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Kieran, 1-1-2017, “Abuse of the Hatch-Waxman Act: Mylan 's Ability to Monopolize Reflects Weaknesses”, Brooklyn Journal of Corporate , Financial, and Commercial Law, https://brooklynworks.brooklaw.edu/bjcfcl/vol11/iss2/12/#:~:text=Though%20the%20Hatch%2DWaxman%20Act,consumers%20of%20a%20generic%20option.

The citizen petition is another tactic that brand name companies use to impede competitors’ efforts to enter the market. According to the Administrative Procedure Act (APA), the FDA must provide the public with a right to petition an agency rule.78 A citizen petition is a means through which the FDA allows the public to invoke their right to petition for the issuance, amendment, or revocation of a rule, or to petition the FTC “to take or refrain from taking any other form of administrative action.”79 The citizen petition must contain, amongst other things, the factual and legal grounds for the petition.80 In theory, the right to petition a government agency allows for an “important route of dialogue” that provides the public “with an invaluable tool for getting good scientific arguments in front of the FDA.”81 In addition, the citizen petition is intended to raise valid medical and safety issues that the FDA considers, addresses, and reports on to the filing pharmaceutical company. In practice, however, brand-name companies have been able to morph this right of the people into a clever business tactic to delay FDA approval of competing generic drugs, without facing any legal or regulatory penalty for doing so. Brand-name pharmaceutical companies can ask the FDA to take a particular action against a pending ANDA through the use of a 505(q) citizen petition, the petition that brand names “are most likely to file to delay generic entry.”82 The FDA is mandated to take final action on these petitions no later than 150 days after the petition’s filing date, unless a delay would be necessary to protect the public health.83 Though the FDA must respond to the citizen petition within 150 days, it does not have to do so before it rules on the ANDA.84 Current FDA policy is to assess the citizen petition prior to approving the ANDA, but the FDA often waits to release the response to the citizen petition alongside releasing the ruling on the accompanying ANDA.85 Since the FDA often responds to the citizen petition and ANDA simultaneously, it is not difficult to imagine a situation wherein an ANDA is weeks from being approved or the brand-name drug’s patent is nearing expiration, and the brand name files a 505(q) petition at this time. This tactic effectively pushes back the approval of the ANDA by taking advantage of the FDA’s well- reasoned policy of thoroughly vetting the citizen petition before approving the ANDA. These petitions are known as “eleventh hour” petitions because companies would file them “on the eve of drug approval for the purpose of delay.”86 Brand-name manufacturers continue to file long and complex eleventh hour 505(q) petitions that push back the generic approval clock up to 150 days. Despite the 505(q) petition requirement that petitioners to certify that they did not delay in filing the petition, these eleventh hour petitions are extremely common in the pharmaceutical industry.87 “Evidence that citizen petitions are used to delay generic entry can be inferred from the vast number of petitions that the FDA denies.”88 Specifically, the FDA denied 94% of citizen petitions challenging the approval of ANDAs in 2013, 95% in 2014, and 100% in 2015.89 This tactic serves to delay the approval process of a generic drug, which the amended application process Hatch-Waxman purposely accelerated.

Kieran, 1-1-2017, “Abuse of the Hatch-Waxman Act: Mylan 's Ability to Monopolize Reflects Weaknesses”, Brooklyn Journal of Corporate , Financial, and Commercial Law, https://brooklynworks.brooklaw.edu/bjcfcl/vol11/iss2/12/#:~:text=Though%20the%20Hatch%2DWaxman%20Act,consumers%20of%20a%20generic%20option.

Mylan and other pharmaceutical companies have the ability to derail Hatch-Waxman because there is no federal regulation capping drug pricing in the United States, and the Act, the one statute designed to increase the flow of generic market entry, fails to fill that void. The Act has led to many unforeseen situations as the industry has developed. The looming expiration of a patent, together with the approaching 180-day generic exclusivity period, has incentivized brand-name companies to creatively and legally come up with a host of ways to cement their market shares, while making and saving as much money as possible. A. REVERSE PAYMENTS As a result of the 180-day exclusivity period, “more generic filers are seeking to enter the market sooner.”50 Although the intent behind the exclusivity period is to encourage this generic competition, the 180-day exclusivity period has “ultimately created an incentive for the brand and generic companies to limit competition with each other.”51 Since generic manufacturers typically gain an average of 44% of sales of branded drugs within the first year they are allowed to go to market, brand-name companies want to keep these threatening generics out of the hands of the public for at least those 180 days.52 As a result, instead of generics competing for the first flier position, they are now competing to be the first company paid off by the brand-name companies not to enter the market.53 One major, controversial strategy pharmaceutical companies use to halt generic entry is known as “reverse payment,” or “pay-for-delay.”54 Reverse payments are essentially arrangements in which the brand manufacturer sues the generic manufacturer for patent infringement, arising from invalidity of the required Paragraph IV certification of the ANDA,55 whether or not there actually is patent infringement.56 These cases quickly settle with the brandname manufacturer paying the generic manufacturer in exchange for the generic’s delay in launching its product.57 These settlements make sense for both companies since, from the outset, the generic stands to make less profit than the brand name stands to lose from its entry.58 As former FTC Chairman Jon Leibowitz explained in 2009: So if it is legal for a brand to pay the generic to ‘sit it out,’ why wouldn’t it? And if the generic drug company is allowed to make more money by not competing than by going to market, isn’t that a good business deal for the company and its shareholders? Of course it is.59 The payment from the brand name to the generic company typically accounts for the amount of money that consumers would have saved if the generic drug actually went to the market.60 Instead, both companies share the “pool of money” that the Act actually intended to save consumers.61 In fact, reverse payment settlements actually “cost American consumers anywhere between $0.6 billion and $7.5 billion each year, or $3.5 billion each year on average.”62 It is likely that Mylan dipped its feet in the reverse payment pool in 2012 when they filed a patent infringement suit against Israeli pharmaceutical company Teva Pharmaceutical Industries Ltd., which sought permission from the FDA to manufacture, market, and sell a generic version of the EpiPen.63 Mylan quietly announced an agreement wherein Teva would not launch a generic epinephrine auto-injector until 2015, subject to FDA approval of its ANDA.64 After waiting three years per the terms of the settlement, Teva’s launch was again delayed due to a lengthy citizen petition Mylan threw its way in 2015. Eventually, the FDA rejected Teva’s ANDA in the spring of 2016.65 Mylan quickly took advantage of this continued exclusivity period and raised the price of its EpiPen two-pack to $609.66 Although it has not been officially reported that Teva and Mylan engaged in a reverse payment settlement, the holes in the Hatch-Waxman allow Mylan to lawfully pay off a generic manufacturer such as Teva and implement major price increases. It is difficult to imagine Teva agreeing to refrain from market entry and giving up its spot as the only company with a generic epinephrine injector on the market without hefty consideration from the billion-dollar brand-name company. Other drug companies have also circumvented the statute by entering into these reverse payment settlements.67 The Act, however, does not account for these reverse payments that thwart the consumer benefits of generic competition. Such failure has resulted in judicial uncertainty and Circuit splits concerning reverse payments. In FTC v. Actavis, the Supreme Court ruled that brand-name and generic pharmaceutical companies are subject to antitrust scrutiny for engaging in reverse payment settlements, since these payments deter generic entry and contribute to rising health care costs that consumers and governments are struggling to keep up with.68 The Supreme Court rejected a common defense used by pharmaceutical companies that claim to be acting within the “scope of the patent,” in paying off generics to delay market entry.69 The Court applied the “rule of reason” antitrust analysis and outlined some considerations to justify its decision to subject reverse payment settlements to antitrust scrutiny.70 Though a somewhat successful ruling for the FTC, Actavis failed to fill the gaping holes in Hatch-Waxman that allow for this type of activity. The latest pay-for-delay suit accused Endo Pharmaceuticals Inc. of paying Watson Pharmaceuticals Inc. to delay its launch of a generic version of the lidocaine pain patch.71 In January 2017, Endo and the FTC settled the claim that Endo violated Section 5 of the FTCA by entering into a reversepayment settlement agreement with Watson, resolving all litigation between Endo and the FTC.72 Though Endo “denies that it engaged in any illegal conduct under the deal,” the settlement “prohibits the company from entering into the same type of reverse payment patent infringement settlement for [ten] years, including agreements that involve promises by branded drug makers not to market competing authorized generics.”73 Although the FTC’s commitment to stopping reverse payments continues, the fact remains that reverse payments are an attractive and, if done strategically in light of these rulings, legal practice that works to favor corporations to the detriment of consumers. In an attempt to combat the derailment of Hatch-Waxman via reverse settlements, Congress passed the Medicare Prescription Drug Improvement and Modernization Act of 2003, which required such settlements to be filed with the FTC within ten days of being agreed upon.74 Congress sought to stop companies from quickly settling through a reverse payment without the FTC hovering over quiet payouts.75 One brand-name company, following an industry pattern of circumventing the law, attempted to get around this requirement by lying to the FTC about the true nature of the settlement.76 In regard to the settlement between Mylan and Teva,77 consumers are left to foot the bill without any explanation of why this generic is not on the market. This is because there is no disclosure requirement for these patent infringement settlements. Hatch-Waxman has the foundational purpose and potential to combat this abuse of the market. These reverse payments can be outlawed and phased out as a legal tool for cementing a brand-name company’s position in the market

Yet despite epidemic after epidemic, despite mass killers like smallpox and the 1918 flu, at no point has disease threatened humans with extinction. Even the Black Death, likely the most concentrated epidemic of all time, now appears as little more than a minor downturn in what has otherwise been a bull market for long-term human population growth. That’s true for animals as well. The International Union for Conservation of Nature reports that of the 833 plant and animal extinctions that have been documented since 1500, less than 4 percent can be attributed to infectious disease. Those species that were eradicated by disease tended to be small in number and geographically isolated—very much unlike human beings, who are both numerous and have spread to every corner of the world.38

With the exception of HIV—which can now be managed as a chronic condition with antiviral drugs—every major epidemic mentioned above took place before the dawn of modern medicine, before the development of antibiotics and widespread vaccines. Smallpox was even fully eradicated from the wild in 198039—the only known samples of the virus are kept at highly secure government facilities in Atlanta and Koltsovo, Russia.40 Plague is now so rare that when it breaks out in countries like Madagascar, it makes global news—yet fewer than 600 deaths from the disease were reported between 2010 and 2015. Studies have shown that most of the fatalities from the 1918 flu were actually due to secondary bacterial infections that today could be controlled by antibiotics,41 which were introduced less than a century ago. Influenza pandemics remain the great fear of infectious disease experts, but the most recent one in 2009 killed only about 284,000 people worldwide.42 That was fewer than the number of people who die from seasonal flu in an ordinary year.43

[Nicole Lurie, served as Assistant Secretary for Preparedness and Response at the U.S. Department of Health and Human Services during the Obama administration; Jakob P. Cramer, Head of Clinical Development at the Coalition for Epidemic Preparedness Innovations; and Richard J. Hatchett, CEO of the Coalition for Epidemic Preparedness Innovations, “The Vaccine Revolution: How mRNA Can Stop the Next Pandemic Before It Starts,” Foreign Affairs, May/June 2021, accessed 6-23-21]

A new era in vaccinology has arrived. The year 2020 will be remembered not only for the pandemic but also for the fact that it witnessed the culmination of nearly a decade’s worth of technological breakthroughs in a mere 12 months. The world will emerge from the pandemic with a new arsenal of vaccine technologies at its disposal, with mRNA at the forefront. These successes in dark times provide much-needed grounds for optimism that in the future, societies will be able to respond much more rapidly, effectively, and equitably to emerging pandemic threats.

But when people ask me if I’m worried about infectious diseases, they’re often not asking about the threat to human lives; they’re asking about the threat to human life. With each outbreak of a headline-grabbing emerging infectious disease comes a fear of extinction itself. The fear envisions a large proportion of humans succumbing to infection, leaving no survivors or so few that the species can’t be sustained. I’m not afraid of this apocalyptic scenario, but I do understand the impulse. Worry about the end is a quintessentially human trait. Thankfully, so is our resilience. For most of mankind’s history, infectious diseases were the existential threat to humanity—and for good reason. They were quite successful at killing people: The 6th century’s Plague of Justinian knocked out an estimated 17 percent of the world’s population; the 14th century Black Death decimated a third of Europe; the 1918 influenza pandemic killed 5 percent of the world; malaria is estimated to have killed half of all humans who have ever lived. Any yet, of course, humanity continued to flourish. Our species’ recent explosion in lifespan is almost exclusively the result of the control of infectious diseases through sanitation, vaccination, and antimicrobial therapies. Only in the modern era, in which many infectious diseases have been tamed in the industrial world, do people have the luxury of death from cancer, heart disease, or stroke in the 8th decade of life. Childhoods are free from watching siblings and friends die from outbreaks of typhoid, scarlet fever, smallpox, measles, and the like. So what would it take for a disease to wipe out humanity now? In Michael Crichton’s The Andromeda Strain, the canonical book in the disease-outbreak genre, an alien microbe threatens the human race with extinction, and humanity’s best minds are marshaled to combat the enemy organism. Fortunately, outside of fiction, there’s no reason to expect alien pathogens to wage war on the human race any time soon, and my analysis suggests that any real-life domestic microbe reaching an extinction level of threat probably is just as unlikely. Any apocalyptic pathogen would need to possess a very special combination of two attributes. First, it would have to be so unfamiliar that no existing therapy or vaccine could be applied to it. Second, it would need to have a high and surreptitious transmissibility before symptoms occur. The first is essential because any microbe from a known class of pathogens would, by definition, have family members that could serve as models for containment and countermeasures. The second would allow the hypothetical disease to spread without being detected by even the most astute clinicians. The three infectious diseases most likely to be considered extinction-level threats in the world today—influenza, HIV, and Ebola—don’t meet these two requirements. Influenza, for instance, despite its well-established ability to kill on a large scale, its contagiousness, and its unrivaled ability to shift and drift away from our vaccines, is still what I would call a “known unknown.” While there are many mysteries about how new flu strains emerge, from at least the time of Hippocrates, humans have been attuned to its risk. And in the modern era, a full-fledged industry of influenza preparedness exists, with effective vaccine strategies and antiviral therapies. HIV, which has killed 39 million people over several decades, is similarly limited due to several factors. Most importantly, HIV’s dependency on blood and body fluid for transmission (similar to Ebola) requires intimate human-to-human contact, which limits contagion. Highly potent antiviral therapy allows most people to live normally with the disease, and a substantial group of the population has genetic mutations that render them impervious to infection in the first place. Lastly, simple prevention strategies such as needle exchange for injection drug users and barrier contraceptives—when available—can curtail transmission risk. Ebola, for many of the same reasons as HIV as well as several others, also falls short of the mark. This is especially due to the fact that it spreads almost exclusively through people with easily recognizable symptoms, plus the taming of its once unfathomable 90 percent mortality rate by simple supportive care. Beyond those three, every other known disease falls short of what seems required to wipe out humans—which is, of course, why we’re still here. And it’s not that diseases are ineffective. On the contrary, diseases’ failure to knock us out is a testament to just how resilient humans are. Part of our evolutionary heritage is our immune system, one of the most complex on the planet, even without the benefit of vaccines or the helping hand of antimicrobial drugs. This system, when viewed at a species level, can adapt to almost any enemy imaginable. Coupled to genetic variations amongst humans—which open up the possibility for a range of advantages, from imperviousness to infection to a tendency for mild symptoms—this adaptability ensures that almost any infectious disease onslaught will leave a large proportion of the population alive to rebuild, in contrast to the fictional Hollywood versions. While the immune system’s role can never be understated, an even more powerful protector is the faculty of consciousness. Humans are not the most prolific, quickly evolving, or strongest organisms on the planet, but as Aristotle identified, humans are the rational animals—and it is this fundamental distinguishing characteristic that allows humans to form abstractions, think in principles, and plan long-range. These capacities, in turn, allow humans to modify, alter, and improve themselves and their environments. Consciousness equips us, at an individual and a species level, to make nature safe for the species through such technological marvels as antibiotics, antivirals, vaccines, and sanitation. When humans began to focus their minds on the problems posed by infectious disease, human life ceased being nasty, brutish, and short. In many ways, human consciousness became infectious diseases’ worthiest adversary. None of this is meant to allay all fears of infectious diseases. To totally adopt a Panglossian viewpoint would be foolish—and dangerous. Humans do face countless threats from infectious diseases: witness Zika. And if not handled appropriately, severe calamity could, and will, ensue. The West African Ebola outbreak, for instance, festered for months before major efforts to bring it under control were initiated. When it comes to infectious diseases, I’m worried about the failure of institutions to understand the full impact of outbreaks. I’m worried about countries that don’t have the infrastructure or resources to combat these outbreaks when they come. But as long as we can keep adapting, I’m not worried about the future of the human race.

