Drug Pricing and Intellectual Property Law: A Legal Overview for the 116th Congress
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Drug Pricing and Intellectual Property Law:
A Legal Overview for the 116th Congress
Kevin J. Hickey, Coordinator
Legislative Attorney
Erin H. Ward
Legislative Attorney
Wen S. Shen
Legislative Attorney
April 4, 2019
Congressional Research Service
7-....
www.crs.gov
R45666
SUMMARY
Drug Pricing and Intellectual Property Law:
A Legal Overview for the 116th Congress
Intellectual property (IP) rights play an important role in the development and pricing of
pharmaceutical products such as prescription drugs and biologics. In order to encourage
innovation, IP law grants the rights holder a temporary monopoly on a particular invention or
product, potentially enabling him to charge higher-than-competitive prices. IP rights, if
sufficiently limited, are typically justified as necessary to allow pharmaceutical manufacturers
the ability to recoup substantial costs in research and development, including clinical trials and
other tests necessary to obtain regulatory approval from the Food and Drug Administration
(FDA). However, because they may operate to deter or delay competition from generic drug and
biosimilar manufacturers, IP rights have been criticized as contributing to high prices for
pharmaceutical products in the United States.
R45666
April 4, 2019
Kevin J. Hickey,
Coordinator
Legislative Attorney
-redacted-@crs.loc.gov
Erin H. Ward
Legislative Attorney
-redacted-@crs.loc.gov
Wen S. Shen
Legislative Attorney
-redacted-@crs.loc.gov
For a copy of the full report,
Two main types of IP may protect pharmaceutical products: patents and regulatory exclusivities.
please call 7-.... or visit
Patents, which are available to a wide range of technologies besides pharmaceuticals, are granted
www.crs.gov.
by the U.S. Patent and Trademark Office (PTO) to new and useful inventions. Pharmaceutical
patents may claim chemical compounds in the pharmaceutical product, a method of using the product, a method of making
the product, or a variety of other patentable inventions relating to a drug or biologic. The holder of a valid patent generally
has the exclusive right to make, use, sell, and import the invention for a term lasting approximately 20 years. If a court
concludes that a competitor’s generic or biosimilar version infringes a valid patent, the court may issue an injunction
precluding the competitor from making, using, selling, and importing that competing product until the patent expires.
In some circumstances, FDA grants regulatory exclusivities to a pharmaceutical manufacturer upon the completion of the
process required to market pharmaceutical products. Before a new drug or biologic can be sold in the United States,
companies must apply for regulatory approval or licensure from FDA, which determines if the pharmaceutical is safe and
effective. For certain pharmaceuticals, such as innovative products or those that serve particular needs, FDA provides a term
of marketing exclusivity upon the successful completion of the regulatory process. If a product is covered by an unexpired
regulatory exclusivity, FDA generally may not accept and/or approve an application seeking FDA approval of a follow-on
product (i.e., a generic drug or biosimilar). Regulatory exclusivities vary in length from as little as six months to as much as
12 years depending on the specific type of drug or biologic at issue and other factors.
Like regulatory exclusivities, patent rights can affect when generic and biosimilar manufacturers can market their follow-on
products. Pharmaceutical patent disputes are subject to certain specialized procedures under the Hatch-Waxman Act and the
Biologics Price Competition and Innovation Act (BPCIA). Under Hatch-Waxman, applicants seeking approval of a generic
version of an existing FDA-approved drug must make a certification with respect to each patent that the brand-name drug
manufacturer lists as covering the product. If the generic manufacturer challenges those patents, FDA generally cannot
approve the generic drug application for 30 months while the patent dispute is litigated. For biologics, applicants seeking
approval of a biosimilar version of an existing biological product may choose to engage in the BPCIA’s “patent dance,” a
complex scheme of private information exchanges made in preparation for formal patent disputes between brand-name
biologic and biosimilar manufacturers. The patent dance does not affect FDA’s ability to approve a biosimilar application.
Some pharmaceutical companies have been criticized for charging high prices and engaging in practices that are perceived by
some to exploit the existing legal system governing IP rights on pharmaceutical products. For example, some generic
manufacturers have claimed that brand-name drug manufacturers have unreasonably refused to sell them samples of brandname drugs in order to impede their ability to obtain FDA approval and delay market entry of generic competition. Other
commentators have criticized the practice of “pay-for-delay” settlements, through which brand-name drug companies settle
patent litigation with generic or biosimilar manufacturers by paying them to delay their entry into the market. Still others
criticize so-called patent “evergreening,” in which pharmaceutical companies are alleged to serially patent minor
improvements or ancillary features of their products in order to extend the effective term of patent protection.
