Legal landscape of biomedical innovation in the US
The legal system governing access to biomedical innovation in the US comprises multiple interacting parts, including multiple intellectual property laws, regulations governing federally funded research, FDA regulation, and public and private insurance regulation. While some interactions make policy sense, such as costly FDA vetting by means of clinical trials for therapeutics, other parts are mismatched, hindering access to clinically valuable innovation.
Biologics and IP protection
Biologics, which represent over 40% of total US biopharmaceutical spending but are used by only 2% of the population, benefit from multiple layers of IP protection, including a 12-year period of FDA-administered exclusivity over clinical trial data on brand-name agents, hindering biosimilar entry. The relatively clumsy process for biosimilar entry set up by the Biologics Price Competition and Innovation Act (BPCIA) of 2009 does not require that patents covering the brand-name therapeutic be listed publicly, leading to litigation risks for biosimilar firms.
Access and value-based payments
Payers could demand alignment of cost with clinical value, but in practice, such value-based payments do not appear to have achieved substantial traction, partly due to the lack of financial incentives or information for PBMs, physicians, and patients who make purchasing decisions. Medicare poses particularly interesting legal issues for value-based pricing, with Congress passing the Inflation Reduction Act in August 2022 to trim Medicare's impact on the federal budget.
Future outlook
While the legal system governing access to biomedical innovation needs improvement, both Congress and the executive branch have begun to take action, and collaboration between the USPTO and the FDA could limit the accumulation of future patents and increase competitors' ability to invalidate dubious patents. As long as this action is not itself gamed, and the Supreme Court forbears further activity, progress is possible.