United States: Why The TERM Act Is A Misguided Solution To A Different Problem

The “Terminating the Extension of Rights Misappropriated (TERM) Act of 2019” would create a presumption that every other patent listed in the Orange Book has been terminally disclaimed over the earliest-expiring Orange Book-listed patent. The press release from Representative Hakeem Jeffries (NY-08) states that the TERM Act will “address the rising cost of prescription drugs by significantly limiting the process known as ‘evergreening’, whereby pharmaceutical companies make minor changes to a drug and file for a new patent on those trivial changes in order to extend their exclusivity and maintain high prices.” But are second-generation patents really to blame for high prescription drug costs? And would the TERM Act even simplify patent challenges?

The Misguided Underpinnings of the TERM Act 

Apparently referring to ANDA litigation, the press release states that “[u]nder existing patent statute, generic drug manufacturers must prove why a new patent should not be granted on existing medication. This process adds significant costs to generic manufacturers and slows the ability of lower cost drugs to be released.” Missing from this characterization is an explanation that generic drug manufacturers only need to invalidate a granted patent (i) if they want to enter the market before the patent expires and (ii) want or need to sell an infringing product because they can’t design-around the patent and still obtain approval as a generic drug. 

The press release continues: 

The TERM Act shifts that burden of proof to pharmaceutical companies, who would have to reasonably demonstrate why changes to a drug qualify it for a new patent.

Missing from this characterization is a recognition that before a patent is granted the USPTO determines that the claims “qualify … for a new patent.” Do Representative Jeffries and his co-sponsors lack so much faith in the USPTO they want to create another exception to the presumption of validity accorded patents under 35 USC § 282? 

According to Representative Doug Collins (GA-09)--who also may not appreciate the rigors of the patent examination process--“some manufacturers simply file additional patents in order to delay generic drugs from coming to market.”  

Representative Debbie Mucarsel-Powell (FL-26) paints a nefarious picture, asserting that drug manufacturers have a “shady practice of amassing endless patents to prevent more affordable generic medicines from reaching the market.” 

Missing from the press release is any analysis of how often improvidently granted second-generation patents have kept generic drugs off the market for a significant period of time, and the impact of such patents on drug prices. 

The Misguided “Solution” to the Problem of High Drug Prices 

The TERM Act (HR 3199) was introduced by Representative Jeffries and Representative Collins and is co-sponsored by Representative Debbie Mucarsel-Powell and Representative Ben Cline (VA-06).

As noted above, the TERM Act would create a rebuttable presumption that every other patent listed in the Orange Book has been terminally disclaimed over the earliest-expiring Orange Book-listed patent. In particular, the legislation would amend 35 USC § 253 (which relates to disclaimers) to add the following section:

(c) DISCLAIMERS OF DRUG PATENT TERM.— 
(1) IN GENERAL.—Except as provided in paragraph (2), in a proceeding challenging the validity of patents [in ANDA litigation or biosimilar litigation], the patentee shall 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, subject to the exceptions provided for in subsection (2).

(2) DEMONSTRATION OF DISTINCT INVENTIONS.—If a patentee demonstrates by a preponderance of the evidence that certain patents described in paragraph (1) cover patentably distinct inventions from the invention claimed in the first such patent to expire, no part of the term of any such patent shall be presumed to have been disclaimed, and all patent term extensions granted by the United States Patent and Trademark Office shall be respected, unless and to the extent the patentee expressly disclaims, in writing, the patent term for each such patent.

Do We Need More OTDP Rejections?

The TERM Act also calls for the USPTO to “conduct a comprehensive review” of its practices 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.” I would be surprised if anyone with patent applications examined in Group 1600 (where most pharmaceutical patents are reviewed) thinks examiners are missing obviousness-type double patenting rejections or too readily withdrawing such rejections without requiring a terminal disclaimer. 

Would The TERM ACT Even Be Effective?

By its own terms, the TERM Act only would apply in the context of “a proceeding challenging the validity of patents [in ANDA litigation or biosimilar litigation],” but generic and biosimilar companies already can raise obviousness-type double patenting issues in such proceedings. While the TERM Act would alter the burdens of production and proof on such issues, wouldn’t the net gain only be to shorten the term of patents that are more likely than not, but not clearly and convincingly, obvious in view of the earliest granted patent?  Given the ability to raise obviousness-type double patenting issues in post-grant review proceedings (where the challenger would bear the burden of proof, but only by a preponderance of the evidence), would the TERM Act really have much impact on the term of second-generation patents, let alone drug prices?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Oblon, McClelland, Maier & Neustadt, L.L.P
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
 
In association with
Practice Guides
by Mondaq Advice Centers
Relevancy Powered by MondaqAI
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Oblon, McClelland, Maier & Neustadt, L.L.P
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions