The shifting functional balance of patents and drug regulation

Health Affairs

Volumn 20, Issue 5, 2001, Pages 119-135

  Eisenberg, Rebecca S ^a  

^a UNIVERSITY OF MICHIGAN LAW SCHOOL   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ARTICLE; DRUG APPROVAL; DRUG INDUSTRY; ECONOMIC ASPECT; ECONOMICS; HUMAN; LEGAL ASPECT; PATENT; PHARMACOGENETICS; POLITICS; UNITED STATES;

DRUG APPROVAL; DRUG INDUSTRY; ECONOMIC COMPETITION; HUMANS; PATENTS; PHARMACOGENETICS; POLITICS; UNITED STATES;

EID: 2442446865     PISSN: 02782715     EISSN: None     Source Type: Journal    
DOI: 10.1377/hlthaff.20.5.119     Document Type: Article

References (74)

1. See, for example, J. Gleick, "Patently Absurd," New York Times Magazine, 12 March 2000, 44.
2. Decisions include AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999); and State Street Bank & Trust Co. v. Signature Financial Group Inc., 149 F.3d 1368 (Fed. Cir. 1998). For criticisms, see R.C. Dreyfuss, "Are Business Method Patents Bad for Business?" Computer and High Technology Law Journal 16, no. 2 (2000): 263-280; L.J. Raskind, "The State Street Bank Decision: The Bad Business of Unlimted Patent Protection for Methods of Doing Business," Fordham Intellectual Property, Media, and Entertainment Law Journal (Fall 1999):61-104; and P. Samuelson et al., "A Manifesto Concerning the Legal Protection of Computer Programs," Columbia Law Review 94, no. 8 (1994): 2308-2431.
3. Decisions include AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999); and State Street Bank & Trust Co. v. Signature Financial Group Inc., 149 F.3d 1368 (Fed. Cir. 1998). For criticisms, see R.C. Dreyfuss, "Are Business Method Patents Bad for Business?" Computer and High Technology Law Journal 16, no. 2 (2000): 263-280; L.J. Raskind, "The State Street Bank Decision: The Bad Business of Unlimted Patent Protection for Methods of Doing Business," Fordham Intellectual Property, Media, and Entertainment Law Journal (Fall 1999):61-104; and P. Samuelson et al., "A Manifesto Concerning the Legal Protection of Computer Programs," Columbia Law Review 94, no. 8 (1994): 2308-2431.
4. Decisions include AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999); and State Street Bank & Trust Co. v. Signature Financial Group Inc., 149 F.3d 1368 (Fed. Cir. 1998). For criticisms, see R.C. Dreyfuss, "Are Business Method Patents Bad for Business?" Computer and High Technology Law Journal 16, no. 2 (2000): 263-280; L.J. Raskind, "The State Street Bank Decision: The Bad Business of Unlimted Patent Protection for Methods of Doing Business," Fordham Intellectual Property, Media, and Entertainment Law Journal (Fall 1999):61-104; and P. Samuelson et al., "A Manifesto Concerning the Legal Protection of Computer Programs," Columbia Law Review 94, no. 8 (1994): 2308-2431.
5. The Patent Act defines patent-eligible subject matter as "any new and useful process, machine, manufacture, or composition of matter," 35 U.S. Code, sec. 101. For an analysis of the different impact of the patent system on different industries, see W.M. Cohen et al., "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (Or Not)," NBER Working Paper no. 7552 (Cambridge, Mass.: National Bureau of Economic Research, 2000).
6. Cohen et al., "Protecting Their Intellectual Assets," 9-11, Figures 1 and 2.
7. Ibid., 16-24, Figures 7 and 8.
8. Fritz Machlup, "An Economic Review of the Patent System," Testimony before the Senate Judiciary Subcommittee on Patents, Trademarks, and Copyrights, 85th Cong., 2d sess. (Washington: U.S. Government Printing Office, 1958).
9. See generally U.S. Congress Office of Technology Assessment, Pharmaceutical R&D: Costs, Risks, and Rewards, Pub no. OTA-H-522 (Washington: U.S. GPO, 1993).
10. See National Institutes of Health, Office of Financial Management, "NIH Key Facts and History of Funding," March 1998, 〈www4.od.nih.gov/ofm/PRIMER97/page6. stm〉 (22 March 2001). A ten-year history of NIH appropriations may be found at 〈www4.od.nih.gov/ofm/cj01/page43.htm〉 (24 March 2001).
