My Style - Reclaim My Identity

Tuesday, August 13, 2019

Thirty-Two Short Stories About Jeffrey Epstein

Today at The Atlantic: link.

Monday, August 12, 2019

Last Week On ATPL

Last week was all about impeachment, Roger Stone, Avenatti's presidential dreams, and thus and such. Available at KCRW.

Friday, August 2, 2019

Hate Speech and Billboards: A Discussion At Above The Law

Over at Above the Law, Elie Mystal and I had a discussion over that North Carolina billboard: is it protected by the First Amendment (yes, obviously) and should it be (that one is more complicated.)

It's here.

Wednesday, July 31, 2019

Judge to DNC: No It's Not RICO

This week on All The President's Lawyers

Guest Post: The New York Times War On Drugs

(Patrick: We occasionally, when we bother to post at all, as we haven't in over two years, accept guest posts from experts in fields of interest we don't cover. Today's post is written by Molly Ratty, a lawyer practicing in the field of patent litigation. We solicited this post. It is not written on behalf of Ms. Ratty's firm, or her clients. Her only compensation is satisfaction in the knowledge of a job well done.)

A couple of weeks ago, the New York Times Editorial Board decided to wade into the issue of drug pricing, and while I’d like to say I was surprised at the level of ignorance and advocacy of ham-handed government force to get drug prices down, sadly, the Times was true to form. Nearly the entire piece is based on the assumption that drug companies are morally bankrupt for trying to profit from their work, and should be punished or shamed into doing the right thing, as if the right thing is not to earn a profit from the beneficial drugs they invent for patients. Now California Senator Kamala Harris has waded into the fray, promising that she’ll act, if Congress does not, in the first 100 days of her administration. (Exactly how, she does not say.)

The issue of drug pricing is an extraordinarily complicated one, made more complicated by how other countries, notably our friends in Canada, manage pricing of the same drugs being sold here by international corporations. The truth is, Americans do, in effect, subsidize the cost of drugs sold in other countries that have price controls and single payer systems. It may not be fair, but the result is astonishing innovation and access to drugs that were unimaginable even twenty years ago. Everyone should be exceedingly cautious about radical changes that could easily stifle innovation in drug development. We are better off having these drugs developed, even if some cannot afford them, than we would be not having them at all.

The editorial spoke favorably about some of Trump’s long-term proposals, most of which are also based on ham-handed, top-down government force, but purported to offer a few “things the administration could do now, using the power it already has, to help the situation.” The fact is, there is no “right now” solution to the problem and almost none of the Times’ proposals would work “right now” anyway. Moreover, the Times’ approach brings a sledgehammer to the job of repairing a watch. Their proposals, and those of Trump and his ilk, could cause significantly more market distortion and even higher prices than we already have.

In the Popehat tradition, I’ll try this in a Lawsplainer format (which is not trademarked as far as I know, but should be because it’s awesome). First, some background.

Why are drug prices so high? It costs a lot to bring a branded drug to market. Estimates range from about $700M to $2.7B for each drug that is a new chemical compound. These estimates don’t take into account all of the failed trials and false starts, which also cost money. Only one in ten drugs makes the jump from Phase I studies to market, and because of regulatory hurdles, drug companies are having a harder time bringing new products to market than ever before.

The drug industry has prospered and flourished under capitalism—the ability to make a profit by providing a good product that is useful to people. Drug companies have produced treatments and cures that were almost unthinkable fifty years ago. This is a good thing and we should encourage it, not stifle it.

We encourage drug innovation mostly through marketing exclusivities, like patents and FDA exclusivity periods. During the lifetime of a patent, such exclusivities allow drug companies to prevent anyone else from selling a competing or generic version of a protected drug. At the end of the patent, anyone can make and sell the drug, since a patent requires the inventor to disclose the product’s methods. And, if drug companies have no competition on a certain drug, they can charge just about any price they want, with few exceptions. We can and should lower the cost of regulatory approval, by streamlining FDA approval requirements, but that won’t reduce drug prices, not if drug companies have and keep monopolies over their drugs.

