Drug Pricing and the Law: Pharmaceutical Patent Disputes

Drug Pricing and the Law: Pharmaceutical Patent Disputes

May 17, 2019
Drug Pricing and the Law: Pharmaceutical Patent Disputes
Patent rights play an important role in the development and
other remedies. Patents are presumed to be valid, but
pricing of pharmaceutical products. Patent law seeks to
accused infringers may defend against lawsuits by claiming
encourage innovation by granting the holder of a valid
noninfringement (i.e., what they did was not covered by the
patent a temporary monopoly on an invention, potentially
patent) or invalidity (i.e., the patent should never have been
enabling him to charge higher-than-competitive prices.
issued because, e.g., the invention was not novel).
Patent disputes relating to the entry of follow-on
pharmaceuticals are subject to specialized procedures.
Specialized Pharmaceutical Patent
Because patent rights may deter or delay competition from
Dispute Procedures
generic drug and biosimilar manufacturers, these
Federal law contains specialized procedures for certain
procedures can affect whether and when follow-on products
pharmaceutical patent disputes. Instead of traditional acts of
can enter the market, influencing the prices of patented
patent infringement—such as making, using, or selling the
pharmaceuticals. This In Focus provides an overview of the
allegedly infringing product—these procedures are
complex procedures governing pharmaceutical patent
triggered by the act of filing an application with FDA for
disputes.
approval of a follow-on product. Under certain
circumstances, the law treats the filing of these FDA
FDA Regulation of Drugs and Biologics
applications as an “artificial” act of patent infringement,
Drugs and biological products (biologics) are both articles
allowing for the resolution of patent disputes before the
used in the diagnosis, cure, mitigation, treatment, or
follow-on is marketed. These procedures can affect whether
prevention of human disease. Nonbiological drugs do not
and when a generic drug or biosimilar can be marketed, and
derive from living organisms, and are generally artificially
so determine when a brand-name product becomes subject
synthesized, small-molecule chemicals. In contrast,
to direct competition.
biologics are generally large, complex molecules produced
by or derived from living organisms, such as a virus, toxin,
To encourage the market entry of follow-on
antibody, vaccine, blood component, or protein.
pharmaceuticals, federal law provides abbreviated
regulatory pathways for approving generic drugs and
Both drugs and biologics are subject to a premarket
biosimilars. Under the Hatch-Waxman Act, generic drug
approval process administered by the Food and Drug
manufacturers seeking FDA approval can rely on a brand-
Administration (FDA), but under different laws. Before
name drug’s safety and efficacy information, if the follow-
they can be marketed or sold, nonbiological drugs must be
on product is pharmaceutically equivalent and
approved by FDA under the Federal Food, Drug, and
bioequivalent to the previously approved brand-name drug.
Cosmetic Act (FD&C Act), whereas biologics are licensed
Similarly, under the Biologics Price Competition and
by FDA under the Public Health Service Act (PHSA).
Innovation Act (BPCIA), a biosimilar manufacturer can
obtain an FDA license to market a biologic by
General Patent Dispute Procedures
demonstrating that it is biosimilar to (or interchangeable
Patents can be obtained on almost any new and useful
with) an already-licensed brand biological product.
invention made by humans. For example, many different
aspects of new pharmaceutical products—such as active
Patent Procedures Under the Hatch-Waxman Act
ingredients, formulations, or methods and technologies to
Under the Hatch-Waxman Act, new drug manufacturers
manufacture drugs and biologics—may be patented.
must list patents that claim the drug or a method of using
that drug as part of their application for FDA approval.
To obtain a patent, the claimed invention must be novel,
FDA includes information on listed patents in a publication
useful, and nonobvious, and the inventor must be the first
known as the Orange Book.
person to file a patent application with the U.S. Patent and
Trademark Office (PTO). If the PTO grants the patent, the
When a generic drug manufacturer seeks approval from
patentee generally has the exclusive right to make, use, sell,
FDA, it must make one of four certifications with respect to
and import the invention for a set term, usually 20 years
patents listed in the Orange Book: (i) there are no patents
from the date that the application was filed. Any other
listed; (ii) the patent has expired; (iii) the generic will delay
person wishing to use the invention during this period needs
FDA approval until the patent expires; or (iv) the patent is
permission from the patent holder. A person who practices
invalid or not infringed. This final certification, called a
a validly patented invention without permission infringes
“paragraph (iv) certification,” often results in litigation. If
the patent and risks legal liability.
the generic manufacturer makes a paragraph (iv)
certification, it must notify the patentee and the brand-name
To enforce the patent, the patent holder may sue alleged
drug manufacturer, who then have 45 days in which to
infringers in federal court to seek injunctions, damages, and
bring a lawsuit against the generic applicant.
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Drug Pricing and the Law: Pharmaceutical Patent Disputes
If the patent holder timely files suit after a paragraph (iv)
engage in the patent dance, so biosimilar manufacturers
certification, the FDA generally cannot approve the generic
may choose whether or not to initiate the patent dance.
drug application for 30 months while the parties litigate
their patent dispute. If the courts determine that the patent is
To initiate the patent dance, the biosimilar applicant must
invalid or not infringed, FDA can approve the drug
provide its FDA application and information about how the
immediately. If the courts conclude that the patent is valid
biosimilar is manufactured to the brand-name biologic
and infringed, then FDA generally cannot approve the
manufacturer no later than 20 days after FDA accepts the
generic application until the patent expires.
biosimilar application. The biosimilar applicant and brand-
name biologic manufacturer then engage in a series of
Patent Procedures Under the BPCIA
back-and-forth information exchanges regarding the
A different set of procedures applies to patent disputes
relevant patents and the parties’ positions as to the validity
relating to biosimilar market entry under the BPCIA. In
and infringement of those patents. The parties may have the
contrast to the Hatch-Waxman approach, biologic
opportunity to litigate patent disputes (1) at the conclusion
manufacturers need not provide any patent information to
(or breakdown) of the patent dance, and/or (2) when the
FDA as part of their licensure applications. As a result,
applicant provides notice that the biosimilar will be actually
patent information is not included in the Purple Book,
marketed. (Such notice must occur no later than 180 days
FDA’s list of approved biological products.
before the date of commercial marketing.)
Instead of Hatch-Waxman’s listing and certification
Unlike patent listing under Hatch-Waxman, the BPCIA
process, patent disputes regarding biosimilars may be
contains an express statutory penalty for failing to list
resolved through the BPCIA’s “patent dance.” The patent
relevant patents during the patent dance. If the biosimilar
dance is a complex scheme through which brand-name
applicant commences the patent dance, the brand-name
biologic and biosimilar manufacturers exchange
biologic manufacturer must provide a list of all patents for
information about their patents and products in preparation
which it believes a claim of patent infringement could
for potential litigation. The Supreme Court has held that
reasonably be asserted. The patent holder may forfeit his
biosimilar manufacturers cannot be judicially compelled to
right to sue on patents that are not included on this list.
Table 1. Comparison of Patent Provisions in the Hatch-Waxman Act and the BPCIA

