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1 1 (May 17, 2019)

handle is hein.crs/govzso0001 and id is 1 raw text is: Congressional Research Service In Mfrmrg th legailive debate since 1914 May 17, 2019 Drug Pricing and the Law: Pharmaceutical Patent Disputes Patent rights play an important role in the development and pricing of pharmaceutical products. Patent law seeks to encourage innovation by granting the holder of a valid patent a temporary monopoly on an invention, potentially enabling him to charge higher-than-competitive prices. Patent disputes relating to the entry of follow-on pharmaceuticals are subject to specialized procedures. Because patent rights may deter or delay competition from generic drug and biosimilar manufacturers, these procedures can affect whether and when follow-on products can enter the market, influencing the prices of patented pharmaceuticals. This In Focus provides an overview of the complex procedures governing pharmaceutical patent disputes. FDA Regulation of Drugs and Biologics Drugs and biological products (biologics) are both articles used in the diagnosis, cure, mitigation, treatment, or prevention of human disease. Nonbiological drugs do not derive from living organisms, and are generally artificially synthesized, small-molecule chemicals. In contrast, biologics are generally large, complex molecules produced by or derived from living organisms, such as a virus, toxin, antibody, vaccine, blood component, or protein. Both drugs and biologics are subject to a premarket approval process administered by the Food and Drug Administration (FDA), but under different laws. Before they can be marketed or sold, nonbiological drugs must be approved by FDA under the Federal Food, Drug, and Cosmetic Act (FD&C Act), whereas biologics are licensed by FDA under the Public Health Service Act (PHSA). General Patent Dispute Procedures Patents can be obtained on almost any new and useful invention made by humans. For example, many different aspects of new pharmaceutical products-such as active ingredients, formulations, or methods and technologies to manufacture drugs and biologics-may be patented. To obtain a patent, the claimed invention must be novel, useful, and nonobvious, and the inventor must be the first person to file a patent application with the U.S. Patent and Trademark Office (PTO). If the PTO grants the patent, the patentee generally has the exclusive right to make, use, sell, and import the invention for a set term, usually 20 years from the date that the application was filed. Any other person wishing to use the invention during this period needs permission from the patent holder. A person who practices a validly patented invention without permission infringes the patent and risks legal liability. To enforce the patent, the patent holder may sue alleged infringers in federal court to seek injunctions, damages, and other remedies. Patents are presumed to be valid, but accused infringers may defend against lawsuits by claiming noninfringement (i.e., what they did was not covered by the patent) or invalidity (i.e., the patent should never have been issued because, e.g., the invention was not novel). Specialized Pharmaceutical Patent Dispute Procedures Federal law contains specialized procedures for certain pharmaceutical patent disputes. Instead of traditional acts of patent infringement-such as making, using, or selling the allegedly infringing product-these procedures are triggered by the act of filing an application with FDA for approval of a follow-on product. Under certain circumstances, the law treats the filing of these FDA applications as an artificial act of patent infringement, allowing for the resolution of patent disputes before the follow-on is marketed. These procedures can affect whether and when a generic drug or biosimilar can be marketed, and so determine when a brand-name product becomes subject to direct competition. To encourage the market entry of follow-on pharmaceuticals, federal law provides abbreviated regulatory pathways for approving generic drugs and biosimilars. Under the Hatch-Waxman Act, generic drug manufacturers seeking FDA approval can rely on a brand- name drug's safety and efficacy information, if the follow- on product is pharmaceutically equivalent and bioequivalent to the previously approved brand-name drug. Similarly, under the Biologics Price Competition and Innovation Act (BPCIA), a biosimilar manufacturer can obtain an FDA license to market a biologic by demonstrating that it is biosimilar to (or interchangeable with) an already-licensed brand biological product. Patent Procedures Under the Hatch-Waxman Act Under the Hatch-Waxman Act, new drug manufacturers must list patents that claim the drug or a method of using that drug as part of their application for FDA approval. FDA includes information on listed patents in a publication known as the Orange Book. When a generic drug manufacturer seeks approval from FDA, it must make one of four certifications with respect to patents listed in the Orange Book: (i) there are no patents listed; (ii) the patent has expired; (iii) the generic will delay FDA approval until the patent expires; or (iv) the patent is invalid or not infringed. This final certification, called a paragraph (iv) certification, often results in litigation. If the generic manufacturer makes a paragraph (iv) certification, it must notify the patentee and the brand-name drug manufacturer, who then have 45 days in which to bring a lawsuit against the generic applicant. https:!icrsreports congtess S

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