The More Things Change: Improvement Patents, Drug Modifications, and the FDA
95 Pages Posted: 22 Oct 2018 Last revised: 9 Jun 2021
Date Written: October 19, 2018
Pharmaceutical companies often replace prescription drugs that are already on the market with modified versions that have the same active pharmaceutical ingredient. On the surface, such activity seems benign and perhaps even salutary. Nonetheless, antitrust litigation has revealed that firms sometimes modify existing drugs not because new formulations would demonstrably improve health outcomes, but principally because so-called secondary patents covering the new version of the drug enable them to maintain some effective market power over the active ingredient for which original, primary patent protection has expired. This “product hopping” strategy runs counter to the goal of the legislative framework for regulating branded and generic drug approvals, which is to create appropriate incentives for discoveries that elevate the quality of patient care and human health by providing a period of reward for the brand followed by timely and effectual generic entry.
In this Article, I explain that the rules and institutions involved in determining the validity of patents on chemical inventions, certain features of drug regulation under the Federal Food, Drug, and Cosmetic Act, and unique market forces in the pharmaceutical sector combine to allow strategic product hopping. To address this problem, I propose a novel regulatory scheme that would empower the Food and Drug Administration (“FDA”) to induce pharmaceutical companies to generate comparative data indicative of therapeutic distinctiveness between related forms of small-molecule drugs. I explain that the FDA is institutionally well-positioned to serve as an information intermediary that can help increase transparency with respect to drug changes, and show that the relevant disclosures can be presented in a manner that is useful to patients, prescribers, and payers. The proposed framework would then enable these market participants to identify and reject strategic drug product changes, reducing the manufacturer’s incentive to pursue such modifications. Ultimately, the FDA’s new authority for comparative data development could lead to improvements in patient care and promote downstream clinical research based on scientific evidence gathered under the directives of the proposed scheme.
Keywords: FDA, follow-on drugs, product hopping, blocking patents, non-obviousness
JEL Classification: I13, K10, L44
Suggested Citation: Suggested Citation