Regulatory Malfunctions in the Drug Patent Ecosystem

Abstract

Patent protection for several of the world’s best-selling and most promising drugs—biologics—has begun waning. Over the next few years, many other drugs in this category will lose critical patent protection. In principle, this should open the United States market to competition, as more manufacturers are now able to produce relatively cheaper versions of these expensive drugs, known as biosimilars. That, however, has not been the case. This Article examines this problem in the context of the articulation between anticompetitive behaviors and regulatory interventions in the biopharmaceutical arena and argues for a novel solution: a timelier response provided by the U.S. Food and Drug Administration (FDA) in the form of license revocation when follow-on innovators fail to compete. In one significant case, the FDA approved several biosimilar versions from different manufacturers that would in principle compete with the biologic drug Humira—the largest-grossing drug in the United States and worldwide—but the manufacturer of Humira entered into multiple agreements with biosimilar manufacturers to keep the drug out of the U.S. market until 2023, while making it available elsewhere from 2018 onward. An abundant stream of scholarship has examined the relationship between pharmaceutical markets and antitrust mechanisms to curb anticompetitive behaviors. This Article moves the debate in a new direction. Because antitrust responses generally face a time lag, this Article posits that an additional regulatory intervention is needed outside antitrust law, and it argues that the FDA is institutionally well-placed to provide a first-line checkpoint for anticompetitive agreements that result in non-commercialization of approved drugs. While novel, this proposal incorporates a solution that has been hiding in plain sight: the FDA regulatory framework allows the Agency to revoke licenses under certain circumstances, including some forms of inaction on the part of the licensee. This Article shows that the FDA not only has the authority, but also the statutory obligation, to revoke the licenses of biosimilar manufacturers who deliberately fail to bring their products to market within a reasonable period of time. Many of the biologics slated to lose patent protection in the first half of the 2020s are routinely used in the treatment of some of the most challenging medical conditions, including certain cancers and auto-immune diseases. At a time when concerns over drug prices are at the forefront of political and social debates, finding ways to instill competition into post-patent markets remains a crucial task. The solution put forth in this Article furthers the interests of different parties, as it clears the pathway for motivated biosimilar manufacturers to bring their products to a profitable market while bringing down overall costs for health systems and, in particular, for patients in need of extremely expensive pharmaceuticals.

ISSN

0094-4076

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