Aff - Hatch Waxman - JDI 2024

Hatch-Waxman Aff
Notes
When a patent is filed, the firm that owns the patent has exclusive rights to create that thing/use that process for 20 years. The problem is, when a new drug or pharmaceutical product is created in a lab, the creating company seeks a patent, but then has to spend years performing clinical trials and waiting for FDA approval. This means that while they have 20 years in theory, they get much fewer to profit off of their invention. That makes it often less profitable to invest in drugs that have a long trial time, because those companies have less time to make money exclusively off their invention. This aff proposes that the US extend or modify the amount of time certain drugs get to be profitable
Glossary
Patent Term: The length of time the patent gives the patent holder the right to exclusively sell/use the patented technology. Currently, the patent term in the US is 20 years, which means that when a patent application is submitted, the patent holder gets 20 years to basically have a monopoly on that technology/invention.
Effective Patent Term: The length of time that a patent holder can actually profit off of the patented invention in practice. Drugs need to have their patents submitted before they begin clinical trials, but can’t be sold until after those trials are done and the FDA has approved the drug. This means the effective patent term for drugs is often much shorter than the 20 year patent term, because companies can’t profit off of the drug immediately when the get the patent.
Clinical Trials: Trials involving tests on humans. Most drugs are tested on non-human animals and observed in labs before they are approved for testing on humans. New drugs need to register for a patent before they begin clinical trials.
FDA: The US Food and Drug Administration. This government organization must approve any food, drug, or other consumable before it can be sold.
Hatch-Waxman Act: Does a lot of things. Most relevant for our aff is that it provides drug companies a partial patent extension when long clinical trails decrease the effective patent term of a drug. The extension has several caveats. 1. It provides half a year for every year burned in clinical trial. 2. The extension can’t be longer than 5 years. 3. It can’t result in more than 14 years of patent life after the FDA approves the drug. The combination of these restrictions means there is no way for a drug to get a full 20 years of effective patent life, and often results in much fewer years than that. I’ll give a few examples to illustrate:
A drug takes 18 years of clinical trails. That means before the extension, it has an effective patent life of 2 years (20 – 18 = 2). The extension means it should get an additional 9 years (because 18 years of clinical trials /2 = 9) BUT since the extension can’t be longer than 5 years, they only get 5 years added on. That makes the effective patent term 7 years, a full 13 years less than the typical patent term.
A drug takes 7 years of clinical trails. Before the extension, it has an effective patent life of 13 years. The extension would normally give it 3.5 additional years of patent life, but since that would result in an effective patent term of more than 14 years after FDA approval, the extension can only be a max of 1 year, giving the drug an effective patent term of 14 years, 6 years less than the typical patent term.
Both of these examples should make it obvious why it’s so much more profitable to invest in drugs which have a short period of time for clinical trials. If a drug only takes 1 year to get FDA approval, the drug company gets to profit off of it for a full 19 years. Compare that to the drug in example 1. Even if it’s effective and profitable, the drug company only gets exclusive control over that drug for 7 years, creating an incentive to invest in drugs which are faster to test in clinical trails.
Commercialization Lags: A long period of time between acquiring the patent and profiting off of the drug.
Surrogate Endpoints: In clinical trials, the drug company must demonstrate the drug they’re testing actually solves the problem they’re treating. They do this typically by administering the drug to one group and giving the other a placebo. They determine effectiveness by comparing the health metrics of the test group (the group that got the drug) to the control group (the group that got the placebo). Sometimes, it can be difficult to run these tests in a timely manner. A medication preventing heart attacks, for instance, would need to be administered to a very large number of people with an equally large control group to demonstrate that the test group had fewer heart attacks over time. This would take a long time to test because you would basically need to give the medicine to a ton of people, and wait several years to compare the number of heart attacks in the test group to the control group. Because this takes so long, scientists will sometimes find other metrics to demonstrate that drugs do the thing they’re intended. For heart attack medication, it might be sufficient to prove that the medicine thins a patients blood and lowers their blood pressure, because both of those things reduce the risk of a heart attack. This can be measured much more quickly and easily than outcome-based endpoints.
