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NCEs can occur only when there has been some clinical experience with the drug." Conse. quendy, if fewer new drugs are being tested in man, the probability of finding new therapies by this method is reduced.

Although many drugs continued to reach the market, certain pharmacologic areas have been neglected, and some believe there has been a definice shonfall in the introduction of important new drugs in both the United States and Europe." We consider that the decline in the number of new drugs introduced in the United States is attributable in part to the 1962 amendments and the regulations implementing them and in part to the other factors discussed. In the light of these profound and long-lasting changes in the levels of clinical drug investigation and approval that resulted, it will be important to monitor the course and outcome of the new decline we have observed in the number of investigational drugs in the 1970s. Such monitoring needs to identify the causes of this recent change in drug development and the ultimate eifeces.

way. Such trials. however, are more time consuming than uncontrolled ones and more likely to end ambiguously. The economic consequence is chat fewer drugs can be studied clinically for a given research effort.

The flight of early clinical research abroad that began in the late 1960s seems most readily explained as industry's reaction to regulatory and economic constraints in the United States and the eventual shutdown of drug testing in prisoners. The possibility of testing drugs abroad in a less cumbersome and less expensive environment was attractive. The reversal of this trend in the late 1970s was probably related to the economic and regulatory climate abroad, where changes were occurring to reduce the benefits of foreign testing that had seemed altractive a few years before.

In the early 1960s. product candidates were dropped and time was lost as drug companies struggled to satisfy the new statute and the de: veloping FDA regulations. With time, how. ever, the companies increased their regulatory affairs personnel and learned how to satisfy the new requirements and the FDA. These devel. opmenos may help to explain not only the return of some early human testing to the United States in recent years but the recovery in the numbers of NDA approvals in the late 1970s. Other possible explanations for the recovery of approvals include an increase in the number of NCEs that U.S. firms license from abroad, a moderation of official policy and informal regulatory attitudes in the FDA. clearing of an accumulaced backlog of aging compounds, and the pass-through effect of the large increase in development time that occurred in the 1960s.

In conclusion, our studies have shown that before and coincident with the enactment of the 1962 amendments, the number of new drug candidates entering clinical testing declined sharply and permanenty, and subsequently the time required for them to reach the market increased. This caused a long-lasting reduction in the number of U.S. firms' new drugs reaching the market, in addition to the imynediale, direct effect of the amendments on new drug approve als. The consequences of this are far-reaching. For example, the serendipitous discovery of valuable. although unpredicted, clinical uses of

In addition to the National Science Foundation, which supported this study, we wish to thank many people in the pharmaceutical firms who supplied us with data and also to thank experts in the Food and Drug Administration, industry, and elsewhere who suggested explanations of our findings.

References 1. Ashford NA, Buder SE, Zoit EM: Comment on

drug regulation and innovation in the pharmaceutical industry. Prepared for the HEW Review

Panel on New Drug Regulation. 1977. pp 4.5. 2. Ashford NA, Hattis D. Andrews R. Worth-Estes

J. Owen ST: Relationships between aspects of pharmaceutical regulation, innovation, and therapeutic benefits. Report of the Center for Policy Alternatives at the Massachusetts Institute of

Technology. March 1980. 3. Bresler 18, Lehnhard MN: A legislative history

of the Federal Food, Drug and Cosmetic Act (revised). Washington, DC. 1977. Congreso

sional Research Service. 4. Clarkson KW. MacLeod WC: Reducing the drug

lag: Enterpreneurship in pharmaceutical clinical testing. In Helms RB, editor. Drugs and health, Washington, DC. 1981. American Enterprise

Institute for Public Policy Research. S. De Haen P: New product surveys. Eaglewood,

Colo., Paul de Haen Division. Micromedex. Inc.

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6. Drug amendments of 1962: 21 U.S.C.1/321(0)

(1), 351(a)(2XB). 360 et seq., P.L. 87-781. 76

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U.S.C.! !301-392. 52 Stat. 1040, 35 June 1938. 9. Federal Register. P. 179-182, 3 January 1963. 10. Federal Register. May 8. 1970. 35 F.R. 7250. pp

A9-014. 11. Food and Drug Administration's process for

approving new drugs: A report prepared by the Subcommittee on Science, Research and Technology of the Comminee on Science and Technology. U.S. House of Representatives. 96th

Congress. November 1980. 12. Grabowski HG: Drug regulation and innovation.

empirical evidence and policy options. Washington. DC. 1976. American Enterprise Institute for

Public Policy Research. 13. Grabowski HG: Regulation and the international

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Health of the Committee on Labor and Public Welfare and the Subcommittee on Administralive Practice and procedure of the Committee on the Judiciary. U.S. Senate. 93rd Congress, 2nd Session, on examination of new drug research and development by the Food and Drug Administration. September 27, 1977. Washington. DC. 1975. U.S. Government Printing Office. pp

658-661. 18. Peitzman S: Regulation of pharmaceutical inno

vation, the 1962 amendments. Washington, DC, 1974. American Enterprise Institute for Public

Policy Research. 19. Temin P. Taking your medicine: Drug regulacion

diffusion of pharmaceuticals. in Helms RB. editor. The internacional supply of medicines: Implications of U.S. regulatory reform. Washington. DC. 1980. American Enterprise Institute

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1981. Br J Clin Pharmacol 12:+53-463. 1981. 15. Hutt PS: The legal requirement that drugs be

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Health Affairs - Spring 1982

PATENT TERM EXTENSION: AN OVERREACHING SOLUTION TO A NONEXISTENT PROBLEM

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by Alfred B. Engelberg

he proponents of extended life for drug patents argue that the "effective patent life" of pharmaceutical composition and use

patents has been cut in half due to the additional time now required to comply with government safety and efficacy regulations prior to commercial marketing. They define "effective patent life” as the period of actual commercial exploitation of a patent monopoly and claim that it has been reduced from seventeen to 7.5 years. Since the proposed legislation (S. 255; H.R. 1937) would extend patent life only for a maximum of seven years, they contend that it would provide less than the full return of time to which pharmaceutical innovators are entitled a matter of equity.