In recent years, a number of congressional proposals have been introduced that seek to address these and other issues in IP
law that are perceived by some to contribute to high prices for pharmaceutical products. These proposed reforms range from
relatively modest changes, such as increasing patent transparency, to more sweeping reforms such as pricing controls and
government compulsory licensing provisions.
Congressional Research Service
Drug Pricing and Intellectual Property Law: A Legal Overview for the 116th Congress
Contents
Legal Background ........................................................................................................................... 5
Patent Law................................................................................................................................. 6
Requirements for Obtaining a Patent .................................................................................. 6
Rights of Patent Holders ..................................................................................................... 9
Types of Pharmaceutical Patents....................................................................................... 12
Compulsory Licensing ...................................................................................................... 16
Food and Drug Administration (FDA) Law ............................................................................ 17
New and Generic Drug Approval ..................................................................................... 18
Biological Product and Biosimilar Licensure ................................................................... 21
Regulatory Exclusivities ................................................................................................... 23
Patent Dispute Procedures for Generic Drugs and Biosimilars .............................................. 27
Rationale for Specialized Pharmaceutical Patent Procedures ........................................... 28
The Hatch-Waxman Act: Patents and Generic Drug Approval ......................................... 30
The BPCIA: Patents and Biosimilar Licensure................................................................. 32
Selected Drug Pricing Proposals in the 115th and 116th Congresses .............................................. 35
Facilitating Follow-On Product Entry: The CREATES Act of 2019 ................................ 35
Facilitating Public Production of Follow-On Products: The Affordable Drug
Manufacturing Act of 2018 ............................................................................................ 39
Reforming Pay-for-Delay Settlements: The Preserve Access to Affordable
Generics and Biosimilars Act ........................................................................................ 41
Compulsory Licensing of IP Rights: The Prescription Drug Price Relief Act
of 2019 ........................................................................................................................... 45
Limiting Regulatory Exclusivities Based on Price Increases: The FLAT
Prices Act ....................................................................................................................... 48
Orange Book and Purple Book Reform: The Biologic Patent Transparency Act ............. 49
Conclusion ..................................................................................................................................... 51
Tables
Table 1. Summary Comparison of Patents Versus Regulatory Exclusivities ................................ 28
Table 2. Summary Comparison of Hatch-Waxman and BPCIA ................................................... 34
Contacts
Author Contact Information .......................................................................................................... 51
Congressional Research Service
Drug Pricing and Intellectual Property Law: A Legal Overview for the 116th Congress
he prices paid by consumers for prescription drugs have been a recent area of significant
congressional interest. Several committees in the House and Senate have held hearings this
year on drug pricing issues,1 and a number of bills have been introduced in the 116th
Congress that seek to address the perceived high costs of prescription drugs and other
pharmaceutical products.2 Because intellectual property (IP) rights, including patent rights and
regulatory exclusivities, play an important role in the development and pricing of pharmaceutical
products,3 a key focus of this debate is whether existing IP law promptly balances the need for
innovation with the costs that IP may impose on the public.4 Understanding the interplay between
several complex legal regimes is necessary in order to fully make sense of this debate.
T
IP law comprises a set of exclusive rights that prevent others from making, copying, or using
certain intangible creations of the human mind.5 Federal law contains several different varieties of
IP, depending on the type of intellectual creation at issue.6 For example, copyright law generally
grants authors of original creative works (such as literary works or musical compositions) the
exclusive right to reproduce their work, publicly perform and display it, distribute it, and adapt it,
for a specified term of years.7 Other species of federal IP include patent law,8 which protects
novel inventions, and trademark law,9 which protects symbols used to identify goods and
services. Each form of IP covers a different type of creation, has a different procedure for
obtaining rights, and grants the IP owner legal rights that vary in scope and duration.10
Although each of these forms of IP is legally distinct, they broadly share a common motivation:
providing incentives to create.11 Patents and copyrights are typically justified by a utilitarian
1 See, e.g., Drug Pricing in America: A Prescription for Change, Part I, Hearing Before the S. Comm. on Finance,
116th Cong. (2019); The Cost of Rising Prescription Drug Prices, Hearing Before the H. Ways and Means Comm.,
116th Cong. (2019); Examining the Actions of Drug Companies in Raising Prescription Drug Prices, Hearing Before
the H. Comm. on Oversight and Reform, 116th Cong. (2019). The Trump Administration has also discussed how to
address rising drug prices. See DEP’T OF HEALTH AND HUMAN SERVS., AMERICAN PATIENTS FIRST: THE TRUMP
ADMINISTRATION BLUEPRINT TO LOWER DRUG PRICES AND REDUCE OUT-OF-POCKET COSTS (2018) [hereinafter
AMERICAN PATIENTS FIRST].
