Category: Rachel Sachs

Generic Drug Price Increases: Implications for Medicaid

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By Rachel Sachs

The internet (not just the health policy part of the internet!) is fascinated by today’s New York Times story about dramatic recent increases in the costs of many decades-old drugs.  The story focuses on the case of Daraprim, the standard of care for treating the parasitic infection toxoplasmosis.  Daraprim was recently acquired by a start-up, which then raised the drug’s price from $13.50 a pill to $750 a pill.  Daraprim has been around for decades, and as the story notes, it’s just one of many recent examples of dramatic price increases for generic drugs, often after their acquisition by other companies (as in this case).

The article raises an enormous number of issues of interest to intellectual property and health policy scholars, both explicitly and implicitly, and other commentators have begun to canvass them.  But I want to spend the rest of this blog post unpacking a single point made in the article, because it actually contains an enormous amount of complexity.  As the author notes, “[the company’s] price increase could bring sales to tens or even hundreds of millions of dollars a year if use remains constant. Medicaid and certain hospitals will be able to get the drug inexpensively under federal rules for discounts and rebates. But private insurers, Medicare and hospitalized patients would have to pay an amount closer to the list price.”

The author is right that there’s one sense in which Medicaid and entities eligible for the 340B program (I assume this is what the author is referring to when he says “certain hospitals”) will be able to obtain this drug “inexpensively” – but there’s another sense in which they won’t be able to.

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Induced Infringement in Patent Law and the Doctor-Patient Relationship

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By Rachel Sachs

Regular readers of this blog will recall that I often think and write about the interaction between the induced infringement doctrine in patent law and medical method patents of various kinds (previous blog posts are here and here).  Until the recent en banc decision in Akamai v. Limelight, courts had been extremely reluctant to attribute the actions of multiple parties to a single actor for purposes of assigning infringement liability.  These cases have largely involved business method or software patents, but I had hypothesized in prior work that this analysis would extend to medical method patents, making them difficult to enforce.

Last week, Judge Tanya Walton Pratt of the U.S. District Court for the Southern District of Indiana provided evidence for the opposite proposition.  Eli Lilly had sued a set of generic drug companies for patent infringement, arguing that they had induced physicians to infringe a set of method-of-treatment claims involving a chemotherapy drug.  The problem for Lilly was that its claims require action by both physicians and patients, who must take certain other medications, including folic acid, before the physician administers the chemotherapy drug.  Judge Pratt was tasked with determining whether the actions of the patient in preparing for their chemotherapy could be attributed to the physician.  She ruled that because the physician “directs or controls the patient’s administration of folic acid,” “the performance of all the claimed steps … can be attributed to a single person, i.e. the physician.”  As a result, the generic companies could be held liable for infringement.

One problem with Judge Pratt’s ruling is that it fails to confront the single Federal Circuit opinion to have considered and rejected this argument.  McKesson Technologies, Inc. v. Epic Systems Corporation dealt with a patent on electronic communication between physicians and their patients.  In that case, the Federal Circuit had occasion to consider how the doctor-patient relationship fits into the induced infringement paradigm.  Judge Linn’s opinion concluded that “[a] doctor-patient relationship does not by itself give rise to an agency relationship or impose on patients a contractual obligation such that the voluntary actions of patients can be said to represent the vicarious actions of their doctors,” declining to attribute the patients’ actions to their physicians for purposes of assigning liability.

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Akamai v. Limelight: Implications for Medical Method Patents (Redux)

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By Rachel Sachs

Yesterday, the Court of Appeals for the Federal Circuit issued a unanimous en banc ruling in Akamai v. Limelight, altering the reach of patent liability for induced infringement of a method claim under 35 U.S.C. § 271(b).  This is the second time the en banc court has considered Akamai.  Three years ago, in a splintered decision, a majority of the court had ruled that liability for induced infringement was possible where no single entity had performed all the steps of a claim, but where those steps were divided between two or more parties, one of whom had induced the other(s) to infringe.  In 2014, the Supreme Court reversed, essentially reinstating this single entity rule, and after a panel opinion largely adopting the Supreme Court’s reasoning, a unanimous en banc court has now broadened – at least somewhat – the scope of divided infringement liability, relative to the Supreme Court’s decision.

More specifically, the Federal Circuit concluded that an entity may be held liable for others’ performance of steps of a method claim “in two sets of circumstances: (1) where that entity directs or controls others’ performance, and (2) where the actors form a joint enterprise.”  Noting the court’s prior holdings that these circumstances are met where there is an agency relationship between the relevant actors or there are explicit contractual duties to perform the steps of the method claims, the en banc court added another such circumstance in which liability may be found: “when an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance.”  Because this third condition was present in the case under consideration, the Federal Circuit deemed Limelight liable for infringement.

