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The Biden administration on Wednesday announced some Medicare beneficiaries will save money on 64 prescription drugs for the third quarter of this year as part of a program intended to rein in massive price hikes.

The Inflation Reduction Act (IRA), which President Biden and congressional Democrats ushered into law in 2022, requires drug companies to pay rebates to Medicare when prices increase faster than the rate of inflation for certain drugs. Health officials then adjust the cost of drugs that qualify for savings under the program.

Governments worldwide would need to come up with nearly $200 billion a year to comprehensively replace the current market- and patent-based system with a prize system. As noted, in America, U.S. Senator Bernie Sanders’s plan calls for an $80-billion-a-year prize fund. As Dean Baker has written, “The [U.S.] government already spends more than $30 billion a year to finance biomedical research through the National Institutes of Health. It would probably be necessary to increase this amount by $50–$60 billion a year in order to replace the funding currently supported through patent monopolies.”[11] In fact, drug companies invest in excess of $180 billion per year in R&D related to drug development.[12] But even accepting Baker’s lower number, in a political and fiscal environment wherein the U.S. Congress cannot even index the gas tax to inflation to pay for badly needed roads and bridges (even with gas prices close to their lowest levels in nearly a generation), the chances Congress would be willing to appropriate the funds needed for any of these proposals is close to zero.[13]

In fact, the U.S. Congress’s modus operandi is to enact policies to shift public-sector costs to the private sector through mandates, not to take away private-sector costs with public-sector spending. And with government balance sheets tight everywhere (government debt as a share of GDP in Europe reached an all-time high in the mid-2010s, for instance), it is equally unlikely governments in other countries would be willing to allocate the sums needed. Given the general unwillingness of the public or lawmakers to support higher taxes or spending (in the United States or elsewhere), such proposals to replace private revenue with government spending would almost certainly lead to reduced overall investment (combined private and public) in biomedical innovation.

The American patent system has, since our nation’s founding, served as a cornerstone of innovation. But the pharmaceutical industry’s willingness to undermine this system is having real consequences for American patients.

The skyrocketing cost of health care has been fueled by rapidly rising prescription drug prices, which are significantly higher for Americans than patients in other wealthy countries. While some argue that this is just the cost of being a global innovator, it is more complicated than that, and a key source of the problem is the abuse of the patent system.

Americans loathe the pharmaceutical industry. It ranks dead last in a recent Gallup poll that tracks the public's opinion of 25 different sectors. Even the federal government is more popular, with a net favorability rating of negative 27 points, compared to pharma's negative 31-point rating.

This scorn is misplaced. It's true that the biopharmaceutical sector contains a few bad actors who price gouge and cut regulatory corners. But the majority of drug companies are responsible corporate citizens that spend billions to invent lifesaving medicines.

The cost of producing a vaccine, in other words, is priceless. But expecting Big Pharma to deliver a cure means acknowledging how Big Pharma works. The economic logic that drives up drug prices and fuels constant political outrage also makes rapid drug development possible. They’re two sides of the same coin.

Multiple studies show that you can only trim pharmaceutical profits so much before innovation slows, which means fewer new medicines and diminished capacity to solve problems such as SARS-CoV-2 (the virus that causes the COVID-19 disease). The National Bureau of Economic Research has found, for instance, that cutting drug prices in the U.S. by 40 to 50 percent would lead to 30 to 60 percent fewer R&D projects. Another study found that Germany lost 23,000 pharma jobs after it implemented price controls in the 1990s, and Germany slipped from first to third place among the continent’s top drug innovators. As the nonpartisan Information Technology and Innovation Foundation concluded in a white paper last year, “For the issue of pharmaceutical drugs, an overwhelming body of academic research shows that price controls will significantly restrict the number of new drugs in the future.” Every decision involves tradeoffs.

To test that claim, we examined the provenance of the highest-selling prescription medicines of Pfizer and Johnson & Johnson, the two largest pharmaceutical and biotechnology companies in 2018.

We found that these large pharmaceutical companies did not actually invent most of the drugs they sell. Indeed, it appears they have already reduced their investment in the discovery of new medicines to the point where the threat of additional reductions rings hollow and is no longer a persuasive reason for opposing legislation to lower drug prices.

In the first known study of its type, an international team of researchers evaluated whether high research and development (R&D) costs explain high drug prices in the United States.

