In , we learned that it is both possible and valuable to import empirical scientific methods typically used in the hard sciences to the study of law. In fact, in our analysis of patent law and policy we can move beyond patent valuation to assess how and indeed whether a given piece of law or policy is working in conjunction with its so-called . This includes the assessment of innovation within the context of the patent bargain and whether governments that have accepted pharmaceutical linkage laws are being rewarded in their twin policy goals of producing more new and innovative drugs and facilitating timely generic entry. Using the new tools of empirical legal research, we hope to assess whether, as put it at the time the U.S. legislation came into force, the public is in fact “receiving the best of both worlds - cheaper drugs today and better drugs tomorrow.”

We can address this possibility using the innovation index discussed in Part 1 in combination with 3-D spatiotemporal models such as those used in the medical sciences. Over the last few decades, these models have been used increasingly for studying protein, DNA, RNA, and other structure-function relationships, including using x-ray and other crystallography techniques. Consistent with their use in medicine, 3-D legal models can be used to construct data for both descriptive (structural) and prescriptive (functional) law-making and law-reform purposes.

For example, in our study, we developed a 2-D model of identifying patents in relation to “new and innovative” drugs and “follow-on” drugs that tracked the functional and temporal evolution of drug forms and associated patents over time. The example below is for the combination of Salmeterol and Fluticasone into one of several available forms of Advair®. We referred to this technique as a “patent tree” method and used it specifically to identify legally-related drug forms, associated patents, and patent types.

Fig. 1. Example of Convergent Patent Tree Analysis for Fourth Generation Product Advair Diskus.®
Patents were identified using the specific and general search strings described in our Berkeley study. In addition to quantifying patents per drug, the patent tree method allows assessment of how specific drugs evolve into related drug forms or (in this case) drug products representing combinations of known drugs. In addition, the patent tree analysis allows for identification of relevant patent types based on the classification nomenclature described in the Northwestern study. Finally, the patent tree analysis provides data relating to drug development, but also on the type of patents selected by pharmaceutical companies for listing on the patent register in order to prevent generic entry.

This method can be extended, as shown below, to identify “product clusters.” The patent tree method was expanded to include patents listed on the patent register under linkage law and a diagonally increasing axis of cumulative spatiotemporal growth. The model represents a constellation of legally and functionally related new and follow-on drug forms and regulatory approvals, patents associated with these drug forms, the fraction of total patents listed on the patent register in order to slow down generic entry under linkage laws, and how each of the data classes relate to one another over time.

Fig. 2. Product Cluster-Based Model of Drug Development. Product clusters begin at some point in time with the first new and innovative drug (big orange circle; NCE) and associated originating patent (small purple circle). With time, and vetting by the market and regulators, further follow-on drug approvals (big blue circle) and patents (small green circle) are granted within the cluster, and an increasing number of these patents are listed on the patent register (small red circle). Listed patents can be used increasingly over time to prohibit generic entry not only on the originating new and innovative drug, but also on all drugs in the cluster that are deemed under law to be relevant to the originating drug.

We are now in a position to take our 2-D product cluster model above, first reported in , and combine it with the innovation index depicted in of this series, reproduced below for convenience. The result is the spatiotemporal product cluster model shown below in Fig. 4.

Fig. 3. Innovation Index Data for Total Approval Cohort. Bar graphs showing the number of total approvals expressed as a function of the level of innovation (LOI) before (a) and after (b) of generic approval data. (c) shows brand approvals expressed as a function of LOI. Solid line is a fit of the data to a single exponential function. (d) shows cumulative normalized brand approvals expressed as a function of LOI. Solid line is fit using a sigmoidal function.

The combination of the drug nomenclature, product cluster and innovation index described in Fig. 4 yields a potentially new way of looking at the impact of regulatory and market incentives on drug development by multinational firms. As shown by the data in the study, this clearly includes both brand-name firms and generic firms, as both are pursuing cluster-based models of drug development. The resulting analytical model focuses on drug development driven by purposeful policy, and cumulative vetting of serial products by regulators and the market.

