Innovation Incentives and Competition

PORTAL researchers study how incentives in drug and medical device markets can be better aligned to promote meaningful innovation and ensure timely competition.

Innovation Incentives & Competition

Differential Legal Protections for Biologics vs Small-Molecule Drugs in the US

Wouters OJ, Vogel M, Feldman WB, Beall RF, Kesselheim AS, Tu SS | JAMA (2024)

The authors explore the validity of various justifications for the greater legal protections given to biologics over small-molecule drugs in the US. Across development times, clinical trial success rates, research and development costs, patent protection, market exclusivity periods, revenues, and treatment costs, the study found no evidence supporting differential treatment. The authors conclude that US law overly rewards the development of biologics relative to small-molecule drugs.

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Recent Work in Innovation Incentives & Competition

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Orphan Designation for Drugs Approved in the United States and European Union: A Comparative Analysis

Costa E, Ross JS, Kesselheim AS - Clinical Pharmacology & Therapeutics

  • Innovation Incentives and Competition
  • Regulation and Clinical Evidence
The US Orphan Drug Act and EU Orphan Regulation both offer incentives to develop rare disease treatments, but of 344 rare disease drug indications approved from 2011 to 2020, 97.7% received FDA Orphan Drug designation versus only 40.4% from the EMA, with the agencies aligning most on advanced therapies and genetic diseases but diverging on cancer subsets and pediatric indications of common diseases like HIV. These differences reflect the broader US indication-based framework versus the EU’s narrower focus on distinct conditions, suggesting policymakers should target incentives toward truly rare diseases rather than subsets of common conditions like cancer.
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Policy Brief: Eliminating Thickets to Increase Competition (ETHIC) Act

Martin MJ, Tu SS, Kesselheim AS - 119th Congress

  • Innovation Incentives and Competition
Brand-name drug manufacturers accumulate thickets of patents on their drugs that they then use to delay generic and biosimilar competition. Studies show many of these patents are obvious variations of earlier patents, granted only after applicants file “terminal disclaimers.” The ETHIC Act allows one patent per group of obvious variation patents to be asserted against generic or biosimilar competitors in litigation, while maintaining brand-name manufacturers’ ability to enforce any patents that fall outside these patent groups. The ETHIC Act substantially reduces the number of patents that could be enforced against generic or biosimilar competitors in litigation, making market entry of generics and biosimilars faster and more efficient, leading to greater health care savings and broader patient access.
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Delisting of Pharmaceutical Patents Challenged by the Federal Trade Commission

Leon J, Tu SS, Kesselheim AS, Feldman WB - JAMA Internal Medicine

  • Innovation Incentives and Competition
Beginning in 2023, the FTC challenged device-only patents on several drug-device combinations, including inhalers, epinephrine, and GLP-1 products, as being improperly listed in the FDA’s Orange Book. Across the 34 targeted products, companies complied with 90% of delisting requests, shrinking the total listed patents by 80% (from 361 to 72) and reducing the median duration of patent protection from 22.3 to 17.0 years for affected products. By lowering the number of patents generic firms must challenge before approval, these delistings could ease generic entry and improve affordability for several high-cost therapies.
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