The Impact of Patent Laws: The Growing Elusiveness of Drugs

/ Healthcare, Intellectual Property / By

Karolina Viera*1

Introduction

Is access to medicine a human right? Through an interpretivist view, the answer is a definitive no. Access to pharmaceutical drugs may be life-saving for millions of people in the United States, yet there are very few laws to ensure accessibility. Over the past two centuries, pharmaceutical manufacturers have become dependent on monetary profits when developing new creations, which has led to excessive prices that even their target audience can no longer afford to pay. The U.S. Constitution has no mention of health care, but as the pharmaceutical industry has gained significant traction in product development, legislation has been passed to address potential problems. Roche Products v. Bolar Pharmaceutical Company (1984) ultimately defined the current role pharmaceutical companies have and resulted in the Drug Price Competition and Patent Term Restoration Act of 1984 (“Hatch-Waxman Act”), which was the first law that promoted the role of generic pharmaceutical companies and their interests.2

Prior to the Hatch-Waxman Act, the U.S. Supreme Court case Suffolk Company v. Hayden (1865) set the standard of only allowing inventors to hold one patent per invention and voiding any additional patents that coincided with an active one.3 However, these precedents have been disregarded, and pharmaceutical companies have found new ways of holding extended patents instead of seeking multiple licenses. Government officials have attempted to reform this system of exploitation, but pharmaceutical companies have found both innovative and legal ways of renewing patents, whether it is through the slight alterations of chemical components or the transferring of rights to other companies. Patent laws must be re-examined to define pecuniary rewards and determine when patent loopholes have begun contributing to the prioritization of wealth over access.

Pharmaceutical Research and Manufacturers of America v. District of Columbia

In the case Pharmaceutical Research and Manufacturers of America v. District of Columbia (2005), the District of Columbia (D.C.) argued that pharmaceutical companies were charging excessive rates for patented drugs, and the manufacturers were negatively impacting the welfare of the city’s denizens.4 The city emphasized that patents have granted pharmaceutical companies unrestrained power in the market, and, as a result, D.C. could not provide accessible health care for residents in need.5 This case was one of the first in attempting to limit excessive drug prices, but it ultimately failed as the court found that the Prescription Drug Excessive Pricing Act of 2005 infringed on patent law and the commerce clause. The case detailed that D.C. sought to “adjust [the pharmaceutical company’s] wholesale price to an amount no greater than 30% more than the wholesale price of the same product in the four designated foreign countries,” the United Kingdom, Germany, Canada, and Australia.6 Notably, the efforts by the city do not seek to set a standard regulation of the prices of generic medication.7 Since the Act failed, it hindered future cases from limiting pharmaceutical manufacturers from price gouging, but the Act influenced states to take action against companies harming residents.

H.B. 631

Slightly over a decade after the Prescription Drug Excessive Pricing Act, Maryland enacted H.B. 631, or the Prohibition Against Price Gouging for Essential Off-Patent or Generic Drugs of 2017. The Act stated that a “wholesale distributor may not engage in price gouging in the sale of an essential off-patent or generic drug.”8 H.B. 631 sought to prevent excessive prices and described an unconscionable increase of a drug price as a price that:

(1) Is excessive and not justified by the cost of producing the drug or the cost of appropriate expansion of access to the drug to promote public health; and
(2) Results in consumers for whom the drug has been prescribed having no meaningful choice about whether to purchase the drug at an excessive price because of:
(i) The importance of the drug to their health; and
(ii) Insufficient competition in the market for the drug.9

This criterion influenced several states to introduce similar laws to prevent price gouging, but of the fifteen bills proposed, none advanced.10 Ten of the bills proposed by states including Colorado, New Jersey, and Virginia incorporated Maryland’s definition of “unconscionable increase,” but it was not enough to initiate a change in the patent industry.11 The efforts of state legislatures have not been successful and demonstrate that for a substantial change to occur, the problem must be challenged at the root.

Patent Laws and Loopholes

The outline of the patent system is in Article I, Section 8, Clause 8 of the Constitution, which states that “Congress shall have Power… To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive right to their respective Writings and Discoveries.”12 It is “intended to stimulate new discoveries and their reduction to practice, commonly known as innovation.”13 Patent awarding “permits the creator of an idea to exclude others temporarily from use of the at concept without compensation.”14 The purpose of patent law is clearly meant to establish a method of protecting creators from intellectual theft and offer inventors a way of profiting from their discoveries. However, the current twenty-year limit is often exploited through product hopping, which is referred to as an alternative to allowing the patent to expire.15 In the pharmaceutical industry, product hopping refers to the practice of modifying the minimal amount of components in a drug and rebranding the drug as a recently developed invention to renew a patent.16 Consequently, pharmaceutical companies are guaranteed ownership of the medicinal drugs and prevent outside competition.17 Product hopping is becoming more harmful to Americans as companies violate antitrust laws by creating illegal monopolies and maintaining drug prices high, all while preventing competition.18 Product hopping not only causes limited accessibility to generic drugs, but also enables price gouging.19

