PATENTS AND ANTITRUST IN THE PHARMACEUTICALS INDUSTRY

By DeForest McDuff, Ph.D., Mickey Ferri, Ph.D., and Noah Brennan, M.I.A.¹

I. INTRODUCTION

Patent rights are a core element of protecting innovation in the United States. The pharmaceutical industry is often identified as an example of the patent system working well, by compensating innovators for research and development and then allowing competition after innovators have been rewarded. Over the past 10-15 years, however, there has been increased concern of anticompetitive behavior associated with prolonged patent protection, which has led to a number of antitrust lawsuits attempting to restrain the long duration of exclusivity.

Antitrust enforcement efforts have had mixed success to date, depending primarily on whether the efforts are focused on patent-based strategies versus market-based strategies. Patent-based strategies relying purely on seeking additional patents on existing products, such as evergreening and patent thickets, have been difficult to address in the antitrust domain because of constitutional rights to seek patents. By contrast, market-based strategies impacting the availability of competing products, such as product hopping and reverse payments, have shown to be more susceptible to antitrust enforcement. The distinction in effectiveness appears to stem from the legal system’s stronger ability to identify anticompetitive conduct in the market domain, compared to the pursuit of patentable innovations in good faith.