Week in Review: The latest from PhRMA

For more than three decades Hatch-Waxman (the Drug Price Competition and Patent Term Restoration Act of 1984) has encouraged innovation in biopharmaceutical development while at the same time accelerating access to generic products. Today, 90 percent of prescriptions are filled with generic medicines, and that is in part the result of robust brand and generic competition spurred by Hatch-Waxman. Disrupting its careful balance risks losing access to lifesaving new cures, and yet, that’s exactly what the inter partes review (IPR) process does. Let’s take a look at the IPR process:

• What is IPR: In a patent application, the claims section is where the person seeking a patent spells out the inventions they are protecting with the patent, and the U.S. Patent and Trademark Office (PTO) approves these claims when it grants a patent. When challenging a patent, petitioners point to the claims, and one way they do that is through the IPR process. Enacted in 2011 as part of the America Invents Act, IPR is a trial-like proceeding before the Patent Trial and Appeal Board (PTAB), which is a board of the PTO.

• What makes IPR different: Unlike standard federal court proceedings, IPR uses a lower standard of review and looser procedural rules. For example, in federal court, the Constitution requires that a case or controversy exist between the parties involved for a proceeding to continue. For IPR, any individual or organization can bring a challenge at virtually any time. Another difference is that in court a federal judge presumes the patent is valid and the challenger must prove otherwise. In current IPR proceedings, patents are not presumed valid.

The IPR process creates uncertainty in the U.S. patent system, which could stifle innovation and has contributed to the weakening value of U.S. patents. The United States has now slipped to 12th on the U.S. Chamber’s most recent IP index for patents. IPR proceedings have become an additional venue for organizations to challenge patent validity in search of the result they prefer. On average, over 80 percent of IPR petitions that reach a final written decision result in the cancellation of at least one claim.

Patents are the lifeblood of the biopharmaceutical industry and are critical to continued medical innovation, enabling the investments necessary for the development of new medicines. Which is why it is concerning to see that on average about one out of every two IPR challenges of biopharmaceutical patents listed in the Orange Book that reaches a final decision results in at least one claim of the patent being canceled. While this rate is lower than the cross-industry average of 81 percent, that only tells part of the story. The biopharmaceutical industry is unique in that its patents are typically challenged a decade or more after issuance. And these patents are already directly subject to a special litigation framework through Hatch-Waxman. IPR proceedings—and all the uncertainty they create—are layered on top of that process.

Congress intended the IPR process as a cheaper, more efficient alternative to federal court, but for biopharmaceutical patents, they are almost inevitably a second bite at the same apple. Generic manufacturers file IPR challenges in addition to using the Hatch-Waxman process, forcing innovator manufacturer companies to defend patents in two tribunals simultaneously under different rules. This creates a huge amount of uncertainty and, as result, undermines the research and development of future innovations. That’s why we believe Hatch-Waxman should be the sole framework for resolving disputes between innovator manufacturers and generic manufacturers.