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.”
“Either you can file for a drug you would like to market and certify to no IPR, or not market the drug as a generic.”
Yet, as discussed above, the AIA was enacted to address a number of issues in the patent law, and there is no evidence in the legislative history of the AIA that IPR was meant to address only NPEs. Furthermore, there is nothing that shows that Congress meant to carve out Orange Book-listed patents from the IPR process.
The proposed amendment itself is rather simple. If enacted, it would modify: 1) the certifications required in an Abbreviated New Drug Application pursuant to section 505(j)(2) of the Federal Food, Drug, and Cosmetic Act (FD&C Act); 2) the certifications required in a New Drug Application pursuant to section 505(b)(2) of the FD&C Act; and 3) the information included in a biosimilar application under section 351(k) of the Public Health Service Act.
For all of these types of applications, (generic, 505[b][2], and biosimilar), the applicant would be required to certify that neither the applicant nor any party in privity with the applicant has filed, or will file, a petition to challenge the patent using the IPR or PGR. In other words, if an applicant wants to participate in the Hatch-Waxman Act or biosimilars process, that applicant cannot use or rely on the IPR or PGR in any way.
Hatch frames the amendment as providing a choice to a generic drug company: “I’ve circulated an amendment that would force a party that wishes to challenge a brand patent to choose: the party can file a Hatch-Waxman suit, which carries the benefits of being able to rely on the brand company’s safety and efficacy studies for FDA approval, or it can file an IPR proceeding, which is cheaper, faster, and easier to win. But it can’t do both.”
However, the proposed amendment provides a Hobson’s choice to a generic pharmaceutical: either you can file for a drug you would like to market and certify to no IPR, or not market the drug as a generic. If the amendment is enacted, it will simply result in eliminating IPRs and PGRs for generic pharmaceutical companies’ use.
Janine Carlan is a partner at Arent Fox and focuses her practice on Hatch-Waxman litigation. She can be contacted at: janine.carlan@arentfox.com