Exactly thirteen months ago, after the Supreme Court’s decision but before the Federal Circuit had considered the case on remand, I had blogged here about the case’s potential implications for diagnostic method patents.  (For those interested in this field, I then wrote a longer article about diagnostic technologies more broadly, which features a more detailed explanation of this issue.) Essentially, my argument was that the increasing restrictions the courts have placed on patentable subject matter under 35 U.S.C. § 101 would interact with these new divided infringement rules.

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House Passes 21st Century Cures Act, Including a New NIH Innovation Prize Fund

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By Rachel Sachs

This morning, the House of Representatives passed the 21st Century Cures Act by a vote of 344-77, achieving a truly bipartisan result in a difficult political environment.  (I’ve blogged about the Act several times now, and the House Energy & Commerce Committee has a clear section-by-section summary here.)  There is much to like in the bill (such as the increased NIH funding), much to be concerned about (such as some of the provisions abbreviating FDA review of drugs and devices), and much whose value will depend on implementation.  It’s also not certain that any of these provisions will ultimately become law – the Senate has yet to even introduce its own draft bill, let alone vote on it or achieve a consensus with the House.  But I wanted to use this post to draw attention to a new amendment to the Act that was introduced a few days ago and approved by the House this morning prior to the vote on the full bill.

Representatives Todd Young (R-IN) and Andy Harris (R-MD) introduced an amendment creating an Innovation Prize Program within the NIH.  As the text stood on Wednesday (speakers on the floor of the House today suggested that some of this language is likely to change, if it has not already changed), it instructed the Director of the NIH to create the fund in service of one or both of these two goals: 1) “Identifying and funding areas of biomedical science that could realize significant advancements through the creation of a prize competition” and 2) “Improving health outcomes, particularly with respect to human diseases and conditions for which public and private investment in research is disproportionately small relative to Federal Government expenditures on prevention and treatment activities, thereby reducing Federal expenditures on health programs.”  The Director is also given wide discretion to design prize competitions, including whether they involve a lump-sum award at the end or are parceled out in milestone payments along the way.

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Happy about the Supreme Court’s ACA decision? Thank a law professor

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By Rachel Sachs

[Originally published on The Conversation].

The core of the Affordable Care Act (ACA) has now survived its second trip to the Supreme Court.

Chief Justice John Roberts wrote for the majority in King v Burwell, holding that the federal government may provide subsidies for citizens to purchase health insurance on exchanges that were established by the federal government, rather than by their own state.

A ruling for the challengers (the “King” in King v Burwell) would not only have stopped the flow of subsidies to 6.4 million people currently receiving them, but it would also have disrupted the functioning of the individual insurance markets in the 34 states that have not established their own exchanges. Read More

How law professors helped the Supreme Court understand the Affordable Care Act

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By Rachel Sachs

[Originally published on The Conversation].

In March, the Supreme Court heard oral arguments in King v Burwell, a case that could broadly impact the functioning of the Affordable Care Act (ACA). The central question in King v Burwell is whether the federal government may provide subsidies for citizens to purchase health insurance on exchanges that were established by the federal government, rather than by their own state. If the court rules for the government, these subsidies will remain in place. If the court rules against the government, subsidies may no longer be provided to people living in states that have not established their own exchanges.

A decision is expected by the end of June, and a ruling against the government could harm not only the 6.4 million people receiving these subsidies, but also the individual insurance markets in the 34 states that have not established their own exchanges. These markets would likely descend into an actuarial “death spiral,” in which healthier people exit the market in cycles, leaving sicker patients to pay ever-higher premiums. Read More

Ariosa v. Sequenom Invalidates the Non-Invasive Prenatal Testing Patent

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By Rachel Sachs

On Friday, the Court of Appeals for the Federal Circuit affirmed the district court’s judgment of invalidity of several claims in Sequenom’s diagnostic method patent on the grounds that they were not directed to patent-eligible subject matter under the relevant section of the Patent Act, 35 U.S.C. § 101.  The case, Ariosa v. Sequenom, is important not only to those who have been following the recent back-and-forth between the Federal Circuit and Supreme Court on patent-eligible subject matter, but also to those who study medical innovation, as it implicates questions of innovation incentives and of access to an important new technology.

