According to one study<\/a>, the 10 best-selling drugs for 2021 \u2014 drugs for cancer, HIV, arthritis \u2014 were protected by a combined total of seven hundred and forty-two patents. With hundreds more \u201cpending.\u201d<\/p>\nWhen these add-on patents get challenged in court, they actually get tossed out more often than primary patents..<\/p>\n
But lawsuits cost money. A robust patent portfolio \u2014 a patent thicket \u2014 means generic companies would need to be ready to file a LOT of them.<\/p>\n
So, we wanted to know: How did all this happen? How did these games get started?<\/p>\n
It turns out, there is one guy who can tell you the story from the beginning, for better and for worse. Who helped shape it. Made millions of dollars from it. Saw its flaws. And has spent most of the last 30 years trying to fix them. Hie\u2019s a lawyer named Al Engelberg, and he\u2019s 86 years old.<\/p>\n
Alfred Engelberg:<\/strong>\u00a0I tell people all the time, I live in a world, a pharma world where half the people think I\u2019m dead and the other half wish I was.\u00a0\u00a0<\/strong><\/p>\nDan:<\/strong>\u00a0Al Engelberg\u2019s story is the story\u00a0 of generic drugs in America. And it\u2019s a wild ride.\u00a0<\/p>\nThis is An Arm and a Leg \u2014 a show about why health care costs so freaking much, and what we can maybe do about it. I\u2019m Dan Weissmann. I\u2019m a reporter, and I like a challenge. So the job we\u2019ve chosen here is to take one of the most enraging, terrifying, depressing parts of American life, and bring you something entertaining, empowering, and useful.<\/p>\n
?Al Engelberg\u2019s parents fled Nazi Germany in the late 1930s.<\/p>\n
He was born here, less than a year after they arrived. They had nothing.<\/p>\n
And\u00a0 here\u2019s where they made their new life.\u00a0<\/p>\n
Retro news reel:<\/strong>\u00a0We are flying over a well-known eastern city. That is remarkable because manufacturing is almost non-existent. A city whose principle business is the entertainment of millions. Atlantic city, often called the vacation capital of the nation<\/strong><\/p>\nDan:<\/strong>\u00a0Al likes to say he learned most of what he knows about practicing law on the Atlantic City boardwalk, by the time he was 16.\u00a0<\/p>\nAlfred Engelberg:<\/strong>\u00a0We grew up very, very fast there. I started working when I was about nine or 10 and, and there were lots of opportunities on the boardwalk.\u00a0<\/strong><\/p>\nDan:<\/strong>\u00a0His first \u201cjob\u201d was crawling around under the boardwalk, looking for loose change.<\/p>\nAlfred Engelberg:<\/strong>\u00a0But I went on to work at hotdog stands and at an illegal bingo game for the local mob.<\/strong><\/p>\nDan:<\/strong>\u00a0And in every job, Atlantic City drove home its major lesson: Cheating \u2014 hustling \u2014 is something you\u2019ve gotta expect.\u00a0<\/p>\nAt this illegal bingo parlor, Al\u2019s job was walking between tables, doling out bingo cards for a dime apiece. The bosses hired college kids to walk behind kids like Al, to keep him honest.<\/p>\n
Alfred Engelberg:<\/strong>\u00a0I mean, these guys are running an illegal game, but they still need to count, and they still inherently don\u2019t trust anybody.\u00a0<\/strong><\/p>\nDan:<\/strong>\u00a0Which was correct. Al says the college kids had their own hustle: They\u2019d have him set aside a dollar or two before turning in his dimes \u2014 split that dollar with him fifty-fifty \u2014 and tell the bosses Al\u2019s count was fine.<\/p>\nAlfred Engelberg:<\/strong>\u00a0And everybody knowing that the counts were wildly inaccurate anyway \u2018cause the little old ladies were, were stealing cards. Everybody in the room had their own thing going, you know, from the customers on.<\/strong><\/p>\nDan:<\/strong>\u00a0After Al made it out of Atlantic City, his unique on-the-job education continued. He studied chemical engineering at Drexel, then took a job as a patent examiner while going to law school at night.<\/p>\nAnd at that job, he learned: The patent system was ripe for hustling.<\/p>\n
