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Patent Tribunal Comes Under Fire in Congress Drug Cost Fight (1)

Sept. 16, 2021, 8:52 PMUpdated: Sept. 16, 2021, 11:03 PM

Lawmakers are calling out a U.S. Patent and Trademark Office tribunal favored by generic drugmakers over policy they claim blocks pharmaceutical competition, urging the agency to take action amid an ongoing fight to curb prices on prescription medications.

The Patent Trial and Appeal Board has “in recent years, begun frequently denying petitions” to reconsider the validity of already-granted intellectual property rights “for reasons not based on the merits, which has made it more difficult to curtail anti-competitive practices by prescription drug companies,” senators and representatives from both sides of the aisle wrote in a Thursday letter to the Patent and Trademark Office.

The letter obtained by Bloomberg Law counts Senate Judiciary intellectual property subcommittee chair Patrick Leahy (D-Vt.) and fellow Democrats Elizabeth Warren of Massachusetts and Ron Wyden of Oregon among its signers. It comes as lawmakers and the Biden administration mount pressure for the PTO to wade into a government-wide effort to knock down prescription drug costs.

Lawmakers in the Thursday letter take particular issue with policy set for PTAB disputes by the tribunal’s Apple, Inc. v. Fintiv, Inc. decision. Fintiv provides considerations for PTAB judges when determining whether to review the validity of a patent that’s also part of a district court infringement case.

The decision has been challenged by tech companies like Apple Inc. and Alphabet Inc.'s Google in federal court. Lawmakers said Fintiv has spurred “a disturbing rise in discretionary denials” of PTAB inter partes reviews of patents, with 19% of petitions “by some counts” denied in 2020 “for reasons that had nothing to do with the merits.”

“As long as discretionary denials of IPRs under Fintiv continue, the public will lose one of the few tools available that can help address the root cause of high prescription drug prices and drive competition in the marketplace,” the lawmakers said. “We encourage you to reassert the USPTO’s role in reviewing drug manufacturers’ anticompetitive practices, including by ending the policies that have caused the spike in discretionary denials of patent challenges.”

Andrew Hirshfeld, who is temporarly performing the PTO director duties, said the agency “strongly” supports “the goal of lowering drug prices for all Americans” and is “evaluating next steps to help achieve that goal.”

The Food and Drug Administration has also reached out to the PTO for help in the Biden administration’s effort to curb drug prices, asking for information on the PTAB and other practices. The Health and Human Services Department and President Joe Biden have also noted patents’ role in drug pricing, while senators from both parties have supported legislation involving patent practices.

The Fintiv precedent was set during the Trump administration under then-PTO Director Andrei Iancu, who set a series of PTAB precedents. The Biden administration has yet to name a PTO chief.

“The rise of discretionary denials of IPRs for non-merits-based reasons robs generic drug and biosimilar companies of a key venue to challenge the validity of brand manufacturer patents that are primarily designed to extend the manufacturer’s monopoly on a drug,” lawmakers said.

Democratic Sens. Richard Blumenthal of Connecticut and Debbie Stabenow of Michigan also signed the letter. Reps. Darrell Issa (R-Calif.), Tom Tiffany (R-Wis.), Pramila Jayapal (D-Wash.), Bobby Rush (D-Ill.), Victoria Spartz (R-Ind.), and Anna Eshoo (D-Calif.) also signed.

Leahy earlier in September sent another letter to the PTO asking the agency to reject applications that could undermine competition in the drug space. Senate Judiciary IP Subcommittee ranking member Thom Tillis (R-N.C.) signed that letter, but not the one sent Thursday.

(Updates with PTO comment and information on previous Leahy letter.)

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

To contact the editor responsible for this story: Brent Bierman at bbierman@bloomberglaw.com

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