March 26, 2013

Supreme Court Hears Arguments in FTC Challenge to Pay-for-Delay Pharmaceutical Patent Deals

The Supreme Court heard oral arguments yesterday in a case that challenges a type of deal-making (“pay for delay” settlements) between brand name and generic pharmaceutical companies over patent infringement claims. The case is Federal Trade Commission v. Actavis (11th Cir. 2012) and it lies at the intersection of patent law, antitrust law and food and drug law. The FTC presented the following question to the Court:
Whether reverse-payment agreements are per se lawful unless the underlying patent litigation was a sham or the patent was obtained by fraud (as the court below held), or instead are presumptively anticompetitive and unlawful (as the Third Circuit has held). 
A generic manufacturer may enter the market after a patent on a brand name pharmaceutical has expired. The Hatch-Waxman Act of 1984 provided incentives for generic companies to enter the market, and was a Congressional attempt to jumpstart the generic pharmaceutical business in the U.S. Brand-name pharmaceutical companies were offered patent term restoration when effective pharmaceutical patent terms had been eroded by clinical testing and FDA approval. A generic pharmaceutical company could rely on the safety and efficacy data provided by the brand-name pharmaceutical company when it sought FDA approval for the original compound, as long as the generic compound was bioequivalent to the approved pharmaceutical. The Hatch-Waxman Act also provides that the generic company may challenge a patent before its expiration with preparation for a generic launch by engaging in pre-market activites that could constitute patent infringement. If the brand name patent holder sues the generic rival for patent infringement, the underlying patent is potentially at risk in litigation, and a successful case for the generic could terminate patent protection altogether. As a result, brand name companies have sought to keep generic competitors at bay by offering a deal to the generic – a “reverse payment” – paying them to stay out of the market (pay to delay), in exchange for ending the patent litigation. As a result, the generic entry is delayed, brand name market dominance continues (perhaps past the patent term) and consumers are deprived of lower cost pharmaceuticals (see here for my article discussing the impact on breast cancer treatment due to the delayed entry of generic Tamoxifen). 

FTC v. Actavis asks whether these pay-to-delay settlements contravene the purpose of Hatch-Waxman and also raise antitrust concerns, pursuant to the Sherman Act. The FTC has statutory authority to review all such reverse payment agreements, and has challenged several in court, including here. A number of federal appellate courts have applied different tests for the antitrust analysis – and the case at bar is the 11th Circuit’s dismissal of the FTC’s complaint over a settlement involving the brand name Androgel (testosterone gel) made by Solvay and several potential generic competitors. The Third Circuit, in contrast, had ruled for the FTC in In Re: K–Dur Antritrust Litigation (2012). Some confusion has attended to the analysis of these agreements as patent law’s right to exclude must coexist with antitrust law’s policing of anticompetitive behavior. The FTC has urged a “quick look” standard to the Court – asking that court regard such settlements as presumptively illegal, absent a showing of a pro-competitive benefit to consumers. The FTC has reported 40 pay for delay settlements in 2012, a record number, and has calculated that the deals cost American consumers $3.5 billion a year in higher health care costs. Legislative action to curb pay for delay remains an ongoing possibility, the Fair Access to Affordable Generics Act has been introduced in the Senate and would outlaw such settlements (earlier legislative attempts have failed). Notwithstanding the antitrust basis on which the case will be decided, the pay-to-delay settlements also frustrate litigation against potentially invalid patents, an outcome that conflicts with patent law’s norm of endorsing the exercise of patent rights only when pursuant to legally valid patents. Most clearly, they undercut the underlying rationale of Hatch-Waxman, which was to speed the entry of generics into the pharmaceutical marketplace.

March 24, 2013

Fetal Personhood Efforts Continue; North Dakota Ballot Measure in 2014

The fetal personhood movement has resurfaced in North Dakota, as the legislature has approved a 2014 ballot measure that will offer the following constitutional amendment: “The inalienable right to life of every human being at any stage of development must be recognized and defended.” This measure aims to establish legal personhood for the fertilized egg, embryo and fetus, with the attendant implications for the assertion of reproductive rights (a bill in the state to directly install fetal personhood by statute failed last week). North Dakota is the first state to approach fetal personhood by legislatively-referred constitutional amendment, in contrast to the citizen-originated beginnings for other state initiatives. Fetal personhood initiatives have been on the ballot before, twice in Colorado (defeated 2008 and 2010) and in Mississippi (defeated in 2011; see here). The Oklahoma Supreme Court invalidated a proposed personhood initiative in 2012 (in a pre-ballot constitutional review), ruling that the initiative was unconstitutional because it could not be reconciled with Planned Parenthood v. Casey (1992) (establishing the “undue burden” standard to assess the legality of measures restricting the exercise of the right to abortion). At the federal level, the Life at Conception Act has been introduced in the Senate and the Sanctity of Human Life Act in the House. The latter states: 
[T]he life of each human being begins with fertilization, cloning, or its functional equivalent, irrespective of sex, health, function or disability, defect, stage of biological development, or condition of dependency, at which time every human being shall have all the legal and constitutional attributes and privileges of personhood...  

