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Case
Study Patent
Law Reform Initiatives Situation:
The
pharmaceutical industry needed to build an analytical case for increasing
incentive for pharmaceutical research and development by updating US patent
laws.
(It was believed that the tremendous growth of generic pharmaceuticals
usage had undermined the original design of the 1984 Drug Price Competition and Patent Term
Restoration Act for using patent term restoration to
increase incentives for pharmaceutical innovation.)
Actions:
Managed
the development and writing of a Boston Consulting Group study about the
effects of the 1984 Hatch-Waxman Act.
Coordinated input from 12 companies, the industry trade association and
academic experts into the BCG team drafting the report.
Organized and coordinated meetings of participating company representatives
and the BCG team during the drafting of the study.
Edited drafts of the BCG report and coordinated multi-company input into the
drafts.
Worked with BCG staff on final production of their study, and its presentation
at a Congressional hearing.
Outcome:
“Sustaining Innovation in U.S. Pharmaceuticals: Intellectual Property
Protection and the Role of Patents,” was published by the Boston
Consulting Group in January 1996. The
study showed that the effective patent life of an innovator medicine had
declined from about 13 years before the 1984 Hatch-Waxman Act to about 12.5
years in 1995, because the patent term restoration time was insufficient to
make up for the immediate and almost complete loss of market share to generic
copies upon patent expiration.
Situation:
The
BCG study’s results were questioned by industry critics because it was
industry funded, and Members of Congress requested that the Congressional Budget Office
conduct an analysis similar to the BCG’s study.
Actions:
Coordinated industry input into the Congressional Budget Office’s study.
Coordinated industry efforts to enact Federal legislative improvements to
intellectual property protection for innovative pharmaceuticals using the
quantitative conclusions of the BCG and CBO studies.
Outcome:
The Congressional Budget Office published “How Increased Competition
from Generic Drugs Has Affected Prices and Returns in the Pharmaceutical
Industry” in July 1998. This
study found that “the patent extensions available under the Hatch-Waxman Act
were not sufficient to fully preserve the returns from marketing new
brand-name drugs. The present discounted value of those returns has declined
by about 12 percent because of the rise in generic competition. However, that
rise has resulted from a variety of demand-side factors as well as from
changes in the act itself.”
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