That’s really why certain drug prices are so high—lack of competition. And the best way to bring drug prices down is through generic competition. That doesn’t mean we should throw out the patent system, because we also want to give drug companies incentives to invest in drug development. It’s utterly useless to demonize drug companies for wanting to extract profits from their work. Their work is good for society and we want more of it. Profits encourage more of it. But, drug companies shouldn’t be allowed to extend their monopolies as much as they have. We need a better balance of innovation and competition.

How do we balance innovation and competition?

Generic competition works. According to a 2013 FTC study, more than two generic entrants can drive down prices by up to 50%. In 2017 alone, generic drugs generated $265 billion in savings for patients. In fact, in that same year, almost 90% of dispensed drugs were generics, but generics account for only 23% of prescription spending.

Generic drug companies usually get on the market by challenging patents that cover the branded drug. In 1984, Congress passed the Hatch-Waxman Act, which gave generic drug companies a streamlined way to get FDA approval for drugs that are therapeutic equivalents to branded drugs, and an opportunity to challenge patents covering the branded drug before the generic launches, which eliminates generic companies’ exposure to damages for patent infringement. In exchange, branded companies get certain opportunities to extend their patent terms, based on how long it takes to get FDA approval, and a 30-month period in which the FDA cannot approve a generic product, if the brand sues the generic company for patent infringement.

This system has worked pretty well, and we have 35 years of experience with it. Since Hatch-Waxman passed, we’ve experienced an explosion in the number and size of generic drug companies and the availability of generic drugs. But there’s a problem if generic drugs cannot get to market because of patents, particularly in the case of patents that were never worthy of being granted in the first place. That’s what we have now. We have a patent system skewed toward granting and upholding patents that never should have issued. What’s worse, branded companies erect thickets of multiple patents on a single product that have the effect of extended the patent life cycle of the product. (Any readers in the tech industry should be familiar with the problem of “patent trolls”.)

Here’s an extreme example: Let’s take a hypothetical drug company, we’ll call it Erectomax. Erectomax files a patent application for a good drug it discovered, one that relieves “male reproductive troubles.” Erectomax gets a patent that covers not only the drug compound the company discovered, but millions of chemical variations on that drug compound. Erectomax later files another patent application, that contains more data on its drug, and that only covers the specific compound the drug company discovered, and ends up extending patent protection over the compound for another several years. Maybe then, Erectomax files an unrelated application to cover a method of treatment and extend patent protection for their FDA-approved indication, which extends patent protection for even more time. Finally, Erectomax files applications for a specific formulation of the drug or particular blood levels and a method of manufacturing the drug that can provide additional patent protection. In this way, Erectomax can lock up not just its miracle compound, but almost the entire concept of related drugs for treatment of “male reproductive troubles,” potentially for decades.

The problem is, rigid court-developed rules on patent invalidity and infringement often don’t match up well with reality. There should be no good reason for a drug company to get coverage of all these things from compound to treatment to formulation to manufacturing process, each of which frequently has the practical effect of extended the monopoly over the branded drug, but cases like this happen often. The Federal Circuit and district courts, particularly in Delaware and New Jersey where most of these cases are filed, bend over backwards to uphold patent validity and infringement in these cases and the problem is getting worse.

There are several ways to manage these problems, including changing the rules for issuing patents and making it easier to invalidate them, and gearing patent awards toward new drug discovery, not just tweaks on older, existing drugs. Or, perhaps even tying patent term expirations to the launch of the product, as Europe does. In addition, we could make some fairly simple changes to certain FDA exclusivities that would encourage more patent challenges that would allow courts to weed out bad patents. We could also provide incentives, via, for example, limited exclusivities, for generic companies to make drugs that have a limited market that would not otherwise be attractive to them.

