Examining the “Drug Innovation Paradox”: Should the Length of Exclusivity Reflect the Time it Takes to Develop a Drug?

May 10, 2017By Kurt R. Karst

In a new paper, titled “The Drug Innovation Paradox,” Professor Erika Lietzan of the University of Missouri School of Law (and a friend and fellow Hatch-Waxman addict) examines the relationship between the incentives offered under the law to develop drug products and the research and innovation behavior those incentives are intended to encourage.  According to Professor Lietzan’s research, there’s a paradox in this scheme: the period of exclusive marketing of a drug does not adequately reward challenging research and development programs.  Said another way, the post-market reward to the sponsor of a drug is flat (or even decreases) if the company spends a greater amount of time in pre-market research and development.  This means that whole areas of medicine could remain underdeveloped.  Here’s how Professor Lietzan summarizes the issue:

In medicine today, we face an innovation paradox. The companies that develop new medicines are highly dependent on a period of exclusive marketing after approval, to fund their research and development programs.  But longer research and development programs are not associated with longer periods of exclusive marketing. Instead the period of exclusive marketing may be shorter. Exclusivity that dwindles with each additional month of pre-commercialization research would ordinarily lead innovators to be more efficient, but the added factor of the drug regulatory system leads to a different result.  In this system, the length of any particular premarket program turns largely on considerations not within the firm’s control.

The design and length of the program is a function of variables that include the molecule and its chemical class, its mechanism of action, the disease and disease stage targeted, the outcomes that can be formally tested, the nature of other treatments on the market, and scientific obstacles and opportunities at the time.  Moreover, certain types of medicine — for example, drugs for long term use and prevention of disease, drugs to stop progressive or degenerative diseases, and drugs for early stage cancer — are consistently more likely to require longer research and development programs.  These findings have significant implications for innovation policy.

The paradox in drug innovation is that we have chosen to incentivize research and development with a post-market award, but as the research and development timeline increases, the post-market reward for the innovation remains the same or decreases.  If the length of the premarket process correlates with particular drug types, disease targets, or studied outcomes, we may be offering an inadequate incentive in entire areas of medicine where we have a critical need for new treatments.

Professor Lietzan’s research, which will be published in the Missouri Law Review, is based on a dataset of 570 regulatory review periods culled from patent term extension applications received by the Patent and Trademark Office from September 28, 1984 and September 30, 2016. In scouring and examining these records and data points, Professor Lietzan is able to draw some interesting conclusions:

  1. the preclinical research period has been getting shorter;
  2. the clinical period has increased in length, at least for some types of product;
  3. there is variability in the length of the clinical testing period by therapeutic category and perhaps also within therapeutic categories;
  4. surrogate endpoints can shorten the clinical testing period; and
  5. certain types of product will generally require a longer research and development period.

Professor Lietzan’s research is illustrated in various tables and figures included throughout her paper. One figure we found particularly interesting shows the average length of the clinical testing period for some therapeutic categories.  The average length ranges from about 3 years for antimigraine agents, to more than 9 years for central nervous system products:

We don’t have the time now to cover all of the topics and research discussed in Professor Lietzan’s paper, but we encourage our readers to take a closer look at the paper. Perhaps some nice weekend reading?