Fig. 4. Combining Innovation Index and Product Cluster Models to Study Portfolio-Based Drug Development and Hedging. Product clusters are hypothesized to begin life at the most innovative end of the spectrum, with few patents and a small or negligible number of listed patents. Over time, and with increased vetting by regulators and the market, the cluster expands to include more products, patents and listed patents but, as a whole, becomes less and less innovative. The desired end point (the “home run”) is a substantial but low-level cluster with numerous products, patents and listed patents, and the widest scope of market exclusivity and cumulative patent protection. Prior to this point, clusters are “at bat”, as they reach a critical state prior to moving into an expanded spatiotemporal state or merely “on deck” as firms await critical regulator and market vetting.

Described in detail in a forthcoming , which summarizes our research over the last four years, drug clusters denoted ‘on deck’, ‘at bat’, and ‘home run’ represent a theoretical mock-up of how drug clusters grow in time from a spatiotemporal perspective. In this model, product-patent clusters begin their life as single-drug products or small groupings at the most innovative end of the index and, with increased vetting of products in the cluster over time by regulators, the market grows in scope to encompass an increasing number of products and patents. As this occurs, the cluster may be anticipated to ‘swing up and to the left’ of the innovation index, moving from a high level of innovation with a low number of patents and listed patents to first a moderate and then a much lower level of innovation but with greater spatiotemporal characteristics. The model shown here is for 2,087 drug approvals over an eight-year study period; similar results have been obtained using patents and chemical components.

An important observation with regard to product-patent drug clusters is that as a given cluster grows spatiotemporally over time, it grows not only in scope but also in the scale of the interrelatedness of its functional components over time.

As noted in 2001 by and later by and, notably, the , the strength of patent portfolios and related product clusters from an intellectual property law perspective is “greater than the sum of its parts”. An easily identified example of the value-added dimension of clusters is the strong profitability for follow-on Me Too drugs that nevertheless have low levels of innovation. This “more is different” element of product clusters, originally described in 1972 by , is characteristic of complex systems, including complex legal systems such as those described by JB Ruhl and many others in the mid-1990s. As noted in , we have referred to the complex multidirectional interrelationships and interdependencies between drug development, drug regulation and intellectual property law in our previous and studies as a regulated Therapeutic Product Lifecycle or rTPL.

Of interest, our data show that the profit of a given molecule is strongly related to the number of patents, regulatory approvals, the number of patents listed on the register, and the range of drugs and regulatory approvals that are legally related but separated by only very minimal changes to existing uses and chemistry. This is true even for drugs thought be innovative such as those with First in Class and New Active Substance (New Chemical Entities), owing to regulatory loopholes.

At least somewhat surprisingly, in light of global innovation policy over the last 50 years, the greater the number and scope of these metrics, the lower is the calculated level of innovation of a basket of drugs in a product cluster. As market and regulator vetting increases with time, one sees generally (1) more patents, regulatory approvals, fractional patent listing, patent classifications per marketed drug, (2) a greater follow-on-to-new drug ratio in the cohorts studied, and (3) greater profitability for less innovative drugs.

Indeed, drug clusters driven by line extension, or follow-on, drugs are proving to be very profitable. For example, we found that the vast majority of approval, patenting and chemical development activity associated with brand pharmaceutical products is directed to the development of Me Too drugs, in particular follow-on Me Too drugs. Of the top 25 most profitable drugs in 2006, 48% (12) were line extension Me Too drugs. The combined sales of these drugs were US $45.7 billion dollars. Follow-on First in Class drugs represented 28% of the top 25 selling drugs, and 7 of the top 15 selling drugs. Profit on this group of drugs was US $39.7 billion dollars in 2006. Combined, follow-on Me Too and First in Class drugs accounted for 19 of 25 of the most profitable drugs, with total sales of US $85.5 billion in a single year.

From a science of law perspective, a major advantage of the rTPL and product cluster models is that there is, in fact, considerable empirical evidence available for study. This includes the various types of new and follow-on drugs, patents, patent classifications, listed patents, related litigation, as well as the relation of these metrics to one another over time. This wide array of empirically observable metrics and the observation that they change over time sets up the possibility that, akin to protein folding and X-ray crystallography models, the data can be expressed in 3-D spatiotemporal form.

