How can policymakers encourage the expansion of at-home diagnostic testing for COVID-19?

By Nicholson Price, Rachel Sachs, Jacob S. Sherkow, and Lisa Larrimore Ouellette

As we have previously discussed, fighting the COVID-19 pandemic will require a massive expansion of testing. Diagnostic tests for who is currently infected are particularly important. Given a limited number of health-care providers and testing sites, at-home testing has emerged as an important route to expand diagnostic testing capability. But developing at-home diagnostic tests that are affordable, reliable, effective, and able to be administered by untrained individuals presents a number of challenges. How should policymakers encourage the development and deployment of such tests?

Why is at-home COVID-19 testing needed?

Currently, the vast majority of testing for active infection (principally by RT-PCR) requires a health-care worker trained to collect samples. In large part, this requirement arises because samples are collected using a nasopharyngeal swab—something like a very long Q-tip which is inserted through the nostril as far back as the ear. The task is unpleasant for the patient and requires training to do right. It can also be dangerous to the health-care worker, because patients often sneeze or cough in reaction to the swab, potentially exposing the worker to SARS-CoV-2.

As a result, getting tested for COVID-19 requires traveling to a testing site, whether a hospital, a clinic, or a drive-through site. Today, availability is still limited; appointments are often required, and some sites are limited to residents of a particular area. Getting to a testing site also requires actually getting to the site, which can be difficult for those without cars or ready access to public transportation (which itself brings risks). Unfortunately, the populations most vulnerable to COVID-19 frequently overlap with those lacking good access to personal transportation. 

At-home testing could ease the path to substantially increased testing, allowing more frequent testing of more people and readier access across different populations. At-home testing could lessen friction from transportation and site access and circumvent bottlenecks due to the limited availability of health-care workers.

Nonexcludable Innovations and COVID-19

By Lisa Larrimore Ouellette, Nicholson Price, Rachel Sachs, and Jacob S. Sherkow

Some of the most widely discussed COVID-19 interventions include vaccines, drugs, and medical devices—typical interventions for many diseases, whether the cause of a pandemic or not. These interventions share a further similarity—they’re all generally excludable. That is, the owner of a particular invention can generally exclude others from practicing it without permission. In a classic account of IP, it is this excludability that encourages their development in the first instance. But as Professors Amy Kapczynski and Talha Syed have explained, some knowledge goods are more excludable than others. In this post, we describe why many successful COVID-19 interventions—washing hands, wearing face masks, even the proning of patients in a hospital setting—are generally nonexcludable and thus likely to be underincentivized by IP-based market rewards. Policymakers tasked with encouraging COVID-19 innovation should attempt to correct for this asymmetry in excludability.

Remdesivir Part II: Allocating Access

By Jacob S. Sherkow, Lisa Larrimore Ouellette, Nicholson Price, and Rachel Sachs

Last week, we focused on incentives for developing clinical evidence supporting the use of remdesivir for COVID-19 and analyzed the FDA’s grant of an emergency use authorization (EUA) for the drug. This week, we consider mechanisms for allocating access to the drug, including distribution, payment, and patents. Importantly, many of these issues are relatively uncommon to encounter in the prescription drug space. The government does not usually control the allocation and distribution of new drugs after marketing authorization has been granted, although it is doing so for remdesivir. These novel issues raise opportunities, but also concerns, for law and policy.

Remdesivir Part I: Incentivizing Antiviral Innovation

By Rachel Sachs, Jacob S. Sherkow, Lisa Larrimore Ouellette, and Nicholson Price

The antiviral drug remdesivir, developed by California-based biopharmaceutical company Gilead Sciences in collaboration with government scientists, has emerged as the new standard of care for COVID-19 patients. The drug has also been beset by controversy, from Gilead’s withdrawn orphan drug application to conflicting reports of clinical trial results to an opaque and haphazard distribution process. We examine the role of legal institutions in the remdesivir rollout in two posts focused on the two (separable) parts of innovation policy. This week focuses on the innovation incentives for producing information about remdesivir and other COVID-19 treatments, including the FDA’s role in deciding whether and under what conditions a new drug can reach the market. Next week we will turn to pharmaceutical allocation mechanisms, including payment and distribution.

How is regulatory policy influencing the development and marketing of antibody testing for COVID-19?