 For most of human history, natural pandemics have posed the greatest risk of mass global fatalities.37 However, there are some reasons to believe that natural pandemics are very unlikely to cause human extinction. Analysis of the International Union for Conservation of Nature (IUCN) red list database has shown that of the 833 recorded plant and animal species extinctions known to have occurred since 1500, less than 4% (31 species) were ascribed to infectious disease.38 None of the mammals and amphibians on this list were globally dispersed, and other factors aside from infectious disease also contributed to their extinction. It therefore seems that our own species, which is very numerous, globally dispersed , and capable of a rational response to problems, is very unlikely to be killed off by a natural pandemic. One underlying explanation for this is that highly lethal pathogens can kill their hosts before they have a chance to spread, so there is a selective pressure for pathogens not to be highly lethal. Therefore, pathogens are likely to co-evolve with their hosts rather than kill all possible hosts.39

(Alan, “Who’s Afraid of the Big, Bad Bioterrorist?”, 1-24, , DOA: 3-14-13, ldg)

The second problem is much more serious. Eliminating the toxins, we’re left with a list of infectious bacteria and viruses. With a single exception, these organisms are probably near-useless as weapons, and history proves it. There have been at least three well-documented military-style deployments of infectious agents from the list, plus one deployment of an agent that’s not on the list. I’m focusing entirely on the modern era, by the way. There are historical reports of armies catapulting plague-ridden corpses over city walls and conquistadors trying to inoculate blankets with Variola (smallpox), but it’s not clear those “attacks” were effective. Those diseases tended to spread like, well, plagues, so there’s no telling whether the targets really caught the diseases from the bodies and blankets, or simply picked them up through casual contact with their enemies. Of the four modern biowarfare incidents, two have been fatal. The first was the 1979 Sverdlovsk anthrax incident, which killed an estimated 100 people. In that case, a Soviet-built biological weapons lab accidentally released a large plume of weaponized Bacillus anthracis (anthrax) over a major city. Soviet authorities tried to blame the resulting fatalities on “bad meat,” but in the 1990s Western investigators were finally able to piece together the real story. The second fatal incident also involved anthrax from a government-run lab: the 2001 “Amerithrax” attacks. That time, a rogue employee (or perhaps employees) of the government’s main bioweapons lab sent weaponized, powdered anthrax through the US postal service. Five people died. That gives us a grand total of around 105 deaths, entirely from agents that were grown and weaponized in officially-sanctioned and funded bioweapons research labs. Remember that. Terrorist groups have also deployed biological weapons twice, and these cases are very instructive. The first was the 1984 Rajneeshee bioterror attack, in which members of a cult in Oregon inoculated restaurant salad bars with Salmonella bacteria (an agent that’s not on the “select” list). 751 people got sick, but nobody died

Greg Slabodkin, 1-11-2024, "JPM2024: IRA Favors Biologics Over Small Molecule Drugs and Hurts Innovation, Industry Analysts Say," BioSpace, https://www.biospace.com/article/jpm2024-ira-favors-biologics-over-small-molecule-drugs-and-hurts-innovation-say-industry-analysts/

The potential impact of the Inflation Reduction Act’s drug pricing provisions on small molecule drugs was on the minds of industry stakeholders in San Francisco this week for the J.P. Morgan Healthcare Conference. At the crux of the matter is a disparity in which biologics are spared from price negotiations under the Inflation Reduction Act (IRA) for 13 years following approval, while the grace period for small molecules is only nine years. Incubate, a lobbying group for venture capital firms in the life sciences, contends there is an urgent need for 13-year parity when it comes to small molecule drugs and biologics. “Nine years of exclusion from price negotiations for small molecule products and 13 years for biologics—that’s a big difference when you consider that 50% of all drug revenues come in years 10 to 13 and you’re taking that off the table,” John Stanford, Incubate’s executive director, said at the group’s policy panel in San Francisco on Sunday. It’s a concern shared by Gaurav Gupta, managing partner of J.P. Morgan Life Sciences Private Capital, who said the loss of four years of exclusivity for small molecules has “very real” consequences from an investment standpoint. “The impetus for what has led to the development of many of these exciting medicines that we’ve seen is that someone has taken that risk to have it pay out down the line,” Gupta said at the panel. The IRA provisions, he added, are “taking, for certain types of medicines, a significant amount of revenue potentially off the table.” An analysis from the Partnership for Health Analytic Research (PHAR), in collaboration with the Pharmaceutical Research and Manufacturers of America (PhRMA), highlighted the fact that the majority of cancer medicines approved by the FDA are small molecules and projected that the IRA’s price setting provisions will have “an acute impact” on the research and development (R&D) of cancer drugs. J.P. Morgan’s Gupta said it is “head-scratching” that lawmakers who drafted and passed the IRA into law would “bias the modality by which we target certain disease,” adding that the provisions are particularly detrimental because they affect patients. “There will be people and companies who just choose to back away from small molecule programs” including radiopharmaceuticals, Gupta said. “Cancer patients may end up being disproportionately affected.” In September 2023, credit rating agency Fitch Ratings released an analysis showing that the Medicare Drug Price Negotiation Program will likely deter investments in small molecule drugs. “Companies may focus more on complex biologic products that benefit from longer periods before price negotiation is required, with less attention and investment for small molecule drugs, as they tend to lose the vast majority of their sales in the 12 months following patent expiration,” according to Fitch Ratings, which warned that “this may affect pharmaceutical companies’ product diversification and growth prospects.” PhRMA has similarly made the case that biopharma companies are rethinking their R&D investments, “with the government essentially picking winners and losers” by stifling the development of certain types of drugs for specific patient populations. Kirsten Axelsen, a senior policy advisor at DLA Piper, also expressed concerns about the IRA’s targeting of small molecules, which she said will have potentially dire consequences. “Are we going to see switch strategies towards the end of lifecycles? Are we going to see indications split into different products? There’s going to be a lot of inefficient R&D as a result of this law,” Axelsen told the panel.