Partly because most of his colleagues weren\u2019t necessarily giving the job their all.\u00a0<\/p>\n
Like him, most patent examiners were working their way through law school. And they were sneaking time to study on the job.<\/p>\n
Alfred Engelberg:<\/strong>\u00a0We used to be able to cut our notes down so they fit in these file drawers with the patents. And we would be reading your notes and if your boss came by, you would just drop a patent on top of the notes.<\/strong><\/p>\nDan:<\/strong>\u00a0You could say it was Atlantic City all over again. Everybody in the job is sneaking something for themselves \u2014 in this case, time.<\/p>\nAnd Al Engelberg could see that, even if his colleagues gave it their all, they were too green to do their job well.\u00a0<\/p>\n
A patent examiner\u2019s job \u2014 deciding whether a proposed invention deserves a monopoly (which at that time was 17 years) \u2014 means deciding whether the idea for that invention would be obvious to \u201ca person of ordinary skill in that field.\u201d<\/p>\n
Alfred Engelberg:<\/strong>\u00a0And most of the examiners had never worked in that field and had absolutely no idea. And this is the big leagues. You\u2019re granting somebody a monopoly for 17 years, and it seemed ridiculous on its face.<\/strong><\/p>\nDan:<\/strong>\u00a0Al cut his own path at the patent office. He\u2019d worked his way through engineering school, in manufacturing plants, he saw what people of ordinary skill in that field solve problems every day. So he specialized in examining patents he actually knew something about.<\/p>\nThat got him promoted, then it got him recruited by a corporate lawyer.. After the company paid his way through the rest of law school, he jumped to the Justice Department.\u00a0<\/p>\n
He was ambitious\u2013 he wanted experience junior lawyers don\u2019t usually get \u2014 like trying cases of his own.<\/p>\n
After a few years doing just that, he took a job with a small law firm in New York City in 1968.<\/p>\n
Alfred Engelberg:<\/strong>\u00a0I came to New York to private practice at the age of 30 and I was ready to go. I mean, I was ready to, to tear the world apart and I did.<\/strong><\/p>\nDan:<\/strong>\u00a0Patents were still a specialty. Then, in 1973, he gets a call that leads to his first generic drug case.<\/p>\nGeneric drugs were not a hot market at the time.<\/p>\n
Alfred Engelberg:<\/strong>\u00a0?The generic drug industry in 1970s was essentially, a half a dozen, privately owned family businesses, mostly in the metropolitan New York area. And most of the drugs that they were selling were drugs that were approved before 1962.\u00a0<\/strong><\/p>\nDan:<\/strong>\u00a0Yeah. 1962 is when the FDA made it harder to get a new drug approved \u2014 you had to go through long clinical trials to show that your drug was safe and effective.\u00a0<\/p>\nEven if your drug was a generic version of an existing drug. Those little companies didn\u2019t have the capital to run those trials, so they were stuck selling those old drugs.<\/p>\n
Not much of a business. Maybe 20 percent of prescriptions were for generic drugs.<\/p>\n
So when Al Engelberg got a call for his first generic drug case, that was the context. And the case itself did not sound promising. For one thing:<\/p>\n
Alfred Engelberg:<\/strong>\u00a0The call wasn\u2019t even from the client. It was from a bank. The client was bankrupt.\u00a0<\/strong><\/p>\nDan:<\/strong>\u00a0The client was bankrupt.\u00a0This bankrupt client, Premo Pharmaceuticals, was getting sued for patent infringement. The bank was willing to put up ten thousand dollars for a defense. Nowhere near enough to actually try a case. Oh, and\u2026<\/p>\nAlfred Engelberg:<\/strong>\u00a0From what they told me, the information they gave me, we didn\u2019t have a very good defense.<\/strong><\/p>\nDan:<\/strong>\u00a0But Al Engelberg saw an opening. He could see that his opponents have weaknesses too.