“Reduced patent exclusivity terms under the TERM Act or increased obviousness standards under the No Combination Drug Patents Act could disincentivize follow-on innovations that can reduce drug toxicity or treat more diseases.”
The growing debate over the effects of patents on the rising price of pharmaceuticals continues to encourage the introduction of drug pricing-focused bills in Congress over the past few months. Most recently, a pair of proposed bills have been introduced which seek to limit the ability to patent follow-on innovations involving medicines which have already received patent protection in one level of dosage or method of administration.
TERM Act Would Shift Patent Eligibility Burden from Generics to R&D Firms
On June 12, a press release announced the introduction of the Terminating the Extension of Rights Misappropriated (TERM) Act into the U.S. House of Representatives. The bill is sponsored by a bipartisan coalition including Representatives Hakeem Jeffries (D-NY), Doug Collins (R-GA), Debbie Mucarsel-Powell (D-FL) and Ben Cline (R-VA). According to the release, this proposed law looks to change the burden of proving patentability of a drug-related invention under existing patent statute from generic drugmakers challenging drug patents to the pharmaceutical research and development firms filing patent applications.
The TERM Act would amend Title 35 of the U.S. Code to prevent “double patenting” by altering Section 235 to include language on disclaimers of drug patent term. According to the language proposed in the bill, patents related to a drug being challenged on validity grounds under 21 U.S.C. § 355(c), patents related to a biological products being challenged under 42 U.S.C. § 262(l), or patents being challenged in district court proceedings under 35 U.S.C. § 271(e)(2) shall be presumed to have their patent terms disclaimed by the patentee after the date on which the first patent related to the drug or biological product expires. Patent terms granted by the U.S. Patent and Trademark Office (USPTO), however, will be respected if the patentee demonstrates by a preponderance of the evidence that challenged patents cover patentably distinct inventions than is covered by the first patent to expire.
Also included in the language of the TERM Act is a requirement that the USPTO Director must conduct a comprehensive review of the agency’s patent examination procedures to ensure that the Office is avoiding the issuance of patents that aren’t patentably distinct from patents issued on the same drug or biological product. The law would require the Office to implement best practices, guidance and procedures to improve the examination of patents related to previously patented drugs or biological products and reduce the issuance of patents that improperly extend the term of exclusivity on those drugs or biological products. If the TERM Act passes into law, the USPTO Director will be required to conduct a report on these items and present both the findings and recommendations to the House Committee on the Judiciary within one year.
No Combination Drug Patents Act Would Reduce Patentability for Dosing Regimen, Delivery Mechanism Changes
A second bill titled the No Combination Drug Patents Act is on its way to being introduced by Senator Lindsey Graham (R-SC). The bill would similarly limit the issuance of pharmaceutical patents by codifying that changes to dosing regimens or delivery mechanisms would be considered obvious under U.S. patent law. The goal of this bill is to cut down on dense patent thickets covering drug or biologic product developments that are routinely investigated by manufacturers and which deter competition from generic drugmakers. The bill’s drafters seek to consider these routine developments as obvious while respecting the recent findings of the Court of Appeals for the Federal Circuit’s decision in Neptune Generics, LLC v. Eli Lilly & Company regarding instances in which a combination patent wouldn’t be considered obvious.
The No Combination Drug Patents Act would amend 35 U.S.C. § 103, which governs nonobviousness criteria for patent eligibility, to include a section on presumption with respect to certain changes to drugs and biological products. Under this section, covered claimed inventions, which include claimed inventions that use a prior art drug or biological product and that only differs from the prior art with respect to a dosing regimen, a method of administration or delivery, a method of treatment or pharmaceutical formulation. If this bill were enacted as law, there would be a presumption that such covered claimed inventions would have been obvious before the effective filing date of that invention.
The bill as written does allow patent applicants to rebut the presumption that the combination drug patent would be considered obvious. It would also require the USPTO Director to issue guidance to patent examiners within 90 days that is consistent with final precedential opinions which have been issued by both the Federal Circuit and the U.S. Supreme Court. As the findings section of the bill notes, there have been seven consecutive decisions issued by the Supreme Court in the 13 years preceding this act which have “strengthened the patent system of the United States to meet the requirements imposed on the patent system of the United States system by the Constitution.”
The Struggle Between Price and Innovation Grows
Various hearings on drug pricing issues have provided plenty of fodder for lawmakers who believe that reducing the number of pharmaceutical patents would provide a panacea to rising pharmaceutical prices. As a handout on the No Combination Drug Patents Act notes, AbbVie CEO Richard Gonzalez testified before Congress that Humira, the company’s blockbuster drug for treating arthritis, Crohn’s disease and ulcerative colitis, is protected by more than 200 patents and more than 100 patent applications, “several of which combine Humira with an injection device.” Applying the Federal Circuit’s test from Neptune Generics enables true innovation to be delineated from obvious combinations of generic compounds, the handout maintains.
While there are many who accept the logic that rising pharmaceutical prices necessitate strong action to reduce patent protections in that sector, some legitimate concerns have been raised over the negative impacts that restrictions on patentability would have on drug innovations. At a May 9 USPTO oversight hearing conducted by the House Intellectual Property Subcommittee, USPTO Director Andrei Iancu noted that the blockbuster AIDS treatment AZT was first a failed cancer drug. That particular tidbit came in response to a question from TERM Act co-sponsor Rep. Ben Cline, who asked if it was appropriate to offer patent protections to trivial improvements. If patents could be invalidated or face a reduced term of exclusivity because they covered the use of a known drug for treating a new disease, either of which the recently proposed bills seem to contemplate, that could easily reduce the motivation of pharmaceutical firms to continue improving upon known drugs to disastrous effect.