Annette Bakker, 7-20-2023, "EU pharma reforms will hurt patients and hinder research," POLITICO, https://www.politico.eu/article/european-union-pharmaceutical-reforms-hurt-patients-hinder-research/

The European Commission recently proposed its first major overhaul of European Union pharmaceutical policies in two decades. With these reforms, the Commission is trying to ensure all Europeans, regardless of nationality, have faster access to affordable, lifesaving drugs — a worthy goal that policymakers, patients and healthcare providers all share. But good intentions don’t necessarily translate to good policy. And the Commission’s proposal rests on a flawed premise that will ultimately block — not facilitate —access to lifesaving medicines. The proposed reforms take a carrot-and-stick approach, shortening the duration of market exclusivity for new medications, thus allowing cheaper generic drugs on the market two years sooner. The threat of massive revenue loss caused by generic competition is the stick here. The fact that drugmakers could earn back most of those two protected years by introducing their new medicines in all 27 EU member countries within a certain time frame, and by developing medications that address an “unmet medical need,” is the carrot. But while the proposal could offer an even lengthier overall regulatory protection period than the current regime, the strict conditions linked to obtaining full protection are unlikely to be matched by pharmaceutical companies. And rather than resulting in more and faster drug launches, the proposed approach will likely result in fewer launches and less research taking place on the Continent. Right now, a drug approved by the European Medicines Agency (EMA) can be sold in all EU member countries. However, the economies and health care budgets of these countries can vary drastically, and budget constraints often prevent smaller, poorer EU members from pricing or reimbursing new medicines until years after others do — if ever. As a result, these countries have fewer innovative medicines available in their markets. Just consider that between 2015 and 2017, patients in Germany had access to 104 new drugs approved by the EMA, while their counterparts in Latvia had access to just 11. Thus, the Commission is trying to shrink this gap, and it is attempting to do so by prodding companies to launch their medicines in these countries sooner. However, the idea that a medicine’s launch is somehow in the hands of its manufacturer is illusory. Even if biotech firms were to launch in all 27 member countries, it’s ultimately up to the individual states — which have to set the price and reimbursement for a drug before it debuts on the market — to determine when a medicine launches. And many of them routinely fail to conclude pricing negotiations in a timely manner, creating far too much uncertainty around the proposed reforms. Under the new policy, member countries would have an added incentive to drag out pricing talks, as missing the deadline would give them additional leverage and compel companies to accept lower reimbursements. This means, the Commission’s scheme would simply function as a price control — and one that would compound the impact of price controls that most European countries already impose on medicines. Such policies have already limited European patients’ access to drugs and deterred research on the Continent. Just a few decades ago, Europe accounted for the majority of all new drugs invented globally, while now it accounts for just 31 percent of global biopharmaceutical R&D spending, with the United States accounting for over half. And if the Commission now further restricts the ability of companies to earn a return on their investments, they will ultimately invest less. This isn’t a reflection of moral or political preferences — it’s an iron law of economics. Meanwhile, the legislation directly contradicts the bloc’s industrial policy as well and could be economically devastating for Europe, putting over €200 billion, 2.5 million jobs and a €135 billion trade surplus stemming from the pharmaceutical industry at risk. The human cost, however, would be far higher. If the EU drives pharmaceutical R&D to Asia and North America — a trend that’s already underway — Europeans will end up forgoing opportunities to enroll in clinical trials that test new treatments for cancer, heart disease, Alzheimer’s and rare illnesses.

Big tech’s growing interest in the healthcare sector has largely been seen to put it on a collision course with big pharma. However, there are early signs of a culture of collaboration emerging between big tech and big pharma, which has only been accelerated by the Covid-19 pandemic. Allie Nawrat asks what this new era of collaboration between big tech and big pharma could mean for healthcare.

Collaboration has widely been deemed a silver lining of the Covid-19 pandemic. The word ‘unprecedented’ has certainly been overused in the past year, but nowhere is it more apt than in describing the actions of pharma companies big and small working together to tackle the coronavirus crisis.

The pandemic has reminded the world of strengths-its capacity to innovate and provide drugs on a vast scale. Many of the big firms, such as Johnson & Johnson and Sanofi, are working on covid-19 vaccines and therapies. Scores of smaller companies are at work, too. On May 18th Moderna, an American biotech firm, said that its much-anticipated vaccine has shown positive early results (although some analysts questioned the validity of its tests). AstraZeneca, a big British firm that invests heavily in research and development (r&d), is working on a vaccine with scientists at Oxford University, helped by $1bn of new funding from America's government. Even before the virus, the industry had started to invest more heavily. In the most recent quarter America's 30 biggest firms boosted their r&d by a median of 6% year on year. Now medical innovation is back in fashion.

It looks like big pharma's moment to shine. However, the pandemic has also created new ethical and political dilemmas. Vaccine nationalism is spreading as governments panic that others may get their hands on crucial drugs first. France's Sanofi has found itself embroiled in a transatlantic row over who will be first to get any covid-19 vaccine it develops. Paul Hudson, the firm's boss, stated last week that because the American government invested in his firm's risky scientific efforts, the United States would have early access. This led to a political explosion in France and a dressing-down from Emmanuel Macron, France's president. And there is mounting pressure to suspend elements of the patent system. A gathering of the World Health Organisation this week passed a resolution urging drugs firms to pool patent rights. Several dozen current and former world leaders released an open letter demanding that any successful covid-19 vaccine should be made available patent-free.

