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Senator Hatch’s New Legislation Would Eliminate IPR Challenges by Generics and Biosimilar Makers

Generics and biosimilar makers have increasingly used inter partes reviews (“IPRs”), proceedings made possible by the America Invents Act, to challenge patents protecting innovator small-molecule drugs and biologic medicines.  Senator Orrin Hatch, co-author of the Hatch-Waxman Act, has introduced an amendment that would require these manufacturers either to take advantage of the abbreviated regulatory approval pathways provided by the Hatch-Waxman Act and BPCIA and challenge innovator patents in district court or to challenge innovator patents in IPRs before the PTAB, but not both.  Senator Hatch explains that while he strongly supports IPRs and the America Invents Act and that IPRs are of particular importance to the tech community to fight “patent trolls,” they are also “producing unintended consequences in the Hatch-Waxman context” and “threaten[] to upend the careful Hatch-Waxman balance by enabling two separate paths to attack a brand patent.”  If enacted, generics and biosimilar makers that choose to take advantage of the abbreviated regulatory process will challenge innovator patents in court rather than in IPRs before the PTAB.

Senator Hatch states that he has filed the amendment, the Hatch-Waxman Integrity Act of 2018, “to restore the careful balance” struck by the Hatch-Waxman Act for small-molecule drugs and by the BPCIA for biologics.  Congress enacted the Hatch-Waxman Act in 1984.  Senator Hatch explains that to “incentivize innovation by branded drug manufacturers, the Hatch-Waxman Act included various protections for patent terms and data exclusivity.”  At the same time, to “incentivize market entry of low-cost generic drugs,” the Hatch-Waxman Act created an abbreviated drug approval pathway and a pathway for challenging drug patents.  Senator Hatch explains that Congress “has also enacted rules comparable to the Hatch-Waxman Act for biologic products.”  The BPCIA, enacted in 2010, provides incentives for biologic innovation and creates an abbreviated pathway for market entry of biosimilar products.

As Senator Hatch explains, in 2011 “Congress enacted the America Invents Act to fix a problem unrelated to drug/biologic innovation and drug/biologic affordability; it created the inter partes review (“IPR”) and post-grant review (“PGR”) processes to combat the growing problem of patent trolls.” He notes that “[e]ven though Congress did not intend to upset its drug/biologic-specific Hatch-Waxman and BPCIA procedures with the enactment of the IPR and PGR processes, generic drug and biosimilars manufacturers have increasingly used the IPR process to circumvent the Hatch-Waxman Act and BPCIA patent challenge processes while nonetheless taking advantage of their abbreviated processes for drug entry.”

Senator Hatch’s legislation “would close the loophole unintentionally created by the America Invents Act.”  “To restore the careful balance of the Hatch-Waxman Act and the BPCIA, and to prevent the IPR or PGR processes from undercutting them, the FD&C Act and the PHS Act would be amended to prevent using IPR (or PGR) challenges to circumvent the specific patent-challenge processes for drugs and biologics painstakingly created by Congress.” 

In his remarks to the Senate, Senator Hatch explained that Hatch-Waxman litigation “contains numerous carefully calibrated requirements affecting timing, market exclusivity, and FDA approval.”  He stated that IPRs, by contrast, are “a much blunter instrument than Hatch-Waxman” and “contain[] none of the important industry-specific balancing features that come into play in Hatch-Waxman litigation.”  Senator Hatch’s amendment would require generic and biosimilar applicants to certify to FDA that “neither the applicant nor any party in privity with the applicant, has filed, or will file,” IPRs (or PGRs) in order to be eligible for abbreviated regulatory approval under the Hatch-Waxman Act or BPCIA.  An applicant would also be required to certify that it is not relying on an IPR or PGR determination in making a certification that the relevant listed patent “is invalid or will not be infringed.”  As Senator Hatch explains, the amendment “would force a party that wishes to challenge a brand patent to choose” litigating in district court and being able to rely on the abbreviated regulatory pathway of the Hatch-Waxman Act and BPCIA, or “it can file an IPR proceeding, which is cheaper, faster and easier to win” than a challenge to the patent in district court.  “But it can’t do both.”

The Hatch amendment “would preserve” litigation in district court under the Hatch-Waxman Act or BPCIA as the “standard path” for generics and biosimilar makers to challenge innovator patents, while keeping IPRs an option in certain circumstances.  Given the tremendous benefits of the abbreviated regulatory pathway, generics and biosimilar makers will opt for abbreviated approval of their products over being able to file or rely on an IPR in the typical case.  The amendment “would prevent companies from using IPR to put added litigation pressure on innovators above and beyond what Hatch-Waxman” and the BPCIA already provide.  And it would prevent a company that loses in district court from “getting a second bite at the apple” in IPR proceedings.  

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