To those who lack a basic understanding of our complex patent system, this argument seems simple and logical, and for that reason it has attracted broad support. In reality, the arguments which have been made in support of patent extension have no reasonable foundation in fact or law; and the extension legislation undermines fundamental principles on which the entire patent system is based for, at least, the following reasons: 1) Effective patent life.

The term “effective patent life” is the creation of those who are promoting patent extension legislation and has no counterpart in patent law or the fundamental philosophy on which the patent system is based. The notion that the seventeen-year patent grant carries with it any guarantee that the patent owner will enjoy seventeen years of commercial exploitation of the patented invention is contrary to that philosophy, as well as to the requirements which must be met to obtain a patent, particularly in the pharmaceutical field.

Alfred B. Engelberg is a partner in the law firm of Amster, Rothscein & Engelberg, New York City and Paleni Counsel to the Generic Pharmaceutical Industry Association.

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2) Government regulation.

Government regulation is only one of many factors which have an effect on the length of a commercial monopoly, and it is less significant than many others, all of which are largely under the discretion and control of the patent owner. These factors include when the patent application is filed in relation to the state of development of the invention; how long the patent application remains pending in the United States Patent and Trademark Office before a patent is granted; the scope of the patent in relation to the commercial product which it seeks to dominate; the number and type of patents which may be available to cover different aspects of the commercial development; the time at which clinical investigations are commenced in relation to the patent application and issue date; and the pace of commercial development in terms of the time, effort, and money invested to reach the commercial stage. The statistics which have been put forth in support of the proposition that “effective patent life” is now 7.5 years do not tell us which of the foregoing factors actually played a significant role in the net result and make the inaccurate assumption that regulatory delay is the exclusive cause. 3) Equity concept.

The extension legislation in its present form goes far beyond the "equity" concept on which it is being promoted. The application of equitable principles would dictate that any patent extension would be no greater, in either duration or scope, than the delay actually caused by the government. In fact, the legislation would extend the life of a product patent claim for all therapeutic end uses and not merely the end use which is the subject of regulatory review. It would also make it possible to obtain extended patent protection for compositions which were not specifically known or disclosed in the patent, but were covered by broad hypothetical composition claims. This approach will serve to discourage improvements and innovations by third parties which the patent system was designed and intended to encourage. Further, the true length of government-caused delay is, in fact, no greater than the difference between the date on which a reasonably prudent businessman, subject to product liability claims, would commercially release a product and the date on which the government commercially releases the product by approval of a new drug application (NDA). The Senatepassed bill would grant an extension from a time commencing long prior to the first clinical tests in human subjects, thereby rewarding rather than discouraging delay.

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Effective Patent Life Is a Nonexistent Concept

The patent system was established to promote the progress of science and the useful arts by encouraging inventors to make early disclosure of their inventions to the public in the belief that such disclosures would prevent wasteful duplication of research. This would stimulate further inventions and improvements which

would make the earlier

disclosures on which they were based obsolete. The system was primarily designed to benefit society and not to create private' fortunes for the owners of patents, although it has always been recognized that some reward is essential as an inducement for the invention disclosure.

The inducement provided by the patent law is not a positive grant the right to commercial exploitation of the invention for the life of a patent, but rather a negative grant, namely, the right to exclude others from making, using, or selling the invention for a period of seventeen years. Whether or not the patentee derives a commercial benefit from that exclusion is a matter which is totally divorced from the patent system and depends upon a multitude of other factors including the commercial practicality of the invention disclosed in the patent, the state of its development, the existence of a market and, of course, the existence of other laws which determine whether a particular device can be used or sold and, if so, under what conditions.

Until the present controversy concerning patent extension, no one connected with the patent system believed or argued that the grant of a patent created a positive right to exploitation for a fixed period of time. Indeed, the fundamental tules pertaining to what must be disclosed in a patent make it clear that patents are designed to disclose ideas and not necessarily to support the ultimate commercial manifestation of those ideas.

If the basic purpose of the patent system was to convey to the inventor a positive grant of a fixed period of commercial exploitation, a logical requirement of the patent system would be a full disclosure of the commercial embodiment of the invention, and the patent claims would precisely define that commercial monopoly. In contrast, one of the fundamental rules of our patent system prohibits the grant of a patent if the invention was publicly disclosed or commercially used for more than one year prior to the date on which a patent application is filed. This rule exists because the patent grant is a reward solely for the early disclosure of the invention to the public and not a reward for either its discovery or for an investment in its commercial development and exploitation. If society would eventually obtain the benefit of the invention through its public disclosure or commercial use, no reward to the inventor is necessary and none is given by the patent system.

Under the United States patent system, with certain difficult-to-prove

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