As patent attorney Kevin Buckley noted in our coverage of the Affordable Prescriptions for Patents (APP) Act introduced in early May by Senators John Cornyn (R-TX) and Richard Blumenthal (D-CT), that law’s definition of patent thicketing as an anticompetitive activity that can be prosecuted by the Federal Trade Commission could cause pharmaceutical companies to avoid the expensive process by which existing drugs could be repurposed to treat new diseases. Reduced patent exclusivity terms under the TERM Act or increased obviousness standards under the No Combination Drug Patents Act could have similar effects of disincentivizing follow-on innovations that can reduce drug toxicity or treat more diseases.
One could argue that these pharmaceutical bills follow a similar zeitgeist regarding the patent-eligibility of inventions in the software industry. Much like many software-related patents are decried as “abstract ideas” that are simply implemented by general purpose computers or computing architecture that already exists in the prior art, it seems like lawmakers have zeroed in on the idea that many pharmaceutical patents cover little more than combinations of prior art drugs and delivery methods, with little regard for the increased therapeutic benefits of different dosage regimens or delivery mechanisms.
Drug Patent-Related Bills Proposed During the 116th Congress
Here is a list of the other drug patent and pricing bills that have been introduced so far this term.
- Affordable Prescriptions for Patients Act of 2019: This bill would amend the Federal Trade Commission Act to define product hopping and patent thicketing as anticompetitive activities against which the Federal Trade Commission (FTC) can institute enforcement proceedings. (S. 1416 – Introduced by Sens. John Cornyn [R-TX] and Richard Blumenthal [D-CT])
- Preserving Access to Cost Effective Drugs (PACED) Act of 2019: This bill would amend Title 35 of U.S. Code to abrogate sovereign immunity as a defense against patent validity trials conducted at the Patent Trial and Appeal Board (PTAB). (S. 440 – Introduced by Sens. Tom Cotton [R-AZ], Joni Ernst [R-IA] and Pat Toomey [R-PA])
- Prescription Drug Price Relief Act of 2019: This bill would allow the Secretary of Health and Human Services to review patent-protected brand-name drugs to determine if any drugs are being sold at excessive prices relative to costs in five reference countries and, if so, issue non-exclusive licenses at royalty rates set by the Secretary. (S. 102 – Introduced by Sens. Bernie Sanders [I-VT], Cory Booker [D-NJ], Richard Blumenthal [D-CT], Kamala Harris [D-CA] and Elizabeth Warren [D-MA]; H.R. 465 – Introduced by Reps. Ro Khanna [D-CA] and 13 other Democrat co-sponsors)
- Orange Book Transparency Act of 2019: This bill would increase the reporting requirements for pharmaceutical manufacturers with drugs listed in the Food and Drug Administration’s (FDA) Orange Book, including a list of all patents for which a patent infringement claim could be reasonably asserted. (H.R. 1503 – Introduced by Rep. Robin Kelly [D-IL])
- Purple Book Continuity Act of 2019: This bill would amend the Public Health Service Act to create a public listing of licensed biological products that includes information on patents covering biological products and their date of expiration. (H.R. 1520 – Introduced by Rep. Anna Eshoo [D-CA])
- Fair Access for Safe and Timely (FAST) Generics Act of 2019: This bill would amend the Food, Drug, and Cosmetic Act to provide generic drugmakers increased access to approved drugs and biological products for development and testing purposes. (H.R. 985 – Introduced by Reps. Peter Welch [D-VT], David McKinley [R-WV] and David Cicilline [D-RI])
- Hatch-Waxman Integrity Act of 2019: This bill would amend both the Food, Drug, and Cosmetic Act and the Securities Exchange Act of 1934 to prevent the use of inter partes review (IPR) proceedings at the Patent Trial and Appeal Board (PTAB) to challenge pharmaceutical patents. (S. 344 – Introduced by Sen. Thom Tillis [R-NC]; H.R. 990 – Introduced by Rep. Bill Flores [R-TX])
- Preserve Access to Affordable Generics and Biosimilars Act of 2019: This bill would give the FTC the authority to begin enforcement proceedings against pharmaceutical companies that engage in pay-to-delay settlements that prolong the market entry of drugs or biological products. (S. 64 – Introduced by Sens. Amy Klobuchar [D-MN] and Chuck Grassley [R-IA]; H.R. 2375 – Introduced by Reps. Jerry Nadler [D-NY], Doug Collins [R-GA] and David Cicilline [D-RI])
- Competitive Deals Resulting in Unleashed Generics and Savings (DRUGS) Act of 2019: This bill would also extend authority to the FTC to start enforcement proceedings against pharmaceutical firms making pay-for-delay settlements. (H.R. 1344 – Introduced by Reps. Lloyd Doggett [D-TX] and 19 other Democrat co-sponsors)
- Medicare Negotiation and Competitive Licensing Act of 2019: This bill would amend Title XVIII of the Social Security Act to give the Secretary of Health and Human Services authority to negotiate the price of drugs offered under Medicare Part D and, if negotiations are unsuccessful, offer competitive licenses to other firms that can make use of patent, clinical data or other exclusivity to provide such drugs. (S. 377 – Introduced by Sens. Sherrod Brown [D-OH], Tammy Baldwin [D-WI] and Amy Klobuchar [D-MN]; H.R. 1046 – Introduced by Reps. Lloyd Doggett [D-TX] and 108 other Democrat co-sponsors)
- Stopping the Pharmaceutical Industry from Keeping drugs Expensive (SPIKE) Act of 2019: This bill would amend Title XI of the Social Security Act to require drug manufacturers to publicly justify price increases, including providing relevant information on patent acquisition and licensing expenditures. (S. 474 – Introduced by Sens. Ron Wyden [D-OR] and 8 other Democrat co-sponsors)
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