1AC
Contention 1 is Innovation
Status quo pharmaceutical companies face an innovation paradox. Drugs with longer clinical trials face shorter effective patent terms, biasing research towards short-term medicines.
Lietzan 18 , Erika Lietzan is a William H. Pittman Professor of Law and Timothy J. Heinsz Professor of Law at the University of Missouri School of Law. (Erica, 2018, “THE DRUG INNOVATION PARADOX,” Missouri Law Review, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2948604)
In medicine today, we face an innovation paradox. Companies that develop new medicines depend on a period of exclusive marketing after approval, to fund their research and development programs. This period is made possible by patent protection and regulatory data exclusivity. But when a particular premarket research and development program is more challenging and time consuming than other programs, the period for exclusive marketing is not longer and may, in fact, be shorter. This is a paradox; the relationship between the incentive (exclusive marketing) and the behavior we seek to encourage with the incentive (research and innovation) is the opposite of what one would expect. The scheme contradicts itself.1 This Article explores the drug innovation paradox, using scientific and historical regulatory sources and a new dataset constructed from publicly available sources. Its findings have profound implications for innovation policy. The length of the premarket period may correlate with particular drug types, disease targets, and studied outcomes, which means we may not be providing adequate incentive to develop new medicines in entire areas of need. Federal patent law stimulates scientific and technological progress – innovation – by ensuring that innovators can enjoy a period of exclusivity in their inventions, meaning a period during which no others may manufacture and sell embodiments of their inventions.2 Federal drug law prohibits the sale of new medicines, however, until those medicines have been approved by the U.S. Food and Drug Administration (“FDA”).3 The tension between these two frameworks – one protecting exclusivity in an invention, the other precluding commercialization of that invention – gives rise to the paradox that is the topic of this Article. Obtaining approval of a new drug generally entails testing the medicine in a laboratory and in animals (“preclinical” testing) and then completing several rounds of trials in humans (“clinical” trials), followed by preparation and submission of a marketing application. This process can take years and can cost in the high hundreds of millions of dollars (or more), and its outcome is uncertain.4 After a new medicine reaches the market, it may face competition from other medicines for the same condition, but it generally enjoys a period of exclusive marketing before FDA will approve generic copies. Generic copies are usually priced at a fraction of the price of a new medicine (often known as the “brand” product) and are usually substituted by pharmacists for the brand product at the point of sale.5 Their approval ends the brand product’s exclusivity in the marketplace, and in fact, they usually take the lion’s share of the market.6 There is a paradoxical relationship between the period for exclusive marketing and the premarket research and development performed for FDA approval. If a particular premarket research and development program is more challenging and time-consuming than other programs, the period for exclusive marketing is not longer and may, in fact, be shorter. The exclusive marketing period prior to generic market entry is largely a function of the company’s patents. Certain aspects of patent law doctrine effectively require the application for a patent claiming the active ingredient of a new drug to be filed early in the research and development process. Patents last for a fixed term, which used to start when the patent issued but now starts on the date of the patent application. Either way, much of the patent term can elapse while the company is performing the research needed for approval.7 And the more research performed, the more of the patent term elapses. The period for exclusive marketing of a medicine is also a function of the “data exclusivity” available to the innovator. During this time, generic companies may not rely on the research generated and submitted by the innovator for approval of their own drugs.8 Data exclusivity suffers from a slightly different problem; even where the premarket study period is much longer, the length of the data exclusivity period does not change.
Whole areas of medicine are underdeveloped.
