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Executive Summary

BIOTECH PROCESS PATENT BILL PROVIDES AMGEN WITH ONLY "PARTIAL SOLUTION" to the company's concern about patent protection against imported products that use U.S.-patented starter materials, according to a Senate Judiciary Committee report that appears to favor the general concept of a legislative remedy. The report reviews S 654, which cleared the Senate Judiciary Committee in November ("The Pink Sheet" Nov. 25, 1991, T&G-8). The bill would establish patent safeguards for a production process when the starter material is patentable. Amgen has advocated an amendment to block importation of finished products using U.S.-patented starter material such as host cells, initially due to lingering concerns that Genetics Institute licensee Chugai could import recombinant erythropoietin into the U.S. despite Amgen's 1991 judicial victory in a patent battle over the product. Currently, though, Chugai is barred from such importation due to Amgen's orphan exclusivity provisions for Epogen. While the Judiciary Committee did not add an amendment addressing the Amgen situation, the committee report says it "is hopeful that this issue ultimately may be resolved by Congress in the near future." Amgen "is not the only entity facing this problem today," the report notes. "There are other small biotechnology companies and universities that have obtained only host cell protection" for biotechnology products. "If the loophole in the patent laws is not closed, these companies and universities could also experience the problem faced by Amgen -- competition from a foreign competitor who can do what no U.S. manufacturer may lawfully do." Filing a report on a committee-passed bill is a prelude to floor consideration. Sen. Heflin (D-Ala.) is working on a floor amendment to S 654 to close the importation "loophole" cited in the report. Heflin, who expressed interest in the issue during full committee and subcommittee sessions on S 654, is expected to try to work out an amendment that is acceptable to Sens. DeConcini (D- Ariz.) and Hatch (Utah), the lead sponsors of S 654 and the chairman and ranking Republican, respectively, of the Judiciary/Patent subcommittee. One possible compromise is that the amendment may apply prospectively, so that Amgen itself would is not be protected by the amendment. Heflin probably also will examine concerns of the Patent & Trademark Office that previous drafts of the amendment appear to limit "relief to a particular industry" and might confer inappropriate patent protection to the end product, not just the process or starter material ("The Pink Sheet" Oct. 7, 1991, T&G- 3). The Bush Administration endorses S 654 as currently configured. Commenting more generally on S 654, the Judiciary Committee report states that currently, "biotechnology inventors cannot take advantage of the benefits" of process patent rules used by other industries. The bill "is consistent with the structure of existing law"; does "not fundamentally alter the requirements of patentability"; and "most importantly," is the "least drastic alternative to solve a limited problem."

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