The Hatch-Waxman Act
The BPCIA
Pharmaceutical
Drugs—usually small molecules, chemically
Biologics—often large, complex molecules (e.g.,
Product
synthesized (e.g., Aspirin: C9H8O4)
Humira: C6428H9912N1694O1987S46)
FDA Approved
The Orange Book (includes patent information)
The Purple Book (no patent information)
Product List
Patent Listing
New drug manufacturer is required to list any
If the patent dance is initiated, brand-name biologic
Requirements
patent that claims the drug or a method of using
manufacturer must list patents for which a claim of
the drug.
patent infringement could reasonably be asserted.
Patent Listing
If no patent listed, generic applicant need not
Patentee may forfeit right to sue on patents that
Consequences
certify; brand drug manufacturer may not obtain
should have been included on list provided during the
30-month stay of FDA approval.
patent dance, but were not included.
Patent Dispute
Patent Listing and Certification Process:
The “Patent Dance” (simplified steps):
Procedures
1. Generic applicant makes certifications with
1. Biosimilar applicant provides application and
respect to patents listed in the Orange Book;
manufacturing information to brand-name biologic
2. Generic applicant must notify patent holder and
manufacturer;
brand-name drug manufacturer of paragraph (iv)
2. Parties exchange lists of relevant patents, positions
certifications challenging a patent;
on patent validity and infringement, and negotiate to
3. Brand-name drug manufacturer may sue within
try to reach agreement and/or narrow disputed issues;
45 days after notice of paragraph (iv) certification;
3. Eventually, “first phase” of litigation may result at
4. If suit is filed, FDA generally cannot approve
conclusion of patent dance (or if the dance breaks
generic application for 30 months while the parties down); some patents may be reserved for “second
litigate the patent dispute.
phase” of litigation when biosimilar applicant gives
notice of commercial marketing.
Source: CRS.

IF11214
Kevin J. Hickey, Legislative Attorney

https://crsreports.congress.gov

Drug Pricing and the Law: Pharmaceutical Patent Disputes

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