Lietzan 18 , Erika Lietzan is a William H. Pittman Professor of Law and Timothy J. Heinsz Professor of Law at the University of Missouri School of Law. (Erica, 2018, “THE DRUG INNOVATION PARADOX,” Missouri Law Review, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2948604)
VI. CONCLUSION The problem explored in this Article is the paradoxical relationship between drug innovation and its reward. The reward shrinks (or, at best, stays flat) when premarket innovation takes longer. On the whole this should lead to post-invention efficiency, minimizing the impact of any endogenous factors contributing to the premarket program length.285 It also means that companies are unlikely to make choices specifically to delay market entry. With the clock ticking on post-approval market exclusivity, there is no benefit to doing so.286 The historical and empirical work in this Article leads to three important insights about the paradoxical relationship between drug innovation and its reward. First, the length of any particular drug’s premarket research and development program may depend heavily on factors like the disease and its therapeutic category, our current understanding of the causal pathways of the disease, the proposed therapeutic outcome, the chemical structure of the active ingredient, its mechanism of action, its physiological effect, and FDA’s innate conservatism. These exogenous factors are beyond the sponsor’s control in the sense that any seasoned firm with qualified personnel picking one premarket program instead of another would face the same issues.287 Second, certain drugs are simply going to take longer to develop. These will include some drugs for some early stage cancers that have a longer time to progression and mortality, for instance, as well as drugs for use in the earliest stages of neurodegenerative diseases if the therapeutic goal is delay or prevention of the ultimate outcome. They will include drugs for long-term use for conditions (such as diabetes mellitus) that significantly precede clinical events of interest (such as heart disease, stroke, and kidney damage). They will include drugs intended for less well understood body systems, like the central nervous system, where even novel surrogate markers may be years off. Third, the choices faced by a company in the new drug paradigm are generally not choices among more and less efficient routes to the same end result. A new drug in the federal drug scheme is a particular combination of active ingredient, product features, and the labeling (disease and outcome). The research performed by a drug’s sponsor thus defines the product approved by FDA at the end of the day. This means the sponsor’s choices during the research and development period are tantamount to choices about the product to be pursued. The Paraplatin example illustrates why it may generally be more rational to select a short runway with a limited approval than a long runway with a broader approval. This decision may be due to the time value of money, but the innovation paradox suggests that it may also result from the price paid in lost effective patent life when clinical programs run longer. As a matter of public policy we may prefer that companies facing this choice select the product with the shorter runway. But in some cases a company will not have that option. If a company must choose between a long runway and a different product altogether, the innovation paradox may mean whole areas of medicine remain underdeveloped. The implication for social welfare is that we may have a profound interest in breaking the paradox – in ensuring that longer research programs no longer lead to shorter rewards.
That shreds pharmaceutical innovation and results in unnecessary deaths. There’s a causal relationship between long trial times and a decrease in R&D funding.
Ouellette and Williams 20 , Lisa Larrimore Ouellette is the Deane F. Johnson Professor of Law at Stanford Law School, as well as a Senior Fellow at the Stanford Institute for Economic Policy Research. Heidi Williams is the Charles R. Schwab Professor of Economics at Stanford University; Professor, by courtesy, of Law at Stanford Law School; and a Senior Fellow at the Stanford Institute for Economic Policy Research (SIEPR). She is the Editor of the Journal of Economic Perspectives, and is a Research Associate at the National Bureau of Economic Research (NBER) where she is co-director of the Health Care program as well as co-director of the Innovation Policy working group. (Lisa Larrimore and Heidi, June 2020, “Reforming the Patent System.” The Hamilton Project, https://law.stanford.edu/wp-content/uploads/2020/06/Ouellette_Williams_LO_6.16_FINAL.pdf)
