Law Commons^™

Cryptic Patent Reform Through The Inflation Reduction Act, Arti K. Rai, Rachel Sachs, Nicholson Price

Law & Economics Working Papers

If a statute substantially changes the way patents work in an industry where patents are central, but says almost nothing about patents, is it patent reform? We argue the answer is yes — and it’s not a hypothetical question. The Inflation Reduction Act (IRA) does not address patents, but its drug pricing provisions are likely to prompt major changes in how patents work in the pharmaceutical industry. For many years scholars have decried industry’s ever-evolving strategies that use combinations of patents to block competition for as long as possible, widely known as “evergreening,” but legislators have not been receptive to …

Congressional Myopia In Biomedical Innovation Policy, W. Nicholson Price Ii

Reviews

Innovation policy is hard. Getting it right requires balancing incentives for developers, consumer access, rewards for later innovators, safety concerns, and other factors. This balance is vitally important and wickedly difficult—even when it’s the focus of concerted, careful, informed effort. How well should we expect it to go when innovation policy is made by accident? Enter The Accidental Innovation Policymakers, an illuminating new project by Professor Rachel Sachs. Sachs persuasively shows how Congress has repeatedly made substantial changes to innovation policy, seemingly without talking about, seriously considering, or even recognizing that it is doing so. There’s an asymmetry to this …

Why Can't I Get Pliny The Elder? Beer Distribution Law In Michigan, Kincaid C. Brown

Law Librarian Scholarship

If you are a craft beer drinker, you have noticed that there are many beers brewed in the United States that you cannot buy in Michigan, like California-based Pliny the Elder. You will have also noticed that there are many craft beers brewed in Michigan that you cannot buy at your local grocery store or bottle shop. Why is that the case? The short answer is because Michigan law mandates that beer pass through what’s known as a three-tier distribution system. This article outlines what a three-tier distribution is, what it means for Michigan brewers and beer drinkers,

Medicare Coverage Of Aducanumab - Implications For State Budgets, Rachel E. Sachs, Nicholas Bagley

Articles

Aducanumab (Aduhelm), the controversial $56,000-per-year Alzheimer’s disease drug approved by the Food and Drug Administration (FDA) in June 2021, has the potential to cost the federal government many billions of dollars — more, by one estimate, than it spends on agencies such as the Environmental Protection Agency or the National Aeronautics and Space Administration. The drug’s extraordinary price tag helps explain why, soon after its approval, the Centers for Medicare and Medicaid Services (CMS) opened a national coverage determination to decide whether and under what circumstances Medicare would pay for it.1

Researching Marijuana Law, Seth Quidachay-Swan

Law Librarian Scholarship

This article provides a brief overview of the current legal framework governing the regulation of marijuana at the federal and state levels in the United States. It also provides an overview of the state of Michigan’s current regulatory framework and resources for attorneys interested in learning more about marijuana regulation.

Medical Marijuana, Taxation, And Internal Revenue Code Section 280e, Douglas A. Kahn, Howard J. Bromberg

Articles

Congress enacted § 280E of the Internal Revenue Code in 1982 to punish businesses engaged in illegal drug trafficking, including marijuana. Section 280E denies all credits and deductions, including ordinary business expenses, from gross income of businesses illegally trafficking in a Schedule I or II controlled substance. This provision violates the principle that the tax code should foster a consistent treatment of income, regardless of source; and that the income tax is ill-used for punitive measures. Now that marijuana has been legalized in some form in at least 46 states for therapeutic purposes, this federal tax penalty transgresses principles of …

Importing Prescription Drugs From Canada — Legal And Practical Problems With The Trump Administration's Proposal, Rachel E. Sachs, Nicholas Bagley

Articles

As Americans report ever-growing difficulty affording their prescription drugs, President Donald Trump has come under increasing pressure to act. To date, the Trump administration has attempted to advance a number of policy initiatives by means of executive action, but it has not yet adopted a program that would meaningfully assist patients. Most recently, the administration proposed a rule that, if finalized, would allow states to develop programs to import lower-priced prescription drugs from Canada, with the intent of reducing spending on drugs by U.S. patients and states and increasing access for patients.