While the fetal personhood movement has largely originated as an attempt to limit reproductive rights, most clearly abortion and certain forms of birth control, the impact of shifting legal personhood to the prenatal stage affects other life science technologies. In vitro fertilization is a commonly used assisted reproductive technology (ART) in which embryos are created in vitro (outside the body) for implantation and pregnancy. In the process, some embryos are either destroyed or unused, and legal personhood for the embryo could potentially upend how IVF is performed, if at all. Fetal personhood further impacts the use of embryonic stem cell techniques, in which stem cells are derived from embryos leftover from IVF procedures and are used to treat various kinds of cellular degeneration (e.g., Parkinson’s disease). Elevating the legal status of the embryo could potentially derail this field of research and medicine. Therefore, fetal personhood strikes at reproductive rights, fertility treatments and stem cell therapies. At the present time, renewed efforts are underway in Mississippi as well as other states to place personhood initiatives on the ballot. The decision from the Oklahoma court on that state’s failed initiative is instructive, because the fetal personhood efforts began in response to the invalidation of many abortion-restricting laws in the country under either Roe v. Wade (1973) or Casey. However, the Oklahoma court applied the same constitutional lens to the proposed amendment that it would apply to more routine abortion restrictions, suggesting that the legal strategy of fetal personhood may be more legally vulnerable than its proponents have hoped.

March 14, 2013

State Efforts to Enact Labeling Laws for Genetically Engineered Food

Following the defeat of California’s Proposition 37 last November, which would have required the labeling of genetically engineered (GE) foods sold in the state, other state efforts to require such labeling are underway and continue to emerge. These states include Vermont, Pennsylvania, Florida, New Jersey, Washington, among others. The efforts generally involve the introduction of legislation to mandate the labeling of GE foods in the state (similar to other attempts in earlier years, none successful). (GE foods are also characterized with the label GMO, standing for genetically modified organisms). At the federal level, the FDA does not mandate such labeling; legal challenges to the policy have failed. While the California proposition might have been expected to pass in view of consumer surveys demonstrating widespread public support for GE food labeling, the mechanism of a ballot initiative (coincident with a Presidential election) in the nation’s largest state recruited much national attention from supporters and opponents (see here). Those inclined to support the labeling measure either casually or by default encountered a visible and persuasive opposition campaign that warned of the costs of such a measure (litigation, regulatory apparatus, price hikes, etc.). As a result, the measure was defeated 51%-48%. Into the ongoing legislative battles around the country comes the recent announcement from food retailer Whole Foods: “Whole Foods Market commits to full GMO transparency by giving supplier partners five years to source non-GMO ingredients or to clearly label products with ingredients containing GMOs.” That takes the effective date to 2018, giving suppliers lead time to comply. How this market-driven move will affect the political climate in which new state labeling bills are introduced is unknown at the moment (this retailer is only located in 39 states), but it would be fair to conclude that the policy (made in response to consumer demand) could also start to shape consumer expectations, which might generate more public support for GE food labeling laws.

March 9, 2013

New Rules for Institutional Oversight of Dual-Use Research

The White House Office of Science and Technology Policy (OSTP) has issued new proposed rules for how dual use research of concern (DURC) is to be monitored by institutions that conduct such federally funded research. The guidelines apply to research with a defined list of agents that could potentially generate altered pathogens with more virulence or defenses than the native pathogen (e.g., influenza H5N1 with increased resistance to antiviral drugs). Almost all of the agents listed are select agentsEffectively, the policy requires such institutions to conduct their own biosecurity review, and communicate the review process and outcome to the federal funding agency.The document also places responsibility on a principal investigator (PI) to identify such experiments and bring them to the attention of the relevant review body at her institution. The policy is directed to risk identification and mitigation; it is not intended to denigrate such research: 
It is important to note that research that meets the definition of DURC often increases our understanding of the biology of pathogens and makes critical contributions to the development of new diagnostic, prevention, and treatment measures, improvements in public, animal, and plant health surveillance, and the enhancement of emergency preparedness and response efforts. Thus, designating research as DURC should not be seen as a negative categorization, but simply an indication that the research may warrant additional oversight in order to reduce the risks that the knowledge, information, products, or technologies generated could be used in a manner that results in harm. As a general matter, designation of research as DURC does not mean that the research should not be conducted or communicated. 
Thus, OSTP contemplates the dissemination of knowledge that is gathered by DURC research; however, there is a likelihood that the NSABB could be recruited again to review specific DURC publications; see here. The new policy complements the earlier 2012 DURC policy for funding agencies; it was intended to “establish regular review of United States Government funded or conducted research with certain high-consequence pathogens and toxins for its potential to be dual use research of concern (DURC)” and required that a "risk assessment be completed prior to the funding decision." That focused on the responsibility of federal funding agencies to ensure proper review. Now, the institutions that host DURC research must overlay a specific biosecurity review in addition to existing biosafety (IBC) and institutional review board (IRB) requirements; reaction is mixed. Some of the new review procedures might be challenged as excessive or duplicative in view of the already existing Federal Select Agent Program which “oversees the possession, use and transfer of biological select agents and toxins, which have the potential to pose a severe threat to public, animal or plant health or to animal or plant products.” Public comments on the new rules can be filed until April 23, 2013.