By Nicholson Price, Rachel Sachs, Jacob Sherkow, and Lisa Larrimore Ouellette

Over the last few weeks, dozens of companies have begun marketing tests intended to determine whether someone has antibodies directed to SARS-CoV-2, the virus that causes COVID-19. These tests indicate likely immunity to COVID-19 and are different from diagnostic tests to determine whether someone is currently infected. However, recent evaluations have shown that these antibody tests are often failing to deliver accurate results. Last week, the House Oversight Committee called for more information from these companies about the accuracy of their tests, and the FDA has now responded by increasing its oversight over antibody tests. But why did the FDA’s initial stance toward these tests differ so strongly from its stance toward COVID-19 diagnostics, and what lessons should policymakers draw from these experiences going forward?

How does the law impact the use of 3D printing to address COVID-19 production shortages?

By Lisa Larrimore Ouellette, Nicholson Price, Rachel Sachs, and Jacob Sherkow

Health systems worldwide are facing shortages of crucial medical supplies, including personal protective equipment (PPE), diagnostic testing components including kits and nasal swabs, and even ventilators or ventilator parts. Enter 3D printing. A growing network of hobbyists, small-scale makers, 3D printing firms themselves, and even larger companies with some 3D printing capacity are using the technology to help address ongoing shortages in the COVID-19 response.

What kinds of COVID-19-related products are being 3D printed?

3D printing, also called additive manufacturing, involves building a 3D form from the bottom up by adding one thin layer of material at a time. (Here’s a handy Congressional Research Service overview.) Many materials can be used, including plastic, metal, or resin. The printer is controlled by a computer which prints based on a computer-assisted design (CAD) file. 3D printers have been used for rapid prototyping or by hobbyists for years, but are more recently being used at larger scale.

3D printing is being used to create a host of products potentially relevant to COVID-19. PPE is perhaps the most common example; many people are producing the headbands of protective face shields; some are printing masks. Nasal swabs are also being printed in substantial numbers (the swabby bit at the end is a bristled resin structure, not cotton fibers like you’d find in a Q-Tip), and have been evaluated by, among others, Beth Israel Deaconess Medical Center. Printing has also been used for more complex components of medical devices, such as ventilator valves or splitters so that patients can share a ventilator—or even most of the components of emergency open-source ventilators.

Who’s Afraid of Section 1498?: Government Patent Use as Versatile Policy Tool

Guest post by Christopher Morten & Charles Duan

Chris Morten (@cmorten2) is the Clinical Teaching Fellow and Supervising Attorney in NYU’s Technology Law and Policy Clinic. Charles Duan (@Charles_Duan) is Director of Technology and Innovation Policy at the R Street Institute.

From vaccines to ventilators to diagnostic tests, technology has dominated response strategies to the ongoing COVID-19 pandemic. Where technology leads, patent law and policy follow. Recently, some attention has turned to federal government patent use under 28 U.S.C. § 1498. Jamie Love of KEI has called on the federal government to explore use of section 1498 in its response to COVID-19, to reduce prices, expand supplies, and ensure widespread, equitable access to patented technologies. (We have, too.) There is a long line of scholarship, including Amy Kapczynski and Aaron Kesselheim, Hannah Brennan et al., Dennis Crouch, Daniel Cahoy, and others discussing the relevance of section 1498 in a variety of contexts.

Yet others have encouraged the government to “tread lightly” and described use of section 1498 as a “nuclear option”—potent but dangerous—because it can be used to make massive interventions in the market for patented products—e.g., by issuing compulsory licenses to patents on high-priced brand-name drugs, “breaking” patent monopolies and accelerating the entry of numerous generic competitors. One recent example: a few years ago, Gilead’s high prices on hepatitis C drugs exacerbated a different public health crisis and prompted a chorus of voices, including Senator Bernie Sanders and the New York Times editorial board, to call on the federal government to exercise its section 1498 power to “break” Gilead’s patents in just this way, which might have saved tens of billions of dollars in public spending. (The federal government did not do so.)

Irrespective of the merits of 1498 as a general matter, in the context of a crisis such as the COVID-19 pandemic we see real value in bold, “nuclear option” use of section 1498 to save billions on high-priced prescription drugs and maximize their availability. But that is not the only way section 1498 can be used. It can also be used in modest, incremental, unexceptional ways—it can be as much as a scalpel or a Swiss Army knife as a nuclear weapon, and some of its virtues in this regard have gone underappreciated.

Accordingly, we highlight four particularly valuable features of government patent use under section 1498 in a crisis like the present one: (1) speed, (2) flexibility, (3) ex post determination of the appropriate compensation, and (4) determination of that compensation by an impartial adjudicator. In particular, we compare section 1498 with an alternative policy tool, patent buyouts, which can also expand public access to patented technologies, and identify several reasons why section 1498 may be the preferable tool.

