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exceptions, the patent is granted to the first inventor who actually discloses the invention in a patent application and not to the first person who may have actually made the discovery. It is self-evident that this system encourages the filing of patent applications at the idea stage, rather than at a stage when they are ready for commercial exploitation.

A patent may only be obtained if the invention described in the patent is useful, but the standard for determining utility is not a commercial standard. Indeed, after the passage of the 1962 amendments to the Food and Drug Law which required pharmaceutical manufacturers to establish safety and efficacy prior to marketing therapeutic compositions, the United States Patent and Trademark Office took the position that patents covering therapeutic compositions could not be granted without proof that the claimed compositions met the Food and Drug Administration (FDA) standards with respect to safety. This position was overruled by the highest patent court, the Court of Customs and Patent Appeals, on the ground that an invention could be “useful” in the sense of the patent law, even though it might not be commercially saleable under other laws. In so ruling, the court adopted the argument that one fundamental purpose of the patent grant, recognized by the Report of the President's Commission on the Patent System, was to stimulate the investment of additional capital needed for the further development and marketing of the invention. Having successfully taken the position that patents should be granted on therapeutic compositions which are clearly not in commercial form at the time the patent is granted as a stimulus to investment, it is completely disingenuous for the pharmaceutical companies to now urge that the grant of a patent entitles them to seventeen years of commercial exploitation.

Clearly all of the foregoing fundamental principles on which the patent system is based completely undermine the argument that the concept of “effective patent life” exists, or that, in any event, it is intended to be equal to the seventeen-year life of a patent. Pharmaceutical companies are not, as they allege, the victims of any inequity caused by the granting of a monopoly by one government agency (the Patent Office) and an alleged interference with the exploitation of that monopoly by a different agency (the FDA). Rather, they seek to redefine the concepts on which the patent system is based by urging that the patent grant is a guaranteed seventeen-year monopoly.

Factors Affecting Commercial Patent Life

Given the basic principles of the patent system, what are the factors which actually affect so-called "effective patent life", or more accurately, the length of the commercial monopoly on a therapeutic composition?

How can it be that it is demonstrably far longer than seventeen years in some instances and significantly shorter in others? Regulatory review is not the exclusive answer to these questions. There are a multitude of patent and economic factors, largely under the discretion and control of the patent owner, which can dramatically affect the answer.

The patent application filing date, patent issue date, and scope of a patent application are factors which may have an important effect on the length and scope of a commercial monopoly. This can be readily demonstrated by considering the following patent rules and practices: • The patent law contains no requirement that a patentable idea be at any particular stage of development before a patent application may be filed. Obviously, if no patent application is filed until the invention is reasonably well along in the development process, it is likely that the inventor will enjoy a longer period of commercial exploitation. By waiting, the inventor runs a risk that others will file earlier patent applications on the same invention with the possible result that all patent protection will be denied and, worse yet, that someone else will possess a monopoly which will prevent the commercial practice of the invention Not surprisingly, many patent applications are filed long before it is known if the inventions are commerically practical, solely as a defensive measure and without regard to any possible impact on the life of any subsequent commercial monopoly: • It is perfectly permissible to file a patent application on a concept which has never been tested or which is far broader that the limited concept which has actually been tested. In pharmaceutical composition cases, for example, it is quite common to define the invention by a broad hypothetical chemical formula which encompasses hundreds or thousands of possible compounds having certain structural similarities, even though, at the time the original patent application is filed, only a small handful of compounds have actually been made and tested. • The seventeen-year patent monopoly runs from the date on which the patent is actually granted, after it is examined by the United States Patent and Trademark Office, and does not run from the filing date of the patent application. How long a patent application remains pending in the Patent Office is highly variable and, to a significant extent, can be controlled by the inventor. It is entirely permissible to keep a patent application pending for a long time by abandoning the original patent application in favor of so-called continuation or continuation-in-part applications which supplement or expand upon the original invention disclosure, and which are based on work carried out by the inventor subsequent to the original application filing date. The use of this practice is widespread and has been common in pharmaceutical industry patents. • By law, each patent must be limited to a single invention and, in many

instances, the method of making a product or the method of using a product. Although initially disclosed in a single patent application which also discloses the product, these methods are required to be set forth in separate, so-called divisional applications. This practice leads to a multiplicity of patent applications, all of which travel through separate tracks in the Patent Office and may issue at separate times. Indeed, it is common practice to refrain from filing divisional patent applications covering processes or methods of use until just prior to the issuance of the product patent. Thus, the expiration of a single patent cannot be automatically equated with the loss of commercial monopoly because the methods of making and using that product, which are disclosed in the expired patent, are also the subject of separately issued patents having later expiration dates. In addition, commercially crucial composition variations or methods may also be set forth in later filed continuation-inpart applications, or independent patent applications as research proceeds towards a more precise definition of the nature of the commercial products, methods, and uses.