Indeed, the goal of our empirical work over the last four years involving new and follow-on drugs, patent trees, patent types, WHO Anatomical Therapeutic Classification (ATC) data, litigation data, the innovation index, and product cluster model is to convert the cumulative data into 3-D formats used in the medical sciences. For example, the protein-RNA model presented below underscores the utility of 3‑D “rotational” models to both identify and quantify the complex structural and functional characteristics in a given network of biological components, here those between an RNA strand and protein components in the context of Multiple Sclerosis.

Fig. 5. Medical Sciences Template for Rotational 3-D Spatiotemporal Models of Cluster-Based Drug Development. From: .

As discussed , rotational 3-D drug product-drug patent cluster models would be particularly useful to policy-makers and law-makers in order to enable visual and numerical quantification of the impact of intellectual property law on drug development, generic entry, and access to essential medications in the same manner that one might look at a car from behind (highlighting the ‘gas tank,’ or original drug product and associated patent tandems) as well as from the side (from the rear to the front of the vehicle, underscoring how and when approvals, patents, and listed patents increase over time with market and regulator vetting).

In this manner, extrapolating the empirical techniques conventionally used in the hard sciences to the study of law, including patent law and innovation policy, offers an important opportunity to not only quantify the effect of a given piece of law or policy, but also to help determine the vires of such laws after they have been put in motion and to guide law reform efforts in light of objective arm’s length evidence.

It is hoped this series of articles has shed some light on the utility of traditional scientific methods for quantitative and qualitative assessment of patent value, and on whether laws made decades ago to enhance innovation in the pharmaceutical sector and to facilitate timely generic entry are producing intended effects, unintended effects, or some combination of both.

In any event, it will be interesting to see whether, as in other fields such as medicine and engineering that are accustomed to taking an “evidence-based” approach to problem identification and problem solving, we in the legal field may also include empirical evidence in our expanding toolkit of legal assessment and interpretation methods.

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An earlier article on IP Osgoode by gives admirable service to the issue of patent valuation, which presents to a wide audience as a kind of titanic contest of wills between those who prefer big incentives for innovation and those who focus of the social benefits, or outcomes, of innovation. The article focused on the tension between the business value known to be associated with patents and the ways of extracting value from those patents. In addition to the excellent survey of sources in the article, one can add fundamental work done by Mark Lemley at and Polk and Parchomovsky at .

In the world of life sciences products, there is, of course, a fundamental distinction to be made between an economic analysis (even one cast in a law and economics light) and a patent law analysis. This is because one is in service of utilitarian benefit and the other is in service of the patent bargain interpreted in light of the public health mandate of food and drug law. As noted by the Supreme Court of Canada in its seminal decisions in and , linkage regulations tying generic entry to brand-name patents must be made in a ‘patent-specific’ manner, thus highlighting the terms of the traditional patent bargain read in light of the so-called special provisions of linkage laws when parsing pharmaceutical patents.

Paul Grootendorst, Aidan Hollis, and I commented on the need for patent valuation in a recent issue of . We discussed the limits of patent valuation in terms of Canada’s basket of intellectual property laws as it applies to pharmaceuticals. The article underscores the need for patent valuation and intellectual property law reform not only in regards to domestic drug costs and expenditures, but also in where generic entry is controlled by linkage regulations.

In new work by our group, we have outlined a tandem of new methodological tools to identify and quantify new and follow-on drugs and patent valuation. The first is a harmonized method to quantify drug approvals, patents and associated chemical components that summarizes and extends our previous work on topic. The second provides a new “innovation index” that incrementally grades the value, not only for patents in the life sciences and other technology-intensive sectors, but also for associated regulatory approvals, chemical components, patent characteristics, etc. The innovation index values are based on evidentiary hurdles and prioritizations for several classes of “new” and “follow-on” drugs disclosed by drug regulators.

As indicated by the titles of the articles, one focuses on the quantitative side while the other focuses on the qualitative side of the analysis.

The presents a harmonized method to collect, compare, and quantify regulatory approval data from multiple cohorts of new and follow-on drugs. We looked in some detail at about 2,000 regulatory approvals, 5,000 patents, and 130 chemical components. The analysis encompasses all drug classes enumerated, described and prioritized by domestic drug regulators. The drug classes were gleaned from the usual literature reviews, supplemented by several hours of consultation with Health Canada regulators and review of Health Canada Guidance Documents on topic. A second purpose of this work was to go beyond simplified descriptors of new and follow-on drugs found in the literature, to categorize classes of new, line extension and generic approvals according to the nomenclature used by regulators themselves. This is relevant, as we found different scholars use different approaches, and that these approaches were not always the same as those used by regulators themselves.

