Gene Patents - POLICYFORUM INTELLECTUAL PROPERTY Balancing...

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16 OCTOBER 2009 VOL 326 SCIENCE www.sciencemag.org 370 POLICY FORUM ±I mprovements in pharmaceutical research and development (R&D) depend on prod- uct innovation. But the number of new compounds approved annually by the U.S. Food and Drug Administration (FDA) has fallen from an average of 35 in 1996–2001 to 20 in 2002–07 ( 1 ). This decline stems from several factors ( 2 ); however, one particular U.S. regulation—the Paragraph IV patent challenge—is increasingly stifl ing new drug innovation and deserves our attention. Paragraph IV Patent Challenges Although the U.S. patent system has been criticized, particularly when it interferes with access to medications ( 3 ), patents are widely used, and there is little debate that they are important for spurring drug innova- tion ( 4 ). In a market system of pharmaceu- tical innovation, industry revenues support continued R&D, and patents support reve- nues. The estimated average R&D cost of a new drug brought to market in 2000 exceeded $800 million ( 5 ). Because drug companies are making substantial investments with no certainty about outcomes, they rely on patent-protected revenues to recoup their R&D expenditures ( 6 ). Although drugs newly approved by the FDA are awarded 5 years of “data exclusivity” during which generic versions may not be marketed ( 7 ), effective patents can offer longer protection by blocking substitute products beyond the 5-year data exclusivity period. Nevertheless, companies that produce generic drugs can challenge such patents, beginning the process of competing with brand-name drugs after only 4 years ( 7 ). To market a generic version, the law requires a company to fi le an Abbreviated New Drug Application (ANDA) with the FDA that specifi es how the generic version relates to the brand-name drug and its patents ( 7 ). Para- graph IV permits generic-producing compa- nies to “challenge” each patent associated with the brand-name drug, stating either that (i) the patent is invalid or (ii) the ANDA does not infringe the patent ( 7 ). Although ANDA approvals involving patent challenges gener- ally take from 2 to 3 years ( 8 ), the fi rst Para- graph IV applicant is offered 180 days, should their challenge succeed, during which no other generic-producing company may enter the market ( 7 ). This incentive to challenge patents allows the successful challenger, without fear of cheaper generics competition, to reap large dividends by pricing just below the brand-name drug ( 9 ), earning on average $60 million per drug ( 10 ). Congress’s Intended Balance The ANDA and Paragraph IV challenge are elements of the Drug Price Competition and Patent Term Restoration Act of 1984 (Public Law 98-417, also known as the “Hatch-Wax- man Act”). Congress originally intended to strike a balance between two confl icting, but related, policy objectives: ensuring timely, affordable access to drugs, by allowing for expedited FDA approval of generic drugs, and encouraging drug innovation, by restoring some years of patent protection that are lost by fi rms during the average 1 to 2 years spent in the FDA approval process ( 8 , 11 ). But the
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Gene Patents - POLICYFORUM INTELLECTUAL PROPERTY Balancing...

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