The Cost Of Novelty, Will Nicholson Price Ii

Articles

Patent law tries to spur the development of new and better innova­tive technology. But it focuses much more on “new” than “better”—and it turns out that “new” carries real social costs. I argue that patent law promotes innovation that diverges from existing technology, either a little (what I call “differentiating innovation”) or a lot (“exploring innova­tion”), at the expense of innovation that tells us more about existing technology (“deepening innovation”). Patent law’s focus on newness is unsurprising, and fits within a well-told narrative of innovative diversity accompanied by market selection of the best technologies. Unfortunately, innovative diversity brings not only …

Response To 'Reverse Al Capone-Ism' And The Tax Treatment Of Marijuana Businesses, Douglas A. Kahn, Howard J. Bromberg

Other Publications

Mr. Silverberg’s comment stresses that the proponents of the legalization of marijuana have not been able to convince Congress to legalize it, and so it is appropriate for Congress to penalize trafficking in that drug. Apparently, he sees our contention that the penalty adopted in I.R.C. § 280E is irrational and contravenes established punitive jurisprudence as a backdoor attempt to accomplish indirectly, by weakening the penalties on the marijuana businesses, what has not been able to be accomplished by those seeking its federal legalization. That was not the motive for our proposal and is not a fair reading of our …

Response To Dude, Where's My Deduction?, Douglas A. Kahn, Howard J. Bromberg

Other Publications

Mr. Pullin’s thesis is that marijuana should be excluded from § 280E when it is operated legally under state law. However, his preferred solution is that the federal government remove marijuana from Schedules I and II of the Controlled Substances Act of 1970 (CSA), thereby legalizing it for federal law purposes. Either action would exclude the marijuana business from § 280E.

Opting Into Device Regulation In The Face Of Uncertain Patentability, Rebecca S. Eisenberg

Articles

This article examines the intersection of patent law, FDA regulation, and Medicare coverage in a particularly promising field of biomedical innovation: genetic diagnostic testing. First, I will discuss current clinical uses of genetic testing and directions for further research, with a focus on cancer, the field in which genetic testing has had the greatest impact to date. Second, I will turn to patent law and address two recent Supreme Court decisions that called into question the patentability of many of the most important advances in genetic testing. Third, I will step outside patent law to take a broader view of …

Hemp Fiber, Howard J. Bromberg, Ming Y. Zheng

Book Chapters

Hemp, Cannabis sativa, is indigenous to temperate regions in Asia. All major industrialized countries but the United States cultivate hemp for its fibers and oil-rich seeds. The former Soviet Union was the world's leading producer until the 1980s. As of 2018, China was the largest producer, with other significant industries in Ukraine, Russia, China, Canada, Austria, Australia, Great Britain, Hungary, Romania, Poland, France, Italy, and Spain.

Cannabis was initially spread around the world because of its fiber, not its intoxicant chemicals or its nutritious oil seeds. It is one of the oldest sources of textile fiber, whose use for cloth …

Cannabis For Medical Use: Fda And Dea Regulation In The Hall Of Mirrors, Rebecca S. Eisenberg, Deborah B. Leiderman

Articles

A majority of Americans now live in states that purport to authorize medical use of cannabis, although federal law continues to prohibit both recreational and medical use. The current legal regime for cannabis is unstable and may be more effective at deterring research than it is at deterring medical use. Lack of data on medical cannabis products poses public health risks as well as policy and legal challenges. Modified regulatory approaches for other kinds of products provide alternative models for encouraging safety and effectiveness research and providing better information about cannabis products already in clinical use.

The Orphan Drug Act At 35: Observations And An Outlook For The Twenty-First Century, Nicholas Bagley, Benjamin Berger, Amitabh Chandra, Craig Garthwaite

Articles

On the thirty-fifth anniversary of the adoption of the Orphan Drug Act (ODA), we describe the enormous changes in the markets for therapies for rare diseases that have emerged over recent decades. The most prominent example is the fact that the profit-maximizing price of new orphan drugs appears to be greater today than it was in 1983. All else equal, this should reduce the threshold for research and development (R&D) investment in an economically viable product. Further, the small size of patient populations for orphan drugs, together with the increasing prevalence of biologics among orphan drugs, have created a set …

Limiting State Flexibility In Drug Pricing, Nicholas Bagley, Rachel E. Sachs

Articles

Throughout the United States, escalating drug prices are putting immense pressure on state budgets. Several states are looking for ways to push back. Last year, Massachusetts asked the Trump administration for a waiver that would, among other things, allow its Medicaid program to decline to cover costly drugs for which there is limited or inadequate evidence of clinical efficacy. By credibly threatening to exclude such drugs from coverage, Massachusetts hoped to extract price concessions and constrain the fastest-growing part of its Medicaid budget.

