Building a Better Innovation System: Combining Facially Neutral Patent Standards With Regulation of End Product Therapeutics

Arti K. Rai

8/13/2008
(Original Publish Date: 7/15/2008)

The current logjam over legislative reform might lead to the pessimistic conclusion that patent reform efforts are likely to be either: 1) ineffectual (the current situation); 2) zero sum (one set of industry interests is able to garner more votes than its opponent and override the legitimate interests of the other); or 3) founded in disparate treatment of different industries (a departure from the much-heralded "unitary" nature of the patent system). This Essay argues that such a conclusion would be premature. One important counter to the pessimistic view is the example of the Supreme Court's recent judicial reform. Although the biopharmaceutical industry has been quite opposed to this judicial reform, the available evidence thus far suggests that the Court's decisions will have only a limited impact on the legitimate interests of the industry. Specifically, although the Court's decisions adopt a facially neutral approach, this approach is likely to have a disparate impact that leaves relatively untouched the patent law that surrounds end product therapeutics. Two other counters to the pessimistic view bear emphasis. First, to the extent that the outlier set of inventions appears to be biopharmaceutical end products, these end products are embedded in a web of non-patent-based regulatory and market structures that do much of the heavy lifting in terms of setting up barriers to entry and influencing price. These non-patent structures are narrowly tailored to the peculiar economic questions raised by end product therapeutics. Second, in those situations where neither existing patent law standards nor existing regulation specific to end product therapeutics is sufficiently sensitive to relevant considerations of economic policy, additional facially neutral standards (and tweaks to FDA and health insurance regulation) could be implemented.