Should responsible regulators follow the letter or the spirit of the law?

We typically expect ethical companies to follow not only the letter of the law, but also the spirit of the law. And in some cases, we would say that they should follow the spirit of the law rather than the letter. For example, if your washing machine breaks the day after the 3-year warrantee expires, you might think that an ethical – or even just reasonable – appliance manufacturer would nevertheless fix it for free.

By the same token, shouldn’t we expect responsible regulators and other government officials to respect the spirit of the law as much as the letter – and perhaps even to let the spirit override the letter some times?

Test your intuitions on the following case.

The Medicines Company engaged in a 9-year legal battle with the FDA and the United States Patent and Trademark Office, on whether it will be allowed to extend the patent on its blood thinner drug Angiomax until September 2014. The legal battle stemmed from the failure of the company to file its application for renewal within the 60 days allotted.

“The Medicines Company, based in Parsippany, N.J., learned of Angiomax’s approval by fax from the F.D.A. at 6:17 p.m. on Dec. 15, 2000, a Friday. It applied for the patent extension on Feb. 14, 2001. That is either 61 or 62 days after the approval, depending on whether the approval date itself is counted.”

Medicines Company contended that since the original fax was sent after 5pm the clock should not have started until the next business day allowing them to fit the law. The company pointed to the fact that the FDA marks anything received by their office after 5pm as received on the next business day. This administrative mistake could have cost the company over a billion dollars, and given its small size (with only one other drug on the market) marked the end of the company.

Big picture here isn’t just about one company’s struggle against the patent office and FDA, it is about the role of regulators in the pharmaceutical industry and the spirit of the law. Do we want our regulators to be inflexible in enforcing written laws or would we prefer some discretion allowed by administrators? Should they look to the spirit of the law, and not merely to its letter?

Sometimes the courts say, Yes. After 9 years of fighting and over $4 million spent on lawyers and lobbyists, Medicines Company won their legal battle.