BioRationality: Bill to Remove Double Patenting That Harms Biosimilars Heads to the House

The S-150 bill, officially known as the "Affordable Prescriptions for Patients Act of 2023," was passed by the US Senate on July 11, 2024. It passed after a major campaign organized by patient advocacy groups, including Patients For Affordable Drugs Now (P4ADNow), which resulted in around 27,000 letters and more than 30,000 phone calls to Congressional offices demanding action on the issue. Among other elements of the bill is that it authorizes the Federal Trade Commission (FTC) to enforce the prohibition and impose limits on patent litigation involving biological products. In addition, it includes measures intended to curb “product hopping” when a manufacturer winds down production of an old drug and forces patients to switch to a newer, in-patent version.

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The bill has been passed as the FTC has launched a crackdown on what it calls ‘junk patents’, sending warning letters to 10 manufacturers disputing more than 300 patent listings covering 20 brands used for diabetes, weight loss, asthma, and chronic obstructive pulmonary disease.

P4ADNow—which said the Congressional Budget Office has projected that this bill alone could save taxpayers $1.8 billion – called it a major step forward for patients and consumers.

This legislation aims to curb anti-competitive practices in the pharmaceutical industry, specifically targeting "patent thickets" and "product hopping" that delay the entry of cheaper generic and biosimilar drugs into the market.¹ Patent thicketing involves drug manufacturers filing numerous patents for minor modifications to extend market exclusivity, while product hopping entails manufacturers discontinuing an older drug in favor of a new, patent-protected version, forcing patients to switch and thus delaying generic competition.

This practice increases litigation costs, as biosimilar manufacturers must navigate and challenge numerous patents protecting a single biologic drug, a costly and time-consuming process.² Each patent may need to be individually invalidated in court, raising the financial burden on biosimilar developers and potentially deterring them from pursuing development.³ The presence of multiple patents can also complicate the regulatory approval process, as agencies like the FDA may be hesitant to approve biosimilars until patent disputes are resolved, further delaying market entry.⁴ This ongoing litigation and uncertainty create a risk-averse environment for investors and biosimilar manufacturers, discouraging investment and reducing the number of companies willing to enter the biosimilar market.⁵

As a result, the reduced competition in the biologics market allows original manufacturers to maintain higher prices, limiting patient access to more affordable biosimilar alternatives.⁶ The US Patent Trade Office's proposed rule to require specific terminal disclaimer agreements aims to address these issues by simplifying the process of challenging and invalidating secondary patents, potentially facilitating easier market entry for biosimilars.

The strong opposition to this rule by Biotechnology Innovation Organization (BIO) will be detrimental to the future of biosimilars. I request that all biosimilar stakeholders, especially associations like the Biosimilar Council, keep writing about this issue until it passes the House and is signed into law. Notably, the Association for Accessible Medicines had filed a convincing comment.⁷

The Bill, co-sponsored by Senators John Cornyn (R-Texas) and Richard Blumenthal (D-Connecticut), seeks to limit the number of patents a pharmaceutical company can assert on a single drug and empowers the FTC to enforce these provisions, aiming to promote competition and reduce drug prices.

BIO, an arm of the big pharma, had filed an opposition to the “Proposed Rule: Terminal Disclaimer Practice To Obviate Nonstatutory Double Patenting” filed by the US Patent and Trademark Office on 05/10/2024 (Docket PTO-P-2024-0003.^8,9

In the proposed amendment, the USPTO proposes a new rule requiring terminal disclaimers, filed to overcome nonstatutory double patenting, to include an agreement that such patents will only be enforceable if they have not been tied to other patents by terminal disclaimers where any claim has been finally invalidated. This rule aims to prevent multiple patents on obvious variants of an invention from deterring competition, thereby promoting innovation and reducing litigation costs. Under current practices, a terminal disclaimer ensures that the term of a patent does not extend beyond a related patent and mandates common ownership for enforcement.

However, even with these protections, tied patents can deter competition due to the cost of challenging each separately. The proposed rule, reflecting public feedback, focuses on enforceability rather than validity, intending to simplify litigation and reduce barriers to market entry. The changes would require a patent owner to agree that a patent with a terminal disclaimer will not be enforceable if linked patents are invalidated, thus reducing the need to challenge multiple related patents.