<\/p>\nAlfred Engelberg:<\/strong>\u00a0The patent owners were in a very strange position. If they won, they got nothing because we were already bankrupt. Two, they were gonna have to spend the legal fees to win.<\/strong><\/p>\nDan:<\/strong>\u00a0Win against a young lawyer named Al Engelberg who already had a rep as a tough opponent. So they could lose.<\/p>\nAlfred Engelberg:<\/strong>\u00a0And if they lost, they would lose millions and millions of dollars in business because there wouldn\u2019t be a patent. And they\u2019d have competition from generic drugs.<\/strong><\/p>\nDan:<\/strong>\u00a0And meanwhile, Al Engelberg is also sizing up the judge.\u00a0He knows the guy doesn\u2019t love patents.<\/p>\nSo Al shows up to the first conference and he bluffs.\u00a0<\/p>\n
Alfred Engelberg:<\/strong>\u00a0I said to the judge, oh, your Honor, you know, it\u2019s another one of those patents. They\u2019re all invalid. And I said, we don\u2019t need very much discovery. We\u2019re, we\u2019ll be ready to go to trial in a few months. Just set a trial date.<\/strong><\/p>\nDan:<\/strong>\u00a0The other side walks out beside themselves.<\/p>\nAnd within a couple of weeks they call Al to say: Hey, how about this? You guys just acknowledge our patent is OK, and we\u2019ll give you the money we would\u2019ve spent litigating. Call it 400,000 bucks?<\/p>\n
Alfred Engelberg:<\/strong>\u00a0I called the client and said, how\u2019s $400,000? He said, are you kidding?<\/strong><\/p>\nDan:<\/strong>\u00a0They didn\u2019t just get out of trouble \u2014 they got out of bankruptcy, with $400,000 in their pockets. Because Al Engelberg knew how to size up a situation.\u00a0\u00a0\u00a0<\/p>\nAlfred Engelberg:<\/strong>\u00a0You don\u2019t learn that in law school.\u00a0<\/strong>That\u2019s not what they teach.<\/strong><\/p>\nDan:<\/strong>\u00a0Word gets\u00a0 around about that case, and pretty soon everybody in the generic drug world is calling him.<\/p>\nIt\u2019s a small world, but by the end of the 1970s, there may be room for it to start getting bigger.\u00a0<\/p>\n
People are starting to notice: Drugs are expensive. Maybe there should be more cheap generics.\u00a0<\/p>\n
Some generic drug companies form an association and start lobbying: Make it easier to get generic drugs to market without having to go through all those trials.<\/p>\n
The brand-name drugmakers push back: They say it takes so long to run the trials and get their drugs approved, they don\u2019t get enough time to make money before those patents expire.<\/p>\n
In 1983, Democratic Representative Henry Waxman steps in to broker a compromise, with Republican Senator Orrin Hatch.<\/p>\n
And Mr. Engelberg goes to Washington. To run strategy for the generic drugmakers.\u00a0<\/p>\n
Alfred Engelberg:<\/strong>\u00a0In a lot of ways , that\u2019s where my Atlantic City training really helped me at the end of the day<\/strong><\/p>\nDan:<\/strong>\u00a0There were a lot of people, with a lot of interests. A lot of angles. ?He starts commuting from New York to Washington DC a couple times a week \u2014 for months and months, more than a year.<\/p>\nAnd Al Engelberg says: This time, it wasn\u2019t just about winning a case.<\/p>\n
Alfred Engelberg:<\/strong>\u00a0I was in the back of a cab the way I remember, with the senior partner of the law firm.\u00a0<\/strong>And he says to me, why are you breaking your ass going to Washington two or three times? Why don\u2019t you send an associate? You know, it\u2019s just like, it\u2019s just another case. And I said. I said, are you kidding? I said, you know, how many lawyers ever get to do what I\u2019m doing right now?\u00a0<\/strong>To be at the table influencing what may be a major law that\u2019s gonna have major consequences is, is like something I never thought my whole life I\u2019d be doing.<\/strong><\/p>\nDan:<\/strong>\u00a0A kid from Atlantic City was exactly the right person to try to balance all the angles, negotiate a compromise. It took more than a year. It almost didn\u2019t happen. But then it did. Congress passed the bill, and President Ronald Reagan got in front of cameras to sign it.<\/p>\nRonald Reagan:<\/strong>\u00a0Let me turn my attention to the real reason we\u2019re here this afternoon, signing into law the Drug Price Competition and Patent Term Restoration Act of 1984.\u00a0<\/strong><\/p>\nDan:<\/strong>\u00a0better known as Hatch-Waxman.<\/p>\nHatch Waxman had three basic components:<\/p>\n
