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Executive Summary

BIOTECH PATENT PROECTION BILL WOULD BAR MAROGEN (erythropoietin) sales in the U.S. under current production practices. Introduced by Reps. Boucher (D-Va.) and Moorhead (R-Calif.) on Feb. 6, the legislation is designed to close an alleged "loophole" in current law which has allowed the importation of biotechnology products made by offshore companies through use of a U.S. patented component. Marogen is manufactured by Chugai in Japan under a license from Genetics Institute, the holder of certain U.S. erythropoietin (EPO) patent rights. The product is awaiting FDA clearance. The bill would grant jurisdiction to the International Trade Commission (ITC) to exclude foreign products that are made through the use of a component, such as a host cell, which has been patented in the U.S. The ITC recently dismissed such an infringement claim by Amgen (currently the sole U.S. marketer of EPO) against Chugai for "lack of subject matter jurisdiction." Issued last April, the ITC decision said that Amgen's patent does not cover the process for producing erythropoietin. The ITC said the Tariff Act may be invoked only when a process patent claim exists ("The Pink Sheet" April 17, 1989 T&G-2). Amgen is appealing the decision. Title II of the Boucher-Moorhead bill would amend Sec. 337 of the Tariff Act and U.S.C. title 35 by establishing that it is an infringement when a firm "without authority imports into the U.S. or sells or uses within the U.S. a product which is made by using a biotechnological material [such as host cells, DNA sequences or vectors] covered by a valid and enforceable" U.S. patent. The law would be prospective, applying only to products imported, or sold for importation after enactment of the bill. Products imported prior to the bill's introduction would be exempted. Products imported after Feb. 6 but prior to enactment can be sold up to 90 days after enactment. That is the situation which would be likely to apply to Marogen. The scope of the bill is not limited to drug products, but its sponsors are focusing on pharmaceuticals. In an introductory statement, Boucher commented that "if the patent law bars a company from using a patented host cell to produce a drug in the U.S., it should bar companies from taking that host cell off-shore, producing the drug, and importing it." The timing of the Capitol Hill action may be favorable for Amgen in its fight with Genetics Institute (Chugai-Upjohn) over the rights to EPO in the U.S. Genetics Institute opposes the legislation, maintaining it will in effect deny a U.S. firm and its partners the right to market in this country. Moorhead noted that the "purpose of the new legislation is to stand up for the American biotechnology industry by eliminating the unfair advantages that our patent law confers on foreign competitors." He pointed to the recently announced acquisition of a controlling interest in Genentech by Swiss firm Roche as an example of "home-grown American industries...captured by foreign competitors." Another major U.S. biotechnology drug product which could be affected by the legislation is Genentech's tissue plasminogen activator (Activase). The bill may impact the entry into the U.S. of a TPA product that would compete with Activase, the only TPA approved in the U.S. Genentech is currently involved in a patent dispute with Genetics Institute and Burroughs Wellcome over another version of TPA. Burroughs Wellcome has licensed a TPA from Genetics Institute but has not yet sought FDA approval for the product. The bill's other major provision, Title I, would change current U.S. Patent Office practice by directing that patents be granted for production processes in situations where the starting material is novel. The Patent Office is refusing in some cases to issue patents for process under a 1985 decision in the Federal Circuit Court of Appeals (the Durden decision) involving chemical patents. The provision differs from the process patents law of 1988 in that it relates to whether a patent should be issued for a process, while the 1988 law establishes an enforcement situation for process patents already held. The bill will be referred to the House Judiciary/Courts, Intellectual Property Subcommittee, chaired by Rep. Kastenmeier (D-Wisc.), a principal author of the process patents law. Kastenmeier is not among the 11 co-sponsors for the bill. He is said to be reviewing the legislation. The co-sponsors include: Reps. Bates (D-Calif.), Bentley (R-Md.), Bilbray (D-Nev.), Collins (D-Ill.), Gallegly (R-Calif.), Glickman (D-Kan.), Kildee (D-Mich.), Levine (D-Calif.), Lipinski (D-Ill.), Matsui (D-Calif.) and Sensenbrenner (R-Wisc.). Moorhead is the subcommittee's ranking Republican. The bill may also be referred to the Ways & Means Committee, which has jurisdiction over ITC matters. Boucher said he hopes for a hearing in March.

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