On Thursday, June 4, the Senate Judiciary Committee approved the Protecting American Talent and Entrepreneurship (PATENT) Act. We previously reported the significant provisions of the bill.

Several members of the Judiciary Committee expressed support for a further proposal that would exempt from PTO post-grant proceedings patents that are subject to the Hatch-Waxman or Biologics Price Competition and Innovation Act (BPCIA) processes. In his prepared statement, Senator Grassley, Chairman of the Judiciary Committee said:

In addition, there is a proposal by the life sciences community concerning the applicability of the PTO’s post grant proceedings to patents that are subject to the Hatch-Waxman Act and Biologics Price Competition and Innovation Act (BPCIA) processes. The Hatch-Waxman process has been instrumental in facilitating the entry of low cost generic drugs in the market. Consumers want access to cheaper drugs as soon as possible, so I’ve been a big supporter of this law. I’m also supportive of incentivizing biosimilar market entry. When the America Invents Act was considered, it’s my understanding that there was no debate over whether or how IPR would impact these important processes.

It’s imperative for us to hear from all sides, get additional information and data, and consult with the HELP Committee, which is the Committee of jurisdiction over the Hatch-Waxman Act and Biologics Price Competition and Innovation Act (BPCIA) laws. This is a complex issue that needs to be seriously and responsibly considered, including further review, discussion, and vetting. My colleagues and I have already started getting views on this matter, and we continue to review and conduct outreach.

I agree that we need to preserve incentives for generics to come to market, and I’m committed to working on this issue as we move towards the floor.

During the hearing, Senator Cornyn commented on additional changes that are needed to the bill, including revisions that “would preserve the vitality of Hatch-Waxman.” He added that “when we passed the America Invents Act, no one anticipated that IPR would impact that process in the way that it has.” Senator Schumer suggested that the bill may be amended to “exclude from the IPR process patents for pharmaceuticals that received FDA approval.” The hearing is available here.

Senator Schumer suggested that the bill may be amended to “exclude from the IPR process patents for pharmaceuticals that received FDA approval.”

The details of any such proposals are currently unavailable. With respect to Hatch-Waxman proceedings, Congress could conceivably exempt all patents listed in the Orange Book from inter partes review before the PTO. Pharmaceutical companies are required to list all patents covering branded drugs in the FDA-published Orange Book.

With respect to the BPCIA, how Congress would address this issue is unclear. The BPCIA provides a pathway for “biosimilar” drugs, essentially generic versions of biologic drugs. The BPCIA does not, however, provide for an equivalent to the Orange Book listing of relevant patents. Instead, a “reference product sponsor” (the company that holds the existing license for the biologic drug) only identifies its patents that are potentially relevant to a biosimilar drug after a biosimilar applicant submits its application to the FDA. This process of identifying patents is informally called the “patent dance.” See 42 U.S.C. § 262(l).

One of the benefits of post-grant proceedings before the PTO is that a biosimilar applicant can seek review with the PTO before filing an application with the FDA, possibly clearing the way for the applicant to market its biosimilar product. But because the reference product sponsor does not identify its patents until after the applicant files with the FDA, the list of patents that would potentially be exempt from post-grant proceedings would remain undefined until the patent dance begins.

Conceivably, Congress could prohibit a biosimilar applicant from seeking post-grant review of patents that are identified during the patent dance, which would at least limit the applicant’s ability to use PTO proceedings to avoid district court litigation. If by identifying a patent during the patent dance a reference product sponsor could bring an end to an already-filed proceeding in the PTO, a biosimilar applicant would need to file its petition with the PTO sufficiently in advance of filing its FDA application to ensure that the petition reaches a final decision in the PTO before the reference product sponsor produces its list of patents in the patent dance.

Several pharmaceutical companies have recently faced the threat of inter partes review sought by hedge fund investors who file IPR petitions and short the company’s stock. While this would seem to be a logical issue for Congress to address, it appears that it is not the issue that concerns the Senate Judiciary Committee. Notably, the Committee did not approve a proposed amendment (OLL15552) that would have introduced a standing requirement for post grant proceedings, similar to the standing requirement for district court. A hedge fund seeking inter partes review would not meet that requirement as it would not face threat of being sued under the patent it seeks to invalidate.