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Concern about the rapid spread of antibiotic resistance among bacteria, including resistance to the strongest antibiotics used as a last resort, led the Infectious Diseases Society of America last year to issue a white paper entitled “Bad Bugs, No Drugs” that characterized the decline in new antibiotic discovery as a public health crisis. See www.idsociety.org/pa/IDSA_Paper4_final_web.pdf. According to IDSA’s July 2004 report, about 2 million people acquire bacterial infections in U.S. hospitals each year, and 90,000 die as a result. About 70 percent of those infections are resistant to at least one drug. The cost to U.S. society was estimated to be at least $4 billion annually. Against this backdrop, IDSA is concerned that the pipeline of new antibiotics is drying up. In the past 30 years, only two new classes of antibiotics have been introduced, and resistance to one class emerged even before the Food and Drug Administration approved the antibiotic. In 2002-2003, not a single new antibiotic was approved. After extensive investigation, IDSA concluded that companies are losing interest in antibiotic research and development because antibiotics are not as profitable as drugs that treat chronic conditions. To reverse this trend, IDSA’s report outlined a plan to motivate companies to return to the anti-microbial business. The IDSA’s intellectual property recommendations included “wild card” patent extensions awarded to any drug company that successfully develops a new antibiotic to a targeted priority microbe. A company could extend a patent for any one of its approved drugs — even a nonantibiotic blockbuster drug — as long as the company commits to reinvesting a portion of the profits derived during the extension period into antibiotic research and development. For a blockbuster drug with billions of dollars a year in revenue, the wild-card extension could prove a substantial reward that would easily offset the investment required to develop a new antibiotic. IDSA’s other IP recommendations included allowing full day-for-day restoration of patent term lost to regulatory review and extending market exclusivity provisions similar to the pediatric or orphan-drug exclusivity provisions already in place. Other non-IP recommendations included tax incentives, liability protection and expedited or flexible FDA review for antibiotics. Some of IDSA’s proposed IP solutions for reinvigorating the antibiotic pipeline appear in H.R. 3154, the “Infectious Diseases Research and Development Act of 2005,” introduced on June 29 in the U.S. House of Representatives. Similar provisions appear in anti-bioterrorism legislation pending in the Senate: S. 3, “Protecting America in the War on Terror Act of 2005,” introduced on Jan. 24; and S. 975, “The Project BioShield II Act of 2005,” introduced on April 29. Generic manufacturers have vigorously opposed the IP provisions, particularly the wild-card patent extension, and at least one bill, S. 975, reportedly was modified in an attempt to pacify them. This article briefly explores the origin of patent-term extension and explains how wild-card patent-term extension provisions would be applied. THE HATCH-WAXMAN ACT Pharmaceutical companies have always relied on patent protection to allow them to recoup the major investment needed to discover and develop a new drug. Patent exclusivity allows pharmaceutical manufacturers to charge higher prices for a new drug until the patent expires and generic copies are allowed on the market. However, the regulatory review process for new drug approval often consumes much of the lifetime of patents relating to the drug. The concept of drug patent-term extension was originally introduced as part of a carefully crafted legislative compromise, the 1984 Hatch-Waxman Act, that was designed to lower the cost of drugs through generic competition while providing sufficient incentives to encourage pharmaceutical companies to invest in research and development of new drugs. Provisions that encourage early market entry of generics immediately after patent expiration have contributed in no small part to the strength of the generic drug industry. To counterbalance these effects, the act provided for patent-term extensions that allow brand-name manufacturers to restore some of the patent term lost during the FDA review process. The measures to expedite generic approval included creation of a streamlined, “abbreviated” form of drug approval. Instead of duplicating the extensive clinical trials necessary to obtain drug approval, generic manufacturers can rely on the brand-name manufacturer’s clinical data to show safety and efficacy. Generic manufacturers need only show bioequivalence of the generic to the brand-name drug (in other words, that it is the same active ingredient and is delivered to the body at the same rate and extent). The Hatch-Waxman Act contained several other incentives for seeking early generic-drug approval, including freedom