The generic drug industry, which is estimated to save American consumers $10 billion a year, owes much of its current market success to Congress’s enactment of the Hatch-Waxman Act in 1984. The Hatch-Waxman Act sought to achieve a delicate balance, one where Americans could obtain unprecedented access to low-cost prescription medicine without somehow undermining the incentive of brand name drug manufacturers to invest large sums of money toward developing new and better drugs. To achieve this balance, the Act allows regulatory approval for generic drugs without costly clinical trials, and enhances patent protections for brand name drug companies by prohibiting generic competition for five years after newly developed drugs are approved.
A recent United States Supreme Court decision could upset this delicate balance. In KSR International Co. v. Teleflex Inc., the Supreme Court criticized the Federal Circuit’s use of “rigid and mandatory formulas” in determining the obviousness of a patent. The Supreme Court mandated, instead, an “expansive and flexible approach.” Commentators have had different views on KSR’s impact on the pharmaceutical industry. Some have concluded that KSR makes it easier to establish a prima facie case of obviousness for pharmaceutical patents and that the effect is substantial. Others think that KSR affects only a limited category of pharmaceutical patents and that innovator companies can adopt various tactics to minimize KSR’s impact. Many nevertheless agree, though, that the KSR decision may have shifted the balance between innovator and generic drug companies by (1) reducing the patentability of certain discoveries made during the late-stage development of a drug and thereby (2) removing some patent protection barriers that generics must overcome before entering the market.
This Comment discusses KSR’s impact on a particular type of pharmaceutical patent—formulation patents—and proposes a new formula to qualitatively determine formulation-patent obviousness. Part II.A of this Comment describes the pharmaceutical industry’s reliance on the patent system. Part II.B briefly introduces the history of patent-obviousness analysis and the KSR case. Part II.C discusses several post-KSR cases involving formulation-patent obviousness. In these cases, generic drug companies challenged the formulation patents of brand name drugs as obvious. Based on the KSR principles, Part III.A identifies three factors that should be considered for the obviousness analysis of a combination patent. Part III.B briefly addresses the current inadequacies of lower courts’ obviousness analyses of formulation patents. Part III.C then proposes a new formula for determining the obviousness of formulation patents, applies the new formula to the post-KSR cases, and discusses the benefits that the proposed formula would provide.