New Paper Looks at “Ill-Advised Legislative Proposals” to Address Pharmaceutical “Evergreening”

The following post comes from Yumi Oda, an LLM Candidate at Scalia Law and a Research Assistant at CPIP.

By Yumi Oda

Many believe that drug prices in the U.S. are unnecessarily high because the pharmaceutical industry is exploiting legal loopholes and acquiring dubious patents to extend protection and delay generics from entering the market (so-called “evergreening” behavior by drug innovators). However, CPIP Senior Scholar Chris Holman of the University of Missouri-Kansas City School of Law has published a new paper arguing that these recent concerns regarding patents and drug prices are unfounded. The paper, entitled Congress Should Decline Ill-Advised Legislative Proposals Aimed at Evergreening of Pharmaceutical Patent Protection and published in the University of the Pacific Law Review, further challenges recent legislative proposals aimed at pharmaceutical evergreening, finding that they “are largely misguided, and, if enacted, would be likely to cause more harm than good by discouraging innovation in pharmaceuticals without effectively addressing the core concern.”

Concepts and Doctrines in the Evergreening Debate

Prof. Holman starts by reviewing the academic literature and other commentaries relevant to the current evergreening debate. He divides his discussion into five concepts and doctrines that have come under scrutiny as purportedly facilitating evergreening: product hopping, product thicketing, secondary patents (or follow-on patents), double patenting, and continuation practice.

1. Product Hopping. Prof. Holman explains that the pejorative term “product hopping” is aimed at “pharmaceutical companies’ efforts to develop follow-on products and to switch patients to these products from an earlier version of the drug.” Critics, who now acknowledge “the fact that literal evergreening generally does not occur,” have shifted the argument to blame product hopping for forcing a market shift by making only a small change to an existing patented drug, such as with a new form, formulation, or dosage, and convincing doctors to prescribe it. Of course, while no patent directed to an earlier composition or biologic is permissible, a new patent on a new formulation, manufacturing process, or use of a previous drug is allowed in our patent system. While some may attack these new patents as a type of evergreening, Prof. Holman points out that these are the very types of innovations the patent system is meant to encourage.

2. Patent Thicketing. Prof. Holman describes another pejorative term, “patent thickets,” which refers to pharmaceutical “companies obtaining multiple patents covering a single pharmaceutical product.” Popularized in the early 2000s and dating back to the term “patent anticommons” that was coined in the late 1990s, patent thickets originally raised concerns that when “too many patents” around the same product are held by different owners, transactional licensing costs could increase substantially. Prof. Holman points to a recent review of patent thicket literature demonstrating that the term is not used coherently. In fact, patent thickets today are sometimes claimed to exist even when the patents are held by the same owner, where potential transaction cost issues would not apply.

3. Secondary or Follow-On Patents. So-called “secondary patents” are those that claim something other than the active ingredients in drugs, such as new formulations or dosages. Prof. Holman dislikes the term “secondary patents” since it suggests they are somehow less meritorious and less worthy of patent protection, and he instead chooses to call them “follow-on patents” since they generally follow the invention of the active ingredient. Critics often target follow-on patents based on the belief that “a drug is a single product and thus should only be subject to the protection of a single patent.” However, Prof. Holman explains that this view oversimplifies how pharmaceutical inventions come about and underappreciates their true value for patients. For example, his earlier article illustrates how Burroughs-Wellcome obtained a follow-on patent for AZT, a failed cancer drug that was ultimately used to treat AIDS.

4. Double Patenting. Some critics complain that pharmaceutical companies are engaged in “double patenting,” where they obtain multiple patents on the same invention or obvious variations of a patented invention. Prof. Holman explains that double patenting rejections—especially nonstatutory, “obviousness-type” rejections—prevent a patent applicant from extending the patent term by filing a second patent “on a non-identical but still merely obvious variant of a patented invention.” Nevertheless, some critics argue that companies are avoiding such rejections by “dressing up part” of their original invention “as a new one,” and they claim that prohibitions on double patenting should be strengthened. Prof. Holman notes that these arguments typically focus particularly on pharmaceutical products, and they fail to consider the effect such changes would have on inventions more generally.

5. Continuation Practice. Prof. Holman explains that some commentators argue that pharmaceutical companies are using continuation practice to engage in evergreening. Continuations entitle patent applications to benefit from the filing date of an earlier-filed patent application, and the patent applicant can amend claims or even add new ones so long as they are supported by the parent application. Some critics claim that this practice allows pharmaceutical companies to “obtain multiple patents covering obvious variants of the same drug” and to extend effective patent terms. However, Prof. Holman notes that these concerns have already been successfully addressed by Congress in statutory amendments.

Proposed Legislation Aimed at the Pharmaceutical Industry

Having identified and summarized the concepts and doctrines that arise in the evergreening debate, Prof. Holman then analyzes three proposed bills from 2019 that are specifically designed to rein in evergreening in the pharmaceutical industry: the Affordable Prescriptions for Patients Act of 2019, the No Combination Drug Patents Act, and the Terminating the Extension of Rights Misappropriated Act of 2019.