Pecuniary Rewards

Price gouging is an issue legislatures have attempted to address over the past decade without success. There should be a balance for reward as motivation for innovation in order to not limit access to health care. A study conducted by the Carnegie Mellon Survey of the U.S. manufacturing sector concluded that firms relied on patents as “strategic tools” and means of monetary success rather than the prevention of imitations.20 There is ample evidence to suggest pharmaceutical companies seek patents for profits and not their social obligations, and the U.S. government should follow the lead of India’s intellectual property laws to prioritize its citizens. After a seven-year legal battle, in 2012 the Supreme Court of India declared that in the case Novartis v. Union of India & Others, the pharmaceutical company could no longer seek patents for medicines with minor changes.21 The court stated that it is the government’s responsibility to protect public health and ensure medicine affordability. Moreover, the court sought to become a model for developing countries and demonstrate that patent laws do not have to compromise public health for corporate interest.22 

Conclusion

One alternative to the current patent system in the United States is to have the government reward innovators for medicinal advancements. According to this system, innovations would immediately be accessible to the general public as the government compensates companies. This would prevent the monopolization of industries by enacting a system.23 However, a more realistic solution to address this problem is to tighten loopholes and limit the amount of times a company can renew a patent for a drug whose intended purpose has not changed, but has been altered enough to be considered innovative. In December of 2019, Congress approved the Creating and Restoring Equal Access to Equivalent Samples Act (“CREATES Act”) to strengthen the Hatch-Waxman Act and address some of the exploited loopholes.24 The CREATES Act essentially increases the production of generic pharmaceutical drugs by preventing companies from blocking the distribution of samples.25 Generic drug companies are now able to sue brand-name companies if they fail to provide samples to recreate biosimilar versions of the drugs.26 However, this is not enough to prevent anti-competitive practices or a complete prioritization of the public’s health like in India. Although steps are being taken to address the pharmaceutical industry’s exploitation of government systems, patent law must be revised to benefit a country’s citizens instead of the pharmaceutical industry.

  1. *B.A. Candidate for International Political Economy, Fordham College at Lincoln Center, Class of 2024. Being a member of the Fordham Undergraduate Law Review has been an honor given the extensive resources and support the group has offered. I would like to thank the FULR Editorial Board for their thoughtful feedback on this Note, as well as my family and friends for encouraging me to follow my passions while exploring new interests.
  2. See Roche Prods. v. Bolar Pharm. Co., 733 F.2d 858 (Fed. Cir. 1984).
  3. Suffolk Mfg. Co. v. Hayden, 70 U.S. 315 (1865).
  4. Pharm. Research & Mfrs. of am. v. District of Columbia, 406 F. Supp. 2d 56, 66, 72 (D.D.C. 2005).
  5. Id. at 61.
  6. Id. at 61, 66.
  7. See Michelle M. Mello & Rebecca E. Wolitz, Legal Strategies for Reining In “Unconscionable” Prices for Prescription Drugs, 114 Nw. U.L. Rev. 859 (2020).
  8. Md. Code Ann., Health § 2-801, 2-820, 2-803 (LexisNexis 2017); see Mario Davis, Wrong Price, Wrong Prescription: Why Maryland’s Generic Drug Law Was Not Enough to Effect Change in Rising Prescription Drug Prices, 49 U. Balt. L.F. 102, 103 (2019).
  9. Md. Code Ann., Health § 2-801 (LexisNexis 2017).
  10. Mello and Wolitz, supra note 7, at 873.
  11. Id. at 882, 892, 950.
  12. U.S. Const. art. I, § 8, cl. 8; see Juanita M. Branes, Patent Technology: Transfer and Industrial Competition (2007).
  13. Id. at 41.
  14. Id.
  15. Rebecca L. Martin, The Big Pharma Game: How Pharmaceutical Companies Have Gamed the United States Patent Law System and Undermined the United States Constitution, 30 Fed. Cir. B.J. 213, 214 (2020).
  16. Id.
  17. Id.
  18. Id.
  19. Id.
  20. See Helen Gubby, Is the Patent System a Barrier to Inclusive Prosperity? The Biomedical Perspective, 11 Global Policy 46, (2019).
  21. See Civil Appeal No. 2706-2716 of 2013; see Ravinder Gabble & Jillian Clare Kohler, To Patent or Not To Patent? The Case of Novartis’ Cancer Drug Glivec in India, 10 Global Health 1 3 (2014).
  22. Gabble & Kohler, supra note 21, at 3.
  23. See Steven Shavel, Rewards Versus Intellectual Property Rights, 44 J. of L. and Econ. 525 (2001).
  24. See Michael Kades, The CREATES Act Shows Legislation Can Stop Anticompetitive Pharmaceutical Industry Practices, Equitable Growth (May 27, 2021), https://equitablegrowth.org/the-creates-act-shows-legislation-can-stop-anticompetitive-pharmaceutical-industry-practices/.
  25. Id.
  26. Id.
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