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Much of the attention paid to patent reform this year will focus on the broad legislative effort to overhaul the patent system. But Congress is also considering several bills that specifically target the life sciences sector. And they aptly embody the current debate over the patent system, which can be summed up as “patents are good, except when they’re not.” The challenge confronting the country is whether a unified patent system having principle-based requirements for all categories of invention will survive or whether the system will be continually altered in technology-specific ways — often at the behest of interest groups. These particular life science bills target the pharmaceutical industry, which is not surprising. The industry operates in a high-stakes, contentious, and imperfect market, driven by (1) the demand for new drugs for aging and burgeoning populations; (2) the existence of large third-party payers, such as Medicare and health insurers in the United States and foreign governments elsewhere; and (3) extensive government regulation of drug safety, efficacy, and price. In this intersection of expectation, need, and government involvement, it is hardly surprising to find simultaneous efforts to strengthen and weaken patent protection for drugs. Some current legislative examples of these efforts are discussed here. What they ultimately reveal is not just lawmakers’ concerns, but also a general challenge to the direction of the U.S. patent system. NEW EXCEPTIONS One bill to strengthen patents is the Beating Infections through the Research and Development Act, H.R. 1496. This bill would allow for either restoration of the patent term lost during the regulatory review process or an automatic two-year extension of the patent term. The eligible patents would be those covering certain antibiotics, antivirals, diagnostic tests, and vaccines for qualifying infectious diseases. Due to ongoing fears of bird flu and the recent scare over drug-resistant tuberculosis, legislators worry that the nation is unprepared for new epidemics and want to encourage more research. The specific rationale for the longer patent periods is to compensate developers for marketing opportunities lost because of the time spent obtaining regulatory approvals from the Food and Drug Administration. The bill would also create an accelerated approval pathway for eligible products. The patent extensions would be in addition to the term adjustments already available based on U.S. Patent and Trademark Office delay. But they would not apply to products covered by patents extended under the existing Hatch-Waxman Act provisions governing generic competitors to brand-name drugs. Hatch-Waxman also extends patent terms based upon regulatory delay, but in many instances those extensions will be less generous than those of H.R. 1496. Other proposed legislation might have an opposite effect. While H.R. 1496 would extend patent protection, another bill would weaken it by creating a new exception to claims of patent infringement. The Pharmaceutical Market Access Act, S. 251, is aimed at reducing the price of prescription drugs in the United States by allowing the importation of drugs from other highly industrialized nations. The bill would create a new subsection under 35 U.S.C. �271 to permit importation and resale of patented drugs, biologics, and controlled substances. In the current situation, which many in Congress find frustrating, drug companies often sell drugs outside the United States at significantly lower prices than they charge in the U.S. market. This can occur, for example, when a foreign government imposes price controls on the drug. But these lower-priced drugs often cannot be imported and resold in the United States because of regulatory restrictions and patent license and enforcement agreements. S. 251 would provide, in essence, that a first authorized sale outside the United States exhausts a drug patent holder’s rights to enforce the patent in the United States. The patent holder would be barred from preventing the resale and redistribution of the drug after that first sale because it would no longer be an infringing act to import the foreign-sold drug into the United States. In other words, by overriding manufacturers’ patent rights, contractual sales, and distribution plans, S. 251 would create a “gray market” for pharmaceutical products. REVERSE PAYMENTS Other bills do not strengthen or weaken patents directly but instead impose increased scrutiny on what their drafters view as anti-competitive agreements among drug companies. The Preserve Access to Affordable Generics Act, S. 316 and H.R. 1432, is intended to prevent so-called reverse payments between brand-name and generic drug manufacturers. To encourage the marketing of generic drugs, the Hatch-Waxman Act granted a 180-day period of exclusive sales to the first manufacturer to file a substantially complete abbreviated new drug application, known as an ANDA, along with a Paragraph IV certification, to sell a given generic drug. In a