from patent infringement liability for activities related to drug approval, and a lucrative 180-day exclusivity period for the first generic manufacturer to apply for approval. To ensure that sufficient motivation remained for brand-name manufacturers to continue to develop successful pioneering products, the act provided for patent-term extensions that allow a patent owner to restore 50 percent of the patent term lost due to time spent on regulatory approval, up to a maximum five years’ extension. Only one patent can be extended per drug, however, so the patent owner must choose carefully based on existing patent term, scope of patent claims and other factors. The act limits the scope of extension rights to the approved drug, FDA-approved uses or manufacturing methods used to make the approved drug. The act created an elaborate procedure for encouraging the resolution of patent infringement disputes before the generic manufacturer begins marketing its drug. The procedure includes several key elements, including the listing of all patents relating to approved new drugs in a compendium called the “Orange Book”; early notification to the brand-name manufacturer of the filing of an Abbreviated New Drug Application for a generic version of a brand-name drug, with certifications by the generic manufacturer that all patents listed in the Orange Book have expired (a “Paragraph III certification”) or are invalid or not infringed (collectively a “Paragraph IV certification”); and, when the brand-name manufacturer timely sues the generic manufacturer for patent infringement, a stay postponing FDA approval of the generic’s ANDA for up to 30 months to allow the litigation to be resolved. As a compromise, the act has elicited complaints from all sides: consumer groups, generic manufacturers and brand-name manufacturers. Pharmaceutical companies spend millions of dollars in legal fights to keep generic versions of their blockbuster drugs off the market. Consumer groups and generic manufacturers have complained that brand-name manufacturers took advantage of loopholes in the act to extend their patent exclusivity longer than intended. The criticized tactics included “evergreening,” the practice of continuing over time to add multiple, sometimes inappropriate, patents to the Orange Book, and improperly delaying entry of generic competition by obtaining additional 30-month stays of ANDA approval each time a patent is added. Critics also complained that brand-name drug companies entered into multimillion-dollar agreements with generic manufacturers to delay market entry of generic versions of drugs. The FDA implemented new regulations, effective on Aug. 19, 2003, that closed some of these loopholes. The new rules restricted the types of patents that may be listed in the Orange Book and limited brand-name manufacturers to one 30-month stay per generic ANDA. The FDA estimates that its new rules limiting 30-month stays will result in savings to consumers of $35 billion over 10 years. AGGRESSIVE PATENT CHALLENGES On the other hand, brand-name manufacturers complain that generic manufacturers, motivated by the 180 days of exclusivity given to the first ANDA filer, are being increasingly aggressive in challenging drug patents before they expire. In the 1980s, Paragraph IV certifications, under which the generic manufacturer asserts that the listed patents are invalid or not infringed, accounted for only about 2 percent of generic applications. That figure rose to nearly 20 percent by the late 1990s. The recent U.S. Court of Appeals for the Federal Circuit case Pfizer Inc. v. Dr. Reddy’s Laboratories Ltd., 359 F.3d 1361 (Fed. Cir. 2004), is an example of such an aggressive challenge. Pfizer’s patent, which claimed amlodipine and salts thereof, was extended based on FDA approval of Pfizer’s Norvasc, which is an amlodipine besylate salt. Dr. Reddy’s filed for approval of a generic version of amlodipine that was a different salt, amlodipine maleate. Dr. Reddy’s argued that the scope of Pfizer’s patent-term extension was limited to the approved product in its besylate salt form, and that therefore Dr. Reddy’s maleate salt fell outside of Pfizer’s extended patent rights. The district judge agreed and would have permitted Dr. Reddy’s to market its drug. However, a divided panel of the Federal Circuit disagreed and reversed based on language of the Hatch-Waxman Act as well as FDA regulations that define drug products as including “any salt or ester of the active ingredient.” The Federal Circuit’s decision thus closed a loophole that generic manufacturers could have used to sell pharmaceutically equivalent versions of a patented drug during the patent extension period. It is worth noting that companies that were not careful enough to include salts in their patent claims, or did not choose to extend patent claims that covered salts, may not be as fortunate as was Pfizer. Despite the criticism, it is clear that the goals of the act have been achieved. Low-cost generic drugs