“There is a presumption that high R&D costs justify high drug prices. If that were true, then we’d see a positive association between the two measures,” said first author Olivier Wouters, PhD, assistant professor at the London School of Economics and Political Sciences.

The trade-off between prices and innovation need not be this stark and, in fact, is likely avoidable. There are ready policy options that can allow us to meet the goals of both controlling prescription drug costs and promoting investments in innovative new therapies that can make us healthier. The U.S. has successfully pursued policies in the past that improved incentives for innovation and affordability, from basic science investments to programs for financing innovative start-ups. There is significant win-win potential in legislation building on the considerable strengths of drug pricing regulation proposals.

A recent RAND Corporation study found that U.S. drug prices were 2.56 times higher than those in 32 comparable countries, with brand-name drug prices averaging 3.44 times higher. What's more, researchers note that across all of the Organization for Economic Co-operation and Development (OECD) nations studied, total drug spending was $795 billion, with the U.S. accounting for more than half of the sales or 58%, but just 24% of the volume.3

“Branded medications are typically the most common for patients to stop taking,” explained Deepti Pidakala, PharmD, a pharmacist with Marley Drug, a full-service pharmacy that offers home delivery nationwide.

A new report from the Centers for Disease Control and Prevention (CDC) cited the high cost of prescription drugs to cause more than 9 million adults to not take their medications as instructed.1

Prescription drugs can be expensive, especially in the U.S. In fact, research shows that Americans spend more on prescription drugs per capita than people in any other country—or about $1,200 more per person.2 And these high costs are not without consequences.

Annual increases in drug price increases can translate to higher Medicare spending and higher out-of-pocket drug costs by patients. Higher out-of-pocket spending occurs when beneficiaries are required to pay coinsurance, or a percent of the drug’s price – which is common for many brand-name Part D drugs and standard for all Part B covered drugs in the form of a 20% coinsurance requirement.

The basic conclusion of this article is that the potentially detrimental impact of forum selection is limited. Contrary to what numerous writers argue, tactics aimed at benefiting from favorable procedural or substantive laws are not detrimental to the achievement of fairness and should not, therefore, be considered as forum shopping. Also, the lack of decisional uniformity caused by the practice of forum selection is not, as such, problematic-not because of the reasons put forward by Professor Juenger (essentially the desirability of applying the substantively superior lexfor), but because lack of uniformity does not directly impact the equality between the parties (fairness). Thus, the real issues that forum selection may cause are issues of efficiency and, to a more limited extent, issues of unequal convenience.

Importantly, this article has also shown that, at the international level, forum shopping is inevitable as long as litigants are offered jurisdictional options or alternatives. This article has also shown that the availability of such alternatives, though it generates forum shopping opportunities, is ultimately beneficial to the interests of international litigation inasmuch as it strikes a reasonable balance between efficiency and fairness, on the one hand, and the interests of the plaintiff and those of the defendant, on the other. Finally, this article has also emphasized that, as a practical matter, litigants have incentives to refrain from forum shopping, which contributes to limiting the practical significance of this problem.

Welcome to the U.S. International Trade Commission. We’re an independent, nonpartisan, quasi-judicial federal agency that fulfills a range of trade-related mandates. We provide high-quality, leading-edge analysis of international trade issues to the President and the Congress. The Commission is a highly regarded forum for the adjudication of intellectual property and trade disputes.

MISSION

This Article fills these voids; it tests the various postulates and describes the real impact of the Kyocera decision. While doing this, the Article also provides real insight into how strong the ITC is in patent law. The Article does this by looking at all ITC utility patent investigations filed after the date of the Kyocera decision until the end of 2010 (eighty-seven investigations) and comparing them to a similar number filed prior to the decision.