Paragraph IV certification, a generic company essentially challenges a brand-name company’s patent as invalid, unenforceable, or not infringed. The brand-name company may then file a patent infringement suit, which will automatically delay the approval of the generic for sale. But infringement litigation is expensive, and generic sales cannot be delayed forever. In recent years, some brand-name companies have been filing and then settling such Paragraph IV suits by paying the first ANDA filer to not market the generic drug during its 180-day exclusivity period. Many believed that, in effect, these reverse payments let the patent holder enjoy brand-name drug sales free from competing generics, so long as it has the agreement of the first possible generic competitor. The ability of later-filing generic companies to launch their products depended upon whether and when the first generic launched its product. Following in the footsteps of Federal Trade Commission arguments, the proposed bills seek to stop such agreements as anti-competitive and (as the FTC contends) violative of antitrust law. These bills would amend the Clayton Antitrust Act to make it unlawful for an ANDA filer to receive anything of value in return for agreeing not to research, develop, manufacture, or sell a generic drug. A first ANDA filer that violates this provision would also forfeit its 180-day exclusivity period. Brand-name companies would be permitted to resolve patent infringement suits by granting the generic company a right to market the ANDA product before the expiration of the patent. A similar bill, the Protecting Consumer Access to Generic Drugs Act, H.R. 1902, seeks to ban the same type of conduct. The difference is that it would amend the Federal Trade Commission Act instead of the Clayton Act and specifically permit the FTC to promulgate rules in this area. Each of these bills is targeted at perceived distortions in the existing system. The Beating Infections Through Research and Development Act seeks to encourage new approaches to fighting infectious diseases, an area where research and development is thought to have lagged. The Preserve Access to Affordable Generics Act seeks to increase competition in the sale of already-developed products so that they can be purchased by the consumer, insurer, or government as inexpensively as possible. The Pharmaceutical Market Access Act in essence seeks to use foreign governments’ price controls for the benefit of U.S. consumers. WHERE WE ARE GOING How these proposed laws would interact with each other remains unclear. But they all work toward a common result — unfortunately one that undercuts an important goal of patent law. The Patent Act of 1952 created a unified body of law that treated all classifications of invention in the same manner. Every type of invention had to meet the same requirements (usefulness, novelty, and nonobviousness), and every patent application had to comply with the same disclosure requirements (written description, enablement, and best mode). Every patent received a 17-year term from the date of issuance. Infringing acts were defined the same way for every type of invention. Dates of invention were established only by inventive activities occurring in the United States. Times have changed. Global competition, the ready transfer of investment capital, and the information age have altered business models. And the law has departed from the unified design of the 1952 act. Patent terms now vary because of term extensions and adjustments. Under 35 U.S.C. �271(g), the rules governing infringement vary for patented methods and patented products. Medical practitioners performing certain activities are exempted from infringement liability under 35 U.S.C. �287(c). The Hatch-Waxman Act set forth its own special types of infringement and noninfringement under 35 U.S.C. �271(e). Now the pending bills would further change infringement and enforcement practices for pharmaceuticals. Every one of these changes has come with its own set of justifications and laudatory goals. But the overall result has been that we are well into the “boutique” era of patent law. Some of this is surely necessary to meet the demands of a more complex global marketplace. Yet various interest groups will also seek changes to the patent law to satisfy often temporary and narrow goals, and seemingly pragmatic changes can result in unexpected consequences and opportunities for mischief. The Constitution grants Congress the power to “promote the Progress of Science and useful Arts.” This is best served by a patent system based on consistent principles. Constant vigilance and reflection, particularly in view of the current legislative activities, will be needed to ensure that such a system survives.
John P. Isacson is a partner in the D.C. office of Proskauer Rose, where he represents clients in the pharmaceutical, biotechnology, chemical, and medical devices industries. The views expressed are his own and do not necessarily reflect the views of the firm or its clients.

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