Why The TERM Act Is A Misguided Solution To A Different Problem

The “Terminating the Extension of Rights Misappropriated (TERM) Act of 2019” would create a presumption that every other patent listed in the Orange Book has been terminally disclaimed over the earliest-expiring Orange Book-listed patent. The press release from Representative Hakeem Jeffries (NY-08) states that the TERM Act will “address the rising cost of prescription drugs by significantly limiting the process known as ‘evergreening’, whereby pharmaceutical companies make minor changes to a drug and file for a new patent on those trivial changes in order to extend their exclusivity and maintain high prices.” But are second-generation patents really to blame for high prescription drug costs? And would the TERM Act even simplify patent challenges?

The Misguided Underpinnings of the TERM Act 

Apparently referring to ANDA litigation, the press release states that “[u]nder existing patent statute, generic drug manufacturers must prove why a new patent should not be granted on existing medication. This process adds significant costs to generic manufacturers and slows the ability of lower cost drugs to be released.” Missing from this characterization is an explanation that generic drug manufacturers only need to invalidate a granted patent (i) if they want to enter the market before the patent expires and (ii) want or need to sell an infringing product because they can’t design-around the patent and still obtain approval as a generic drug. 

The press release continues: 

The TERM Act shifts that burden of proof to pharmaceutical companies, who would have to reasonably demonstrate why changes to a drug qualify it for a new patent.

Missing from this characterization is a recognition that before a patent is granted the USPTO determines that the claims “qualify … for a new patent.” Do Representative Jeffries and his co-sponsors lack so much faith in the USPTO they want to create another exception to the presumption of validity accorded patents under 35 USC § 282? 

According to Representative Doug Collins (GA-09)–who also may not appreciate the rigors of the patent examination process–“some manufacturers simply file additional patents in order to delay generic drugs from coming to market.”  

Representative Debbie Mucarsel-Powell (FL-26) paints a nefarious picture, asserting that drug manufacturers have a “shady practice of amassing endless patents to prevent more affordable generic medicines from reaching the market.” 

Missing from the press release is any analysis of how often improvidently granted second-generation patents have kept generic drugs off the market for a significant period of time, and the impact of such patents on drug prices. 

The Misguided “Solution” to the Problem of High Drug Prices 

The TERM Act (HR 3199) was introduced by Representative Jeffries and Representative Collins and is co-sponsored by Representative Debbie Mucarsel-Powell and Representative Ben Cline (VA-06).

As noted above, the TERM Act would create a rebuttable presumption that every other patent listed in the Orange Book has been terminally disclaimed over the earliest-expiring Orange Book-listed patent. In particular, the legislation would amend 35 USC § 253 (which relates to disclaimers) to add the following section:

(c) DISCLAIMERS OF DRUG PATENT TERM.— 
(1) IN GENERAL.—Except as provided in paragraph (2), in a proceeding challenging the validity of patents [in ANDA litigation or biosimilar litigation], the patentee shall be presumed to have disclaimed the patent term for each of the listed patents after the date on which the term of the first patent expires, subject to the exceptions provided for in subsection (2). 
(2) DEMONSTRATION OF DISTINCT INVENTIONS.—If a patentee demonstrates by a preponderance of the evidence that certain patents described in paragraph (1) cover patentably distinct inventions from the invention claimed in the first such patent to expire, no part of the term of any such patent shall be presumed to have been disclaimed, and all patent term extensions granted by the United States Patent and Trademark Office shall be respected, unless and to the extent the patentee expressly disclaims, in writing, the patent term for each such patent.

Do We Need More OTDP Rejections?

The TERM Act also calls for the USPTO to “conduct a comprehensive review” of its practices to “avoid the issuance of patents relating to the same drug, or biological product, that are not patentably distinct from one another, and not subject to an appropriate disclaimer of patent term.” I would be surprised if anyone with patent applications examined in Group 1600 (where most pharmaceutical patents are reviewed) thinks examiners are missing obviousness-type double patenting rejections or too readily withdrawing such rejections without requiring a terminal disclaimer. 

Would The TERM ACT Even Be Effective?

By its own terms, the TERM Act only would apply in the context of “a proceeding challenging the validity of patents [in ANDA litigation or biosimilar litigation],” but generic and biosimilar companies already can raise obviousness-type double patenting issues in such proceedings. While the TERM Act would alter the burdens of production and proof on such issues, wouldn’t the net gain only be to shorten the term of patents that are more likely than not, but not clearly and convincingly, obvious in view of the earliest granted patent?  Given the ability to raise obviousness-type double patenting issues in post-grant review proceedings (where the challenger would bear the burden of proof, but only by a preponderance of the evidence), would the TERM Act really have much impact on the term of second-generation patents, let alone drug prices?