The innovation index work described in the accompanying was driven by the fact that almost all published patent assessment methods measure innovation using primarily quantitative methods, otherwise referred to as ‘counting methods.’ For reasons discussed in the references cited by Chaubal, and in Lemley and Polk & Parchomovsky, while quantitative models are widely considered to be problematic, a model that assesses patent value using qualitative methods has not yet emerged. A second reason for developing the methods is that is that even when many scholars and commentators do look at the “innovative” aspect of the data, they simply accept data provided by either Health Canada or the PMPRB in their respective annual reports (or those in other administrative bodies such as the U.S. FDA or E.M.E.A.).

While developing a novel scientific method for either obtaining or analyzing data is fraught with its own problems, this step nevertheless forms a necessary component of the “trial and error” heuristic typical in the hard sciences. As more individuals with prior experience in medical science enter law and legal scholarship, we will undoubtedly see more and more scientific studies of law, including importing of fundamental mathematical, statistical, curve fitting, modeling, and graphing methods.

In the Santa Clara Article, a qualitative innovation index is reported that we hope may fill some of the gaps in patent valuation. One of the figures, relating to regulatory approvals is shown below.

.

Fig. 1. Innovation Index Data for Total Approval Cohort. Bar graphs showing the number of total approvals expressed as a function of the level of innovation (LOI) before (a) and after (b) of generic approval data. c Brand approvals expressed as a function of LOI. Solid line is a fit of the data to a single exponential function. d Cumulative normalized brand approvals expressed as a function of LOI. Solid line is fit using a sigmoidal function.

The figure presents data for many classes of new and follow-on drugs and categorizes these classes using a linear scheme. Raw data values are given in the Y axis of Fig. 1a and 1b, the difference being generic data were subtracted in Fig. 1b to isolate data only from ‘innovator’ firms. The X axis in both panels represents the innovation index data. These data are referred to as transformed data, because the raw data pertaining to drug approvals, drug patents, and chemical components are transformed into qualitative values (0-15) using the methods outlined in the Santa Clara paper.

Fig. 1c shows the data in Fig. 1b fit to an exponential function. As can be seen by the close fit of the data to the function, the choice of an exponential relationship was well founded. The data are interesting as they demonstrate an exponential decline in the numbers of drugs in classes with relatively high innovation index values. In other words, the vast majority of drugs approved in Canada have a very low index value, and indeed are primarily follow-on Me Too drugs. Fig. 1d represents the normalized cumulative data, which is an approximation of “how fast” the innovation index data rise to their maximal peak – a fast rise, as we see here, suggests that most of the drugs approved are in the low index bins. Similar, though not identical, results were obtained with several Cohorts studied, including a wide Cohort of 2,087 drugs, a narrower Cohort of 95 of the most profitable drugs, and a similar Cohort of associated patents and chemical components.

The strengths and weaknesses of the hybrid “subjective-objective” nature of data transformation, and the similarities to subjective-objective hybrid models that are already widely accepted for use in the fields of drug approval, patent grant, and the adjudication of patent claims by the courts are discussed more fully in the Santa Clara Article.

The innovation index provides a means of weighing legitimate patent protection against perceived societal benefit. As such, it affords a qualitative measure of the innovative nature of drug patents that, when compared to counting methods, may more adequately reveal the outcome of development incentives for firms and regulating bodies insofar as these parties have conflicting interests.

The results from our analysis indicate that it is not the most innovative or even strongly innovative drugs that are attracting the greatest firm patenting effort. Rather, when gauged against development priorities disclosed by regulators, it is the least innovative drugs of all classes investigated that display the strongest patenting efforts.

In this manner, our data are contrary to the established dogma that the strength of patent protection is proportional to the level of innovation of a given product. The data obtained fully support the conclusion that cluster-based, or portfolio-based, drug development has become the dominant innovation strategy for both brand and generic firms.

Finally, the data suggest that the perception on the part of governments and the public to the effect that societal benefit comes as a kind of “natural consequence” of patenting may need to be reconsidered.