11. Pharmaceutical Research and Manufacturers of America, PhRMA Annual Report 2000-2001, 〈www.phrma.org/publications/publications/annual2000〉 (3 June 2001); and R. Findlay, "Originator Drug Development," Food and Drug Law Journal 54 (1999):227-232.
12. Pharmaceutical Research and Manufacturers of America, PhRMA Annual Report 2000-2001, 〈www.phrma.org/publications/publications/annual2000〉 (3 June 2001); and R. Findlay, "Originator Drug Development," Food and Drug Law Journal 54 (1999):227-232.
13. Public Citizen, "Why the Pharmaceutical Industry's 'R&D Scare Card' Does Not Justify High and Rapidly Increasing U.S. Drug Prices," 26 January 2000, 〈www.citizen.org/congress/drugs/press/rdscarecard.htm〉 (3 June 2001).
14. See 21 U.S. Code, sec. 355(j).
15. P.L. 98-417, 98 Stat. 1585 (codified as amended at 15 U.S. Code, sees. 68b-68c, 70b; 21 U.S. Code, sees. 301, 355, 360cc; 28 U.S. Code, sec. 2201; and 35 U.S. Code, secs. 155, 155A, 156, 271, 282).
16. 21 U.S.Code, sec. 355(j).
17. 35 U.S. Code, sec. 156.
18. Ibid., sec. 271(e)(1).
19. 21 U.S. Code, sec. 355(b)(1).
20. 35 U.S. Code, sec. 271(e)(2); also see 21 U.S. Code, sees. 355(c)(3)(C), 355(j)(4)(B)(iii).
21. See E. Dickinson, "PDA's Role in Making Exclusivity Determinations," Food and Drug Law Journal 54 (1999): 195-203; and A. Engelberg, "Special Patent Provisions for Pharmaceuticals: Have They Outlived Their Usefulness? A Political, Legislative, and Legal History of U.S. Law and Observations for the Future," IDEA: The Journal of Law and Technology 39 (1999): 389-426.
22. See E. Dickinson, "PDA's Role in Making Exclusivity Determinations," Food and Drug Law Journal 54 (1999): 195-203; and A. Engelberg, "Special Patent Provisions for Pharmaceuticals: Have They Outlived Their Usefulness? A Political, Legislative, and Legal History of U.S. Law and Observations for the Future," IDEA: The Journal of Law and Technology 39 (1999): 389-426.
23. 21 U.S. Code, sec. 355(j)(5)(B)(iv).
24. This practice has attracted antitrust scrutiny from the Federal Trade Commission. See J. Resek, "Biovail v. Hoechst Aktiengesellschaft, Inc.: An Analysis under the Sherman Act and the Noerr-Pennington Doctrine," Fordham Intellectual Property, Media, and Entertainment Law Journal (Winter 2000): 571-594.
25. P.L. 97-414, 96 Stat. 2049 (1983).
26. 21 U.S. Code, sees. 355(c)(3)(D)(ii), (iii).
27. P.L 105-115, 111 Stat. 2296 (1997) (codified at 28 U.S. Code, sec. 355a).
28. World Trade Organization, "Agreement on Trade-Related Aspects of Intellectual Property Rights," 15 April 1994, 〈www.wto.org/english/tratop_e/trips_e/ t_agm0_e.htm〉 (19 June 2001).
29. See "Report of the National Institutes of Health (NIH) Working Group on Research Tools," Presented to the Advisory Committee to the Director, 4 June 1998, 〈www.nih.gov/news/researchtools/index.htm〉 (3 June 2001).
30. See R.S. Eisenberg, "Bargaining over the Transfer of Proprietary Research Tools: Is This Market Failing or Emerging?" in Expanding the Bounds of Intellectual Property:Innovation Policy for the Knowledge Society, ed. R. Dreyfuss, H. First, and D. Zimmerman (New York: Oxford University Press, 2001), 209-249.
31. R.S. Eisenberg, "Public Research and Private Development: Patents and Technology Transfer in Government-Sponsored Research," Virginia Law Review 82 (1996): 1663-1727.
32. W. Evans and M. Relling, "Pharmacogenomics: Translating Functional Genomics into Rational Therapeutics," Science (15 October 1999): 487-491.
33. R. Norton, "Clinical Pharmacogenomics: Applications in Pharmaceutical R&D," Drug Discovery Today (February 2001): 180-185.
34. For an excellent summary, see L.J. Lesko et al., "Optimizing the Science of Drug Development: Opportunities for Better Candidate Selection and Accelerated Evaluation in Humans," Pharmaceutical Research 17, no. 11(2000):1335-1344.
35. See J. Kling, "Opportunities Abound in Pharmacogenomics," Scientist (10 May 1999):16.
