63 Food and Drug Law Journal 275-320 (2008).
The period of new drug market exclusivity finely balances the incentives to innovate against the deadweight loss consequent to the monopoly pricing paradigm. Legal equilibrium has been maintained in recent years, at a point that enables ample drug discovery and generic competition, due to strong lobby representation from the drug innovators on one side, and from the generic drug manufacturers and consumers on the other.
The recent decision by the Supreme Court in KSR v. Teleflex threatens to disrupt the present balance, as pharmaceutical innovators may be at risk of losing some of the essential patent tools by which to maintain market exclusivity long enough to recoup the costly drug discovery and development investment.
The court in KSR was motivated by the basic normative considerations that underlay the patent right in this country―promoting the progress of science and the useful arts. While the decision may serve that purpose for some industries, the effect experienced by the innovator drug industry appears to be just the opposite.
This paper provides background on some of the technological, legislative, and judicial forces that play upon the pharmaceutical industry, and reviews the KSR decision and a few pharmaceutical patent decisions of lower courts. The discussion illustrates how the present paradigm of technology-blind patentability jurisprudence can be complicating, rather than clarifying. The industries that are reliant upon the patent grant are tremendously diverse, and the courts should consider evaluating industry differences in future jurisprudential adjustments.