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I am pleased to announce a new collaborative consortium of eleven intellectual property law and health policy scholars, economists, and practicing lawyers in nine countries. The group is called the Consortium Study of Global Pharmaceutical Linkage (CsGPL or Consortium).

The Consortium is spread across nations with mature linkage regulations (US: Dan Cahoy; Canada: Ron Bouchard; Aidan Hollis; Joel Lexchin), nascent regulations (Australia: Tom Faunce; China: Paul Jones), those without regulations but with certain practices that may operate to parallel linkage (EU: Bengt Domeij; Graham Dutfield) and those where both the existence and scope of linkage regulations are currently the subject of intense public scrutiny and litigation (India: Feroz Ali Khader; Mexico: Juan Louis Serrano; South Korea: Heesob Nam).

The Consortium includes individuals with past and present litigation experience with pharmaceutical linkage regulations on both sides of the brand-generic divide, and includes scholars appointed in Faculties of Law, Medicine, Health, and Economics as well as practicing lawyers working in law firms and Non-Governmental Organizations on pharmaceutical matters. The Consortium is fortunate to be supported in its work by a Key Decision Maker Advisory Board composed of senior members of government in health, industry and intellectual property portfolios and the judiciary working on matters relating to pharmaceutical linkage regulations.

In its work thus far, the Consortium understands that the study of structure-function relationships in living systems, both at the micro and macro level, has served science especially well over the last century. Indeed, the rapid spread of pharmaceutical linkage worldwide offers a unique and time sensitive opportunity to carry out empirical work on the system as it evolves outward from its original focus in the U.S. As a result, a major goal of the Consortium’s work on global pharmaceutical linkage will be to investigate the structural and functional aspects of different systems of linkage regulations, and their relationship on the one hand to drug availability costs, and expenditures, and incentives for innovation and protection of intellectual property rights on the other.

A second major goal of our work is to produce and use empirical knowledge relating to different global linkage regimes to assist key decision-makers and knowledge users in domestic and global governments and legal systems working with linkage in their efforts to stimulate the production of new and innovative drugs while at the same time lowering public health costs and increasing access to essential medicines.

The first paper from the Consortium has now been accepted for publication. The full cite is: Bouchard, R.A. Cahoy, D., Domeij, B., Dutfield, G., Faunce, T., Hollis, A., Jones, P., Ali Khader, F., Lexchin, J., Nam, H., & Serrano, J.L. "Global Pharmaceutical Linkage Regulations: A Consortium Framework." Minnesota Journal of Law, Science & Technology 12(2): 1-30. 2011.

The article can be found online at:

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BePress:

I also have a new book coming out on pharmaceutical linkage. The book, entitled Patently Innovative. How Pharmaceutical Firms Use Emerging Patent Law to Extend Monopolies on Blockbuster Drugs, (Biohealthcare Publishing (Oxford) Limited, Oxford UK), is to be published in the summer of 2011.

A preview of the book can be found online at:

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The Canadian Patent Act defines an invention as any “new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter.” An invention must meet three basic requirements in order to be patentable; the subject matter defined in the claims must be new, useful and non-obvious.

The first requirement is met where the subject matter of the patent has not yet been disclosed to the public. The second is met where the subject matter provides sufficient utility or benefit to the public and achieves the purpose for which it came into being. The third is met where the subject matter constitutes an “inventive step” or manifests sufficient “inventive ingenuity” over the prior art to warrant the traditional patent bargain. Where an inventive step is lacking, a patent is not granted or, if granted, can be later ruled invalid on the grounds that it is “obvious” in light of the prior art, provided that the person skilled in the art would have been led directly and without difficulty to the solution taught by the patent. When the claims at issue are deemed to be obvious or anticipated (for lack of novelty), they are struck down and can no longer be used to prohibit competitors from using the invention.

Under the terms of the Act, the lens through which the court must gaze when deciding the issue of obviousness is that of a Person Having Ordinary Skills in the Art, also referred to as the PHOSITA. When assessing the issue of obviousness courts are charged with undertaking a determination of whether the impugned invention represents an inventive step over the prior art, including previously disclosed inventions.

