A New Formula for Analyzing Formulation-patent Obviousness

The generic drug industry, which is estimated to save American consumers $10 billion a year,1 owes much of its current market success to Congress’s enactment of the Hatch-Waxman Act in 1984.2 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.3 To achieve this balance, the Act allows regulatory approval for generic drugs without costly clinical trials,4 and enhances patent protections for brand name drug companies by prohibiting generic competition for five years after newly developed drugs are approved.5 A recent United States Supreme Court decision could upset this delicate balance. In KSR International Co. v. Teleflex Inc.,6 the Supreme Court criticized the Federal Circuit’s use of “rigid and mandatory formulas” in determining the obviousness of a patent.7 The Supreme Court mandated, instead, an “expansive and flexible approach.”8 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.9 Others think that KSR affects only a limited category of pharmaceutical patents and that