• Using Antitrust to Fix Broken Markets

    The prescription drug market is a real mess, in my view. At the very least, it is complicated, and prices for drugs seem to be higher in the U.S. than elsewhere (though teasing that out is hard, since very few pay sticker price and insurance companies negotiate deals). But I don’t know what the solution is, and I’m not convinced anyone else does, either. The recent article that triggers my thoughts on this is: A Non-Coercive Approach to Product Hopping, 33 Antitrust 102 (2018), by Michael Carrier (Rutgers) and Steve Shadowen (Hilliard & Shadowen LLP). Their paper is on SSRN, and the abstract is here:

    The antitrust analysis of product hopping is nuanced. The conduct, which consists of a drug company’s reformulation of its product and encouragement of doctors to switch prescriptions to the reformulated product, sits at the intersection of antitrust law, patent law, the Hatch-Waxman Act, and state substitution laws, and involves uniquely complicated markets with different buyers (insurance companies, patients) and decision-makers (physicians).

    In Doryx, Namenda, and Coercion, Jack E. Pace III and Kevin C. Adam applaud some courts’ use of a product-hopping analysis that finds liability only where there is an element of coercion. In this response, we explain that the unique characteristics of pharmaceutical markets render such a coercion-based approach misguided. We also show that excessively deferential analyses would give brand-name drug firms free rein to evade generic-promoting regulatory regimes. Finally, we offer a conservative framework for analyzing product hopping rooted in the economics and realities of the pharmaceutical industry.

    This very brief response essay does a good job of highlighting some of the difficult nuances associated with product hopping (something I’ll describe more in a minute) in the prescription drug market. I don’t necessarily agree with it – I actually disagree with the final proposal. I share this here because it prompted me to think more closely about an issue I had mostly ignored, and I respect Mike Carrier and think that he does about as good a job at presenting this particular viewpoint as anyone.

    Still, I’m troubled by the use of the blunt weapon of antitrust against product hopping, even as I have misgivings about other areas of this market. Product hopping occurs when a name brand (read, patented) drug is pulled from the market in favor of a “new and improved” product (that is also patented). The concern is that the removal of the old brand from the market just as generics are arriving will fail to trigger mandatory generic substitution rules, because doctors can’t prescribe the old name brand. Instead, the fear is that doctors will only fill prescriptions for the new, improved (though the parties debate the improved point) drug, for which there is no generic to substitute. Further, they won’t ever prescribe the generic once the name brand is off the market.

    Here’s what gives me a bit of trouble about this. While I am a big fan of automatic generic substitution laws, I am skeptical that they should be used as innovation policy, to the point where the inability of a generic to take advantage of it creates an antitrust injury and also forces a company to make a product that it may or may not want to make for profit or other reasons. In other words, a system that requires a company to make a product so that other companies can sell a substitute product that sellers are required by law to sell is a broken system indeed.

    The question is, where is the system broken? Some will, no doubt say that it is the patent system and exclusivity. Surely that plays a role. But I’d like to point to three other points of market failure that drug makers point to. None of these are really new, but I’m taking the blogger’s prerogative to talk about them.

    1. I think it is a huge assumption that doctors will only prescribe the new drug and won’t prescribe the generic once it hits the market. The argument in the article above is that because doctors don’t have to pay for it, they have no incentive to cost minimize. Which the incentive is certainly diminished in theory, this is not my experience with (many) doctors at all. I have had many doctors prescribe me (or my wife) “older” generic versions of drugs because they were cheaper. One funny thing is that often times those older versions were awful – like a drug my wife had to take as an awful tasting liquid because the pill version cost 3 or 4 times as much and wasn’t covered by the (generally good) insurer, or a blood pressure medication I had to take because it was the standards–until I could show that I had a rare side effect.

    2. I think insurance companies can regulate much of this through formularies. If you make the new drug non-formulary (or even brand cost), people will migrate to the cheaper generic substitute, even if there is no prescription available. Even if doctors don’t pay, insurers sure do, and they have every incentive to make sure that generic substitutes are used if the new drug is not really an improvement.

    3. I bristle a bit at the notion that generic companies must rely on substitution laws to get doctors to prescribe. I realize that’s how it is done now, and while substitution laws are a good thing, there is nothing stopping generics from telling doctors why the new-fangled drug is no better than the one that was just removed from the market for the same money. We make every other industry do this. I suspect that litigation is cheaper than advertising, and while I am happy to give the industry a leg up, I am wary of giving it a pass on basic business requirements, and I am wary to taking something that’s a regulatory windfall to generics (even if it is good for consumers) and making it an affirmative innovation policy. .

    4. Taking this last point further, from an innovation standpoint, is there any reason why generics can’t innovate their own product hopping drug? Knowing that a deadline is coming, why can’t they innovate (or license) their own extended relief version in addition? Indeed, I take an extended release version of a generic drug. It costs a fortune (before insurance), and the generic is benefiting from having created/licensed it. I suppose a more salient example is Mylan’s Epi-Pen, which uses a protected delivery system for a generic drug. While most people are not thrilled with Mylan’s pricing strategy, it illustrates the basic point I’m trying to make: generic manufacturers are not helpless victims of the system stacked against them, they are active, rent-seeking participants willing to exploit systematic flaws in their favor.

