreement does not extend beyond the patent expiration date (see, e.g., Edward Stewart, Skepticism from the Court in Drug Case, N.Y. Times, Mar. 25, 2013).  The fundamental weakness of this argument—and what the N.Y. Times article does not mention—is that many drug patents (73% according to a 2002 government report (see page vi)) turn out to be invalid, not infringed, or otherwise insufficient when litigated in court. If many drug patents would be invalid or not infringed if litigated to conclusion, then the actual “scope of the patent” would be less than its nominal term would suggest, and the high cost borne by consumers would be greater than the patent law contemplates. Continue reading →