The Greatest Trick the Devil Ever Pulled was Convincing the World He Didn’t Exist: Senate Judiciary Set to Mark-Up Patent Reform Bills that Could Significantly Affect Hatch-Waxman and the BPCIA

“Inter Partes Review” and “Section 101” are not terms you typically run into on this all-things-FDA blog, but we have talked about such patent-related issues before (here and here), and they are important legal (patent) principles, particularly in the context of drug and biological products (and the Hatch-Waxman Amendments and the Biologics Price Competition and Innovation Act (“BPCIA”)).  And because of that, we try to stay abreast of such things (while staying in our “FDA lane”), especially when Congress gets involved to change the law.  To that end, we were recently alerted to the fact that the Senate Committee on the Judiciary has scheduled an Executive Business Meeting for Thursday, September 19, 2024 to mark-up, among other things, two bills of interest: (1) S. 2220, the Promoting and Respecting Economically Vital American Innovation Leadership Act  (“PREVAIL Act”); and (2) S. 2140, the Patent Eligibility Restoration Act of 2023 (“PERA Act”).

The PREVAIL Act

In short, the PREVAIL Act is intended to, among other things, reform the Inter Partes Review (“IPR”) process created by the 2011 Leahy-Smith America Invents Act.  IPRs have become an important tool used by generic drug and biosimilar manufacturers to try and clear patent thickets covering brand-name products prior to or during the pendency of an ANDA or aBLA submission.

Reading through the “Findings” section of S. 2220, introduced by Senators Chris Coons (D-DE), Thom Tillis (R-NC), Richard Durban (D-IL), and Mazie Hirono (D- HI), as well as the August 2023 press release accompanying the bill’s introduction, the PREVAIL Act sounds pretty good on paper.  After all, who could say “No” to this?

This bill supports inventors, encourages investments in intellectual property, secures U.S. global technology leadership, and protects economic and national security. The PREVAIL Act updates and improves on legislation that Senator Coons previously introduced to ensure that our patent system protects this essential property right.

Or to this from The Inventor’s Project:

The PREVAIL Act makes commonsense reforms to the [Patent Trial and Appeal Board] to promote fair treatment for inventors, improve efficiency, and ensure that the USPTO has the resources it needs to effectively administer a patent system that incentivizes American innovation and enables U.S. inventors to compete.

But there’s another side to this story.  As noted by the Association for Accessible Medicines (“AAM”) in a March 2024 letter opposing the bill:

The PREVAIL Act includes a prohibitive standing requirement, making it a “necessary condition[]” that an entity must be sued or charged with infringement before filing a petition for IPR.  This provision would prevent timely IPR challenges of pharmaceutical patents, and would chill the feasibility of such IPR challenges altogether. . . .

The PREVAIL Act’s proposal that, absent “exceptional circumstances” subsequent petitions cannot challenge the same patent, uniquely harms generic and biosimilar companies.  The Hatch-Waxman Act and [BPCIA] make it highly likely that multiple generic and biosimilar companies will be interested in invalidating the same patents, though not always at the same time, particularly where companies are at different stages of product development. With multiple companies interested in challenging the same patents, there are numerous circumstances in which a subsequently-filed petition may be warranted. . . .  The PREVAIL Act improperly impedes the IPR pathway for such subsequent petitioners, forcing these companies to defer to the arguments presented by their competitors.

The PERA Act

Like the PREVAIL Act, the PERA Act, introduced by Senators Thom Tillis (R-NC) and Chris Coons (D-DE) and intended to address patent eligibility under 35 U.S.C. § 101, also seems pretty good on paper.  Consider this June 2023 press release on the bill’s introduction:

There is now widespread bipartisan agreement in Congress and across all recent administrations that reforms are necessary to restore the United States to a position of global strength and leadership in key areas of technology and innovation, such as medical diagnostics, biotechnology, personalized medicine, artificial intelligence, 5G, and blockchain.

The Patent Eligibility Restoration Act achieves this critical goal by restoring patent eligibility to important inventions across many fields while also resolving legitimate concerns over the patenting of mere ideas, the purported discovery of which already exists in nature, and social and cultural content that everyone agrees is beyond the scope of the patent system. In short, this system is aimed at promoting technology-based innovation.

And again from The Inventor’s Project:

[D]esigned to clear up the confusion caused by recent court rulings on what can be patented under section 101 of the U.S. Code.  The Act aims to eliminate all judicial exceptions to patent eligibility, maintaining the current categories of what can be patented while adding specific exclusions.  Importantly, it clarifies that sections 102, 103, and 112 will still dictate the requirements for getting a patent, but these requirements won’t affect the initial eligibility decision.  This change is meant to make things more straightforward for everyone involved in the patent process, from inventors to judges to patent officials.

But as AAM notes in a March 2024 letter opposing S. 2140:

Section 101 is critically important to AAM and its members.  Because of two statutory schemes, the Hatch-Waxman Act and the [BPCIA], generic and biosimilar companies generally must address patent issues before launching a product through costly and protracted patent litigation.  Eliminating invalid patents under § 101 enables generic and biosimilar companies to streamline pharmaceutical litigation.  Because § 101 can be addressed at the outset of a case, § 101 is a useful tool for generic and biosimilar companies to avoid burdensome discovery and trim the number of asserted patents, which in some cases amounts to dozens.  This in turn can allow generic and biosimilar companies to launch their products sooner, providing patients with earlier access to more affordable medications.

The PERA Act would not only minimize these benefits of § 101, but it would make it easier for brand-name biologic companies to obtain less innovative patents, leading to higher drug prices. . . .  The PERA Act would abolish § 101’s careful test for eligibility and would open the floodgates to non-innovative patents.

So . . . beware of Roger “Verbal” Kint.  Who you ask?  You might know him better as: Keyser Söze.