Drug Approval In A Learning Health System, W. Nicholson Price

Articles

The current system of FDA approval seems to make few happy. Some argue FDA approves drugs too slowly; others too quickly. Many agree that FDA—and the health system generally—should gather information after drugs are approved to learn how well they work and how safe they are. This is hard to do. FDA has its own surveillance systems, but those systems face substantial limitations in practical use. Drug companies can also conduct their own studies, but have little incentive to do so, and often fail to fulfil study commitments made to FDA. Proposals to improve this dynamic often suggest gathering more …

Scientific Trials--In The Laboratories, Not The Courts, Nicholas Bagley, Aaron E. Carroll, Pieter A. Cohen

Articles

In 2015, one of us published a peer-reviewed study, together with colleagues at the University of California, San Francisco, replicating prior research from the US Food and Drug Administration (FDA) detecting a designer stimulant, β-methylphenylethylamine, in sports, weight loss, and “cognitive function” supplements sold in the United States. The confirmatory study prompted the FDA to take enforcement action against companies selling the stimulant as a dietary ingredient. One of the companies that received an FDA warning letter sued the study’s authors for $200 million in damages for libel, claiming, without supporting scientific evidence, that multiple statements in the article were …

Tax Treatment Of A Marijuana Business, Douglas A. Kahn, Howard Bromberg

Articles

Currently, twenty-eight states and the District of Columbia allow the use of marijuana for medical purposes and permit the conduct of a business marketing of marijuana for that purpose. Eight of those states and the District of Columbia permit the recreational use of marijuana. There is reason to believe that more states will decriminalize the marketing of marijuana. However, marijuana is listed in Schedule 1 of the federal Controlled Substances Act of 1970 (CSA) which makes it illegal under federal law to manufacture or distribute marijuana even when it is legal to do so under local state law. In a …

Promoting Healthcare Innovation On The Demand Side, Rebecca S. Eisenberg, W. Nicholson Price

Law & Economics Working Papers

Innovation policy often focuses on the incentives of firms that sell new products. But optimal use of healthcare products also requires good information about the likely effects of products in different patients, and it is hard to provide the right incentives for producers to develop and disclose information that could limit future sales. Regulation partially fills this gap by requiring sellers to conduct clinical trials and report adverse events. But it is inherently problematic to rely on producers to supply negative information about their own products. Healthcare payers, however, can profit from avoiding inappropriate use of costly technologies. Recent technological …

Manufacturing Barriers To Biologics Competition And Innovation, W. Nicholson Price Ii., Arti K. Rai

Articles

As finding breakthrough small-molecule drugs becomes more difficult, drug companies are increasingly turning to "large molecule" biologics. Although biologics represent many of the most promising new therapies for previously intractable diseases, they are extremely expensive. Moreover, the pathway for generic-type competition set up by Congress in 2010 is unlikely to yield significant cost savings. This Article provides a fresh diagnosis of and prescription for this major public policy problem. It argues that the key cause is pervasive trade secrecy in the complex area of biologics manufacturing. Under the current regime, this trade secrecy, combined with certain features of Food and …

A Liberal Dilemma: Respecting Autonomy While Also Protecting Inchoate Children From Prenatal Substance Abuse., Andrew J. Weisberg, Frank E. Vandervort

Articles

Substance abuse is a significant social problem in America. It is estimated that some eighteen million Americans have an alcohol abuse problem and that almost five million have a drug abuse problem. According to the National Institute on Drug Abuse, substance abuse costs some $700 billion per year Substance abuse is a major contributor to child maltreatment. It is estimated that between one- and two-thirds of cases in which children enter foster care are linked to parental substance abuse. Unfortunately, this may be an underestimate as recent research suggests that many cases, particularly cases in which children have been exposed …

Introducing Marijuana Law Into The Legal Writing Curriculum, Howard Bromberg, Mark K. Osbeck

Articles

Interest in marijuana law continues to grow, due in large part to the complicated and rapidly evolving landscape of marijuana laws in the United States. Nearly every day, newspapers report on new or proposed legislation and the legal controversies that have arisen with regard to this evolving landscape. There are now several marijuana-law blogs on the Internet, Congress is considering sweeping legislation that would essentially grant significant deference to the individual states, and public opinion continues to move in favor of increased legalization. For the last two years, Newsweek magazine has published special editions devoted exclusively to marijuana law and …

Michigan Craft Beer Legislation, Kincaid C. Brown

Law Librarian Scholarship

Michigan is currently in the midst of a craft beer boom. The Michigan Brewers Guild’s member list includes more than 150 breweries and brewpubs brewing craft beer. Michigan’s craft beer industry is boosting the state’s economy. According to an analysis by the Brewers Association customized by the Michigan Brewers Guild, the craft beer industry is directly responsible for more than 5,000 Michigan jobs and contributes more than $277 million to the state’s economy and more than $144 million in wages.

