Unpatentable Drugs and the Standards of Patentability

Article excerpt

The role of the patent system in promoting pharmaceutical innovation is widely seen as a tremendous success story. This view overlooks a serious shortcoming in the drug patent system: the standards by which drugs are deemed unpatentable under the novelty and nonobviousness requirements bear little relationship to the social value of those drugs or the need for a patent to motivate their development. If the idea for a drug is not novel or is obvious-perhaps because it was disclosed in an earlier publication or made to look obvious by recent scientific advances-then it cannot be patented. Yet, the mere idea for a drug alone is generally of little value to the public. Without clinical trials proving the drug's safety and efficacy, which is a prerequisite for approval by the Food and Drug Administration (FDA) and acceptance by the medical community, that drug is unlikely to benefit the public. Given the immense investment needed to fund clinical trials on drugs and the ability of generic manufacturers to rely on those tests to secure regulatory approval for their own products, pharmaceutical companies are rarely willing to develop drugs without patent protection. The novelty and nonobviousness requirements make no concession for the development costs of inventions and thus cause patents to be withheld from drugs that are unlikely to reach the public without that protection. This gap in the patent system for drugs has created a pervasive problem in the pharmaceutical industry, causing firms to regularly screen their drugs during the research-and-development process and discard ones with weak patent protection. The harm to the public from the loss of these drugs is potentially quite significant. Congress can easily avoid this problem by ensuring that the successful completion of the FDA's rigorous clinical-trial process is rewarded with a lengthy exclusivity period enforced by the FDA.

I. Introduction

Pharmaceutical patents are often held out as an example of the patent system at its best.1 It is widely accepted that patents play an essential role in motivating private investment in pharmaceutical R&D, and those investments have yielded tremendous social gains through the resulting introduction of new drugs. For this reason, pharmaceutical innovation is thought to be the patent system's greatest success story.

Amid this general optimism about the effectiveness of patents in promoting pharmaceutical innovation, scholars have overlooked a critical flaw in the system: socially valuable drugs often cannot be patented even though they are unlikely to be developed for public use without that protection. If the idea for a drug is not novel or is obvious-perhaps because it was disclosed in an earlier publication or made to look obvious by recent scientific advances-then it cannot be patented. Yet the mere idea for a drug alone is generally of little value to the public. Without clinical trials proving the drug's safety and efficacy-a prerequisite for approval by the Food and Drug Administration (FDA) and acceptance by the medical community-that drug is unlikely to benefit the public. Given the immense investment needed to fund clinical trials on drugs and the ability of generic manufacturers to rely on those tests to secure regulatory approval for their own products, pharmaceutical companies are rarely willing to develop drugs without patent protection. The novelty and nonobviousness requirements make no concession for the development costs of inventions and thus cause patents to be withheld from drugs that are unlikely to reach the public without such protection. This gap in the patent system for drugs has created a serious problem, causing firms to regularly screen their drugs in R&D and discard ones with weak patent protection. The potential harm to the public from the loss of these drugs may be enormous.

Part I of this Article describes how the public currently depends on patents to promote pharmaceutical innovation and how it benefits from the system via the introduction of new drugs. …