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Patent challenges reduce pharmaceutical innovation and productivity, researchers suggest
Date:10/15/2009

The development of new and innovative pharmaceuticals is being stifled by a U.S. law and successful patent challenges that embolden generic competition, according to an article published in this week's issue of the journal Science.

Matthew Higgins and Stuart Graham, assistant professors in the College of Management at the Georgia Institute of Technology, argue in their article that the recent surge in Paragraph IV patent challenges -- a provision of the Hatch-Waxman Act of 1984 -- is decreasing the incentives for pharmaceutical innovation and contributing to productivity and revenue declines in the pharmaceutical industry.

"With the current healthcare debate, consumers and policy-makers need to understand that while we are getting cheap drugs now, it may be at the cost of novel future innovations and long-term access to new treatments because in our current system, industry revenues support continued research and development, and patents support revenues," explained Higgins, the Imlay assistant professor of strategic management at Georgia Tech.

While Congress passed the Hatch-Waxman Act to ensure timely, affordable access to innovative drugs, 25 years later its balance between pharmaceutical innovation and access is tipping away from the incentives needed to support innovation, the researchers said.

A contributor to this shift is the recent surge in Paragraph IV challenges, which allow manufacturers of generic drugs to challenge a brand company's patents by claiming that either the patent is invalid or the generic drug does not infringe the patent. If the generic company wins the challenge, the brand company loses its remaining market exclusivity for that product.

Federal Trade Commission statistics show that generic firms won 42 percent of the Paragraph IV challenges filed from 1992 to 2000. Since 2001, pharmaceutical companies have filed 749 lawsuits responding to Paragraph IV challenges on 243 unique
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Contact: Abby Vogel
avogel@gatech.edu
404-385-3364
Georgia Institute of Technology Research News
Source:Eurekalert  

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Patent challenges reduce pharmaceutical innovation and productivity, researchers suggest
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