Hatch-Waxman amendment: a Hobson’s choice
US Senator Orrin Hatch, co-author of the original Hatch-Waxman Act of 1984, has introduced a new bill seeking to dramatically change the current course of Hatch-Waxman litigation. On June 13, Hatch introduced an amendment, the Hatch-Waxman Integrity Act of 2018, that is designed “to restore the careful balance the Hatch-Waxman Act struck to incentivise generic drug development”.
According to Hatch, the amendment would restore the balance by outlawing the ability to use the inter partes review (IPR) process in the context of a Hatch-Waxman litigation.
Background
In 1984, US Congress passed the Hatch-Waxman Act to provide a framework for incentivising pharmaceutical innovation, while at the same time allowing a path for affordable generic drugs. The act created a balance between brand companies’ need for exclusivity and ability to recoup their investment with generic companies’ desire to develop low cost medicines for the marketplace.
In 2012, Congress passed a piece of legislation (unrelated to the Hatch-Waxman Act) entitled the America Invents Act (AIA), which was the first significant change to US patent law since 1952. One of the major changes was switching the US system from “first to invent” to “first inventor to file”, which harmonised the US’s legislation with the patent law in many other parts of the world.
The AIA also introduced other revisions to US patent law, including limiting causes of action for false patent marking, eliminating invalidity for failure to disclose “the best mode”, and numerous other changes. Relevant here, the AIA also introduced a revised system for post-grant opposition procedures. In particular, the AIA expanded the previous inter partes reexamination process into the IPR process, which allows any party to challenge a patent at the US Patent and Trademark Office’s Patent and Trial Appeal Board.
The proposed amendment
Hatch introduced his proposed amendment to the Hatch-Waxman Act and provided comments about it at a Senate Judiciary Committee hearing on June 14. In his comments, Hatch stated that “Hatch-Waxman struck a careful balance, one that has endured for decades”, but then added that “it’s recently come to my attention that the IPR process that this committee created in the AIA, and which I strongly support, is producing unintended consequences in the Hatch-Waxman context”.
Hatch said the IPR process is a threat to the Hatch-Waxman Act “by enabling two separate paths to attack a brand patent”, one of which, of course, is via litigation and the other, through the post-grant processes.
None of the remarks or press releases from Hatch points to empirical studies or statistics that support his statement that the IPR process is disrupting the balance of the Hatch-Waxman Act, and there is nothing to show that the proposed amendment is necessary. It is unclear whether Congress will demand evidence of an upset to the Hatch-Waxman Act framework before enacting this legislation.
In both Hatch’s remarks and in the fact sheet about the amendment, there is a strong suggestion that the IPR process was developed only to challenge patents held by non-practising entities (NPEs):
“ Congress enacted the AIA to fix a problem unrelated to drug/biologic innovation and drug/biologic affordability; it created the IPR and post-grant review (PGR) to combat the growing problem of patent trolls.”