Regulatory Responses to N95 Respirator Shortages

By Lisa Larrimore Ouellette, Nicholson Price, Rachel Sachs, and Jacob Sherkow

Our recent posts have highlighted shortages in three COVID-19-related knowledge goods: testing, drugs (such as those needed to put patients on ventilators), and clinical trial information about effective treatments. This week we focus on the role of legal regulators in another critical shortage: N95 respirators, one of the key forms of personal protective equipment (PPE) for healthcare workers. We explain how N95 regulation, like COVID-19 testing, presented an interagency coordination problem. The FDA has successfully removed key regulatory hurdles—though the problem should have been anticipated earlier, and much more needs to be done to ensure an adequate supply.

What are N95 respirators?

N95 respirators are a specialized subset of face masks (here’s a handy NY Times explainer with photos). A normal surgical mask (what you see, for example, in a typical medical TV show) fits fairly loosely around the face; it blocks splashes and relatively large droplets, but not tiny particles. An N95 respirator, on the other hand, is relatively rigid rather than being flexible, and is designed to fit closely to the face and create a tight seal—tightly enough that the masks don’t work with certain beards (or for children). The “95” in N95 refers to the requirement that the mask block at least 95% of 0.3 micron particles (about a thousandth the width of a human hair). Both types of masks are meant to be single-use.

N95 masks are meant to keep droplets that include the SARS-CoV-2 virus out. They’re not perfect, but if they’re well fitted, they are effective at protecting the wearer (most crucially right now, the healthcare providers who are caring for patients and are themselves still getting sick in droves). Surgical masks, on the other hand, do a worse job of keeping the virus out. Cloth masks even less so. But cloth masks can help keep droplets in—that is, if someone is sick, wearing a cloth mask may keep them from projecting droplets that can infect other people. The CDC now recommends that everyone wear a face mask when in public, to avoid infecting other people (because even asymptomatic individuals can infect others, and the lack of testing means it’s very hard for most people to know whether they have been infected). However, surgical masks and especially N95 masks are in very short supply, and should be reserved for medical professionals.

N95s were initially developed for industrial uses including mining. The key feature—and what makes N95s harder to manufacture than other masks—is that the masks are made using what’s called “melt-blown” fabric. A polymer (such as polystyrene, polyurethane, or nylon), is melted then blown through small nozzles; it forms a matrix of tiny fibers with many holes (think: cotton candy), which can capture particles. But the machines to make this fabric are complex and expensive, and manufacturers of the fabric are struggling—and failing—to meet demand.

How can innovation and regulatory policy accomplish robust COVID-19 testing?

By Lisa Larrimore Ouellette, Nicholson Price, Rachel Sachs, and Jacob Sherkow

It’s now clear that expansive, population-wide testing is part-and-parcel of every successful COVID-19 containment strategy. But US testing efforts, from the beginning of the pandemic until now, have been widely criticized as lacking. Perhaps as a direct consequence of this failure, the US now leads the world in COVID-19 cases and deaths. What are these tests and what’s our capacity to test; why is it important to test; how have the FDA and other administrative agencies addressed the issue; and what can we do about it?

What is the status of US testing capacity?

It is important to distinguish between two types of COVID-19 tests: reverse transcription polymerase chain reaction (RT-PCR) tests for SARS-CoV-2, the virus that causes COVID-19; and serological tests for the body’s immune response to SARS-CoV-2. The tests are not interchangeable: RT-PCR tests detect the presence of the virus’s genome, itself, and thus determine whether someone is currently infected. Someone who was once infected and has since recovered will return a negative result. A serological test, by contrast, detects whether the body has produced antibodies to the virus; that’s useful to determine whether someone has been infected for long enough to mount an immune response.

To date, virtually all of the testing has been of the RT-PCR type, useful for answering the question: Is the patient infected now? Testing centers in the US are currently running approximately 135,000 tests a day—far fewer per capita than in other countries. The US’s maximum, overall testing capacity is unclear and is, in any event, a moving target given that new tests are now being cleared by the FDA with some frequency. But it’s widely acknowledged that testing is not at the level that it needs to be to accurately assess the number of people infected with SARS-CoV-2.

