Patent Thicketing Provision Cut From Bill Passed By US Senate Judiciary Committee
Executive Summary
Legislation was also revised to enable manufacturers to justify withdrawing, discontinuing or switching product for follow-on; bills restricting citizen petitions, tribal sovereign immunity also clear committee.
The sponsors of legislation to curtail so-called product hopping and patent thicketing by product innovators cut the section on patent thickets in a manager's amendment that cleared the US Senate Judiciary Committee on 27 June.
The bill, Affordable Prescriptions for Patients Act, S. 1416, would amend the Federal Trade Commission Act to prohibit anticompetitive behaviors by drug manufacturers and give the FTC specific authority to institute a proceeding or bring suit in federal court to enjoin these actions. The original bill specified such action consisted of product hopping and patent thicketing and listed factors for the FTC to consider in determining if additional patents were limiting competition.
Patent Thickets
A large portfolio of overlapping patents which impede potential competitors from commercializing their products, requiring them to litigate or license the patents to gain market entry.
The brand-name drug industry urged dropping patent thicketing from the bill. But at the same time, the manager's amendment (a package of changes developed by committee leaders that have general agreement) added a section on biosimilar litigation that would limit the number of patents that a reference product sponsor asserts in litigation to no more than 20. The limits do not apply to formulation, dosage, composition of matter, method of use, or indication patents.
The patents the brand name manufacturer would be limited to asserting include those with an actual filing date of more than four years after licensure of the original drug; that are not being used by the brand; that are not related to the method of use; and are newly granted, licensed, or acquired.
A staffer for committee ranking Democrat Diane Feinstein of California said the addition of this new section was intended to get at the same issue as the deleted patent thicketing provision by discouraging the same type of anticompetitive behavior.
The Association for Accessible Medicines was pleased with the addition of the provisions on patent infringement litigation between biosimilar and brand manufacturers.
"The possibility of enhancing and accelerating the patent dance could make a great contribution to lowering drug prices," AAM general counsel Jeff Francer said in an interview. Rather than having to engage in litigation of 70 or more patents, "it makes much more sense for the brand to pick a subset of patents and litigate on that capped amount."
During the mark-up, bill co-sponsor Sen. John Cornyn, R-TX, said the manager's amendment includes "important changes to ensure we are targeting only those bad actors and not meaningful developments in the biopharmaceutical field."
The section on product hopping was changed to enable a manufacturer to justify withdrawing or discontinuing a product, or making a soft switch, in favor of a follow-on product.
Product Hopping
A tactic by brand-name manufacturers to block generic competition by making modest alterations to an existing drug, typically before the original version is to lose patent protection. The brand company may withdraw or discontinue the original product or hinder its use to get consumers to switch to the reformulated product.
Specifically, the manufacturer must show it would have taken such actions regardless of whether a generic drug or biosimilar biologic referencing the product had already entered the market and it took the action for reasons relating to the safety risk of patients, a supply disruption, or with regard to a soft switch it had "legitimate pro-competitive reasons, apart from the financial effects of reduced competition, to take the action."
The amendment also specifies that the FTC may rebut any evidence presented by the manufacturer in its justification and establish that on balance, the pro-competitive benefits from the conduct do not outweigh any anticompetitive effects of the conduct.
Bill co-sponsor Richard Blumenthal, D-CT, emphasized the need for vigorous, effective enforcement of the legislation. "We need the FTC to show real teeth and be a watch dog, a bull dog, in enforcing these laws," he said.
Opposition To Tribal Sovereign Immunity Bill
The committee passed three other pharma bills intended to reduce drug pricing and make generic drugs more accessible (see chart).
Only one bill, S. 440, to prevent Indian tribes from asserting sovereign immunity in proceedings before the US Patent and Trademark Office's Patent Trial and Appeal Board (PTAB), faced opposition, but it passed by a narrow 12-10 voice vote.
Co-sponsor Joni Ernst, R-IA, said the manager's amendment adopted by the committee clarifies that public universities are not captured by the intent of the legislation.
Committee ranking member Dianne Feinstein, D-CA, who voted against the measure, said the problem addressed by the bill was already solved as the courts and PTAB had ruled that a Native American tribe could not claim sovereign immunity to block an inter partes review of a patent.
In the case prompting the legislation, Allergan Inc. transferred rights to patents covering its dry eye treatment Restasis (cyclosporine) to the Saint Regis Mohawk Tribe, which then sought to terminate an inter partes review proceeding challenging the patents on the grounds of its sovereign immunity. PTAB denied the tribe's request to end the proceeding and the US Court of Appeals for the Federal Circuit affirmed the decision. (Also see "Restasis Patent Review Back On Track As Federal Circuit Quashes Mohawk Tribe's Sovereign Immunity Claim " - Pink Sheet, 22 Jul, 2018.)
Feinstein said the bill was also too broad as it would prevent Native American tribes from asserting sovereign immunity in any type of patent infringement, regardless of the substance of the patent owned. She said it would also make assertions of sovereign immunity in patent infringement proceedings presumably invalid while allowing the same assertions by state universities to be presumptively valid.
This is "done without any rationale why ownership by Native Americans is inherently more suspect," Feinstein stated.
Sen. Richard Durbin, D-IL, who also voted against the bill, noted that the chair and ranking member of the Senate Committee on Indian Affairs opposed it.
Ernst disagreed that the bill was unnecessary, saying it codifies PTAB's recent decision by removing the loophole that allows tribes to take ownership of patents to block their review.
"Failure to act could incentivize other industries to use similar tactics to block competitors and prevent the production of generics," Ernst stated. The legislation is "responding to an actual fact pattern that would have led to the cascade of patent transfers and a reduction in the availability of cheaper alternatives."
The committee passed two other bills by unanimous voice vote, which mandate action by the FTC. Both of them were replaced with manager's amendments.
The Prescription Drug Pricing for the People Act of 2019, S. 1227, would require the FTC to study the role of intermediaries in the pharmaceutical supply chain and submit a report to Congress on whether pharmacy benefit managers charge some payers at a higher rate, steer patients to pharmacies in which they have an ownership interest, and use formulary designs to depress the market share of low-cost, lower-rebate prescription drugs.
And the Stop Significant Time-Wasting Abuse Limiting Legitimate Innovation of New Generics (STALLING) Act, S. 1224, would authorize the FTC to deter the filing of sham citizen petitions.
Congress has taken up a slew of bills this term to address drug pricing. On 26 June, the Senate Committee on Health, Labor, Education and Pensions passed several bills, including the Lower Health Care Costs (LHCC) Act, which addresses enhanced transparency around price increases, among other things. (Also see "Senate Drug Pricing Legislation Clears Committee With Generic Exclusivity “Parking” Provision Unchanged" - Pink Sheet, 26 Jun, 2019.)