TERM Act Would Presume All Patents Covering a Branded Pharmaceutical Product Are Not Patentably Distinct

On June 11, a bipartisan group of Representatives including Hakeem Jeffries (D-N.Y.), Doug Collins (R-Ga.), Ben Cline (R-Va.), and Debbie Mucarsel-Powell (D-Fla.) introduced a new bill to address the rising cost of branded prescription drugs. The Terminating the Extension of Rights Misappropriated (TERM) Act of 2019, H.R. 3199, 116th Cong. (2019), aims to prevent pharmaceutical companies from extending product exclusivities by making minor changes to a drug and filing for corresponding patent protection. A recent study found that 78% of the drugs associated with new patents in the FDA’s records between 2005 and 2015 were existing drugs and that these new patent terms delayed the marketing of generic drug alternatives.

The current patent regime requires generic drug manufacturers to prove why a new patent is invalid or not infringed. The TERM Act would instead place a burden on the branded pharmaceutical company to demonstrate why any changes to the drug warrant a new patent term and corresponding exclusivity. Under the bill’s section titled “Prevention of Double Patenting,” manufacturers would 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,” unless they can demonstrate that the new patents “cover patentably distinct inventions.” In short, the Act creates a default forfeiture of serial patent terms and presumes obviousness-type double patenting of any subsequent drug patents unless the patentee proves otherwise.

Moreover, the TERM Act would require the USPTO Director to conduct a comprehensive review of the agency’s patent examination procedures 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.” And the agency must implement new practices to “reduce the improper issuance of patents that improperly extend the terms of exclusivity afforded a new drug or biological product.”

Seemingly, the bill sponsors appear to lack faith in the USPTO and assume that the examiners are ignoring obviousness-type double patenting.  Overall, it is unclear how this burden-shifting framework would affect the Act’s broad goal of lowering prescription drug costs. Obviously, many pharmaceutical products are covered by multiple patent families directed to disparate aspects of the product.  And when the patents originate from the same parent, the USPTO usually requires terminal disclaimers where appropriate.  The TERM Act could, however, implicate divisional patents that escape double patenting scrutiny. See Applied Materials, Inc. v. Advanced Semiconductor Materials Am., Inc., 98 F.3d 1563, 1568 (Fed. Cir. 1996). Whether or not the TERM Act would achieve the goal of lowering drug costs, it once again reinforces the increased scrutiny the industry is receiving from legislators, while other players in the health care industry, such as pharmacy benefit managers and insurance providers, do not appear to be facing the same scrutiny.

Thanks to Elvis Kim, a law student at the University of Minnesota Law School, for his contributions to this post.