1) Biological attack could be survived in underground shelters. The United States and other countries could substantially upgrade their shelter infrastructure to preserve a major percentage of the affected population after biological warfare or terrorism. 2) The first serious catastrophe connected with a leak of dangerous pathogens results in so draconian control measures, enough to prevent the creation or distribution of dangerous bioprinters. This would require a government substantially more authoritarian than what we have now. 3) Al and molecular manufacturing are developed first, and serve as a shield against bioweapons before they are developed. (Highly unlikely as these technologies seem much more difficult than bioprinters.) 4) Nuclear war or other disaster interrupts the development of biotechnologies. Obviously, depending on a disaster to mitigate another disaster is not the best strategy. 5) It is possible that biotechnologies will allow us to create something like a universal vaccine or artificial immune system before biological minilaboratories become a serious problem.

As such, I believe it is important to carefully consider the probability of various proposed existential risk scenarios. In the subsequent two sections I will consider risks of engineered pandemics and unaligned artificial intelligence.

Engineered Pandemics

Dan, 09-20, “IRA and political rhetoric harming pharma reputation and innovation, Amicus” BioProcess International, https://www.bioprocessintl.com/global-markets/ira-and-political-rhetoric-harming-pharma-reputation-and-innovation-amicus

With biopharma reputation at an all-time low, John Crowley told a packed BWB plenary how Amicus Therapeutics is “getting back the magic of biotechnology” and “recapturing the narrative.”

Standish Fleming, 2-22-2024, "FTC’s Antitrust Regulation Threatens Pharma Innovation," Forbes, https://www.forbes.com/sites/stanfleming/2024/02/14/ftcs-misguided-antitrust-regulation-threatens-pharma-innovation/

On December 11 of last year, the Federal Trade Commission filed suit to block a partnership between Sanofi and Maze Pharmaceuticals to develop a drug for Pompe disease, a partnership that the government said threatened “to deprive patients of a new, innovative treatment.” In fact, the anti-trust policy, intended to promote innovation, could disrupt the development of “life-saving, essential care.” It is often said that small companies are not simply miniature versions of their larger brethren. Nowhere is that more clearly demonstrated than in the pharmaceutical industry, where the entrepreneurial community serves as a principal source of new medicines. The commission’s approach, designed to prevent the manipulation of markets by the largest corporations, could have the opposite effect of discouraging competition in the market for innovation. Currently there are only two injectable drugs for the disease. Sanofi owns them both. Maze, a small biotech, has completed early testing of an oral medication, which, if successful, would likely take much—if not all—of the market. The FTC stated that “the proposed deal would have allowed Sanofi to maintain its monopoly power” and continue charging “over $750,000” annually for its Pompe therapies.” However, the high prices that the commission seeks to prevent are not the result of collusion but the patent system. Regardless of who owns the new drug, if approved, it will be expensive because competitors cannot copy it. Patents create a temporary monopoly that enables the inventor/developer of a product to recoup the costs of innovation. High prices are the reason that a company would spend hundreds of millions of dollars and as much as a decade to develop a new medicine for a market of only 1,000 patients. Competitive pricing will begin without FTC intervention when patents expire, and generic competition enters the market at discounts of as much as 90%. The response to the suit was immediate. To quote an FTC press release: “Within hours after the commission issued the complaint, Sanofi announced that it would terminate the agreement.” FTC Chair Lina M. Khan called the result a “successful effort by the commission to protect competition in the pharmaceutical industry.” In her statement, Ms. Khan pointed out that “The complaint also broke new ground by charging that an acquisition of a product in the pipeline with no sales can still constitute illegal monopolization.” In case anyone failed to grasp that the intent of its policy is “to arrest anticompetitive tendencies in their incipiency,” the following week the commission issued “Merger Guidelines” that spelled out its plans in detail. If the FTC pursues this policy broadly in the life-sciences community, it could have a chilling effect on the supply of new drugs. Large and small biopharma companies operate in different markets. Startups, like Maze, focus exclusively on innovation; the multi-national giants devote most of their attention to the sales of existing products, the activity for which anti-trust laws were written. Innovation markets operate differently from conventional markets. The commissioners talk about the prices of the drugs that people take but focus regulatory efforts on molecules in development that haven’t yet—and may never—become products. In that arena, conventional antitrust tactics can reduce competition and prevent new medicines from reaching patients. More than half of new drugs originate in small biotech companies. By targeting Sanofi-Maze, the FTC broke up a research collaboration, not a cartel. The cost of development is so great, the process takes so long and the probability of failure is so high that few startups can take a product from discovery to approval without help. Through a collaboration, a small biotech can access infrastructure and expertise that a large partner has spent decades and hundreds of millions of dollars building. To reduce risk and attract investors, startups must have the option of seeking support from pharma. The companies best suited and most likely to be interested are those already in the therapeutic area. The commission claimed that “If Sanofi did not acquire MZE001, MZE001 would continue development as part of Maze,” either independently or partnered with another firm. That may be true in this case. However, not all small companies would be so fortunate, particularly when interest rates are high, as they have been lately, and financial markets are closed to them. Rare-disease niche markets support few players—in the case of Pompe disease—a single company. By taking the market leader out of the market for drugs in development, antitrust policy limits the field of potential bidders for molecules or companies. Reduced competition means buyers can dictate lower prices that don’t reflect the true value the small companies have built. When returns for investment in innovation suffer, entrepreneurs struggle to raise money; some fail and molecules do not get developed. The commission expects that by publishing its guidelines and highlighting its “important victory” over a small research partnership, it can discourage such arrangements before they happen. If a would-be buyer like Sanofi of a product or company suspects that the commission will object, they will not waste their time considering a collaboration. Should the molecule ever come to market, they can buy it then, when it might be worth a court battle. The importance of unfettered M&A in the research market is reflected in the opening lines of a January 11 Wall Street Journal article: “Recent acquisitions of small drugmakers are giving biotechnology venture capitalists hope for stabilization in their industry following two years of declining investment.” Antitrust policy that discourages research partnerships will limit investment in new molecules. Lawsuits will go unchallenged in courtand and the collaborations will end. Ideas and inventions that never get to market will not be missed. The commissioners should promote—not disrupt—collaborations if they want to help bring new innovative treatments to patients.