36. See G. Shaw, "Does the Gene Patenting Stampede Threaten Science?" AAMC Reporter, February 2000, 〈www.aamc.org/newsroom/reporter/feb2000/gene.htm〉 (3 June 2001).
37. For a description of the SNP Consortium and its objectives, visit the SNP Consortium Web site, 〈snp.cshl.org〉.
38. 〈snp.cshl.org/about/program.html〉 (19 June 2001).
39. S. Heffler et al., "Health Spending Growth Up in 1999; Faster Growth Expected in the Future," Health Affairs (Mar/Apr 2001):193-203.
40. C. Hogan, P.B. Ginsburg, and J.R. Gabel, "Tracking Health Care Costs: Inflation Returns," Health Affairs (Nov/Dec 2000): 217-223.
41. Results of this study, which was conducted by the Brandeis University Schneider Institute for Health Policy and PCS Health Systems, are available at 〈bcbshealthissues.com/issues/drugprices/report/intro.vtml〉 (19 June 2001). Mark Merlis of the Institute for Health Policy Solutions reaches slightly lower estimates of annual price increases from his own analysis of the same study. M. Merlis, "Explaining the Growth in Prescription Drug Spending: A Review of Recent Studies," 8-9 August 2000, 〈aspe.hhs.gov/health/reports/drug-papers/ merlis/merlis-final.htm〉 (17 May 2001).
42. Merlis, "Explaining the Growth."
43. See M. Hunt, "Prescription Drug Costs: Federal Regulation of the Industry," September 2000, 〈bcbshealthissues.com/proactive/newsroom/release.vtml? id=17520〉 (19 June 2001).
44. Medicine Equity and Drug Safety Act of 2000, incorporated in P.L. 106-387, sec. 745. See M. Kaufman, "Shalala Halts Bid to Lower Drug Costs," Washington Post, 27 December 2000.
45. In a press briefing, Secretary of Health and Human Services Tommy G. Thompson said that prospects for implementing the legislation were "doubtful," although he had not yet made a final decision. "Secretary Thompson Holds Briefing on the Budget," Federal Document Clearing House Political Transcripts (9 April 2001) (LexisNexis news service).
46. See, for example, Prescription Reimportation, Improvement, Correction, and Enhancement Act, H.R. 698, 107th Cong., 1st sess. (introduced in the House of Representatives 14 February 2001); and Greater Access to Affordable Pharmaceuticals Act of 2001, S. 812, 107th Cong., 1st sess. (introduced in the Senate 1 May 2001).
47. R.J. Blendon et al., "Health Care in the Upcoming 2000 Election," Health Affairs (July/Aug 2000): 210-221.
48. B. Washuk, "States Legislating Solutions for High Drug Prices," State Net Capitol Journal (28 May 2001); and M. Uhlman, "States Wage Own Fight against Drug Prices," Philadelphia Inquirer, 22 June 2000.
49. B. Washuk, "States Legislating Solutions for High Drug Prices," State Net Capitol Journal (28 May 2001); and M. Uhlman, "States Wage Own Fight against Drug Prices," Philadelphia Inquirer, 22 June 2000.
50. An Act to Establish Fairer Pricing for Prescription Drugs, 2000 Maine Legis. Ch. 786 (S.P. 1026) (L.D. 2599) (to be codified at Maine Rev. Stat. Ann. title 22).
51. Pharmaceutical Research and Manufacturers of America v. Commissioner, 2000 U.S. Dist. LEXIS 17363 (D. Me. 2000); and Pharmaceutical Research and Manufacturers of America v. Commissioner, 2001 U.S. App. LEXIS (1st Cir. 2001).
52. See, for example, M. Schoofs and M. Waldholz, "AIDS Epidemic Traps Drug Firms in a Vise: Treatment vs. Profits," Wall Street Journal 2 March 2001.
53. M. Shoofs and M. Waldholz, "AIDS-Drug Price War Breaks Out in Africa, Goaded by Generics," Wall Street Journal, 7 March 2001.
54. See Joint MSF-Oxfam-TAC Press Release, "Drug Companies in South Africa Capitulate under Barrage of Public Pressure: Powerful Precedent Set for Other Developing Countries," 19 April 2001, 〈www.accessmed-msf.org/msf/ accessmed/accessmed.nsf/html/4DTSR2?OpenDocument〉 (11 June 2001). For an analysis of the arguments presented in the lawsuit, see D. Nash, "South Africa's Medicines and Related Substances Control Amendment Act of 1997," Berkley Technology Low Journal 15, no. 1 (2000): 485-502.
