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The high cost of prescription medicines is a problem not just for the individual patient – government health authorities, hospitals, health insurance providers and doctors are all struggling to cope. According to a study by the Kaiser Family Foundation, the rate of growth in spending on prescription drugs in the US is expected to exceed the growth rates for spending on hospital care and other professional services from 2010 through 2019. No wonder the pharmaceutical industry’s profit margins are being closely scrutinised. The Fortune 500 industry rankings put pharmaceutical manufacturing in the lead as the most profitable industry in the US, ahead of the oil industry from 1995 to 2002. From 2008 to 2011 pharma was still generating profits after tax of 17-19 percent. A major contribution to the industry’s profitability is the availability of patent protection in most countries, which provides a barrier to competition for an average of 11.5 years after a drug has been approved and brought to market. In Europe and other regions the industry is not able to achieve quite the same juicy margins, largely because of strict price controls. In a study of 170 of the most popular prescription drugs, market analyst firm Decision Resources found that on average they were 40 percent less expensive in Europe than in the US. Many of the lowest prices were found to be for drugs that face generic competition because government bodies such as the UK’s NICE (National Institute for Health and Clinical Excellence) negotiate drug prices on a pay-for-performance basis. Without regulation on the cost of prescription drugs, however, the market in the US is wide open to exploitation, often from surprising sources. For several years, Americans living in the north of the country have been driving into Canada to fill their prescriptions. A combination of government price restrictions, lower product liability costs and a relatively lower standard of living in Canada means the prices on branded prescription medicines can be as much as 30 to 60 percent lower than in the US and there is no legal restriction on Canadian pharmacies fulfilling medical prescriptions written by US doctors. But while these anomalies in cross-border pricing have created a legitimate market opportunity, there is a more dangerous development in the black market trade of medicines within the US. Across the country, stories are emerging of poverty stricken people or drug addicts under doctor’s care for long-term illnesses such as HIV or cancer, who are selling their prescription medicines on the black market to help pay the rent or fund their habit. These are the small players, who, according to one report may be able to get around $250 from the black market gangs for a bottle of pills that is worth more than $1,500. Or they become inadvertent suppliers by allowing the gangs to forge prescriptions for expensive drugs using their Medicaid cards, then fulfilling the prescriptions and handing the drugs over for a cash ‘wage.’

Ensuring that patents are granted only for genuinely new and useful inventions is vitally important, especially in industries like pharmaceuticals, where high drug prices can have life or death consequences. That’s why we need mechanisms like inter partes review (IPR) proceedings that make it possible to challenge wrongly granted patents before the agency that created them: the U.S. Patent and Trademark Office.

IPR proceedings, created as part of the America Invents Act of 2011, empower any individual to challenge patents that are the same or obvious modifications of things that already existed. In essence, they offer a means to eliminate patents that offer no genuine invention and, therefore, should never have been granted. Such patents unfairly hinder others from innovating and competing, which stifles the development of new products and keeps prices artificially high.

The STRONGER Patents Act forces challengers to prove invalidity with “clear and convincing evidence,” like they do in district courts, rather than the “preponderance” of the evidence standard they need to meet now. That drastically raises the difficulty, and cost, of invalidating the worst patents. In practical terms, having to provide clear and convincing evidence instead of a preponderance is like having to get the ball to the 25 yard line instead of just having to make it over the 50 yard line.

Congress didn’t create IPR with a different standard by accident. This bill would undo the whole purpose Congress had in creating inter partes review in the first place: it’s supposed to be easier to invalidate wrongly-issued patents, by putting them before administrative patents judges with relevant technical expertise.

Both Congress and the courts have worked to improve the patent system and address such concerns. In 2011, Congress passed the America Invents Act, which, among other things, established a new Patent Trial and Appeal Board (PTAB) in the U.S. Patent and Trademark Office. The PTAB was designed to curb excessive patent litigation by providing a more expeditious administrative review process for weeding out low-quality patents. The Supreme Court has contributed to this effort by addressing the question of what is patentable in a series of key decisions issued over the last 17 years.

Problems with PREVAIL

The U.S. Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), today announced 41 drugs available through Medicare Part B will have a lowered Part B coinsurance rate from April 1 – June 30, 2024, if the drug company raises prices faster than the rate of inflation. An estimated 763,700 people with Medicare use one or more of these drugs annually.

Because of the President’s lower cost prescription drug law, the Inflation Reduction Act, which establishes the Medicare Prescription Drug Inflation Rebate Program, some people with Medicare who use these drugs during that time period may save between $1 and $3,575 per average dose depending on their individual coverage.

A key goal of the Biden administration has been to rein in healthcare costs. As the administration nears the end of its of its first term, Quartz talked to experts, industry analysts, and a government regulator to see how the industry has responded to federal policies to date — especially those aiming to drive down drug prices.