9 The EPROM factors are set forth in Certain Erasable Programmable Read-Only Memories, Components Thereof Products Containing Such Memories, and Processes for Making Such Memories, USITC Pub. 2196, Inv. No. 337-TA-276, at 125 (May 1989). 10 Kyocera, 545 F.3d at 1355-56 (citing 19 U.S.C. § 1337(d)). " Id. at 1356 (citing 19 U.S.C. § 1337(d)(2)(A) and (B)). 12 See Symposium, Where is the ITC going after Kyocera?, 25 SANTA CLARA COMP. & HIGH TECH. L.J. 701 (2009). 1 See, e.g., Sidley Austin LLP, General Exclusion Orders in the Wake of Kyocera, INTELLECTUAL PROPERTY: ITC SECTION 337 UPDATE, (Sept. 9, 2009), available at. 3 TEXAS INTELLECTUAL PROPERTY LA WJOURNAL

This trend may continue for several reasons. First, the ITC offers a number of advantages to patent owner complainants, in addition to the increased availability of injunctive-type relief. Not only is broad discovery permitted in ITC investigations, where the limitations imposed by the Federal Rules of Civil Procedure do not apply, but they must be concluded “at the earliest practicable time” 28—typically within about 16–18 months after institution.29 And district courts routinely stay cases once a parallel ITC investigation has been initiated.30 Thus, when there are parallel district court and ITC proceedings, discovery from the ITC is often used at the district court. While not binding, the district court also has the benefit of the ITC’s rulings on, for example, claim construction. In addition, nothing precludes a district court from granting alternative relief to a patent owner involved in a parallel ITC investigation, regardless of the ITC’s final determination.31

Do China’s 5G networks “export” its version of authoritarianism? There is a well-established narrative that the societal impacts of a nation’s 5G network infrastructure reflects the values of that network’s creators. This narrative contends that the values of those who design a technology are embedded in that technology. Moreover, China’s first-mover advantage in 5G not only secures economic benefits but also allows Chinese values—through the network’s technological design—to shape how societies live. These scholars call for “free-market economies” to coalesce and establish principles, particularly freedom of expression, that highlight the ways in which 5G can be developed to advance Western liberal values and emphasize their importance to emerging economies. Beyond market share, the competition in establishing technological infrastructure concerns a nation’s rights and values and can be exploited by authoritarian agents. This narrative suggests that Huawei’s 5G networks are both designed and deployed in such a way (relative to other 5G vendors) to enable authoritarian governments to better control their populations.34 A related narrative advances an even more direct connection between Beijing’s digital authoritarianism at home and how it is practiced abroad. Should liberal democracies fail to offer a compelling and cost-effective alternative to Chinese 5G infrastructure, Beijing’s own digital governance norms and practices will spread increasingly to other countries.35