Julia Payne, 11-6-2023, "EU proposal may accelerate pharma innovation decline, industry group says," Reuters, https://www.reuters.com/business/healthcare-pharmaceuticals/eu-proposal-may-accelerate-pharma-innovation-decline-industry-group-says-2023-11-06/

A major pharmaceutical rules overhaul, proposed by the European Commission in April, could see Europe's share in global research and development contract by a third to 21% by 2040 translating to 2 billion euros ($2.15 billion) per year in lost investment, industry group EFPIA said on Monday. The European Federation of Pharmaceutical Industries and Associations (EFPIA) says the Commission has not conducted a competitiveness impact assessment and if the new rules become law, they would accelerate the negative innovation trend in the EU and hit small and medium-sized enterprises the hardest. "Any changes to our incentives system would equally affect EU-based and foreign-based companies which bring medicines to the EU and, therefore, it would not put EU firms at a disadvantage," an EU Commission spokesperson said. Medication was the single biggest contributor to the EU’s trade surplus, with 235 billion euro ($252.13 billion) worth of exports in 2021. The EFPIA said small biotech companies have already moved to the United States and China. The Commission has proposed shortening the time a new medicine remains patented in a bid to reduce the cost of medicines for its citizens with a faster shift to cheaper generics. The Commission said its proposal would reduce new medicine approval times to 180 days from 400 days. It also includes boosts for small and medium-sized enterprises such a longer period to get data protection in all 27 member states as well as fee reductions or waivers schemes and favourable regulation for rare disease medicines. Lars Fruergaard Jorgensen, CEO of Novo Nordisk (NOVOb.CO), opens new tab, said that the reduction would not allow a pharmaceutical company to recoup the investment in development as well as the cost of marketing. "If you chop off, one or two or three years of exclusivity, it’s the peak sales that you take away. When you launch a product, you have a negative profit contribution because you invest more in marketing, sales...it's really only the last few years that you recoup your investment," Jorgensen said. Novo Nordisk, a Danish firm, has become the Europe's most valuable listed company since it launched game-changing weight loss and diabetes drugs, Wegovy and Ozempic. Jorgensen added that Novo Nordisk has already invested more in its Boston presence. "Everyone, going forward, will start conducting trials in the U.S....In some cases, they (the medicines) are not going to developed in Europe," Jorgensen said, adding that the U.S. offers a major market after one approval process versus country-by-country in the EU. Germany, Belgium and France would be the hardest hit by the proposed rules, the EFPIA said citing research by Dolon that it commissioned.

Robin C., David Hyman, W. Nicholson Price II, and Mark Ratain, 09-10-2021, “Negative innovation: when patents are bad for patients”, Nature Biotechnology, https://www.nature.com/articles/s41587-021-00999-0

Incentives in patent law have driven innovation into spaces that are affirmatively harmful to patients, and patentees are discouraged from taking steps to improve the product so as to prevent adverse health outcomes.

Beth Winehouse interviewing Frank Lichtenberg, 11-30-2023, "Why the High Cost of New Drugs Might Be a Bargain," CBS Insights, https://leading.business.columbia.edu/main-pillar-business-society/healthcare/healthcare-new-drugs-cost

CBS: Why is scientific innovation so important for national productivity? Frank Lichtenberg: An economist at MIT named Robert Solow won the Nobel Prize in economics in 1987 for his research on economic growth. He demonstrated that, in the long run, the only way to increase productivity and prosperity is for there to be innovation and technological progress. Most students of economic growth today believe that innovation, which is driven by investment in research and development, is really the key to increasing productivity and per capita income. New products and new processes don’t just fall out of the sky like manna from heaven. They’re the result of investment in research and development by both private and public sectors. CBS: Why did you decide to focus your research on one specific type of innovation — pharmaceutical innovation and access to it? Lichtenberg: One way to measure which industries innovate the most is to measure research and development investment. One common metric is R&D intensity, which is the ratio of R&D expenditure to sales — how much do those companies spend on R&D as a percentage of revenue? The pharmaceutical and biopharma industry ranks at the top of that list. It’s the most R&D-intensive industry. And while innovation is very important, in order to benefit from it, you have to use the products that embody those innovations. In the pharmaceutical industry, that means new drugs and biologics and vaccines. And the users of those new products are the people who benefit the most from that kind of innovation. CBS: How can access to these new products potentially increase worker productivity? Lichtenberg: Think about the benefits of pharmaceutical innovation. One of them is allowing people to live longer — increasing the quantity of life. But innovation also improves quality of life. You can look at different diseases and say, “Why has disability declined more for some diseases than other diseases?” In part, it’s because there have been more new drugs for some diseases than others. If people have diseases that are disabling and preventing them from engaging in activities of daily living, those new drugs could allow them to work more years and to miss fewer days of work. CBS: Is it really possible to isolate the effect of new drugs from access to healthcare in general? Lichtenberg: According to several studies, the vast majority of private biomedical research is about pharmaceuticals. While there are other types of biomedical innovation — new procedures, new imaging techniques, new apps on the phone — that’s a relatively small part of biomedical R&D. If most of the R&D is about pharmaceuticals, we would expect most of the improvements in health to come from pharmaceutical innovation rather than other types of innovations. CBS: Pharmaceutical companies are often vilified for the high cost of new drugs, and they counter that the high cost of research and development is responsible. Your work seems to imply that these costs are justifiable. Lichtenberg: Yes, the cost is well worth it and might even be negative. One of my earlier studies showed that even under conservative assumptions, the value of the increase in people’s ability to work thanks to new drugs is 2.5 times as great as the expenditure on new drugs. A few weeks ago, I published a peer-reviewed paper entitled “Has Pharmaceutical Innovation Reduced the Average Cost of US Healthcare Episodes?” The study draws on data from the US Bureau of Economic Analysis about the cost of treating different diseases and how it’s changed over time. I show in the article that the diseases for which the most new drugs were approved by the FDA tended to have lower growth in overall healthcare costs and, in particular, hospital costs. This study provides very strong evidence that there are cost offsets. For instance, new drugs often reduce the need for people to be hospitalized for different conditions. Let’s say that a new drug costs $1,000, but it prevents someone from being hospitalized, which might cost $10,000. Then the net cost of the drug is actually negative. Although the drugs may appear to be expensive, they reduce the need for other medical care and also reduce disability. Also, a number of studies have shown that when new drugs enter the market, they reduce the cost of older drugs that continue to be used. That’s another cost offset that needs to be taken into account. CBS: Access to pharmaceutical innovation, like access to healthcare in general, is not equal or universal. What determines who benefits? Lichtenberg: Last year, I published a study that showed pharmaceutical innovation primarily increased the longevity of people with the most education. People with less than nine years of school didn’t benefit, presumably because more educated people had greater access to new drugs. An earlier study I did with a colleague also showed that people with less education tended to have less access to new drugs. CBS: Do you think your work can help convince the public, employers, health insurance companies, and others that the high cost of pharmaceutical innovation is justifiable? Lichtenberg: I do believe that it’s very important to correctly measure the benefits as well as the costs of pharmaceutical innovation. The cost seems pretty obvious. But we also have to look at the cost offsets. The new drug will often result in less use of hospital care as well as other types of medical care like emergency room visits or home health visits. So, when we think of the benefits and costs of drugs and their cost effect, that’s the metric we try to evaluate: incremental cost effectiveness. That’s been a big theme of my research, that in order to correctly measure cost effect, you have to measure all the benefits and costs. And possibly cost savings. That’s why it might be in an employer’s interest to provide healthcare coverage to employees. Partly it might be to compete in the labor market but also for employees to be healthier and more productive. Access to healthcare, and to new drugs, can reduce disability and absenteeism, so that health insurance that covers new drug costs is in both the employer’s and employee’s interest.

