Unpatenting Product Hops

Abstract

On July 9, 2021, President Joseph R. Biden signed Executive Order 14036 (“Promoting Competition in the American Economy”), which directed the U.S. Food and Drug Administration (FDA) and the U.S. Patent and Trademark Office (USPTO) to collaborate on new approaches to increasing competition and lowering prices in the pharmaceutical marketplace. In response, the USPTO outlined several new initiatives, among them an intent to improve the robustness and reliability of issued patents.

A major impetus for the Executive Order was the pervasive nature of pharmaceutical product hopping, which occurs when manufacturers introduce new follow-on versions of lucrative pharmaceutical products to the market, versions of low added commercial value like extended-release forms of drugs or modifications to device components of combination therapeutics. Product hops are usually intended to mitigate lost market share due to generic competition or thwart generic competition entirely. Yet the small benefits of these new products are usually far outweighed by excess costs to payers and patients alike. Product hops remain an essential part of product lifecycle management strategies due to patents, many of which are obtained after the flagship product is on the market and which offer market exclusivity for these incrementally better products. These patents also discourage manufacturers from entering lucrative markets, encourage settlement and delayed generic entry, and result in prescribing of marginally better product hops at brand-name prices. In doing so, they undermine the fundamental constitutional intent of the patent system—a time-limited exclusive right.

Elevating patentability standards at the USPTO could mitigate product hopping through the rejection of weaker patents, which should eventually curtail patent applications from manufacturers that attempt to create “new,” yet arguably uninventive, products intended primarily to capture market share from would-be competitors. This article evaluates the core elements of patentability and relevant case law, highlighting opportunities for the USPTO to strengthen its review of pharmaceutical patents. When coupled with regulatory reforms that further mitigate the impact of product hops, pharmaceutical research and development may pivot away from product life cycle management strategies that focus on extending the profitability of older drugs facing the prospect of generic competition and toward transformative innovation that accelerates the development of the next generation of therapeutics and cures.