One: Brand drugmakers got a few extra years on their patents.<\/p>\n
Two: Generic drugmakers got a pathway to get FDA approval.<\/p>\n
And three \u2013The new law laid out rules for a generic drugmaker when they wanted to CHALLENGE an existing patent.\u00a0<\/p>\n
Negotiating that third part was the part where Al Engelberg\u2019s education on the Atlantic City boardwalk, and the U.S. patent office, and the generic drug industry came together: The result would make him millions and millions of dollars \u2014 and blow a giant hole into the grand bargain he had worked so hard to bring about.<\/p>\n
That\u2019s coming right up.<\/p>\n
This episode of An arm and a Leg is produced in partnership with KFF Health News. That\u2019s a nonprofit newsroom covering health issues in America. The folks at KFF Health News are amazing journalists \u2014 their work wins all kinds of awards, every year. We are honored to work with them.<\/p>\n
So. The brand-name drug makers and the generic drug makers struck a deal. That deal was good for them. Both sides got something big out of it. The public was supposed to get something out of it too.<\/p>\n
And, to be fair, we did: Remember, back then, maybe one out of five prescriptions was for a generic drug. Now it\u2019s nine out of ten.<\/p>\n
But we pay more than ever for drugs. Mostly for branded, patent-protected drugs. And the biggest, most-important, most profitable drugs get locked behind patent thickets.<\/p>\n
How did that happen?\u00a0<\/p>\n
Well, to understand that, it helps to know what Al Engelberg got out of the whole bargain.<\/p>\n
Al had been there at the bargaining table, on behalf of the generics.\u00a0<\/p>\n
One day, during those negotiations, he was in the office with Henry Waxman\u2019s lead counsel, a guy named Bill Corr, when Corr got a call from someone on the other side.<\/p>\n
Corr starts pointing at the phone, pointing to Al \u2014 indicating: This guy is talking about you.<\/p>\n
When Corr gets off the phone he says: That guy\u2019s not sure about this deal where bad patents could be challenged. He\u2019s suspicious about where you might take this. Like, are you just gonna set up a bounty-hunting operation, to get patents declared invalid?<\/p>\n
And Corr said, Al, would you do that?\u00a0<\/p>\n
Alfred Engelberg:<\/strong>\u00a0And I said, you know, Bill, until this moment, I\u2019ve never given it any thought, but it\u2019s a hell of a good idea. Maybe I\u2019ll look at it.\u00a0<\/strong><\/p>\nDan:<\/strong>\u00a0And he did. Starting almost as soon as Hatch-Waxman became law.<\/p>\nAlfred Engelberg:\u00a0<\/strong>And<\/strong>\u00a0we sat in the rose garden, September 23rd, 1984, watched Reagan sign the bill. And in December of that year, I sat down at my kitchen table with a yellow pad and I laid out a strategy.<\/strong><\/p>\nDan:<\/strong>\u00a0If you were gonna set up a bounty-hunting operation, how would you do it?<\/p>\nAl Engelberg knew a lot of patents were garbage. Knew it from his time in the patent office, knew it from practicing law. And he knew\u00a0how much money a successful patent challenge could be worth.<\/p>\n
The way Hatch-Waxman worked: If a generic drug company challenged a patent and won, they would get six months before any OTHER generic drugmakers could get a crack at the market.<\/p>\n
So their only competition would be the brand. If a pill cost two cents to make, and the brand was selling for a dollar a pill \u2014 that\u2019s 98 cents of profit for every pill.<\/p>\n
You\u2019re the only competitor? You could charge 75 cents a pill and get 73 cents of profit. On a hit drug, you could make millions and millions \u2014 just in those six months.\u00a0<\/p>\n