The point, however, is that the system as originally designed already works, or it could with a little tinkering from the appellate courts or Congress. It absolutely needs adjustment, but it works! Why would any reasonable person want to march the government in with heavy-handed regulatory requirements that depend on the judgment of unaccountable bureaucrats who often don’t have a clue what they’re doing; who will force prices down at the expense of innovation and impose additional business and uncertainty costs to making drugs? And yet, that’s exactly what the New York Times is proposing.

Why not use patent seizure or march-in rights?

The most controversial of several proposals from the New York Times is its proposal for the government to use patent seizure or so-called “march-in” rights to snatch back patents already issued. The Times dismisses out of hand patent law reform as “fantastical,” but thinks it’s a great idea to just grab patents already issued based on some bureaucrat’s assessment of whether a drug has made enough money.

Of course, this would need to be done on an individual, ad hoc basis, based on some, so far, unexplained assessment of which drugs are making “too much profit.” Notice the ad hoc nature of this proposal. No warning to drug companies. No advanced notice of what could happen if they price “too high.” No description of what “too high” actually is. This is a recipe for disaster.

It would not be done on a global basis and would therefore necessarily be limited in scope (in other words, it would be arbitrary). The Times hopes this would act like some sort of deterrent to those evil drug companies. It might. But it is absolutely certain to make drug companies adjust their pricing based on when they think they’ll face competition and when they think they’ll face the government grabbing their patents—adopting a “milking” strategy to squeeze out the highest profits possible, in the shortest possible time, before their patents are forfeited. It could actually have the effect of driving up prices across multiple products, in order for companies to save themselves from patent seizure of one big product. It’s not a long-term solution. It’s not even a short-term solution. It’s not really a fair solution. It’s certainly not a market-based solution, and would likely cause all manner of unintended consequences, including potentially stifling innovation.

Importantly, it would also introduce a lot of business uncertainty, because of its ad hoc nature. The harder it is for companies to predict what the legal and business future looks like, the more expensive things tend get for the company, while lining the pockets of lawyers. And when costs go up, guess what? So do prices. It’s beyond strange that the Times thinks this ham-handed approach would be more effective and realistic than a more elegant, long-term, and limited solution of patent reform.

What’s wrong with negotiating with drug makers or letting the government price drugs based on the benefits they provide?

The Times has miraculously discovered the benefits of government negotiating Medicare drug prices, as if this issue has not already been vetted and found wanting. In 2007, the CBO assessed whether allowing the government to directly negotiate would result in cost savings to the feds and concluded it would not. Rather, it would likely restrict drug options for Medicare patients, by the government removing drugs that are too expensive from Medicare coverage, or drive up costs for everyone else, by forcing other patients to pay more so that Medicare patient can pay less.

We don’t have a single payer system here, and the government cannot and should not negotiate on behalf of insurance companies. This might help Medicare patients, although that’s doubtful, but it would not help other patients. Moreover, there is no evidence whatsoever that the government is in a better position to understand the correct price for a drug than insurance companies or doctors do.

(Note: the bigger issue with respect to price negotiations is not the force applied, but pricing opacity and multiple layers of payers, which not only drives up prices but also makes it much harder to know the actual market value of a drug. Just look at this chart. There’s almost no relationship between the consumer of the product and the manufacturer.)

(Source.)

Why shouldn’t we get the FTC involved?

The Times’ final proposal, to get the Federal Trade Commission involved, is probably the worst of all. First, if the FTC had a current legal mechanism for going after drug companies, they would already be using it. There’s a very basic problem with invoking antitrust laws to go after products that have monopolies due to patents—the patents are almost always granting lawful monopolies. This is almost certainly why the FTC is not pursuing antitrust cases against drug companies. They would lose. But, more importantly, even if they could, they shouldn’t.