The rule supports promoting competition and lowering consumer costs, aligning with Executive Order 14036. The proposal also includes updates to reflect current terminology and clarify the circumstances under which terminal disclaimers may be filed, ensuring consistency with existing practices and legal precedents.

The bill is part of broader efforts to control rising drug costs. It is complementary to the Inflation Reduction Act, which also includes measures to address high prescription drug prices by allowing Medicare to negotiate prices for certain drugs. The Affordable Prescriptions for Patients Act is expected to save taxpayers approximately $1.8 billion by fostering market conditions that facilitate the entry of lower-cost biosimilars and generics.

Despite its bipartisan support, the bill faces opposition from the pharmaceutical industry. The Pharmaceutical Research and Manufacturers of America argues that the legislation could undermine the incentives for innovation the patent system provides. They also raise concerns that singling out the pharmaceutical industry for such patent rules might violate international trade agreements, specifically the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights. The passage of this bill marks a significant step towards reducing drug prices, but its full impact will depend on how it navigates further legislative processes and potential industry pushback.

The bill's passage is part of a broader strategy to control rising drug costs. It complements the Inflation Reduction Act, which includes provisions for Medicare to negotiate drug prices.¹⁰ Together, these measures aim to provide significant relief to consumers burdened by high prescription drug costs.

The following steps for the S-150 bill involve its consideration in the House of Representatives, where relevant committees will review it before being brought to the floor for a vote. If passed by the House, it will be sent to the President for signing into law. Given the strong bipartisan support and the urgent need to address drug pricing, there is optimism for its swift progression through these remaining legislative stages.

We cannot take the BIO for granted; our vigil should continue until this bill becomes law.

References

1. Cudkowicz M, Hercher L. Patent thickets and their effects on competition and innovation. J Intellet Prop Law. [correct publication year];15(3):187-194. doi:

2. Freilich J. Patents' new salience. Va L Rev. 2023;109(3):595-649. Accessed August 12, 2024. https://virginialawreview.org/articles/patents-new-salience/

3. Carrier MA, Minniti J. Biologics: The new antitrust frontier. University of Illinois Law Review. January 12, 2018. Accessed August 9, 2024. https://illinoislawreview.org/wp-content/uploads/2018/01/Carrier.pdf

4. Kesselheim AS, Sinha MS, Avorn J. Determinants of market exclusivity for prescription drugs in the United States. JAMA Intern Med. 2017;177(11):1658-1664. doi:10.1001/jamainternmed.2017.4329

5. Sampat BN, Shadlen KC. Secondary pharmaceutical patenting: A global perspective. Res Policy. 2017;46(3):693-707. doi:10.1016/j.respol.2017.01.005

6. Edgar BS, Cheifetz AS, Helfgott SM, et al. Overcoming barriers to biosimilar adoption: real-world perspectives from a national payer and provider initiative. J Manag Care Spec Pharm. 2021;27(8):1129-1135. doi:10.18553/jmcp.2021.27.8.1129

7. Comment from Association for Accessible Medicines. Regulations.gov. July 9, 2024. Accessed August 9, 2024. https://www.regulations.gov/comment/PTO-P-2024-0003-0299

8. BIO comments to the USPTO’s May 10, 2024 proposed rulemaking on terminal disclaimer practice, 89 Fed. Reg. 40439, Docket No. PTO-P-2024-0003. BIO. May 10, 2024. Accessed August 9, 2024. https://www.bio.org/letters-testimony-comments/bio-comments-usptos-may-10-2024-proposed-rulemaking-terminal-disclaimer

9. Terminal disclaimer practice to obviate nonstatutory double patenting. Federal Register. May 10, 2024. Accessed August 9, 2024. https://www.federalregister.gov/documents/2024/05/10/2024-10166/terminal-disclaimer-practice-to-obviate-nonstatutory-double-patenting

10. Niazi SK. The Inflation Reduction Act: A boon for the generic and biosimilar industry. J Clin Pharm Ther. 2022;47(11):1738-1751. doi:10.1111/jcpt.13783