Al\u2019s idea was this: Partner up with a generic drugmaker. Go find cases\u2013 drugs with weak patents. Win \u2019em.\u00a0<\/p>\n
And split those millions in potential profits fifty-fifty.\u00a0<\/p>\n
Al pitched a generic drugmaker \u2014 they were ready to go \u2014 and brought the deal to his law firm. .<\/p>\n
Alfred Engelberg:<\/strong>\u00a0As it turned out, my partners weren\u2019t interested in having me do this. They tried to talk me out of it.<\/strong><\/p>\nDan:<\/strong>\u00a0But they couldn\u2019t. So he left. Went out on his own.\u00a0All on his own.<\/p>\nAlfred Engelberg:<\/strong>\u00a0I never hired a single soul, not even a secretary. And I couldn\u2019t type. I still can\u2019t type.<\/strong><\/p>\nDan:<\/strong>\u00a0But he hunted and pecked his way through brief after brief. He bought an early portable computer \u2014 it weighed thirty pounds \u2014 and lugged it around in the back of his car. For ten years.<\/p>\nAlfred Engelberg:<\/strong>\u00a0It was stupid. I almost killed myself. But, it worked out okay.<\/strong><\/p>\nDan:<\/strong>\u00a0Yeah. Turns out Al was really good at finding the problems with drug patents.<\/p>\nIn one of his first cases, Al Engelberg personally made more than 70 million dollars. Others settled: A few million here, a few million there\u2013 it adds up.<\/p>\n
And then\u2026<\/p>\n
Alfred Engelberg:<\/strong>\u00a0It got to be the mid nineties, and I was working on a case called Buspar.\u00a0<\/strong><\/p>\nDan:<\/strong>\u00a0The Buspar case ended up a big winner for Al Engelberg and his generic drug partners.\u00a0<\/p>\nBut it\u00a0had consequences that went\u00a0way beyond a single case.\u00a0And led to big losses for the public..\u00a0Here\u2019s how it went.\u00a0\u00a0<\/p>\n
Alfred Engelberg:<\/strong>\u00a0Buspar was an anti-anxiety drug. And by all accounts not a very good one.<\/strong><\/p>\nDan:<\/strong>\u00a0But Bristol Meyers Squibb invested in big advertising and marketing campaigns.<\/p>\nSpeaker 5:<\/strong>\u00a0I feel anxious. I can\u2019t concentrate.\u00a0<\/strong><\/p>\nSpeaker 6:<\/strong>\u00a0I\u2019m so irritable. If you. You suffer from excessive worry. It can feel like a mountain of anxiety.\u00a0<\/strong><\/p>\nSpeaker 5:<\/strong>\u00a0I\u2019ll never get it all done. I\u2019m overwhelmed.\u00a0<\/strong><\/p>\nSpeaker 6:<\/strong>\u00a0But a prescription medication called buspar can help.<\/strong><\/p>\nDan:<\/strong>\u00a0And all that marketing did its job. By the mid-1990s, Buspar was making more than 200 million dollars a year for Bristol.<\/p>\nAlfred Engelberg:<\/strong>\u00a0The only problem for them was that the drug was not new.\u00a0<\/strong><\/p>\nDan:<\/strong>\u00a0The active ingredient was well-known in medical literature as a tranquilizer. Nobody had bothered to market it.<\/p>\nSo Bristol Myers Squibb filed a patent on it, claiming it had discovered a new use for this well-known tranquilizer: Treating anxiety.<\/p>\n
Al Engelberg says when he read the patent application, he could barely believe it: What do tranquilizers do if not\u2026 treat anxiety?<\/p>\n
It\u2019s like saying: There\u2019s this stuff called sugar. We\u2019re gonna take out a patent on using it as a sweetener.<\/p>\n
This looked like a case for a guy from Atlantic City.\u00a0<\/p>\n
Alfred Engelberg:<\/strong>\u00a0I did something that lawyers don\u2019t. That\u2019s just the way I was built.\u00a0<\/strong><\/p>\nI filed a motion with the court and basically said, we don\u2019t need any evidence.<\/strong><\/p>\nYou just have to read the patent. If you believe it\u2019s true, the patent\u2019s invalid. Just, you know, all you need is a dictionary basically.<\/strong><\/p>\nDan:<\/strong>\u00a0Al says Bristol was eager to settle.\u00a0<\/p>\nAlfred Engelberg:<\/strong>\u00a0We get into a settlement discussion and we keep saying, no, no, no, no.<\/strong><\/p>\nDan:<\/strong>\u00a0Al\u2019s partners had done the math: They figured they stood to make a hundred million dollars or more once they won. So when the other side offered 25 million, no was the easy answer.<\/p>\nAlfred Engelberg:<\/strong>\u00a0We said, why are we gonna take this? You know, it\u2019s crazy. There\u2019s a reward here we know what it is. We\u2019re gonna get it eventually.<\/strong><\/p>\nDan:<\/strong>\u00a0Al sits down with a lawyer from the other side, a guy he knows, explains how he sees the math.<\/p>\nAnd soon the other side comes through with a much bigger offer: 72 million dollars \u2013 almost three times as much.\u00a0<\/p>\n