One of the most direct challenges to drug prices has been the Federal Trade Commission’s (FTC) crackdown on improper drug patent listings. And later this year, the Centers for Medicare and Medicaid Services (CMS) is set to announce the price for the first ten drugs participating in Medicare negotiations. Both have had varying responses from the industry.

The Biden administration on Wednesday said it will impose inflation penalties on 64 prescription drugs for the third quarter of this year, lowering costs for certain older Americans enrolled in Medicare.

President Joe Biden has made lowering U.S. drug prices a key pillar of his health-care agenda and reelection platform for 2024. A provision of Biden’s Inflation Reduction Act requires drugmakers to pay rebates to Medicare, the federal health program for Americans over age 65, if they hike the price of a medication faster than the rate of inflation.

Terrorism is among the most volatile and unpredictable threats faced by the international community, with a wide array of non-state actors committed to carrying out widespread violence for political and ideological gain.

But a soon-to-be published report by two leading experts outlines the potential for an even more deadly scenario on a scale that could threaten the existence of humanity as a species.

Intelligence experts have made a connection concerning organized crime and terrorism. Financing is the primary connection in this relationship. Terrorists use several methods of financing because strategic regional locations offer some groups an advantage in one market over another. For instance, Al-Qaeda is most known for deriving funds from the profit of heroine in European markets. Their relationship with Taliban controlled poppy plants in Afghanistan is a major source for the opium needed in heroine production. Narcotics offer terrorists a major advantage based on a high consumer demand for these illegal drugs. Within narcotic rackets, the connection has been established between organized crime and terrorism. Money needed in order to execute attacks, and the means of gaining such money must go undetected. The nature of organized crime allows it to extort certain markets for money, making crime highly attractive to terrorist who must keep their funding confidential and untraceable. Narcotics are not the only form of funding. Terrorists use a large number of criminal activities in the effort to acquire funds. Narcotics and human trafficking are the most commonly noticed. Because their trafficking patterns are often unique and identifiable, criminal trafficking routes tend to be under heavy surveillance. Al-Qaeda as well as the Iranian backed terrorist group Hezbollah has begun looking for non-conventional m ethods of funding in order to become more unnoticeable and in order to acquire more funds.

The crime-terror relationship has always been a concern but not until the 1990’s did policy makers become concerned.32 The relatively new association may be in due part that crime was once viewed as a “self-limiting” source of funding. Discoveries were made during this time suggesting terrorists were entering the drug trade and also exploiting natural resources such as diamonds, ores, and oil.33 The nature of their relationship still bewilders some though. Their interests seem entirely separate; criminals possessed by profit, terrorists by belief. If there relationship is be successful, it must be stunted—as to avoid government detection—and it must provide a significant profit in order to be advisable. These two groups act as any business partnership would; both must have a mutual agreement in which both parties believe they will profit from the partnership. This illegal partnership may appear best suited for terrorists because, “Proceeds from criminal enterprises… allow terrorists to diversify financial sources and to diffuse risk across multiple sources of financing.”34 This appears to be the most prevalent motivation as to why terrorists look to illegal activity for financing. The other is because security and law forces are always investigating legitimate business sources. Crime can also aid in operational logistics such as providing fraudulent documents and weapons. What will organized crime members achieve from this relationship? Criminals provide the resources and logistical transfers, while the terrorists provide the network and the possibility of destabilizing a policing government.

Talk about counterfeit medicines tends to conjure up images of illicit medicines laced with fentanyl and other opioids, Mr. Campbell told physicians. While that image is based in reality, all types of medications are regularly counterfeited – meaning unscrupulous entities deliberately and fraudulently mispresent the medications’ identity, composition, or source.

Pfizer’s well-known COVID-19 vaccine has not been counterfeited much because the distribution of it has been tightly controlled, he said. But since 2004, Pfizer has prevented about 302 million doses of counterfeit medications of all kinds from reaching patients worldwide. The entities producing those counterfeits prey on patients’ need for medications that are expensive or in short supply.

The core question for intellectual property law is identifying which branch of government, Congress or the Supreme Court, is more likely to effect intellectual property laws that achieve socially desirable objectives. The answer to this question turns somewhat on whether one takes an instrumentalist or deontological view of the goals of intellectual property law.

