Does Congress Really Want to Stop Medical Innovation?
By Adam Mossoff
Congress selected a perfect clickbait title for its recent hearing: "Treating the Problem: Addressing Anticompetitive Conduct and Consolidation in Health Care Markets." But the hearing itself was long on rhetoric and short on facts.
Several congresspersons and witnesses sounded the alarm about pharmaceutical companies patenting new, updated versions of older drugs. They accused these companies of "product hopping" or "evergreening" -- essentially abusing the patent laws to extend terms of drug patents and prevent cheaper generics from reaching the market.
These accusations stem from a misunderstanding of how innovation happens incrementally -- and how the patent system is designed to protect precisely that sort of innovation.
Incremental innovation is so commonplace and familiar that it usually goes unnoticed. No one blinks an eye when Apple launches version 12 of the iPhone, when Microsoft releases version 4 of its Surface laptop, or when Honda unveils a new model of its Odyssey minivan. These new versions of pre-existing products all have new features or uses, which were created from continuing investments in research and development and secured by intellectual property rights.
Just like other companies, drug firms also refine and update their products after the first versions go to market. These ongoing investments in research and development sometimes produce a new drug. Other times, they reveal a new innovative use, such as when a drug originally approved to treat breast cancer is found to shrink other types of tumors.
These companies are doing the exact same thing as Apple, Microsoft, and Honda -- creating new, incremental innovations through their productive efforts.
Just like the patents on the 5G chip that replaced the 4G chip in an iPhone, or the patents on the self-driving technologies that replace the old cruise controls in a car, any improvements to an existing drug can be patented only if they represent a new contribution over and above the prior invention. This is a core requirement in patent law: all inventions must be new, useful, and an improvement over what came before.
When a drug company receives a new patent for a new improvement to an existing medicine, it does not extend any pre-existing patent on the original drug. The old patents expire on schedule. The new patent does not impact the ability of other manufacturers to produce cheap generic copies of the original drug.
This is the reason why 89 percent of all drug prescriptions in the United States are filled with generics. In fact, we have one of the highest generic utilization rates of any country in the world.
The vibrant healthcare market is the best evidence for the fact that patents don't impede competition. Conditions like diabetes, hepatitis, and many cancers, which were death sentences several decades ago, are now manageable conditions with multiple treatments.
If lawmakers weaken patent rights based on mistaken rhetoric, they will stifle this medical innovation. Patients will suffer. And Congress will have violated the ancient maxim in healthcare: First, do no harm.
Adam Mossoff is a patent law expert at George Mason University, and Chair of the Forum for Intellectual Property and a Senior Fellow at the Hudson Institute.