One problem that frequently comes up in the obviousness analysis is whether or not experimental research or testing leading to crystallization of the impugned invention constitutes an inventive step from the perspective of the PHOSITA. The issue of “testing” is thus shorthand for whatever scientific experimentation and research was conducted prior to crystallization of the invention. The issue of testing is significant in the context of pharmaceutical inventions because like all biomedical inventions they typically come about as a result of cumulative incremental advances over the prior art; that is, they do not come into being in vacuo.

There is considerable “push-pull” between inventiveness and obviousness in determining the validity of a patent. While in one sense there is a zero sum game between the two concepts insofar as the final decision of the court is concerned (the invention is either valid or invalid), in a more subtle sense, there is a broad spectrum of potential research and testing leading up to crystallization of the invention that cannot be seen in a binary fashion and which only the PHOSITA is positioned to judge.

For example, assume it was well known to an industrial drug development PHOSITA that ingestion of one of either two known methylxanthine compounds, theophylline or theobromine, yields a mild stimulant effect in humans by raising the levels of cyclic AMP and antagonizing endogenous adenosine. The patentee conducts an array of simple tests in the lab using well known methods and equipment, and finds that a small and easy to effect change in the ring structure of either compound produces yet another methylxanthine compound, caffeine, which has a substantially larger stimulant effect via the same two biochemical pathways as theophylline and theobromine. Does the discovery of the stimulant effects of caffeine amount to the exercise of sufficient inventive ingenuity to constitute a patentable invention, or is it obvious in light of the known existence, chemical structure, stimulant effects and mechanism of action of the parent compounds? One could ask the same question under circumstances where all three methylxanthines were known in the art and later testing showed that caffeine had the same or similar stimulant effects as previously documented for theophylline and theobromine. The potential combinations are endless.

On the one hand, it might be said that only very minor or “routine” (e.g., non-inventive) testing was needed in order to simply confirm caffeine had properties similar to those of other known methylxanthines. On the other hand, it might be said that there is sufficient uncertainty involved in any testing that the mere act of undertaking it is an expression of sufficient inventive ingenuity to warrant a patent. Thus, obviousness and inventiveness represent divergent positions on the continuum of potential inventive activity undertaken by patentees as well as that contemplated by the PHOSITA in the post-hoc obviousness analysis. It is the overlapping grey zone between the two poles that has presented the greatest challenge to courts grappling with the issue.

While obviousness and inventiveness are opposite ends of the spectrum of activity leading up to invention, the roof under which they co-inhabit, however uncomfortably, is that of human agency. Notwithstanding the PHOSITA represents at once the metric for the obviousness analysis undertaken by the courts, the class of persons most likely to be actual inventors in reality, and the societal medium through which all pharmaceutical inventions emanate and are vetted, rejected and put into practice, Canadian patent jurisprudence and legal commentary nevertheless stipulates that for an invention to be obvious, no “experimenting or serious thought, or research, whether the research be in the laboratory or amongst literature” can be conducted in the lead-up to invention.

Judicial reasoning underpinning this approach hinges on the current legal fiction of the PHOSITA, who is said to possess not even a “mere scintilla” of inventiveness or creativity. This is true independent of whether the obviousness analysis is couched as an express injunction against testing or the “worth a try” approach to testing or whether the PHOSITA “would have” versus “could have” arrived at the impugned invention. The approach taken by Canadian courts on the issue is highly binary in nature, which contrasts sharply with the spectrum of inventive activity engaged in by both actual patentees or more generally by persons skilled in the art of pharmaceutical research and development.

In order to gain a better understanding of the issue, a social sciences construction of the normative practices of the pharmaceutical PHOSITA was undertaken. This involved evaluating the scientific norms of industrial pharmaceutical research and development, with particular focus on the identity and inventive capacity of the pharmaceutical PHOSITA. Two analytical methods were employed in the analysis: the tacit and focal knowledgebase framework of Polanyi and actor-network theory (ANT) as described by Latour.

Both methods yielded a nuanced and complex picture of the normative PHOSITA, who was seen to be highly creative and inventive. The normative PHOSITA was viewed to be comfortable with, indeed strongly adapted to, working under conditions of profound uncertainty and ambiguity, with one eye focused firmly on the commercial, regulatory, legal and political implications of their day-to-day activities. Moreover, from an ANT perspective, pharmaceutical inventions are not the result of individual scientists working alone in a laboratory but rather are the product of numerous actors working in concert with common (yet diverse) interests in the commercialization of pharmaceutical products.