There are myriad reasons for this deficit in testing: an initially slow ramp-up of tests approved by the FDA; difficulties in speeding manufacturing of kits used to conduct the tests; a shortage of reagents to conduct the tests, including solutions, primers, and even the swabs used to collect samples from patients; the capacity of clinical laboratories to run tests and return results; and less technical hang-ups like patients’ difficulties in finding or physical getting to testing sites and questions concerning who will pay for such testing.

How can the US address coronavirus drug shortages?

By Lisa Larrimore Ouellette, Nicholson Price, Rachel Sachs, and Jacob Sherkow

The escalating pandemic has caused devastating shortages not only of ventilators and personal protective equipment like masks, but also of essential medicines needed to treat COVID-19 patients. As detailed by STAT and the New York Times, prescriptions for painkillers, sedatives, anesthetics, and antibiotics are up, but the rate at which prescriptions are filled and shipped to hospitals is down. The FDA helpfully tracks drug shortages, but this doesn’t solve the problem. With the sudden spike in hospitalized patients with COVID-19 symptoms, physicians are using these drugs faster than manufacturers are making them.

What is causing these drug shortages?

Drug shortages are frighteningly common even in the best of times. A 2019 FDA report noted that from 2013 to 2017, at least 163 drugs went into shortage. (The actual number is likely much higher.) That report blamed “economic forces”—namely, price-eroding generic competition, a lack of incentives to make quality generic manufacturing more efficient, and supply chain difficulties that made the continued manufacture of older generics unprofitable. These problems are now exacerbated by the sudden demand spikes caused by COVID-19 patients. As just one example: propofol, an important drug for sedating patients who need intubation—and, historically, already in waxing and waning states of shortage—has seen prescriptions shoot up about 100%.

Supply has been slow to meet COVID-19-related demand—but slower still because of the outbreak’s disruption to the global supply chain. Many pharmaceutical ingredients are manufactured in China, which has seen slowdowns (and in some cases, shutdowns) in manufacturing sectors across the country. Furthermore, because drugs do expire, they’re not stockpiled when there’s a surplus. In some instances, countries have banned the export of drug products important for treating COVID-19 to ensure adequate supply for their own citizens. India, for example, has banned exports on hydroxychloroquine in the event the drug proves useful in treating COVID-19. It’s a wicked problem: the very thing causing the sudden spike in demand is shutting down the means of supply.

What does it mean that Oracle is partnering with the Trump administration to study unproven COVID-19 drugs?

By Lisa Larrimore Ouellette, Nicholson Price, Rachel Sachs, and Jacob Sherkow

One of the dizzying stream of innovation and health law stories to emerge last week is Oracle’s partnership with the White House to study unproven pharmaceuticals for treating COVID-19. We decided to unpack this story for ourselves and then to collectively share our thoughts in a short explainer.

What are the drugs being studied?

The initial stories about Oracle’s platform mention its use for two older drugs approved to treat malaria—chloroquine and hydroxychloroquine—that are now being tested to treat COVID-19. Both drugs are quite old: chloroquine was first approved by the FDA in 1949 and sold, until recently, under the brand name Aralen. Hydroxychloroquine, which is also used to treat lupus and rheumatoid arthritis, is sold under the brand Plaquenil and was first approved in 1955.

The impetus behind studying these two drugs stems from in vitro studies following the 2005 SARS-CoV-1 outbreak. Those studies suggested the drugs could inhibit some types of coronaviruses from both entering cells and replicating after infection—potentially serving as a preventative and a treatment. But the studies were small, in cell culture rather than living animals, and not conducted against the virus that causes COVID-19, SARS-CoV-2. Some early work with the drugs against SARS-CoV-2 may be promising but it, too, has been done in a test tube rather than an animal model.

Does Gilead's (withdrawn) orphan designation request for a potential coronavirus treatment deserve your outrage?

Many commentators were outraged by the FDA's announcement on Monday that Gilead received orphan drug designation for using the drug remdesivir to treat COVID-19. The backlash led to a quick about-face by Gilead, which announced today that it is asking the FDA to rescind the orphan designation. For those trying to understand what happened here and the underlying policy questions, here's a quick explainer:

How could the Orphan Drug Act possibly apply to COVID-19?

Under 21 U.S.C. § 360bb(a)(2), a pharmaceutical company can request orphan designation for a drug that either (A) treats a disease that "affects less than 200,000 persons in the United States" at the time of the request or (B) "for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for such disease or condition will be recovered from sales in the United States of such drug." An ArsTechnica explainer suggests that remdesivir received orphan designation under option (B), but this email from the FDA indicates that it was option (A).

