Is Intellectual Property Management a Missing Piece of the FDA’s Regulatory Puzzle?

Armand Rossetti

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Should the FDA establish an Intellectual Property Committee (IPC) to oversee licensing and distribution of pharmaceutical and medical device intellectual property?

The following discussion outlines some reasons why the FDA should step in and require intellectual property pooling as a requirement for those manufacturers that are seeking FDA approval for commercial distribution of pharmaceuticals and medical devices, and how the FDA might go about managing intellectual property pooling.

It is obvious that US manufacturers operate within the umbrella of a free enterprise system. While free enterprise in a health care setting might produce patient safety concerns from time to time, it would not be wise to stifle innovation by prohibiting manufacturers from operating under the free enterprise system. However, it might be beneficial to change free enterprise operating policies to enhance patient safety. The FDA might accomplish this by imbedding intellectual property management within the FDA’s regulatory scheme.

Under the current patent system, manufacturers conduct research and invent new pharmaceutical substances and medical devices. Thereafter, those manufacturers usually seek utility patents on those products that provide product manufacturing and distribution exclusivity for up to 21 years.

Manufacturers holding patents can prevent other manufacturers or entities from making, using or selling a same or substantially similar product. The limited patent “monopoly” provides a manufacturer with a means to accumulate wealth for the corporation and to fund future research and development. This is and has always been highly beneficial to the public.

However, when other manufacturers interested in developing alternatives to a blockbuster drug or medical device find themselves with their backs up against the technological wall, attempting at all costs to reverse engineer a same or similar drug or device, frustration could spell and sometimes has spelled trouble for patient safety. Here is an example.

By now, we are all aware of problems that plagued the contact lens solution industry. During the past decade, contact lens solution manufacturers, such as Alcon, Bausch & Lomb (B&L) and Advanced Medical Optics (AMO) were in stiff competition with each other to remain on the cutting edge of contact lens care solution technology. The first to develop the right contact lens solution active ingredients would win, and the others would either reverse engineer that effort or lose.

During its contact lens solution research and development phase, Alcon discovered an active called polyquaternium-1 (PQ-1), a polymer that provided a unique combination of lubrication and disinfection capabilities in a single ingredient, and a unique polymer that was relatively cornea friendly. Although Alcon did not hold a patent for this substance, the company quickly realized the uniqueness of PQ-1 and it negotiated with PQ-1's manufacturer and patent holder to enter an exclusive contract. These types of contracts are not uncommon. An exclusive contract acts like a patent because no other entity can obtain the particular ingredient from the supplier or manufacturer. Thereafter, Alcon successfully incorporated PQ-1 into its Opti-Free line of multipurpose disinfecting solutions, and produced a line that was unparalleled in safety and effectiveness. What were the competitors to do?

With the advent of PQ-1 and Alcon's exclusive contract, B&L was faced with a dilemma. B&L was faced with reverse engineering a similar active or losing its competitive edge. For the next three years, B&L searched its R&D files in an attempt to arrive at a solution. In addition, B&L looked at Alcon’s PQ-1, and at the family of PQ chemicals to try to come up with an alternative active with the same beneficial properties.

Needless to say, the task was not that easy, because all of the other PQ substances were either too harsh, did not disinfect effectively, or presented other problems that disqualified them as possibilities.

After a comprehensive review, B&L’s investigators felt that PQ-10 came closest to Alcon’s PQ-1. However, PQ-10 had little or no disinfecting capability. As a result, B&L had to find a complimentary active ingredient to provide adequate disinfection. The first choice for added disinfection was PHMB (which B&L was already using as an ingredient in its MultiPlus multipurpose disinfecting solution).

Nevertheless, B&L’s first choice proved not to be ideal because it was unstable in combination with PQ-10 and certain buffers. As a result, B&L reached into its file cabinet of experimental disinfecting actives and came up with another substance that was closely related to PHMB, Alexidine. That ingredient had a lower molecular weight, it was from the same family and Alexidine was quite effective as a disinfectant. The only problem was that B&L had tried to use Alexidine in the 1990’s without success, because it was harsh. Yes, Alexidine was more stable in combination with PQ-10, but it was hard on corneas.

What could B&L do to alleviate this problem? The answer was to develop combinations of actives and buffers in solution to dampen Alexidine’s harshness, and that was not an easy task. In fact, B&L attempted to do just that for three years, with limited success.

B&L used every combination of substances it could muster to alleviate the Alexidine problem, and it was almost impossible to arrive at a "tame" solution. Then the deadline fell upon B&L to produce a solution or lose market, and B&L decided to chose the best of the worst, then to seek FDA approval, and proceed to market ASAP.

We all know what resulted.

The question remains: How might the FDA have preserved Alcon’s right to enter an exclusive contract with the sole PQ-1 manufacturer and intellectual property rights holder, yet have promoted consumer safety?

There is no easy answer except to suggest the following as a starting point:

1. The FDA should establish an intellectual property committee (IPC);
2. The IPC should have authority to require manufacturers to attach to all PMAs and 510(k) submissions, copies of all patents, exclusive contracts, agreements and, if applicable, affidavits that one or more actives are a trade secret;
3. Subsequently, the IPC should review the intellectual property submissions and decide on a public safety basis, whether the applicant should be required to provide non-exclusive licenses, or the substance itself, to competitors for profit to allow them to use a particular unique active;
4. The FDA should suggest fair compensation for the manufacturer holding exclusive rights to the intellectual property under review, in the form of royalties, perhaps as a percentage of sales; and
5. If the manufacturer does not agree to license its competitors that FDA may refuse to grant approval to the manufacturer to market the drug or device.

Here is the reason why the FDA would not be overstepping its authority. Where pharmaceuticals and medical devices are concerned, ublic safety is imperative. While manufacturers have a right to prevent others from making using, selling, distributing or contracting with another to obtain certain useful substances or technology, intellectual property rights do not give manufacturers the right to produce, distribute or to sell a substance or a technology. Manufacturers are free to place that technology on the shelf. Likewise, the FDA is well within its granting rights to manage intellectual property in a quest for consumer safety.

As a result of establishing an IPC, the FDA would learn more about new and esoteric drugs and devices, and it would be able to use that information to promote public safety.

Let’s take a look at what might be looming in our future if the FDA does not become proactive in intellectual property management.

Global pharmaceutical and device enterprises are rapidly emerging. For example, global companies are partnering with corporations like Ranbaxy in India to provide affordable medicines, in some cases to acquire older products that are off patent. Although substances are off patent, nothing prevents a manufacturer from enhancing those substances and keeping the technology as a trade secret. Likewise, nothing prevents a global manufacturer from contracting exclusively with a primary producer of an active ingredient that has sole proprietary large scale production capabilities.

Given the profit involved, other players such as China will be in a quest to compete with India. For example, Chinese manufacturers are posing a serious threat to their Indian counterparts by reverse engineering similar drugs and manufacturing alternatives at prices that are cheaper than Indian drugs. With all of this in mind, India is beginning to realize that Intellectual property management might play a major role in encouraging R&D and proper regulation.

In conclusion, the FDA should consider becoming more involved in reviewing and managing the intellectual property behind pharmaceuticals and medical devices. There will be a day when a competitive global, technological tsunami occurs, and the time for the FDA to prepare for that eventual tsunami is the present.