Food Deprivation: A Basis For Refugee Status?, James C. Hathaway

Articles

It is commonplace to speak of those in flight from famine, or otherwise migrating in search of food, as “refugees.” Over the past decade alone, millions of persons have abandoned their homes in countries such as North Korea, Sudan, Ethiopia, Congo, and Somalia, hoping that by moving they could find the nourishment needed to survive. In a colloquial sense, these people are refugees: they are on the move not by choice, but rather because their own desperation compels them to pursue a survival strategy away from the desperation confronting their home communities.

The question addressed here is whether persons in …

Actavis, The Reverse Payment Fallacy, And The Continuing Need For Regulatory Solutions, Daniel A. Crane

Articles

The Actavis decision punted more than it decided. Although narrowing the range of possible outcomes by rejecting the legal rules at the extremes and opting for a rule of reason middle ground, the opinion failed to grapple with the most challenging issues of regulatory policy raised by pharmaceutical patent settlements. In particular, it failed to clearly delineate the social costs of permitting and disallowing patent settlements, avoided grappling with the crucial issues of patent validity and infringement, and erroneously focused on “reverse payments” as a distinctive antitrust problem when equally or more anticompetitive settlements can be crafted without reverse payments. …

Taxing The Platypygous, James J. White

Articles

This Article maintains that obesity in the United States is an enormous public health issue that causes the health care costs of the obese Americans greatly to exceed those of citizens of normal weight. Recognizing that that much of that cost will be born by publicly financed programs and that the taxes supporting those programs will constitute an externality that the fat impose on the thin, the Article proposes a tax on high calorie food-but only when that food is purchased by the obese. The Article addresses many of the administrative, moral and other objections to a tax aimed at …

United States--Certain Measures Affecting Imports Of Poultry From China: The Fascinating Case That Wasn't, Donald H. Regan

Articles

US–Poultry (China) was the first Panel decision dealing with an origin-specific SPS measure, or with what the United States referred to as an ‘equivalence regime’. More specifically, it was the first instance in which the basis for the challenged measure was the claimed inability of the complainant country to enforce its own food-safety rules. Unfortunately, as the litigation developed, the very interesting novel issues raised by such a measure were not discussed. This essay discusses those novel issues – in particular, what sort of scientific justification or risk assessment should be required for a measure like this, and what SPS …

Provigil: A Commentary, Daniel A. Crane

Articles

Michael Carrier's case study on Provigil' offers new support for the view that Big Pharma is to blame for stymieing competition, retarding innovation, and inflating prices in the drug industry. Carrier argues that Cephalon was able to thwart generic entry by a combination of anticompetitive strategies. It entered into a reverse payment settlement agreement with generics seeking to enter the market. These settlements purported to allow generic entry before the expiration of the patent period, but, according to Carrier, the promise of early entry was negated by the second prong of Cephalon's anticompetitive strategy. During the time that it had …

"Per Se Illegality For Reverse Payment Settlements?" Review Of "Unsettling Drug Patent Settlements: A Framework For Presumptive Illegality, Daniel A. Crane

Reviews

Congratulations to Mike on a very fine book. I will confine my comments to Mike's chapter on patent settlements (Chapter 15), which I understand will also be coming out as an article in the Michigan Law Review. Patent settlements involving "reverse payments" are a huge topic on which I and many others have spilled much ink already. Representative Bobby Rush (President Obama's erstwhile nemesis from Chicago's South Side) has just introduced legislation that would ban reverse payments.' I will not regurgitate my entire spiel on patent settlements here, but instead just try to highlight my essential disagreement with Mike …

Two Masters, Carl E. Schneider

Articles

American government rests on the principle of distrust of government. Not only is power within the federal government checked and balanced. Power is divided between the federal government and the state governments. So what if a state law conflicts with a federal law? The Constitution says that the "Constitution, and the Laws of the United States ... shall be the supreme Law of the Land; ... any Thing in the ... Laws of any State to the Contrary notwithstanding." Sometimes the conflict between federal and state law is obvious and the Supremacy Clause is easily applied. But sometimes ...