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Recently, analysts have argued that emerging technologies with military applications may undermine nuclear stability (see here, here, and here), but the logic of these arguments is debatable and overlooks a more straightforward reason why new technology might cause nuclear conflict: by upending the existing balance of power among nuclear-armed states. This latter concern is more probable and dangerous and demands an immediate policy response. For more than 70 years, the world has avoided major power conflict, and many attribute this era of peace to nuclear weapons. In situations of mutually assured destruction (MAD), neither side has an incentive to start a conflict because doing so will only result in its own annihilation. The key to this model of deterrence is the maintenance of secure second-strike capabilities—the ability to absorb an enemy nuclear attack and respond with a devastating counterattack. Recently analysts have begun to worry, however, that new strategic military technologies may make it possible for a state to conduct a successful first strike on an enemy. For example, Chinese colleagues have complained to me in Track II dialogues that the United States may decide to launch a sophisticated cyberattack against Chinese nuclear command and control, essentially turning off China’s nuclear forces. Then, Washington will follow up with a massive strike with conventional cruise and hypersonic missiles to destroy China’s nuclear weapons. Finally, if any Chinese forces happen to survive, the United States can simply mop up China’s ragged retaliatory strike with advanced missile defenses. China will be disarmed and US nuclear weapons will still be sitting on the shelf, untouched. If the United States, or any other state acquires such a first-strike capability, then the logic of MAD would be undermined. Washington may be tempted to launch a nuclear first strike. Or China may choose instead to use its nuclear weapons early in a conflict before they can be wiped out—the so-called “use ‘em or lose ‘em” problem. According to this logic, therefore, the appropriate policy response would be to ban outright or control any new weapon systems that might threaten second-strike capabilities. This way of thinking about new technology and stability, however, is open to question. Would any US president truly decide to launch a massive, bolt-out-of-the-blue nuclear attack because he or she thought s/he could get away with it? And why does it make sense for the country in the inferior position, in this case China, to intentionally start a nuclear war that it will almost certainly lose? More important, this conceptualization of how new technology affects stability is too narrow, focused exclusively on how new military technologies might be used against nuclear forces directly. Rather, we should think more broadly about how new technology might affect global politics, and, for this, it is helpful to turn to scholarly international relations theory. The dominant theory of the causes of war in the academy is the “bargaining model of war.” This theory identifies rapid shifts in the balance of power as a primary cause of conflict. International politics often presents states with conflicts that they can settle through peaceful bargaining, but when bargaining breaks down, war results. Shifts in the balance of power are problematic because they undermine effective bargaining. After all, why agree to a deal today if your bargaining position will be stronger tomorrow? And, a clear understanding of the military balance of power can contribute to peace. (Why start a war you are likely to lose?) But shifts in the balance of power muddy understandings of which states have the advantage. You may see where this is going. New technologies threaten to create potentially destabilizing shifts in the balance of power. For decades, stability in Europe and Asia has been supported by US military power. In recent years, however, the balance of power in Asia has begun to shift, as China has increased its military capabilities. Already, Beijing has become more assertive in the region, claiming contested territory in the South China Sea. And the results of Russia’s military modernization have been on full display in its ongoing intervention in Ukraine. Moreover, China may have the lead over the United States in emerging technologies that could be decisive for the future of military acquisitions and warfare, including 3D printing, hypersonic missiles, quantum computing, 5G wireless connectivity, and artificial intelligence (AI). And Russian President Vladimir Putin is building new unmanned vehicles while ominously declaring, “Whoever leads in AI will rule the world.” If China or Russia are able to incorporate new technologies into their militaries before the United States, then this could lead to the kind of rapid shift in the balance of power that often causes war. If Beijing believes emerging technologies provide it with a newfound, local military advantage over the United States, for example, it may be more willing than previously to initiate conflict over Taiwan. And if Putin thinks new tech has strengthened his hand, he may be more tempted to launch a Ukraine-style invasion of a NATO member. Either scenario could bring these nuclear powers into direct conflict with the United States, and once nuclear armed states are at war, there is an inherent risk of nuclear conflict through limited nuclear war strategies, nuclear brinkmanship, or simple accident or inadvertent escalation. This framing of the problem leads to a different set of policy implications. The concern is not simply technologies that threaten to undermine nuclear second-strike capabilities directly, but, rather, any technologies that can result in a meaningful shift in the broader balance of power. And the solution is not to preserve second-strike capabilities, but to preserve prevailing power balances more broadly. When it comes to new technology, this means that the United States should seek to maintain an innovation edge. Washington should also work with other states, including its nuclear-armed rivals, to develop a new set of arms control and nonproliferation agreements and export controls to deny these newer and potentially destabilizing technologies to potentially hostile states. These are no easy tasks, but the consequences of Washington losing the race for technological superiority to its autocratic challengers just might mean nuclear Armageddon.

The International Trade Commission, or ITC, is a forum that’s meant to protect U.S. industries from unfair trade practices. But in recent years, the prime beneficiaries of the sprawling ITC haven't been American manufacturers, but patent owners, patent lawyers, and—you guessed it—patent trolls.

The ITC is a quasi-judicial agency, that has the power to act a lot like a court. An administrative judge decides disputed issues, including allegations of patent infringement. When patent owners show imported items infringe, the ITC can ban those products from coming into the U.S., with “exclusion orders” that stop further importation.

Americans benefit from innovation and the policies and protections that promote it. However, the very system intended to protect US trade interests and innovators from foreign counterfeiters and infringers, notably the International Trade Commission, is being abused by non-practicing entities that specialize in acquiring patents for extortion—not for development or commercialization into products.

Also known as patent trolls, more and more NPEs are filing lawsuits at the ITC where they hope they can win powerful exclusion orders under a law called Section 337. Exclusion orders block allegedly infringing imports from the US, and NPEs use the threat of such an order to shake down legitimate companies and extract a large financial settlement.

The International Trade Commission (ITC) has power under Section 337 of the Tariff Act to investigate whether goods are being imported unfairly and are affecting a domestic industry.[1] One type of unfair import is a good that infringes U.S. intellectual property rights, including patents.[2] Section 337 can therefore be a useful tool for protecting American industry against infringing imports. But, increasingly, the ITC has become a means for certain non-practicing entities (or “NPEs”), often referred to as “patent trolls,” to exploit the ITC for financial gain—and to do so in a way that perversely threatens the very domestic industry the ITC was designed to protect.

Patent Trolls