1. Affordable Prescriptions for Patients Act of 2019. The Affordable Prescriptions for Patients Act of 2019 attempts to tackle product hopping and patent thicketing. To combat product hopping, the bill would make it a prima facie antitrust violation for a drug manufacturer to (1) discontinue or withdraw the “reference drug’s” application (or announce discontinuance of or withdrawal of the application) once it receives notice of an application to market a generic version or (2) market or sell a follow-on product during a period of time referred to as the “competition window.” A drug manufacturer can rebut the presumption by showing that the drug was discontinued or withdrawn from the market for “significant and documented safety reasons.”

The bill would also make pharmaceutical patent thicketing a prima facie antitrust violation. The bill broadly defines “patent thicketing” as covering any action by a patentee to limit competition for an approved drug when certain conditions are met. A drug manufacturer can rebut the presumption by establishing that the pro-competitive effects of the action are not outweighed by its anti-competitive effects, which in turn can be rebutted by the FTC demonstrating that the harm to consumers outweighs the benefit from the action.

Prof. Holman warns that the effect of this bill “would be to discourage pharmaceutical innovators from improving existing products,” instead of encouraging further innovation and research to improve the first version of a drug. Prof. Holman cites testimony by Prof. David Olson before the Senate Judiciary Committee stating that, despite the common misconception that a large number of patents delays innovation, “there is no conclusive evidence that smartphone or other high-tech innovation is being retarded by the large numbers of patents that may cover these devices.” Prof. Olson explains that this is also true for pharmaceutical patents, where the number of patents covering one specific drug is relatively low—not enough “to constitute a substantial thicket that will deter innovation.”

2. No Combination Drug Patents Act. The No Combination Drug Patents Act would change the nonobviousness standard under Section 103 for follow-on pharmaceutical innovations. If enacted, it would create a presumption that any “covered claimed invention” is obvious if it “contains or uses a drug or biological product that is prior art” and differs from the prior art under one or more of four enumerated criteria. An applicant may rebut this presumption by showing that the invention is either a new treatment for a new indication or that it leads to a statistically significant increase in the drug’s efficacy.

Prof. Holman points out that the proposed “rule of construction” exempting certain claimed inventions “could largely eviscerate the bill’s effect,” depending on how it is interpreted. He presents three possible interpretations, two of which could be easily overcome by filing a divisional application. Under the third possible interpretation, which seems like the one the bill’s drafters intended, Prof. Holman predicts that pharmaceutical companies would be forced to significantly change their current patent filing strategy, which affords some time to figure out and secure claims directed to inventions that were unknown when the parent application was filed, by starting to file many patent applications at the outset.

Stepping back for a moment, Prof. Holman explains that the proposal to raise the nonobviousness bar especially for follow-on pharmaceutical patents is not new. However, he questions such a proposition because the “assumption that many types of pharmaceutical inventions are inherently obvious and undeserving of patent protection” does not withstand scrutiny. Prof. Holman notes that numerous follow-on inventions have been upheld by the courts and recognized for the positive impact they have on people’s lives. (For a CPIP policy brief by Prof. Holman responding to such a proposal by the United Nations, please see here.)

3. Terminating the Extension of Rights Misappropriated Act of 2019. Finally, Prof. Holman discusses the Terminating the Extension of Rights Misappropriated Act of 2019, which is designed to prevent double patenting in drug patents by presuming that the patentee has “disclaimed the patent term for each of the listed patents after the date on which the term the first patent expires.” Prof. Holman explains that the bill neither alters the standard for determining obviousness-type double patenting, nor the remedy, but it does shift the burden of proof from the PTO to the patent applicant to prove that the listed patents are patently distinct from one another. The bill would also require the PTO to conduct a comprehensive review of its examination procedures.


Prof. Holman echoes Senator Thom Tillis’ concern that “by just focusing on patent protections, and the number of patent protections available to a single product, [Congress] may be doing more harm than good to our nation’s innovation economy.” And he notes that it “is important to bear in mind that the reason there has been such an uproar over the price of drugs is that these drugs provide huge benefits for society, far exceeding most other patentable innovation.” Prof. Holman mentions that these drugs would probably not have been available in the first place without proper incentives, and he worries that the legislation aimed at preventing the perceived problems with evergreening “could discourage the investment necessary to bring the next generation of pharmaceutical innovation to patients.”

Further, Prof. Holman criticizes the current evergreening debate for failing to target the supposed misuse of patents by going after the patents and not that misuse. For example, if the claim of product hopping were true and patients were being prescribed much more expensive drugs with no additional benefit, that would be an issue with the market, not with the patent system. Similarly, if drug companies were using anti-competitive means in the same scenario, that would be an antitrust violation, not a patent issue. As such, instead of the current legislative proposals targeting the patents themselves, Prof. Holman concludes that any legislation should focus on the alleged bad actions of pharmaceutical companies, not on changing the patent incentives for pharmaceuticals inventions overall.