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Biden Patent Office Pick Will Shape Fight Over High Drug Prices

July 30, 2021, 9:36 AM

The path toward lower drug prices could hinge on who President Joe Biden picks as the next director of the U.S. Patent and Trademark Office.

Generic drug groups are pushing for a PTO chief who will make it easier to invalidate patents they find as obstacles to bringing lower-cost medicines to the market. Proponents of strong intellectual property protections believe they are the gateway to innovation, and want a director like Andrei Iancu who will take steps to ensure that inventors aren’t easily stripped of their rights.

Biden has yet to announce a nomination. But the debate comes amid renewed government efforts to boost access to treatments for Covid-19 and other potentially life-threatening conditions. An executive order Biden issued earlier this month calls for measures to bolster competition to lower drug prices. Democratic lawmakers have asked for a federal probe into AbbVie Inc. deals to delay biosimilar versions of its Humira arthritis medication.

The choice of a PTO director is “pretty important in this particular moment” for the pharma industry, said Matthew Lane, executive director of the Coalition Against Patent Abuse.

Lobbyists have dropped several names as potential picks, including Marcus Delgado, Cox Enterprises’ chief IP counsel; Colleen Chien, a Santa Clara University law professor; and Ellisen Turner, an IP partner at Kirkland & Ellis LLP. The administration has yet to publicly signal a candidate for the role.

Critical for Drugs

The U.S. patent system encourages drug research and developments that give the pharmaceutical industry a competitive edge, some intellectual property specialists say.

Patents are “critical to the initial development of drugs, the ability of the private sector to invest in research and new drug developments,” said Iancu, who led the patent office under former President Donald Trump. They also “have a significant role to play in the commercialization of successful drug candidates.”

But major drugmakers are accused of levying the system as a bulwark against generic competition, erecting patents by the dozen to add decades to the amount of time before a rival can offer a lower-cost alternative.

“The concern is when invalid or low quality patents are issued. And then those patents can block generics from coming into the market for some time and drive up prices,” said Melissa Wasserman, a University of Texas at Austin law professor who focuses on patents.

Generic drug advocates, tech interest groups, and others say reforms under the Trump administration made it harder to invalidate patents that secure drug monopolies.

Iancu led efforts to raise the standards for challengers trying to get the agency’s Patent Trial and Appeal Board to hear a dispute, relying on PTO guidance and PTAB precedent such as Apple v Fintiv—which set out factors PTAB judges must consider when deciding whether to institute a patent review when parallel litigation is pending.

PTAB challenges to patents in the Orange Book—the Food and Drug Association’s registry of approved drug patents—have been declining since fiscal 2015, when the number peaked at 130, according to PTO data. Fewer than 20 challenges were filed against such patents in fiscal 2020.

“It’s a big deal in the drug industry,” Lane said. PTAB proceedings are a “necessary step” for ensuring a drug patent covers an innovative idea rather than merely extending a monopoly, he said.

Agency Reforms

Advocates for agency reform say rolling back some of Iancu’s changes would make it easier for generic companies to challenge allegedly weaker patents among the lot surrounding a particular drug so that they can bring their own version to the market.

Active ingredients for a drug are covered by what’s known as “primary patents.” But as a drug patent’s expiration date nears, pharmaceutical companies sometimes file for “secondary” patents, covering things like production methods and formulations.

Those secondary patents can keep generic drugs from entering the marketplace for a longer period of time, critics say.

“Secondary patents are in general as a class lower quality and more likely to be invalidated by courts,” Wasserman said. Biden’s PTO director could undo red tape that makes it harder for companies to try and get these patents invalidated at the patent office, she said.

Yet Iancu’s reforms aren’t without their advocates. Congressmen on both sides of the aisle have cheered Iancu’s leadership, commending the Trump appointee with revamping the agency’s image as a “patent death squad.” Among his supporters have been Sens. Thom Tillis (R-N.C.) and Chris Coons (D-Del.), who led efforts to revamp the law on what inventions are eligible for a patent.

“The thrust of the reforms that some folks complain about is to eliminate duplicative proceedings” at the PTO and the courts, Iancu said. “If you had a meritorious petition, the office would hear it. But not if you’re trying to have multiple bites at the apple.”

Quality Control

Some attorneys want to see an improved patent office workflow to reduce the rate of what they consider low-quality patents.

The number of patent applications an examiner considers a year depends on their technology specialty and employment level. But Wasserman noted that on average, an examiner has 19 hours to review an application.

Giving examiners more time to review previous inventions and craft more thorough rejections for inventors would help cut down on the rate of granted secondary drug patents, Wasserman said. PTO collaboration with international patent offices and use of those agencies’ information would help as well.

“You have a whole menu of options to increase the quality,” Wasserman said.

Others suggest being cautious with reform.

“Through the policies and processes they implement, directors can either encourage more innovation that can benefit patients and our broader health-care system, or discourage it,” said Megan Van Etten, senior director of public affairs at the Pharmaceutical Research and Manufacturers of America, an industry group representing name brand drug companies.

“Any erosion of the U.S. patent system can disincentivize the biopharmaceutical R&D that leads to new medicines for patients and more competition in the marketplace,” she said.

Yet bipartisan interest in drug pricing is high, and a PTO director has a place in the fight.

“There’s a lot conversation going on about rebalancing things toward the public interest and higher quality patents, and they can be a part of that in a lot of ways,” Lane said.

To contact the reporter on this story: Ian Lopez in Washington at ilopez@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Alexis Kramer at akramer@bloomberglaw.com

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