In October I wrote about the paragraph IV challenge to Eli Lilly’s anti-lung cancer drug Alimta®, royalties from which had paid in full for a new $280 million chemistry building at Princeton University, the patentee. In November, Princeton and Lilly prevailed at the district court, and in December the Princeton Alumni magazine carried a story about the university’s victory. This prompted a letter from an alumnus – a physician by trade – bemoaning the P-IV lawsuit instituted by Princeton and Lilly, and the resulting “additional five years” of exclusivity, beyond the original patent term expiry in 2011, from which Princeton and Lilly would now benefit. “It is likely that the standard seven-year period of patent protection has been enough to cover the development cost of the drug”, he wrote, asserting that while the university had benefited immensely from the drug, the deferment of the entry date for generic competition until 2016 would harm low-income patients who could not afford the $2800 per dose price tag. “It is disheartening to see the University harming low-income patients and contributing to the high cost of American health care in this way”, he concluded.
Now, this may sound surprising coming from a patent attorney who spends a fair amount of his time protecting new molecules, but I’m a big fan of generic drugs. You won’t catch me buying a name-brand version of ibuprofen, my pain-killer of choice. However, I’m also a big believer in new drug development, and that costs big bucks. And frankly, if it’s a choice between erring on the side of giving an innovator a longer period of exclusivity than necessary for its new life-saving drug – with a concomitantly high price for the drug – versus never having that drug reach the market because sufficient exclusivity wasn’t available, I’d rather have the innovator benefit from a few extra years of exclusivity. So between that and some factual errors in his letter, I couldn’t let Dr. Herr’s remarks go without comment. I reprint below (with some hyperlinks inserted) the long version of a letter I sent to the Princeton alumni magazine; my understanding is that a much-edited 275-word version will appear in the print edition of the magazine a few weeks hence.
As a patent attorney who has worked on both sides of the innovator/generic drug company divide, I was disappointed to see the position espoused by a health care professional with regard to the economics of innovative drugs like Alimta® (David Herr ‘65, letters, January 19, 2011).
The FDA, acting as the public’s guardian, requires that new drugs meet stringent safety and efficacy standards. The overwhelming cost of new drug development lies in the hundreds of millions of dollars spent in clinical trials to demonstrate compliance with those standards. Furthermore, for every new drug candidate that receives FDA approval, dozens more fail somewhere during clinical trials, and hundreds more never even make it out of the laboratory. Those many failures are funded by the few successes. Put bluntly, if you want new drugs tomorrow, you’re going to have to foot part of bill today, because without a reasonable expectation of profit, no company is going to invest the kind of money required to develop new drug candidates. So while Alimta®, now approaching seven years on the market, may or may not have already paid for its own development, giving it away to generic competition at this time, as Dr. Herr seems to suggest be done, would doubtless harm the development of the next cancer-curing drug.
Indeed, that Alimta is an anti-cancer drug already makes it exceptional. According the only peer-reviewed study published on the subject (Grabowski, Nature Reviews Drug Discovery, Vol. 7 (June 2008) pp. 479-488), a new drug needs about 13-16 years of market exclusivity following its launch in order to justify its development. Such market exclusivity is presently pegged to patents, which since 1995 have been limited temporally to 20 years from filing, with a possible extension of up to five years for delays in launch due to the FDA approval process. But meeting FDA requirements for drugs for the treatment of cancer and chronic diseases like Alzheimer’s takes longer than it does for other types of drugs.
Alimta® itself is a case in point: the first patent application on the active ingredient was filed in 1989 and eventually granted as US 5,344,932 in August 1994 (not 2004, as stated by Dr. Herr), giving rise to an August 2011 expiration date. However, FDA approval for the drug only came nine-and-a-half years later, in February 2004 – fourteen-and-a-half years after the filing of the initial patent application. Without the possibility of a patent term extension to compensate for slow FDA approval (which extension was ultimately granted, until 2016), it is doubtful that Alimta® would have reached the market; without the profits generated by Alimta® over the next five years (for example, if another generic drug company were to successfully challenge the patent during that time), other promising new drugs may die in the pipeline.
Incidentally, neither the grant of a patent nor a patent term extension is a guarantee that the innovator will have market exclusivity for that optimal 13-16 year period. Under the current system, which ties new drug exclusivity to patents, litigation over the validity of those patents is de rigueur; generic drug companies will usually be considered remiss if they don’t challenge an innovator’s patents. And for reasons I won’t go into here, the deck is currently stacked against the innovators when it comes to patent validity challenges. What bears mention is that making the timing of entry of generic competition dependent on the outcome litigation creates unpredictably for both innovators and generics manufacturers. The potential for the untimely loss of market exclusivity due to the loss of a patent thus becomes part of the pricing calculus for innovators. For this and other reasons, it would probably better to move to a set-term-from-FDA-approval regimen for determining market exclusivity; I discussed this a few months ago in a blog post written in response to an earlier PAW article about the Alimta® litigation.
Returning to Dr. Herr’s letter, it is heart-wrenching to see someone suffer from a terminal disease solely because they can’t afford the treatment. But would Dr. Herr prefer that in 30 years’ time his progeny have no more choices for life-saving therapies than are currently available, because in his own lifetime he gave away today’s profit-generating drugs and thus undermined future drug development?
There is, of course, a place for generic drugs in this system: after the 13-16 year window of exclusivity that makes new drug development financially worthwhile. Not only does the arrival of generic competition cause the price of drugs in the U.S. to plummet precipitously, making those medications affordable for nearly everyone, but without the threat of generic competition, innovator companies would have less incentive to develop new drugs.
Finally, in the global scheme, the construction of a new chemistry building at Princeton using royalties from Alimta® is also a good thing. The old Frick building was well past its prime was I was there in the late 1980’s; at least a few of the many students who will be trained in the new building will over the course of their careers contribute to humanity by participating in new drug development, or by developing generic versions of older drugs.
Daniel Feigelson '90