Alfred Engelberg:<\/strong>\u00a0And I\u2019m sitting there like, what are you crazy? But then think about it from their point of view.\u00a0<\/strong><\/p>\nDan:<\/strong>\u00a0Paying 72 million dollars is nothing, compared to what Bristol stands to gain if this lawsuit goes away.\u00a0<\/p>\nWith their monopoly, Bristol Meyer Squibb is making more than 200 million dollars a year on Buspar. And unless somebody else lines up to do what Al Engelberg had done, expect to keep that monopoly for years.<\/p>\n
Charging whatever they want. Two dollars a pill, three dollars a pill. Which Al Engelberg says is exactly what happened.<\/p>\n
In fact, they kept that monopoly for like five years.\u00a0<\/p>\n
Alfred Engelberg:<\/strong>\u00a0As it turned out, nobody came behind us. And so, they had that monopoly until 2000. So they got five years of 2 billion, in gross profits.\u00a0<\/strong><\/p>\nDan: They made out.<\/strong><\/p>\nAlfred Engelberg:<\/strong>\u00a0 For the cost of $75 million. And you know, the public got screwed \u2019cause they are continuing to pay, you know, $2 a pill or $3 a pill for a drug that eventually ends up being available for 20 or 30 cents. Um, so that\u2019s, that\u2019s how it works.<\/strong><\/p>\nDan:<\/strong>\u00a0That\u2019s how it works. The branded company and the generic company both make out great. Cheaper generic versions of a drug get delayed.\u00a0<\/p>\nThat amazing payday for Al Engelberg and his partners at the generic drug company turned into a model a template for the kind of deal that every generic drug company would want in on.<\/p>\n
It got a nickname: Pay for delay.<\/p>\n
Alfred Engelberg:<\/strong>\u00a0That spread through the industry like wildfire, those numbers, you know, you don\u2019t make those numbers half a cent at a time on, on pills,<\/strong><\/p>\nDan:<\/strong>\u00a0Lawsuits were way more profitable.<\/p>\nBut Al Engelberg wasn\u2019t filing them.<\/p>\n
A year or so after the Buspar case settled, sparking the Pay for Delay gold rush, he retired. He had plenty of money and nothing to prove.<\/p>\n
And in retirement, he started evaluating what he\u2019d accomplished, for better and for worse.<\/p>\n
For better, generic drugs had more than doubled their share of the market since Hatch-Waxman took effect.<\/p>\n
For worse, he could see two places where \u2014 despite all of his Atlantic City training \u2014 he had missed a couple of angles in negotiating Hatch-Waxman.\u00a0<\/p>\n
One was: this whole pay-for-delay scheme. Turned out, in balancing incentives for brands and generic makers, he\u2019d left open this perverse incentive that left the public out.\u00a0<\/p>\n
And the second was a loophole\u00a0 that Hatch-Waxman had left open.:\u00a0<\/p>\n
It created a process where players like Al and his generic partners could challenge patents on drugs like Buspar, that they thought didn\u2019t deserve protected monopolies. It removed some friction for those attacks.\u00a0<\/p>\n
The drug companies developed a way to add more friction:\u00a0 stacking extra patents \u2014 secondary patents \u2014 on every drug.<\/p>\n
Developing patent thickets.<\/p>\n
Even if a secondary patent is trivial\u00a0 \u2014 and lots of them do get tossed out \u2014 challenging it means a court fight. And that costs money.<\/p>\n
Alfred Engelberg:<\/strong>\u00a0It caused the big drug companies to just get more and more patents. Because why not? You know, there was nothing standing in the way.<\/strong><\/p>\nDan:<\/strong>\u00a0I mean, nobody knows better than Al Engelberg: Patent examiners don\u2019t exactly stand in the way.\u00a0<\/p>\nAnd those patent thickets and pay for delay, they feed on each other.\u00a0<\/p>\n
