FDA Exclusivity-An Incentive for Drug Research?


There are many known substances that are believed to have beneficial health effects.   These beneficial health effects can include treatment of disease or medical maladies.  However there is a paucity of medical/scientific research that supports these beliefs.  A current hot topic is the use of ivermectin for the treatment of Covid-19.

Drug companies fund a very significant amount of medical research.  They understandably focus their funding on new compounds and chemical compositions that may achieve patent status, as well as FDA approval for beneficial human treatment.  The limited 20 year exclusivity granted by a patent provides a real economic incentive to encourage this drug research and development.  But what of known substances that are believed to have beneficial properties?  If known, and perhaps used by some for treatment, the known substances are unlikely to be eligible for patenting.  Therefore there is no economic incentive to validate the treatment benefits of these known substances.  There is no economic justification for spending the very considerable research dollars for research and development nor for the proceeding through the stringent FDA regulatory approval to market the substance as a drug for treatment.


There has been a recent publication of an article by Robert C. Feldman et al, in Nature Biotechnology (August 10, 2021) entitled “Negative Innovation: When Patents are Bad for Patients”.  The publication focuses upon the development and marketing of the small molecule drug ibrutinib.  The drug has been proven useful for treatment of chronic lymphocytic leukemia.  However it can be toxic at high doses.  Unfortunately, the researchers disclosed the benefits of low dose usage more than a year before a patent application was filed, thereby destroying novelty and causing low dose treatment to be unpatentable.  The only area for patent protection was in higher dosage amounts.  Again such high dosage amounts could possibly be toxic to some patients.  But the high dosage drug was the only version marketed.

The article discloses that, in addition to the 20 year limited exclusivity available via the patents allowed by the USPTO, the FDA regulatory scheme can provide limited market exclusivity in limited circumstances.  For example, there is 7 year market exclusivity for orphan drugs.  Orphan drugs are a defined category of drugs designed to treat relatively rare diseases or maladies where the size of the market, i.e., a disease or medical condition affecting less than 200,000 persons in the US, may not otherwise economically justify the expense of significant research and development and expense of obtaining regulatory approval.

Under the 1983 Orphan Drug Act, enacted by Congress, the orphan drug sponsors qualify for seven-year FDA-administered market Orphan Drug Exclusivity (ODE).  During this exclusivity period, no other drug company can obtain FDA approval for the drug.  The Orphan Drug Act may also provide tax credits of up to 50% of research and development costs, grants, waived FDA fees, protocol assistance and may get clinical trial tax incentives.

The point I am trying to make is that such limited market exclusivity may be a sufficient incentive for drug manufacturers or researcher to study and develop useful and verified beneficial drugs from commonly known substances.  Examples could include ivermectin or hydroxychloroquine as treatments for Covid-19.  These drugs, believed by many to be effective treatments, could be studied and tested as any other proposed treatment with the economic incentive of limited market exclusivity, understood that these known drugs may not be eligible for patent protection even if shown to be effective.  The goal is to but ivermectin to the test, just as other drugs are tested in order to obtain FDA approval.  Either it works or it doesn’t.  Let the drug companies, motivated as always by profit, fund the necessary studies and trials.  If successful, the drug companies will enjoy a 7 year exclusive market for the exact formulation proven to be beneficial.  No more guess work or trial and error from supplies purchased off shore or via a veterinary supply store.

It will be appreciated that a known compound is not novel.  Thus there are serious problems of patentability under Section 102.  Also the fact that the compound is being currently used by some for the treatment of a disease or malady would make it an obvious choice for use, thereby creating very serious problems of obviousness and Section 103 patent ineligibility.

As a patent practitioner, the idea of expanded exclusivity via FDA regulation has appeal since it would create an exclusivity similar to that allowed by the grant of patent protection, but does not requiring opening the pandoras box of amending US patent law, e.g., Sections 102 or 103.


There are many drug treatments believed to have health benefits.  However the benefits remain unproven.  This is due, at least in part, because there is no existing economic incentive for anyone to expend the very considerable expense of necessary medical trials, combined with the very real expense of obtaining regulatory approval.  Therefore these treatments sit on the shelf as unregulated “health supplements”.

The market incentive provided by patent law is proven.  Yet expansion of this incentive to known compounds “rumored” for years to be effective is very problematic under the principles of patent law.

Providing limited regulatory exclusivity via a program akin to the Orphan Drug Act may provide a solution.  Please note that the Orphan Drug Act has been classified as a success, achieving more than 1,850 orphan drug designations, of which over 300 have received full FDA marketing approval.



© David McEwing, 2021