The Intellectual Property Clause of the Constitution grants Congress the power "to promote the Progress of Science and useful Arts" by enacting copyright and patent laws. 326 Consistent with this consequentialist preamble, the dominant view of intellectual property law and policy in the United States has often been that intellectual property law exists in order to incentivize creative and innovative activity. 327 The incentive theory of intellectual property law is based on the rationale that providing authors and inventors with the potential for intellectual property rights will induce them to engage in greater innovative activity than they would otherwise, from the creation to the production to the commercialization of intellectual works. 328

The vast explosion in patent litigation began in the mid-1980s, resulting from the reinvigoration of the patent system by Congress, including its establishment of the Court of Appeals for the Federal Circuit. 1 That court, which hears all patent appeals, did what Congress presumably wanted and breathed great strength into patents and their protection. Perhaps too much [*1648] so. So much reinvigoration occurred that patent litigation, once a quiet backwater of the federal courts until the 1980s, has become a swelling sea.

A central reason for the litigation boom is the presumption of validity and the "clear and convincing" standard: Patents are presumed valid under 35 U.S.C. § 282 and can only be set aside in litigation upon "clear and convincing" proof of invalidity. 2 This presumption of validity applies equally to all patents - even those that are almost certainly invalid. This is a huge advantage for the patent holder - and it is often an unfair advantage, given the ease with which applicants and their agents can sneak undeserving claims through the PTO. Because of the burnish of this presumption, patentees can use a weak, arguably invalid patent, to force an accused infringer through years of litigation. This is more than just a nuisiance. Legal defense costs run, at the low end, about three million dollars per case, and range well over ten million dollars in some actions. 3 In the United States, the number of patent infringement suits filed annually nearly doubled between 1994 and 2004. 4 According to the Phoenix Center for Advanced Legal and Economic Public Policy Studies, patent litigation costs the economy 4.5 billion dollars annually. 5

Finally, the solution may lie in changing the focus of the entire system to leverage administrative expertise in deciding patent cases. Unlike other areas of law, like torts, in which legislatures are very active, patent law is characterized by an "overmatched judiciary and an absent legislature." 355 Reform of the patent system must be multi-institutional, focusing on the role that Congress, the administrative bureaucracy, and the courts play in implementing policy. The current system puts too much power in the hands of the CAFC as a promulgator of policy by not installing inferior institutions, such as the USPTO and the lower federal courts, while not providing the CAFC with the adequate support necessary for it to actually formulate policy. 356

The current patent system gives too much judicial discretion to courts, allowing them to run rampant in crafting legal doctrine. Some argue that complexity in patent law is no different than in other fields. 357 Even the Supreme Court has hinted that it prefers that patent law not be treated differently, [*586] but the question remains why patent law is different than other fields of law, like environmental law, where a federal administrative agency has plenary authority. 358 Unlike areas of law, such as securities, pharmaceuticals, transportation, and environmental, patent law remains an outlier in that it is a "highly technically complex regulatory field controlled entirely by courts." 359 Masur argues that the time has come to bring patent law's institutional arrangements in line with the rest of the administrative state by, inter alia, empowering the USPTO with greater rulemaking authority. 360

How would the PLRB obtain funding to cover its administrative costs? Generally speaking, complainants who initiate the relevant suits in district court would pay for the PLRB's preliminary review through administrative fees determined by rule. 237 As with various USPTO fees, there would be substantially reduced fees for small entities and micro-entities that are not stand-ins for better-monetized entities. 238 Further, by request, parties, including business entities, might qualify for in forma pauperis treatment, under which the PLRB would waive fees and cover relevant costs through surplus from PLRB fees collected from others or through a "patent system cost" added to USPTO patent issuance and maintenance fees. If there remains concern that the fees required to pay for PLRB review would be too high to serve interests in access to justice, PLRB review could be supported more generally through increases to preexisting fees associated with the obtaining and maintenance of patent rights. If USPTO fees for post-issuance review proceedings are a reasonable guide, administrative costs associated with the operation of the PLRB might be expected to be in the nature of $ 10,000 to $ 30,000 per case, or about $ 50 million to $ 150 million per [*1830] year if we assume approximately five thousand lawsuits per year. 239 Consequently, given that the USPTO grants about three hundred thousand new patents each year, 240 an increase of about $ 500 in total fees associated with patent issuance would likely suffice to cover PLRB administrative costs. 241

The proposed administrative review would be an automatic process that would occur immediately after the filing of a patent suit in district court. This automatic review might be viewed as a variant of the required review of a qui tam False Claims Act complaint by the Department of Justice 221 or the [*1826] requirement of filing employment discrimination claims with the Equal Employment Opportunity Commission before resorting to the courts. 222 One can imagine a number of ways of structuring preliminary administrative review, but this Article proposes a specific framework as a starting point for discussion.