Alfred Engelberg:<\/strong>\u00a0The economics of the business, caused these kinds of settlements to reach epic proportions. So the generic companies would, challenge these secondary patents and, the drug companies would pay them off.<\/strong><\/p>\nDan:<\/strong>\u00a0In 1999 he published an article in a scholarly journal arguing that Hatch-Waxman needed a reboot. Even the six-month head start for a successful challenge could probably go.\u00a0<\/p>\nAnd ever since \u2014 for more than twenty-five years \u2014 he\u2019s poured millions of dollars into efforts to tighten the rules. Funding research. A public-information campaign from Consumer Reports. Even a center for IP law at his alma mater, NYU.<\/p>\n
It hasn\u2019t always gone his way.\u00a0<\/p>\n
Pay for delay has gotten much bigger since Al Engelberg wrote his first article calling for reform: He wrote in 1999 that about two dozen patent challenges had been filed.<\/p>\n
Now he estimates that number at twelve thousand.<\/p>\n
Alfred Engelberg:<\/strong>\u00a0I can\u2019t tell you how many tens of billions of dollars in legal fees that is. It\u2019s one of the fastest growing and and steadiest industries for big law.<\/strong><\/p>\nDan:<\/strong>\u00a0A Hatch-Waxman litigation forum on LinkedIn has more than fourteen thousand members.<\/p>\nAnd Hatch-Waxman doesn\u2019t cover many of today\u2019s the top-selling drugs\u2013 the biggest moneymakers. They belong to a class called \u201cbiologics.\u201d<\/p>\n
That includes famously-expensive rheumatoid arthritis drugs like Humira and Enbrel \u2014 and insulin.\u00a0<\/p>\n
Biologics weren\u2019t a category forty years ago when Hatch-Waxman got negotiated. Congress passed a new law to deal with them in 2010 \u2014 ?the Biologics Price Competition and Innovation Act.<\/p>\n
Al Engelberg is not a fan of that law.<\/p>\n
Alfred Engelberg:<\/strong>\u00a0Whatever mistakes were made in Hatch Waxman, they were multiplied by 10 and deliberately in the biologics law<\/strong><\/p>\nDan:<\/strong>\u00a0He says the all but encourages patent thickets. And doesn\u2019t provide a pathway to challenge them.<\/p>\nHe says it reminds him of some of his early days practicing law.<\/p>\n
Alfred Engelberg:<\/strong>\u00a0Back in the seventies, we used to have small startup clients in the computer field, and they would get letters from IBM. It says, we are ready to inform you that you may be infringing one or more of the following patents. And there was a 10 page list of patents attached.\u00a0<\/strong>And the startup would come to us and say, you know, what should we do? And we would say, find another line of work, you know, what are you gonna do?<\/strong><\/p>\nDan:<\/strong>\u00a0But he has not given up. In 2025, he published a book: Breaking the Medicine Monopolies.<\/p>\nIt tells the story of his career \u2014 and lays out his prescriptions for fixing the problem.<\/p>\n
He doesn\u2019t JUST focus on plugging the holes in Hatch-Waxman and the biologics law.<\/p>\n
Alfred Engelberg:<\/strong>\u00a0You know, we don\u2019t actually need a generic drug industry. We need generic drug pricing.\u00a0<\/strong><\/p>\nDan:<\/strong>\u00a0He\u2019s got proposals for an increased government role in negotiating and regulating prices \u2014 and more than that.<\/p>\nHe argues that a 1980 law allows the government to commisssion generic versions of drugs that were developed using public research dollars.<\/p>\n
He also says the FDA rules that protect secondary patents on drugs \u2014 that allow patent thicketing \u2014 are based on a completely wrong interpretation of Hatch-Waxman.<\/p>\n
And tells us he\u2019s working up a challenge, with help from AI tools like Claude.\u00a0<\/p>\n
He\u2019s 86 years old. And he doesn\u2019t seem inclined to stop.<\/p>\n
Alfred Engelberg:<\/strong>\u00a0It so changed my life and I did so well by it, I thought, how can I not take on this problem? Who\u2019s gonna do it if I don\u2019t do it?<\/strong><\/p>\n