Are short effective patent terms for some pharmaceuticals a problem in practice? As we have argued, there is tremendous empirical uncertainty about whether longer patent terms encourage innovation. This naturally raises the question: Would changes to effective patent terms have real effects on pharmaceutical investments? It is important to stress that our (preferred) justification for this proposed reform does not rest on an affirmative answer to that question. Rather, our preferred justification is more direct: the patent system is meant to provide uniform patent terms across inventions, but fails to do so in practice. Pharmaceutical markets are the obvious case where direct evidence of this failure exists, and there are practical policy levers that could address this failure without distorting other (nonpharmaceutical) markets. That said, we of course recognize that policymakers will be interested in whether the policy reform we are proposing would have real effects on pharmaceutical investments. While there is no definitive evidence on this question, the closest available evidence comes from Budish, Roin, and Williams (2015). The authors start by empirically establishing that longer commercialization lags are associated with less R&D investment in cancer drugs. As suggested by the two New England Journal of Medicine examples discussed above, clinical trials can be completed more quickly for late-stage cancers with low survival rates, such as recurrent and metastatic cancers, because differences in survival in a treatment group relative to a control group in a randomized trial can be observed more rapidly. Given that patents essentially must be filed before the start of clinical trials, late-stage cancer drugs thus receive longer effective patent terms than do early-stage cancer drugs that require lengthier clinical trials. As illustrated in figure 1, this difference in commercialization time correlates with the number of clinical trials conducted for different cancer stages. The same pattern holds when adjusting for measures of market size. Two additional empirical tests conducted by Budish, Roin, and Williams (2015) suggest that, when taken together, figure 1 reflects a distortion of private R&D investments in cancer drugs away from the ideal balance. First, the negative correlation between commercialization lags and R&D does not hold when firms are permitted to rely on surrogate endpoints for clinical trials (i.e., outcomes other than survival rates, which can be observed more quickly), suggesting that the relationship is causal rather than reflecting, for example, fewer scientific opportunities for early-stage treatments. Second, the observed negative correlation is stronger for private investments than it is for publicly funded research investments, suggesting again that the relationship does not merely reflect the lack of scientific opportunities to develop early-stage cancer drugs. As further support for this interpretation, all six FDA-approved cancer prevention drugs—the cancer drugs with the longest commercialization lags—either relied on surrogate endpoints or were approved by the FDA entirely on the basis of publicly funded clinical trials. What Budish, Roin, and Williams (2015) do not show is definitive evidence that longer effective patent terms would fix this distortion. As they discuss, at least one other potential mechanism—namely, private firms preferring to invest in projects that pay out over a short time horizon—could explain these results. While both mechanisms could merit a public policy response, reforms to Hatch–Waxman would only address the problems generated by the first mechanism. Even with that caveat, Budish, Roin, and Williams (2015) are nonetheless able to estimate that underinvestment by private firms in long-term cancer research—generated by either or both of these mechanisms—generates a quantitatively large loss in patient health. The authors estimate that, even focused solely on the subset of U.S. cancer patients diagnosed in 2003, this distortion generated around 890,000 lost life-years, which translates to a total net present value of life-years at stake of between $170 billion and $4.2 trillion. While these specific estimates should of course be taken with a grain (perhaps a spoonful) of salt, they suggest that this distortion is empirically important enough that policymakers should seriously consider potential reforms.
The question is when the next pandemic will strike, not if. A litany of factors make future disease outbreaks inevitable.
Hope 20 , reporter, interviewing Professor Kevin, head of the virology unit of the Institute of Tropical Medicine (ITM) in Antwerp (Alan, 11/28/2020, “The next pandemic: ‘A question of when, not if,’ says expert,” The Brussels Times, https://www.brusselstimes.com/142972/the-next-pandemic-a-question-of-when-not-if-says-expert)
With the world today in the grip of the Covid-19 pandemic, a leading expert in infectious diseases has warned that another pandemic is a disaster waiting to happen.
Professor Kevin Ariën is head of the virology unit of the Institute of Tropical Medicine (ITM) in Antwerp, and has worked on the HIV pandemic, Ebola and the problem of emerging and re-emerging viruses.
“For decades, scientists have

Preview shortened. Download the file for the full document.