Based on these observations, the normative PHOSITA is more legitimately described using terminology that incorporates a combination of indeterminate and determinate language rather than the binary language currently used to describe both the PHOSITA and the role thereof in the obviousness analysis. As described, the social sciences analysis is consistent with a flexible approach to obviousness, which would allow contemplation of experimental testing in the post-hoc analysis without automatically vitiating a finding of obviousness. Finally, even assuming a modern deterministic approach to obviousness, it was demonstrated that certain elements of the “no testing” approach, in particular the “worth a try” formulation articulated by Justice Lederman in Bayer, is unworkable in light of current best-practices in pharmaceutical drug development.

The legal nexus between the normative PHOSITA and the test for obviousness was provided by a “purposive construction” of obviousness in accordance with the Supreme Court of Canada’s leading patent jurisprudence. A purposive construction emphasizes the essence of an invention, including the steps taken to achieve it, rather than binary notions of testing/no testing, scintilla/no scintilla of inventiveness, whether the PHOSITA viewed the invention as not/worth a try, or whether the PHOSITA would have/could have arrived at the invention. This binary can also be extended to routine/not routine testing in so far as taking that approach is antithetical to recognizing the potential spectrum of inventive and non-inventive activity leading up to invention. Instead, a purposive approach to obviousness focuses on whether the testing leading up to the invention was, in the mind of the normative PHOSITA casting their mind back to the claim date in light of all the prior art, inventive or not and whether in this light the PHOSITA would have come “directly and without difficulty to the invention.” A purposive construction views the concepts of inventiveness and obviousness as tied together in a fluid and graded manner through the contextual and evidence-based skills of the PHOSITA and thus is at once objective and evidence-based, yet contextual.

Finally, it was argued that the purposive approach to obviousness is conducive to domestic and international patent policy which facilitates rather than impedes strong innovation. This is particularly relevant to the North American pharmaceutical industry due to peculiarities in the substance and procedure of the linkage regime governing drug approval and patenting and because the industry has become plagued by non-inventive line extension patents to the detriment of the public. This has resulted not only in less competition between brand and generic firms but also reduced access by the public to essential drugs. The importance of the obviousness test to innovation is underscored by Canadian and American appellate jurisprudence to the effect that the nonobvious requirement is the primary mechanism by which non-inventive patents are weeded out of the system and the public protected from undue patent monopolies.

Full Cite: Ron A. Bouchard. Living separate and apart is never easy: Inventive capacity of the PHOSITA as the tie that binds obviousness and inventiveness. University of Ottawa Law & Technology Journal. 4(1). 1-57. 2007

SSRN:

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One of the most strongly contested aspects of pharmaceutical policy concerns the role of intellectual property rights in providing economic incentives to firms and in shaping the agenda for basic medical research. A relatively new addition to the basket of intellectual property rights is a novel form of legal ordering referred to as “linkage regulations.” So named because they tie patent protection for marketed pharmaceuticals to the drug approval process, linkage regulations enable pharmaceutical firms to list as many patents as are deemed relevant to a marketed product on a patent register. Each patent must be demonstrated in litigation to be invalid or not infringed for generic market entry. In Canada, this occurs under the aegis of the Patented Medicines (Notice of Compliance) Regulations (NOC Regulations).

Canada’s linkage regime for pharmaceuticals was enacted under intense political pressure to harmonize the nation’s intellectual property law with those of other developed nations. The original policy intent of the regulations was two-fold: first, to encourage the development of new and innovative drugs, and second to facilitate the timely market entry of generic drugs. The NOC Regulations were expressly intended to balance the goals and objectives of food and drug law with those of patent law. Prior to the linkage regime coming into force, drug regulation and drug patenting represented distinct goals and policy objectives. Under the terms of the linkage regime, there must be a specific functional nexus between approved drugs and patent protection for those drugs pursuant to the NOC Regulations.