The designation seems correct based on the plain language of the relevant statute and regulations: As of Monday, there were 44,183 cases diagnosed in the United States (and even fewer at the time of Gilead's request), and the Orphan Drug Act regulations indicate that orphan designation "will not be revoked on the ground that the prevalence of the disease . . . becomes more than 200,000 persons." But given the CDC's low-end estimates of 2 million Americans eventually requiring hospitalization, commentators have noted that this feels like a loophole that gets around the purpose of the Orphan Drug Act.

What benefits would Gilead have received from an orphan designation?

The main effect would have been a tax credit for 25% of Gilead's expenses for the clinical trials it is running to figure out whether remdesivir is actually effective for treating COVID-19. (The tax credit was 50% when the Orphan Drug Act became effective in 1983, but was reduced to 25% by the December 2017 tax reform.)

Challenging what we think we know about "market failures" and "innovation"

I really enjoyed the final version of Brett Frischmann and Mark McKenna's article, "Comparative Analysis of Innovation Failures and Institutions in Context." The article was published in Houston Law Review in 2019. But I initially encountered it when the authors presented an early draft at the 2012 Yale Law School Information Society Project's "Innovation Beyond IP Conference," conceived and brought together by Amy Kapczynski and Written Description's Lisa Ouellette. The conference explored mechanisms and institutions besides federal intellectual property rights (IP) that government uses, or could use, in order to achieve some of IP's stated goals. Examples explored include research grants, prizes, and tax credits, among countless others.

Deepa Varadarajan on Trade Secret Injunctions and Trade Secret "Trolls"

I wrote some previous posts about eBay in trade secret law, and in particular Elizabeth Rowe's empirical work. Rowe found not all trade secret plaintiffs actually ask for injunctions, even after prevailing at trial, along with many other fascinating findings. I would be remiss if I did not flag a characteristically excellent discussion of this issue by Deepa Varadarajan, in a piece that may have flown under readers' radars.

Google v. Oracle: Amicus Briefing

Hello again, it's been a while. My administrative duties have sadly kept me busy, limiting my blogging since the summer. But since I've blogged consistently about Google v. Oracle (fka Oracle v. Google) about every two years, the time has come to blog again.

I won't recap the case here -my former post(s) do so nicely. I'm just reporting that 20+ amicus briefs were filed in the last week, which SCOTUSblog has nicely curated from the electronic filing system.

There are many industry briefs. They all say much the same thing - an Oracle win would be bad for industry, and also inconsistent with the law (The R Street brief -and prior op ed-describes how Oracle has copied Amazon's cloud based API declarations). But since I'm an academic, I'll focus on those briefs:

1. Brief of IP Scholars (Samuelson & Crump): Merger means that the API declarations cannot be protected
2. Brief of IP Scholars (Tushnet): Fair Use is warranted
3. Brief of Menell, Nimmer, Balganesh: Channeling dictates that API declarations are not protected
4. Brief of Lunney: Infringement only occurs if whole work is copied; protection does not promote the progress
5. Brief of Snow, Eichhorn, Sheppard: Fair Use jury verdict should not be overturned
6. Brief of Risch: Protection should be viewed through the lens of abstraction, filtration, and comparison

My brief is listed last, but it's certainly not least. Indeed, I think it's a really good brief. But of course I would say that. If you've read my prior blog posts on this (including the one linked above), you'll note that my brief puts into legal terms what I've been complaining about for eight or so years: by framing this case as a pure copyrightability question, the courts have lost sight of the context in which we consider the protection of the API declarations. There might be a world where the declarations, if published as part of a novel and reprinted in a pamphlet made by Google, are eligible for copyright registration. But in the context of filtration, which neither the district court nor the Federal Circuit performed, the declarations are not the type of expression that can be infringed by a competing compiler. Give it a read. It's better than Cats (and not just the new movie), you'll read it again and again.

An even better summary of all the briefs is here.

I conclude with a paragraph from the brief, which I think sums things up:

This case boils down to [the] question: can a company own a programming language through copyright? Oracle would say yes, but the entire history of compatible language compilers, compatible APIs, compatible video games and game systems, and other compatible software says no. Michael Risch, How Can Whelan v. Jaslow and Lotus v. Borland Both Be Right? Reexamining the Economics of Computer Software Reuse, 17 The J. Marshall J. Info. Tech. & Priv. L. 511, 539–44 (1999) (analyzing economics of switching costs, lock-in, de facto standards, and competitive need for compatibility).