Antitrust suits are the most indirect, ad hoc way to get at drug pricing. It would drive up costs by driving up litigation expenses and, as with patent seizure, would end up subject to the whim of regulators. We should be trying to drive down costs to drug companies, not up. This would also increase business uncertainty, again driving costs up by, among other things, lining the pockets of lawyers. Lawyers don’t need more money and we don’t need more lawyers in this country.

* * *

There is a market-based solution to the problem of high drug prices, but we currently have a political class that is too enamored with wielding power and engendering class envy without any regard for the risks of squashing the incentive to innovate. Again, we are better off having drugs to which some patients might not have access, than for all patients to have no access whatsoever.

(The author: Molly Ratty, is a patent practitioner working in the United States Pacific Northwest. In her free time, she publishes "Sam I Am Not: The Journal of Critical Theory on the Works of Dr. Seuss," and walking her donkey, who is beloved by children across the Northwest as "Buster the Noble Wonder Donkey." She may be reached with comments or questions on Twitter.)

Friday, March 29, 2019

The State of the Hat

One of the most justifiably ridiculed type of blog posts is the "hey guys I haven't posted in a long time" non-substantive blog posts, but nonetheless, here I am with a hey-guys-I-haven't-posted-in-a-long-time blog posts. (Like that? That's lampshade hanging.)

I'm pretty busy. My creative outlets are my new gig as a contributing writer at The Atlantic and the weekly All the President's Lawyers radio show and podcast on KCRW. And, though it seems I have abandoned the Make No Law podcast, I haven't — those podcasts are just incredibly time consuming to produce.

If I judge there is interest, I may start posting links to the Atlantic pieces and ATPL podcasts here for debate, in part so I can hear more regularly how much the site sucks now that I am Deranged By Trump/In The Tank For Trump. And I may develop some projects to write about here more regularly. So: though the site slumbers, it is not dead.

Friday, January 4, 2019

Alan Dershowitz Is Still Lying To You

Last month I I argued that Harvard Law Professor and frequent Fox guest Alan Dershowitz was lying to you by disguising his perfectly arguable view about what the law should be as a statement of what the law is. Specifically, Dershowitz argues that when someone (say, General Flynn) lies to an FBI agent, and the FBI agent knows that it's a lie, and in fact expected the lie, the lie is not material, and therefore not a violation of Title 18, United States Code, section 1001, that familiar and abused element of vast prosecutorial power.

Dershowitz took quite a bit of heat for his pronouncements on materiality. His defenders — here and elsewhere — argued that he's merely arguing what the law should be and isn't being misleading at all. Professor Dershowitz has now doubled down, and has done his defenders no favors in the process.

He starts out honestly and reasonably enough by framing the issue as one of what the law should be:

The question posed by the Flynn case is whether a lie can be material if the FBI already had indisputable evidence of the truthful answer and asked him the question for the sole purpose of giving him an opportunity to lie.

As a civil libertarian, I believe the answer should be “No.” The proper function of an FBI or a grand jury interrogation is to obtain information they do not already have, and not to create a new crime by giving the suspect the opportunity to pass or fail a morality test with criminal consequences.

This is perfectly arguable as a matter of policy; I agree for slightly different reasons.

But Dershowitz cannot abide criticism. It's not enough to clarify that he meant to be normative and not descriptive.

Well, it turns out that the issue is not “well-settled.” Nor did I invent it. In fact, two influential courts — the New York Court of Appeals, in an opinion by one of the most distinguished jurists of the 20th century, and the D.C. district court that is now preparing to sentence Flynn — have sided with my interpretation. (True civil libertarians, however, should be concerned about what the law and policy should be, regardless of whether there is a precedent.)

Leave aside, for the moment, what Dershowitz is trying to sneak past you in the parenthetical — the notion that it doesn't matter if you're deceiving people about what the law is because you should be concerned with what the law should be. Instead, let's focus on the authority he's talking about. Did I miss cases in my analysis? Did Dershowitz, a formidable legal mind, find support that I did not?

No.