In choosing the words “the development of new and innovative drugs” to be one half of the balance linking patent law to food and drug law, the federal government articulated a clear public policy goal that pioneering drug development is desired in exchange for the unusual protections afforded to the pharmaceutical industry by the linkage regime. In choosing the words “timely market entry of their lower priced generic competitors” the government articulated a second public policy goal of cost savings, triggered by expiry of specific patents on specific drug forms that are no longer new and innovative. Thus the “balance” sought to be effected by the NOC Regulations is not just a qualitative balance between two poles, but also a quantitative balance. The more reward there is on the private side of the ledger, the more there must be on the public side in order to maintain legal equilibrium.

It has now been almost two decades since the regulations were enacted. Given the continuing public debate over high drug prices, the large fraction of research and development carried out by publicly-funded institutions ultimately enveloped within commercialized products, and wide criticism of the failings of the patent system to promote innovation, it is an excellent time to assess whether the NOC Regulations have in fact satisfied the twin policy goals of encouraging new and innovative drug development and the timely market entry of generic drugs.

We recently completed three empirical studies on the linkage between drug approval and drug patenting under the NOC Regulations. The empirical work was designed to investigate whether and how the NOC Regulations have encouraged the development of new and innovative drugs since being enacted. The importance of empirical studies to assessing the efficiency and effectiveness of policy levers such as intellectual property law and regulations cannot be overstated. As noted by some of the most prominent scholars of the economy, innovation and patenting over the last decades, robust conclusions regarding the consequences for technological innovation of changes in patent law and policy are few and far between. This is due primarily to a fundamental lack of relevant empirical data. The same applies in the reverse, as governments have specific legal and policy goals in mind when drafting law and regulations that are reviewable by the courts in judicial review proceedings.

The first study focused on the type of brand-name and generic drug approvals over an eight year term following the coming into force of the linkage regime and leading up to the debate on progressive licensing of drug products. The second was an analysis of patenting characteristics for therapeutic products before and after the coming into force of the NOC Regulations. The study also involved a detailed analysis of patent and therapeutic classes in which multinational drug companies are focusing their attention and how these can be used to support various types of new and follow-on drug development. The third was a more nuanced analysis of the innovative nature of new and follow-on drugs approved by regulators over this time frame coupled with an investigation into how patent monopoly periods for pharmaceuticals were extended via the linkage regulations.

The empirical findings reviewed are at odds with the goals of stimulating the development of new and innovative drugs and facilitating the timely entry of generic drugs. Questions as to the validity of the NOC Regulations arise when a purposive patent-specific approach to interpreting the NOC Regulations is taken, as stipulated by the Supreme Court of Canada in its leading patent jurisprudence. Taking this approach to analysis of the linkage of drug approval and drug patenting in the specific context of s. 55.2(1) of the Patent Act, one could argue that the concept of early working does not refer to the working of any patent at any time. As suggested by testimony by the federal government before the Legislative Committee on Bill C-91, the early working provision was intended to refer to a specific patent on a specific drug so as to allow generic firms to prepare for timely market entry in relation to that drug and that patent. A second element of a patent-specific analysis is that a drug referred in s. 55.2(1) is not a new and innovative drug for the purposes of all time. It is a drug that is new and innovative at a particular time in history. The moment when this drug is no longer new or innovative, for example when it becomes the basis of SNDS submissions and follow-on drugs, constitutes the moment in history when patents are no longer in relation to “new and innovative” drugs and thus the moment which may reasonably trigger “timely” generic entry.

Data such as those reviewed in the article suggest that blending of industrial and health policy goals may be ineffective and possibly counterproductive in terms of public health outcomes. There is no question that established and emerging drug regulatory regimes have great potential to increase the efficiency of public health provision by placing both new and innovative and older blockbuster remedies in clinical environments sooner. However, growing evidence such as ours seems to indicate that the efficacy of this approach can be weakened through inadequate monitoring and supervision, such that pharmaceutical firms perceive a higher incentive to exploit existing patented technologies in new ways rather than increasing the flow of new technologies. At a more general level, the data lend empirical substance to an emerging consensus that, in many circumstances, intellectual property rights may be an inhibitor of innovation.

Professor Bouchard’s full article “I'm Still Your Baby: Canada's Continuing Support of U.S. Linkage Regulations for Pharmaceuticals” is available for download on SSRN .

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