S. Vincent, 06-23-2020, “The high cost of prescription drugs: causes and solutions”, Blood Cancer Journal, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7311400/

Global spending on prescription drugs in 2020 is expected to be ~$1.3 trillion; the United States alone will spend ~$350 billion1. These high spending rates are expected to increase at a rate of 3–6% annually worldwide. The magnitude of increase is even more alarming for cancer treatments that account for a large proportion of prescription drug costs. In 2018, global spending on cancer treatments was approximately 150 billion, and has increased by >10% in each of the past 5 years2.

U.S. economic growth has slowed since 2000, and projections from the U.S. Congressional Budget Office (CBO 2018) and others suggest that the U.S. growth rate is unlikely to substantially accelerate in the coming years. As argued by Shackleton (2018; summarizing CBO forecasts) and others, a key component of this recent slowdown in economic growth is a decline in what economists call total factor productivity growth, which refers to the portion of economic growth that is not explained by the traditional inputs of labor and capital. This recent observed decline in total factor productivity growth is of concern, in part because it has coincided with slow growth in real wages and rising wage inequality. The precise causes of this productivity slowdown are unclear. However, economists are generally in agreement that, for countries that are already at the technological frontier such as the United States, the only way to secure long-run productivity growth is through innovation (see Bloom, Van Reenen, and Williams 2019 for one recent discussion). A key policy challenge facing the United States is hence how to accelerate technological innovation. Government policies have long sought to spur innovation. In a competitive market, inventors frequently capture only a small share of the social value of their inventions. If firms invest in research only up to the point that their private benefits outweigh the costs—not accounting for the broader social benefits—then private research investments will likely be too low from a social perspective. This concern about underinvestment has motivated attention on the design of public policies that are aimed at better aligning inventors’ private benefits with the social value of their inventions. While a variety of policy levers are relevant, including R&D tax credits and publicly funded research subsidies, both historically and globally one of the most widely used policy levers for trying to improve this alignment is the patent system (see Hemel and Ouellette 2013 for one discussion). Unfortunately, as discussed further below, innovation scholars have been unable to credibly demonstrate that stronger patent rights do, in fact, lead to additional research investments (Williams 2017). In the absence of such evidence, it is not clear that the benefits of the patent system are large enough to outweigh patents’ costs, which include higher prices on patented goods for consumers and subsequent innovators (i.e., those whose inventions build on earlier inventions) during the life of the patent, administrative costs within the patent system, and both search and transaction costs for private parties seeking to operate in technology markets. Whether these costs are outweighed by the value of increased innovation—and thus higher productivity and economic growth—is, in our view, the fundamental question of patent policy. Concern about some of these costs, particularly costs associated with frivolous patent litigation, has driven substantial U.S. patent reform efforts over the past two decades, both in Congress and at the U.S. Supreme Court. These reforms have generally weakened U.S. patent protection, leading to a countervailing concern from certain stakeholders that the patent system now provides insufficient incentives for innovation, at least in some markets where patent protection has been scaled back. Given the empirical uncertainty about the effect of the patent system on social welfare, however, our view is that it is difficult or even impossible to rigorously predict the effects of policy reforms aimed at altering the overall strength of patent protection. Instead, in this paper we propose three tailored reforms that would improve the patent system without requiring a stance on the overall contribution of patents to innovation and productivity. That is, rather than proposing more or less patent protection, we suggest reforms aimed at better-designed patent protection. We order these reforms based on our confidence in the supporting evidence, together with the clarity of our proposed reform plan.