In The People v. Tyler, the New York court’s Chief Judge Charles Breitel reversed a conviction for perjury of a former public official who had lied about his connection to a well-known gambler. The court reversed the perjury conviction, holding that:

“The primary function of the Grand Jury is to uncover crimes and misconduct in public office for the purpose of prosecution … It is not properly a principal aim of the Grand Jury, however, to ‘create’ new crimes in the course of its proceedings. Thus, where a prosecutor exhibits no palpable interest in eliciting facts material to a substantive investigation of crime or official misconduct and substantially tailors his questioning to extract a false answer, a valid perjury prosecution should not lie.”

The appeals court cited a district court case in D.C., which held that to interpret “materiality” more broadly would serve no proper legislative purpose. In U.S. v. Icardi, 140 F. Supp. 383, the court held that if “the committee is not pursuing a bona fide legislative purpose when it secures the testimony of any witness, it is not acting as a ‘competent tribunal’ … [and] extracting testimony with a view to a perjury prosecution is [not] a valid legislative purpose.”

So. Let's review. In my post, I cited six different United States Courts of Appeal – six circuits — specifically rejecting Dershowitz' argument.¹ Dershowitz now argues that the point is not "well-settled" because . . . in 1978 a New York court interpreting a New York law came to a different conclusion, and in 1956 a federal trial court in D.C. made comments supporting Dershowitz' view on materiality.

This is not a serious argument. An honest commentator or advocate might cite those cases for the proposition that the current rule is wrongly decided and that it should be changed. But no honest advocate or commentator would cite a state court decision on a different statute and a trial court decision from 1956 to say that the law is not "well-settled" when every federal appellate court to take up the issue has explicitly ruled the other way. Notably, though Dershowitz discusses and links the two cases he cites, he utterly ignores the wall of federal authority contradicting his position. He's not saying "yes, there is contrary authority, but it's wrong." That would be honest. Instead, he pretends the contrary authority doesn't exist. If he did that in a brief, he'd be sanctioned. If the government did it in a brief about one of his clients, he'd be outraged. Dershowitz is trading on the fact that non-lawyers will not grasp the legal significance of every single federal court of appeals to consider the issue going one way and a state court and trial court going another. He's using his expertise to deceive.

Note how he frames the dispute with his critics:

One can reasonably disagree on these issues, and I am ready to debate which is the better civil-liberty view.

But that's not the dispute. Some people do agree with the current regime of prosecutorial power, but those aren't the people Alan Dershowitz is complaining about. The dispute is this — what is the law now? Dershowitz is arguing that the law is, at least, unclear, and that the Special Counsel is breaking it. He's making that argument in fora sympathetic to that view, in service of the general narrative that the Special Counsel is lawless and that the Trump Administration is a victim of wrongdoing. He's doing so deliberately. He's lying.

Dershowitz views himself as a principled victim of calumny:

Being principled and intellectually honest means that, sometimes, your positions may conflict with your partisan preferences. For most of my critics, however, it seems that partisanship trumps their fair-weather commitment to civil liberties.

There's nothing principled about Dershowitz' stance. Principled commentators don't use their prestige to lie about what the law is. The law is vastly complicated and often obscure, which helps the government abuse it. Dershowitz' commentary — as he knows perfectly well — is being used to portray the Special Counsel proceedings falsely as an aberration rather than as a continuation of a long pattern of very troubling federal prosecutorial power. That narrative is a barrier to reform, not an incentive to it, because it suggests we can solve the problem by firing the Special Counsel, who is merely doing what prosecutors do every day. That is not a civil libertarian stance; it's the stance of a hack.

Dershowitz suggests that he's been falsely accused of being a Trump supporter. Allow me to clarify. I do not believe that Alan Dershowitz supports Donald Trump in his heart. I only think he's willing to use deceit to support Trump's narratives, and the narratives of Trump's obedient media allies, to get on television and in print. Alan Dershowitz doesn't love Trump. But he loves the camera more than he loves the truth.