The inability of many patients to access essential drug therapies due to high costs or shortages has had a detrimental impact on patient outcome. Estimates point out that more than 1.1 million Medicare patients could die over the next decade due to their inability to afford their prescribed medications. The median annual price for new drugs in 2023 reached $300,000, a 35% increase from the previous year. A recent report from the Department of Health and Human Services' Assistant Secretary for Planning and Evaluation found that between 2022 and 2023, prices for nearly 2,000 drugs rose faster than the rate of general inflation, with an average increase of 15.2%. From January 2022 to January 2023, this 15.2% increase translated to an average of $590, more than triple the previous year's increase of $172.
Drug price increases have been exacerbated by the inability of new generic drugs to enter the market. Generic drugs are crucial for driving down prices and improving patient access, but barriers such as prolonged patent disputes have limited their availability. This is directly connected to the current injunction framework, where patentees seeking to block generic competition, often leverage the threat of injunctions to maintain high prices. Courts must, therefore, carefully weigh the public interest to ensure that the availability of affordable drugs is not unjustly compromised.
eBay Inc. v. MercExchange (2006) was a landmark U.S. Supreme Court case that fundamentally changed how courts decide whether to issue permanent injunctions in patent disputes. In this case, MercExchange held a business method patent that eBay was found to have infringed[1]. The District Court initially denied MercExchange’s request for a permanent injunction. The Federal Circuit reversed, applying a "general rule" that injunctions should be granted in patent cases absent exceptional circumstances. [2]
The Supreme Court, reversing the decision of the Federal Circuit, held that courts must apply a four-factor test before granting a permanent injunction in patent cases, rejecting the Federal Circuit’s idea of an automatic rule favoring injunctions. The Supreme Court’four-factor test requires a plaintiff to demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.[3]
Despite the existence of the four-factor test pre-eBay, lower courts often struggled to apply it effectively, particularly when addressing the public interest factor. Counterintuitively, the key question for this factor is not whether the public interest would be served by an injunction, but whether it would not be disserved. Therefore, a patentee does not need to prove that an injunction would benefit the public interest, only that it would not cause harm.
While there is no clear rule dictating when an injunction would disserve the public interest and thus prevent a permanent injunction, courts have stated that “the public interest in having access to generic drugs at reduced prices” is not enough to outweigh the “significant public interest in encouraging the massive investment in research and development required before a new drug can be brought to market.” [4] This parallels the long recognition by courts of the importance of the patent system in fostering innovation. Indeed, it has been established that “the encouragement of investment-based risk is the fundamental purpose of the patent grant and is based directly on the right to exclude.” [5]
However, since the Supreme Court's ruling in eBay introduced more balance into courts' discretion to issue or not issue patent injunctions with a careful review of the four factors test, courts ought to now be paying more attention to the public interest component as it weighs the decision to grant permanent injunctions, especially in pharma patent litigation. Such a change might be implemented by shifting the current presumption on this factor from whether an injunction would serve the public interest to whether it would not disserve it. Instead, courts should acknowledge that the public interest is served by facilitating access to inexpensive medicine and balance that consideration with the other three eBay factors. This balance between public health and affordability and the need to incentivize innovation will be a much more equitable compromise judges can make to promote innovation and public health at the same time.
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[1] eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006)(emphasis added)
[2] Id. at 391
[3] Id.
[4] Sanofi-Synthelabo v. Apotex, Inc., 492 F. Supp. 2d 353, 397 (S.D.N.Y. 2007)
[5] Sanofi-Synthelabo v. Apotex, 470 F.3d 1368, 1383 (Fed. Cir. 2007)