The case involves a technology known as non-invasive prenatal testing, or NIPT.  Previously, pregnant women seeking to determine whether their fetuses possessed particular genetic abnormalities only had the option to undergo procedures, like amniocentesis, which pose a risk to the developing fetus.  The scientists in this case made a startling discovery: there is a small amount of fetal DNA circulating in the pregnant woman’s plasma and serum.  These portions of maternal blood samples had previously been discarded as medical waste, and the idea that genetic abnormalities could be discovered through a non-invasive procedure like a blood draw, which poses no risk to the health of the fetus, was groundbreaking.  A patent on the method of detecting the fetal DNA in the mother’s serum or plasma was obtained, and Sequenom commercialized a test to practice the patent.  Sequenom was soon embroiled in litigation with Ariosa and other companies which it believed were infringing its patent.

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Commil v. Cisco: Exploring the Relationship Between Patent Infringement and Validity

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By Rachel Sachs

On Tuesday, the Supreme Court issued its opinion in Commil USA, LLC v. Cisco Systems, Inc., in which it held that a defendant’s belief that a patent is invalid is not a defense to induced infringement of that patent under 35 U.S.C. § 271(b).  Four years ago, in a case called Global-Tech, the Court had held that a defendant could not be liable for induced infringement unless it had knowledge not only of the patent’s existence but also that its behavior constituted patent infringement.  In Commil, six Justices clarified that a defendant who has knowledge of a patent’s existence but believes it to be invalid may still be held liable for inducing its infringement.  (Justice Scalia dissented and was joined by Chief Justice Roberts, with Justice Breyer recused.)

Commil raises several issues for discussion, but I want to talk about just one here: the majority’s fixation on the distinction between infringement and validity.  The key passages of Justice Kennedy’s opinion, on pages 9 through 11, seem to rest heavily on preserving the separation between these two issues.  Essentially, as Justice Kennedy puts it, “because infringement and validity are separate issues under the Act, belief regarding validity cannot negate the scienter required under §271(b).”  Justice Kennedy is clearly correct as a formal matter.  We ask different legal questions when adjudicating issues of infringement and validity, we apply different burdens of proof to the two questions, and we involve different parties in their resolution.

But Justice Kennedy’s opinion ignores the close practical relationship between the two issues.  By contrast, scholars and practitioners have long recognized the tension between infringement and validity as instantiated in patent litigation.  A patentee wants its patent to be construed broadly, to ensure that the defendant’s invention falls within its bounds.  Yet at the same time, the patentee must avoid claiming too broadly, or its patent may be invalidated on precisely those grounds.  (Defendants typically advocate the opposite positions.)

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New Discussion Draft of 21st Century Cures Act Released (Again)

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By Rachel Sachs

Earlier today, the House Energy and Commerce Committee released the most recent draft of the 21st Century Cures Act, in time for it to be marked up by the Health Subcommittee tomorrow.  At 300 pages, the new draft adds back in a number of provisions that were excised from the previous, 200-page iteration of the draft.  I haven’t had time to uncover all of the new additions just yet, but given that this is my third blog post on the subject, I wanted to highlight some of the ways in which this version differs (and doesn’t differ) from the last draft.

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New Discussion Draft of 21st Century Cures Act Released

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By Rachel Sachs

Yesterday, a new discussion draft of the 21st Century Cures Act was released, just in time for today’s hearing on the draft before the House Energy and Commerce Committee.  At just 200 pages (although with some sections still “to be supplied”), this version is just half the size of the previous draft.  As such, it is perhaps more notable for what it took out of the original draft than for what it added in.  I haven’t had time to digest fully all of the cuts just yet, but in advance of the hearing this morning I wanted to highlight two significant deletions from the first draft and one potentially significant addition.

First, when I blogged in February about the first draft of the Act, I expressed excitement over the idea of a Medical Product Innovation Advisory Commission.  The Commission would have had the ability to oversee the way in which agencies like the NIH, FDA, and CMS all interact with each other to affect the development and dissemination of medical products.  A significant portion of my scholarship focuses on precisely these ideas, and I was hopeful that the Commission would make it into the second draft.  Alas, it did not.

Second, the first draft of the Act contained a series of very controversial exclusivity provisions.  Chief among them may have been the draft provision giving “dormant therapies” (essentially, new drugs for unmet medical needs) the option of 15 years of exclusivity.  Alexander Gaffney’s Regulatory Explainer on the first draft provides a helpful overview, for those who are interested in learning more about this provision.  But interestingly, this and other provisions relating to increased exclusivity are gone from the new draft.  Now, it is possible that some of this language will reappear later, especially as the section of the draft relating to “Repurposing Drugs for Serious and Life-Threatening Diseases and Conditions” has yet to be supplied.  But in the first draft of the document, the sections for “Repurposing Drugs” and “Dormant Therapies” were separate, so it is not clear that this is likely to happen.

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