The proposed process would work as follows. Upon the filing of a patentin-fringement suit in a district court, 223 the PLRB would be notified. Unless all parties to the district court suit opted out, the PLRB would conduct a paper hearing in which parties would be allowed to file documentary arguments and evidence relating to questions of patent claim construction, infringement, validity, and enforceability. The PLRB's approach to claim construction during this hearing would follow that of the district courts. Although attorney representation would be advised, PLRB proceedings would improve access to justice by allowing parties to present relevant materials either pro se or through qualified non-attorney representatives such as, in a business entity's case, their chief officers or owners. 224

What’s worse, the America Invents Act (AIA) of 2011 established a “Patent Trial and Appeals Board” within PTO to review already issued patents at the request of third parties. A key justification for the board was that it could help eliminate “bad quality” patents that should not have been issued in the first place. Moreover, it was supposed to be a “fast track” alternative to sluggish and costly court challenges to patent validity. In reality, however, the vast majority of board reviews occur concurrently with federal court challenges. Thus, the hoped for saving in litigation costs has not occurred. Indeed, the administrative costs of lawsuits plus board challenges may be higher than before the AIA.

Even more seriously, the board reviews have been handled in a way that undermines fundamental rights of patent holders — regardless of whether their patents are strong or questionable. This is because, as a result of PTO regulation, the board reviews are designed to make it harder to uphold patents. The board reviews also fail to meet standards of fundamental fairness employed by the federal courts. The Patent Act states that “a patent shall be presumed valid” and that “the burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.”

Representative Deborah Ross exposed the real problem with one simple question. She rightly pointed out the irony that if the PTAB were fair to inventors, they would not need TPLF. Then she asked why the IP Subcommittee is focused on TPLF and not focused on making the PTAB fair?

Ross is the lead sponsor of the PREVAIL Act, which she said would lower invalidation rates at the PTAB. Ross is certainly on the right track; the PTAB’s invalidation rate must be lowered if it is ever going to be fair. I believe Ross genuinely wants to fix this mess.

Chinese companies are leading the way in the experimentation of generative AI, but they’re still behind the U.S. when it comes to full implementation, according to a new survey.

The survey — by AI analytics and software developer SAS Institute and market researcher Coleman Parkes — found that 64% of Chinese companies surveyed were running initial experiments on generative AI but had not yet fully integrated the tech into their business system.

Second, that said, Chinese defense experts are concerned that the PLA is lagging behind the U.S. military in AI and related emerging technology development and deployment.

Whereas U.S. experts increasingly voice concern that China has overtaken the United States in the development and adoption of military applications of AI and related emerging technologies, the articles reviewed in this paper reveal an inverse anxiety across the Pacific; Chinese scholars believe the United States is ahead in the race to develop and field AI-enabled military systems.170 Third, Chinese defense experts identify certain challenges in developing and fielding military AI systems, which are similar to those the U.S. military appears to be facing.

While President Joe Biden's Federal Trade Commission (FTC) keeps trying to stop successful companies from growing through mergers and acquisitions, a new study highlights the significant role large firms play in developing new technologies, goods, and services. In a July working paper for the National Bureau of Economic Research, titled "Mega Firms and Recent Trends in the U.S. Innovation: Empirical Evidence from the U.S. Patent Data," five researchers use sales data and patent data to evaluate the role of megafirms—"the top 50 firms by sales in any given year"—in developing "novel patents." Critics often allege that firms have used their market power to accumulate patents strategically to crowd out competitors. This leads "to slower diffusion of knowledge and deceleration in business dynamism," argue the economists Ufuk Akcigit of the University of Chicago and Sina Ates of the Federal Reserve Board in a forthcoming study titled "What Happened to U.S. Business Dynamism." But the working paper finds that it isn't just the total share of patents held by megafirms that's been growing in recent years. So has their share of novel patents, defined as "those that introduce new combinations of technological components that had never been utilized together before" (as opposed to patents that are "filed for purely strategic reasons and never used in applications"). They conclude from this that big firms have been playing "an increasingly important role in generating new technological trajectories in recent years." "Mega firms, especially new mega firms…were small startups just some 20 years ago, and they became what they are today by winning in a competitive environment," says the study's lead author, Serguey Braguinsky of the University of Maryland. According to the paper, the share of novel patents held by megafirms underwent a long decline from the 1980s to the mid-2000s. But then they began combining information and communication technologies (ICT) with non-ICT components. For example, in 2006 Nike combined "arrangements for transmitting signals characterized by the use of a wireless electrical link" with "footwear characterized by the shape and use." This led to the creation of the NIKE+iPod Sports Kit. The authors add that the innovation generated by megafirms is not monopolized by those businesses. Novel patents can catalyze follow-on patents at other firms that use "the same new technological combination," diffusing the knowledge through society. As the authors explain, "mega firms have more follow-on patents that are assigned to entities other than themselves." All this suggests that regulations aimed at reining in megafirms could diminish their ability to innovate. The FTC is currently trying to make mergers more difficult through guidelines that lower the threshold for considering a market "highly concentrated" and that conflate mergers between companies that sell similar products with mergers between companies that don't.