are widely available, and the patent-term extension provisions are recognized as so valuable that they could drive drug development in specific areas of need, such as bioterrorism and infectious diseases. THE RECENT PROPOSALS The pending House and Senate bills include provisions applying patent-term extension as an incentive for drug development. S. 3, introduced on Jan. 24 by Senator Judd Gregg, R-N.H., would expand incentives and funding for countermeasures against bioterrorist agents. Section 113 of the bill would provide day-for-day patent-term restoration for countermeasures and create special wild-card patent-term extensions, applicable to any patent. The patent-term restoration incentive would allow patents claiming a bioterrorism-countermeasure product, or a process of making or method of using such a product, to be extended for the full number of days spent on FDA regulatory review, rather than the 50 percent permitted under the Hatch-Waxman Act. Eligible countermeasure products would include drugs, antibiotics, biological products, medical devices or vaccines. The provisions would prohibit multiple extensions of the same patent under this or other patent-term extension or restoration provisions. The wild-card patent-term extension in S. 3 would allow a company that develops a bioterrorism countermeasure to extend the term of another, unrelated, patent that it owns or has licensed. Only one patent could be extended based on the development of a countermeasure. The extension authorized by this section would be six months to two years, and actual duration would be determined by the secretary of Health and Human Services. S. 975, introduced on April 29 by Senator Joseph Lieberman, D-Conn., intended to boost research and development for countermeasures to diagnose, prevent or treat illnesses associated with biological, chemical or nuclear attacks, contains similar measures. Section 331 would provide full day-for-day restoration of a patent term spent on regulatory review for eligible patents relating to a countermeasure product, and special wild-card patent-term extensions, applicable to any designated patent, for a company that develops a countermeasure. The designated patent could be completely unrelated to the countermeasure itself and could claim any drug, device or biological product, or a process of making or method of using such a product. Unlike S. 3, vaccines would not be included in this provision. The authorized extensions would run six months to two years, under �301 of the bill. Section 301 also would require the company that develops a countermeasure to irrevocably elect the designated patent for the wild-card patent-term extension within 180 days of entering into its procurement contract with the government. Section 505C of S. 975 would provide additional market exclusivity incentives for biomedical countermeasure products. These incentives would be completely independent of patent protection. The existing exclusivity period of five years for any new chemical entity would be increased to 10 years if it has an identified use as a countermeasure. The period during which generic manufacturers would be prevented from filing ANDAs would be extended from four years to nine years after the period of market exclusivity begins. Orphan-drug exclusivity would be extended from seven years to 10 years for countermeasures. H.R. 3154, introduced on June 29 by Representative Barbara Cubin, R-Wyo., was crafted to provide incentives for pharmaceutical, biotechnology and medical-device companies to invest in research and development of antibiotic drugs, anti-virals, diagnostic tests and vaccines for infectious diseases. Section 5 of H.R. 3154 adopts many of the ideas that IDSA suggested, including the restoration of patent time lost during FDA review of antibiotics and other “qualified infectious diseases products”; a two-year wild-card provision that could extend the patent time on a company’s separate, FDA-approved product, if the pharmaceutical company successfully produces a “qualified infectious diseases product”; and fast-tracking FDA review of these products. Generic manufacturers and consumer groups complain that these incentives are overly broad and open-ended, and would generate higher drug costs that would harm consumers, including employers, insurers, patients, Medicare and Medicaid. The wild-card patent extension in particular is criticized as a disproportionate reward in areas unrelated to bioterrorism that could be reaped after only a minimal investment in developing a biomedical countermeasure. According to IDSA, however, that may be exactly the sort of incentive needed to reinvigorate investment in critical areas where the pharmaceutical companies have lost interest.Li-Hsien Rin-Laures and Kevin M. Flowers are partners at Chicago’s Marshall, Gerstein & Borun, an intellectual property law firm. They can be reached, respectively, at [email protected] and [email protected]

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