The permissible and discretionary manipulation of the foregoing patent rules can sometimes lengthen and sometimes shorten the actual commercial monopoly. For example, the early filing of a patent application covering an extremely broad class of chemical compounds based on preliminary research with only a handful of compounds, makes it more likely that the date of initial commercial exploitation of a product may not occur until long after the patent issues. Indeed, the specific structure of the actual compound to be marketed may not even be known either at the time the patent application is filed or the time when the patent issues, despite the fact that the patent contains broad claims which cover it! One leading advocate of the patent extension concept has described this as “a situation of common occurrence” in pharmaceutical patents. Obviously, any reduction in effective patent life” which flows from the fact that the true invention was not made until after the patent was granted cannot be blamed on regulatory delay.

There is, of course, a definite benefit to the patent owner which flows from the filing of early speculative patent applications, even though there is a potential loss in the length of the actual commercial monopoly. The industry rapidly becomes aware that broad patent protection is being sought by a company in a particular area of chemistry, both as a result of publication in scientific journals and the publication of corresponding foreign patent applications within eighteen months of the U.S. filing date. These publications serve to discourage competitive research, thereby preserving that area for one company on a long-term basis. Any marginal loss suffered as a result of shortened commercial life for the first broad patent application can, and often is, offset by a long




and complicated series of additional patent applications covering the methods of use, methods of production, further composition variations, varying dosage forms, and the like. It becomes a relatively simple matter in the absence of direct competition to obsolete the original commercial compounds as they near their patent expiration dates and promote the use of a variant covered by a new generation of patents.

An alternative and commonly used strategy involves the early filing of a broad speculative patent application which is eventually abandoned in favor of one or more continuation or continuation-in part applications as additional research begins to focus on the preferred compositions. The use of this procedure not only strengthens and broadens the scope of protection, but also postpones the issue date of the patent, thereby extending the period of commercial monopoly.

The possible variations are limitless, and some examples may serve
to illustrate at least some of the foregoing principles. In the case of

Valium, the original patent application was filed in December 1959 and disclosed the specific chemical entity Diazepam which is sold under the Valium trademark. But the patent application also contained broad claims to a large class of compounds having a structure similar to Valium, although many of those compounds had never actually been produced or tested. In May 1960, the Patent Examiner indicated that he was willing to grant a patent which specifically covered Valium, but was unwilling to grant the claims to the broader class of compounds because of the lack of specific disclosure to support them. Rather than accept a patent which covered the specific commercial compound, Roche abandoned the original patent application in favor of a series of continuationin-part applications which were intended to supplement the original disclosure and support the broader claims. The procedures relating to these matters consumed approximately eight years, and no patent cover, ing Valium issued in the United States until 1968. Since Valium had actually been discovered before the initial patent application was filed, the clinical research occurred wholly within the period when the patent application was pending and NDA approval to market Valium was granted in 1963. Accordingly, Roche will have enjoyed twenty-two years of commercial monopoly by the time its patent expires in 1985. The laws of the United States are far more generous in this regard than the laws of other countries. In most industrial nations, the patent monopoly expires twenty years after the patent application is filed, so that

any procedural delays in obtaining issuance of the patent cannot benefit the patentee. It is for that reason that the Valium patent expired in much of the rest of the world in 1980.

The history of Keflex, generically known as cephalexin monohydrate,

demonstrates a different set of circumstances affecting the length of a commercial monopoly, and undermines the assertion that the expiration of a single patent eliminates the commercial monoply. The initial patent application describing a large new class of cephalosporin antibiotic compositions was filed by Lilly in 1962, but only the method of making those products was actually claimed in the initial patent application. The first patent application actually claiming those products was not filed until 1966, shortly before the method patent was granted. That product patent application contained a hypothetical chemical formula, which was broad enough to cover the compound known as cephalexin, although that compound had not yet been discovered. Cephalexin monohydrate, the commercial form of Keflex, was not actually discovered until a later date, while the patent application which broadly covered (but did not disclose) cephalexin was still pending in the Patent Office. Lilly then filed a new patent application claiming cephalexin monohydrate as a separate invention. The broad patent covering cephalexin was granted in 1970, and the specific patent covering cephalexin monohydrate issued in 1972.? When the cephalexin patent expires in 1987, no one will be free to market Keflex because the second patent which specifically covers that compound does not expire until 1989. In short, Lilly will enjoy eighteen years of commercial monopoly on a product which was not even discovered until after the initial patent application covering that product was filed.

These are clearly not isolated examples. The Generic Pharmaceutical Industry Association (GPIA) has documented the fact that the twelve top-selling patented drugs, with U.S. sales of $1.37 billion in 1980, had an average effective patent life of 18.5 years, and the twenty-five top-selling patented drugs had an average effective patent life of 16.7 years. Obviously, the rules of the patent game were effectively manipulated in those instances to ensure maximum commercial exclusivity.

Apart from patent rules, there are also important investment and marketing decisions which affect the timing and speed of research and development work and, therefore, the length of the commercial monopoly. While much has been said about the adverse impact of regulatory review on the length of effective patent life, until recently little, if any, attention was directed to the fact that the totally discretionary decision as to when a clinical investigation is started and how fast it proceeds has an impact on "effective patent life." An Office of Technology Assessment (OTA) analysis of a Pharmaceutical Manufacturers Association (PMA) chart designed to show that effective patent life for new chemical entities approved in 1980 had shrunk to 7.5 years, establishes that there is a direct correlation between the patent application filing date and the date on which clinical investigations are commenced. 8 The low average effective patent life figure derived from the PMA

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