Major shifts in the life sciences sector accelerate growth that increases both competition and legal challenges. As those in the biotechnology space attempt to navigate the pressures of upcoming patent expirations, shrinking funding opportunities, and heightened regulatory oversight, understanding the potential pitfalls has become increasingly critical for the key industry players and the lawyers who represent them.
We asked WIT biotechnology expert and accomplished academic, Dr. Brenda Wilson, to evaluate the industry with respect to ongoing trends, impactful innovations, and litigation challenges. Here's what she has to say about the industry's ongoing developments.
WIT: With respect to the current industry environment, what do you feel is the biggest driver of litigation in the biotechnology space so far in 2024?
Dr. Wilson: Well, the looming “patent cliff” that continues to threaten large pharmaceutical companies is definitely one issue driving disputes.
Despite an urgency to develop new antimicrobials to combat the depletion of our first-line drugs due to the spread of antibiotic resistance, the pharmaceutical industry has concluded that the return on investment (ROI) for these types of drugs is not sufficient enough to cover the costs for discovery, development, formulation, testing, regulatory approvals, and marketing. Smaller biotech companies are dominating the orphan drug development arena, particularly regarding the repurposing of existing drugs for other applications.
Fast-tracking new or repurposed drugs is gaining considerable momentum, and the number of Abbreviated New Drug Applications (ANDAs) is escalating. However, many deem the standard drug patent lifespan of 20 years as insufficient to ensure adequate ROI, so exceptions are being granted in the form of patent extensions or other protections, which in turn prompts growing disputes over IP. And proving patent infringement in ANDA cases is challenging.
As patent expiration dates near, mergers and acquisitions are occurring to offset losses, bolster revenues, and strengthen drug development pipelines. Trade secret diligence in mergers and acquisitions can provide unique challenges during the evaluation of a target company. Protecting trade secrets while having to disclose certain information to potential partners to obtain the best value for the company can lead to downstream litigation when the targets are industry rivals, when the mergers fall through, or when one company lures employees away from the other.
WIT: As technology continues to advance at a rapid pace, do you think that artificial intelligence will create conflicts in the drug development space?
Dr. Wilson: I think that the rapid infusion of artificial intelligence (AI) and machine learning (ML) technology will significantly impact activity in the sector. Specifically, I feel that the role of AI/ML in drug and biologics development has become an important application tool for a wide range of reasons:
- The ability to quickly screen drug/biologics candidates for new application purposes (especially repurposing)
- Determining toxicities (reducing the need for extensive in vivo testing)
- Predicting cross-reactions or adverse drug actions (reducing the risk of drug candidate attrition due to poor biosafety)
- Accessing increasingly structural complexity (thereby introducing uniqueness and better patentability)
- Simplifying synthetic pathways (providing cheaper synthesis schemes)
- Prioritizing scalable reactions (leading to more practical manufacturing)
- Using cheaper starting material (reducing costs)
- Avoiding scheduled chemicals (thus avoiding regulated or restricted precursors)
While the impact of AI/ML on the biotechnology and biomedical fields is still in its infancy, the impact in terms of both potential risks and benefits is considerable. There is already clear application potential for AI/ML in optimizing functionality for diagnostic evaluations to augment and inform physician decisions regarding the interpretation of x-rays, images, and CT/PE scans; immunologic and metabolic panels; wearable and mobile biodata devices; and electronic health records management.
The interface with insurance companies is also somewhat unknown at this point. However, there is growing concern over the role of AI/ML-enabled decisions/diagnostics and possible privacy violations, liabilities, and intellectual property theft. Ensuring validation, securing trust, and protecting privacy and patent rights will be fluid and nuanced as new challenges emerge in response to this rapidly growing arena.
WIT: How do you foresee data privacy and security concerns affecting the biotechnology industry and its legal landscape?
Dr. Wilson: There is going to be an increased need for new regulations, policies, and litigation frameworks for consideration of AI/ML and other digital health management devices, algorithms (electronic apps), and data services in the biomedical and life sciences arena, particularly regarding liability, privacy, and intellectual property.
Ensuring digital security in healthcare will be challenging considering the new developments in wearable and mobile devices that monitor health data and interface with computers, hospital data systems, and insurance companies, as well as self-testing diagnostic kits, and rapid diagnoses via telehealth conferencing instead of in-person exams.
In the area of life sciences, including research, there will likely be an increase in regulatory or intellectual property issues regarding privacy and cybersecurity concerning the role of AI/ML in digital health management. Concerns about AI/ML use in healthcare platforms as the sources for the data used to train the algorithms are expanding as this requires massive, accurate datasets to provide reliable predictions and interpretations. Conflicts will likely occur regarding the data sources, privacy, and IP, along with the liability when the AI/ML platforms fail to provide accurate diagnoses or treatment options. With the expanding prevalence of fake data sources and questionable so-called expert credentials, ensuring reliable and accurate datasets will be demanding and potentially unpredictable, which fosters a situation ripe for conflict.
WIT: What legal challenges do you anticipate with the integration of biotech innovations into traditional healthcare systems?
Dr. Wilson: The greatest challenge is the rapidity with which the biotech, pharmaceutical, biologic, and healthcare space is evolving. Upgrading to incorporate these changes will be a huge financial burden on healthcare systems which will likely cause ripple effects in additional healthcare costs, burdening patients and insurance companies. Consequently, the changes will be slow, and as a result, the existing systems will become vulnerable and insecure. There likely will also be an increase in fraudulent claims.
Regarding biologics, conflicts will continue to escalate over the uniqueness of the biologic at issue. This is particularly a concern for antibody-based biologics, specific microbe- or microbiome-based treatment regimens, and microbial-based manufacturing of metabolites or recombinant macromolecules (proteins, sugars, nucleic acids, lipids, etc.). The challenge these areas will face is that genomic and gene-editing biotechnologies have made it extremely difficult to distinguish native (wildtype, naturally occurring) organisms or their products from genetically modified, mutant, or recombinant versions. How can any of these biologics be patentable in this era? And how will existing patents stand up against infringement litigation? The issues posed in these questions will likely escalate, leading to conflicts and muddying of the litigation waters.
WIT: Do you see any potential for litigation surrounding the evolution and growth of the medical devices market?
Dr. Wilson: Yes, I think there will likely be an uptick in the litigation surrounding medical technology device software implementation that can interface with wearable and mobile devices and healthcare systems, particularly regarding security and privacy as I discussed earlier.
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