55. See Joint MSF-Oxfam-TAC Press Release, "Drug Companies in South Africa Capitulate under Barrage of Public Pressure: Powerful Precedent Set for Other Developing Countries," 19 April 2001, 〈www.accessmed-msf.org/msf/ accessmed/accessmed.nsf/html/4DTSR2?OpenDocument〉 (11 June 2001). For an analysis of the arguments presented in the lawsuit, see D. Nash, "South Africa's Medicines and Related Substances Control Amendment Act of 1997," Berkley Technology Low Journal 15, no. 1 (2000): 485-502.
56. PhRMA, "AIDS and Health Care in Africa," 〈www.phrma.org/publications/ backgrounders/world/aidsinafrica.phtml〉 (19 June 2001).
57. R.G. Frank, "Prescription Drug Prices: Why Do Some Pay More than Others Do?" Health Affairs (Mar/Apr 2001): 115-128; and H.R. Varian, "Examining Differences in Drug Prices," New York Times, 21 September 2000.
58. R.G. Frank, "Prescription Drug Prices: Why Do Some Pay More than Others Do?" Health Affairs (Mar/Apr 2001): 115-128; and H.R. Varian, "Examining Differences in Drug Prices," New York Times, 21 September 2000.
59. WTO, "Agreement on Trade-Related Aspects of Intellectual Property Rights."
60. Ibid., TRIPS Agreement, Article 28, sec. 1(a), and Article 6.
61. T. Swanson, "Combating Gray Market Goods in a Global Market: Comparative Analysis of Intellectual Property Laws and Recommended Strategies," Houston Journal of International Law (Winter 2000): 327-370.
62. See M. Barrett, "The United States' Doctrine of Exhaustion: Parallel Imports of Patented Goods," Northern Kentucky University Law Review 27 (2000): 911-984; and V. Chiappetta, "The Desirability of Agreeing to Disagree: The WTO, TRIPS, International IPR Exhaustion, and a Few Other Things," Michigan Journal of International Law (Spring 2000): 333-392.
63. See M. Barrett, "The United States' Doctrine of Exhaustion: Parallel Imports of Patented Goods," Northern Kentucky University Law Review 27 (2000): 911-984; and V. Chiappetta, "The Desirability of Agreeing to Disagree: The WTO, TRIPS, International IPR Exhaustion, and a Few Other Things," Michigan Journal of International Law (Spring 2000): 333-392.
64. BBS Kraftverzeug Technique AG v. K.K. Racimex & K.K. Jap-Auto Products, Supreme Court of Japan, Case no. Heisei 7 (wo) 1988 (1 July 1997); and A. Reindl, "Intellectual Property and Intra-Community Trade," Fordham International Law Journal (March 1997): 819-865.
65. D.S. Chisum, Chisum on Patents, vol. 5, sec. 16.05[3][a] (New York and San Francisco: Matthew Bender, 2000).
66. Boesch v. Graff, 133 U.S. 697 (1890). A U.S. District Court reads Boesch v. Graff as establishing a rule of national exhaustion in Griffin v. Keystone Mushroom Farm, Inc., 453 F. Supp. 1283 (E.D.Pa. 1978).
67. See, for example, Curtiss Aeroplane & Motor Corp. v. United Aircraft Engineering Corp., 266 F. 71 (2d Cir. 1920); and Kabushiki Kaisha Hattori Seiko v. Refac Technology Development Corp., 690 F. Supp. 1339 (S.D.N.Y. 1988).
68. See, for example, Dickerson v. Tinling, 84 F. 192 (8th Cir. 1897); and Dickerson v. Matheson, 57 F. 524 (2d Cir. 1893).
69. See, for example, C.E. Barfield and M.A. Groombridge, "Parallel Trade in the Pharmaceutical Industry: Implications for Innovation, Consumer Welfare, and Health Policy," Fordham Intellectual Property, Media, and Entertainment Law Journal (Autumn 1999): 185-265; and The Uruguay Round Amendments Act, P.L. 103-465, secs. 532, 533, 108 Stat. 4809, 4983-90 (1994), codified as amended in pertinent part at 35 U.S. Code, sees. 154(a)(1), 271(a).
70. Quality King Distributors, Inc. v. L'Anza Research International, Inc., 523 U.S. 135 (1998). Although the majority opinion was arguably broader, a concurring opinion by Justice Ruth Bader Ginsburg would limit the decision to cases involving U.S.-manufactured goods. 523 U.S. at 154.
71. K-Mart v. Cartier, 486 U.S. 281 (1988).
72. 21 U.S. Code, sec. 355(a).
73. Ibid., secs. 355(b)(1)(D), (F).
74. P.L. 100-293, 102 Stat. 95 (codified as amended at 21 U.S. Code, sees. 301, 331, 333, 353, 381); and 21 U.S. Code, sec. 801(d).