    Finally, I will say that all of my arguments are empirically testable, as are the arguments on the other side. If folks can point to studies that have demonstrated actual physician, consumer, and insurer behavior in product hopping cases, I will be happy to post here and assess!

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  • Federal Circuit Affirms Eastern District of Texas Holding that Medtronic Induced Infringement of Doctor’s Patents

    On January 24, the Federal Circuit affirmed a jury’s finding that the defendant-appellant, Medtronic, induced surgeons to infringe two patents of plaintiff-appellee, Dr. Mark Barry, which were directed to methods of correcting spinal column anomalies, such as those due to scoliosis, by applying force to multiple vertebrae at the same time. Medtronic appealed on several grounds, “principally concerning the public-use and on-sale statutory bars, but also concerning prior invention, inequitable…

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  • News from Abroad — More Pain for Warner-Lambert and Their Pregabalin Patent

    By Charlotte Teall — The long-awaited UK Supreme Court decision concerning Warner-Lambert’s Lyrica® patent was handed down in December. In summary, the Supreme Court dismissed Warner-Lambert’s appeal and upheld that the patent did not sufficiently disclose the claimed medical uses, i.e., all pain including peripheral and neuropathic pain. They also found that the claims were not even sufficient in respect of neuropathic pain in dependent claim 3. They also found that even if the claims had been found valid, they would not have been infringed by Actavis and Mylan’s activities, and that the post-trial amendment to try to limit the…

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  • Denver Patent Office to offer 3-day course on why examiners make the decisions they do

    The Denver Patent Office will be offering a free three-day course in March titled STEPP, or Stakeholder Training on Examination Practice and Procedure. Here is more info from the Colorado Bar Association’s IP Section: STEPP – Agent/Attorney 3-Day Course in DenverMarch 5-7, 2019 at the Denver USPTO Please email STEPPTraining@USPTO.gov to sign up for this free training.About […]

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  • Why Helsinn v. Teva Creates Inscrutable Uncertainty About the Scope of Prior Art Instead of Confirming Longstanding Law

    To the casual observer, the Supreme Court’s January 23 decision in Helsinn v. Teva may seem like no big deal. In just a few pages of text, the Court informs us that Congress did not change the established meaning of “on sale” prior art when it rewrote Section 102 of the Patent Act in 2011. Move along, nothing to see here, right? More than a few commentators seem to assume that we’ll simply return to the pre-America Invents Act (AIA) status quo, and that sales of an invention, whether public or…

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  • 進める




    $$ Upon rotation of adjustment screw 10 it advances down the rod 11, and moves the ring 12 and cross pin 13 axially, but they do not rotate. / 調整ネジ10の回転により、ロッド11を下方に進め、また、リング12およびクロスピン13を、回転することなく、軸方向に動かす。(USP8834478)

    $$ So, the output signal in FIG. 25D is not advanced at all to create a first nulling signal Na. / そのため、図25Dの出力信号は全く進められず最初のヌリング信号Naを生成することはない。(USP7577260)

    $$ The user is asked to register for the authentication process in order to proceed with the transaction / ・ユーザーは、トランザクションを進めるために、認証プロセスへの登録を求められる。(USP8935762)

    $$ Also, a decision to proceed with a transmission despite congestion will in general require the consent of parties at both ends of the transmission. / さらに、輻輳にも関らず伝送を進める決定は、概ね伝送の最初と最後の両方における当事者の同意を必要とする。(USP7319673)

    $$ Then the method may proceed by applying perturbations to that estimate to evolve the estimate over time. / 次いで、その推定値に摂動を加えて、時間にわたって推定値を進展させることによって、この方法を進めることができる。(USP7595755)

    $$ On the other hand, if a hacker cracks the user’s password, they can not process transactions without the TAN. / 一方、もしハッカーがユーザーのパスワードを解読したとしても、彼らはTAN無しではトランザクションを進められない。(USP8935762): process

    $$ The male part 72 is then driven towards the female part 74 so that the panel 12 assumes the shape of the mould. / 雄型72は、その後に、パネル12が金型の形状になるように、雌型74へ向かって進められる。(USP8082599): drive

    $$ At termination of the fifth operation 108, control is passed to a sixth operation 110 where any necessary communications operation is executed. / 第5動作108の終了後、制御は第6動作110へ進められる。第6動作110では、全ての必要な通信動作が実行される。(USP6031489): pass


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  • Gene Quinn Joins Berenato & White But Remains President and CEO at IPWatchdog

    I am pleased to announce that effective February 1, 2019, I have become Of Counsel to the law firm of Berenato & White, LLC. The firm is located in suburban Washington, D.C., not far from the United States Patent and Trademark Office (USPTO). For those unfamiliar with the title Of Counsel, it is frequently used for an experienced attorney who will not be devoting full time to his or her legal practice. I wasn’t going to make an official announcement on IPWatchdog, but when I updated my…

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  • Letter Signed By 170 Corporate Counsel Urges Law Firms to Get Diverse Fast

    On January 27, more than 170 general counsel and corporate legal executives signed an open letter to big law firms expressing their disappointment that “many law firms continue to promote partner classes that in no way reflect the demographic composition of entering associate classes.” The letter states that the signatory companies will prioritize legal spend […]

    The post Letter Signed By 170 Corporate Counsel Urges Law Firms to Get Diverse Fast appeared first on IPWatchdog.com | Patents…

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