2 See infra “Selected Drug Pricing Proposals in the 115th and 116th Congresses.” This report uses the term
“pharmaceutical product” or “pharmaceutical” as a catch-all term to encompass both chemical “drugs” (typically
artificially synthesized small molecules) and naturally derived “biologics” (typically large molecules such as proteins),
which are subjected to different regulatory regimes. See infra “Food and Drug Administration (FDA) Law.” Similarly,
the term “brand product” and “follow-on product” will be used as a catch-all term for “brand-name drugs or biologics”
and “generic drugs or biosimilars,” respectively.
3 See Henry G. Grabowski et al., The Roles of Patents and Research and Development Incentives in Biopharmaceutical
Innovation, 34 HEALTH AFFAIRS 302, 302 (2015) (“Patents and other forms of intellectual property protection are
generally thought to play essential roles in encouraging innovation in biopharmaceuticals.”).
4 See infra notes 11-19 (discussing economic rationale for IP and the costs and benefits that it may impose on the
public).
5 Cf. Intellectual Property, BLACK’S LAW DICTIONARY (10th ed. 2014) (“A category of intangible rights protecting
commercially valuable products of the human intellect.”).
6 See generally CRS In Focus IF10986, Intellectual Property Law: A Brief Introduction, by Kevin J. Hickey.
7 See 17 U.S.C. §§ 102, 106, 302. Copyright is subject to a number of significant limitations such as fair use. See id.
§§ 107-122.
8 See 35 U.S.C. §§ 1-390.
9 See 15 U.S.C. §§ 1051-1141n.
10 See Hickey, supra note 6.
11 An exception is trademark law, which is usually justified by a different rationale: protecting consumers from
confusion and lowering product search costs by preventing businesses from misrepresenting the source of goods or
services. See Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 163-64 (1995). Many alternative rationales for IP
rights exist in addition to the incentives-for-creation theory. See, e.g., Justin Hughes, The Philosophy of Intellectual
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Drug Pricing and Intellectual Property Law: A Legal Overview for the 116th Congress
rationale that exclusive rights are necessary to provide incentives to produce new creative works
and technological inventions.12 This rationale maintains that absent legal protections, competitors
could freely copy such creations, denying the original creators the ability to recoup their
investments in time and effort, and thereby reduce the incentive to create in the first place.13 IP
incentives are said to be particularly necessary for products, such as pharmaceuticals, that are
costly to develop but easily copied once marketed.14 In the words of the Supreme Court, IP rights
are premised on an “economic philosophy” that the “encouragement of individual effort by
personal gain is the best way to advance public welfare through the talents of authors and
inventors.”15 From this perspective, the fundamental aim of IP law is to find the optimal balance
between providing incentives for innovation and the costs that IP rights impose on the public.16
By design, IP rights may lead to increased prices for goods or services that are protected by IP. IP
rights are often said to grant a temporary and limited “monopoly” to the rights holder.17 The
existence of a patent on a particular manufacturing process, for example, generally means that
only the patent holder (and persons licensed by the patent holder) can use that patented process
Property, 77 GEO. L.J. 287, 296-314 (1988) (articulating justification for intellectual property as natural right deriving
from the labor of the author) & 330-39 (articulating justification for intellectual property as rooted in notions of
personhood); Colleen V. Chien, Contextualizing Patent Disclosure, 69 VAND. L. REV. 1849, 1850-51 (2016)
(overviewing justification for patent system as an incentive to encourage innovators to disclose technical information to
public).
12 See Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 429 (1984) (“[Copyrights and patents are]
intended to motivate the creative activity of authors and inventors by the provision of a special reward, and to allow the
public access to the products of their genius after the limited period of exclusive control has expired.”); Twentieth
Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975) (“The immediate effect of our copyright law is to secure a fair
return for an ‘author’s’ creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the
general public good.”).
13 See Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 480 (1974) (“The patent laws promote [the progress of the
useful arts] by offering a right of exclusion for a limited period as an incentive to inventors to risk the often enormous
costs in terms of time, research, and development.”).
14 See Grabowski et al., supra note 3, at 302 (“[T]he process of developing a new drug and bringing it to market is long,
costly, and risky, and the costs of imitation are low. After a new drug has been approved and is being marketed, its
patents protect it from competition from chemically identical entrants (or entrants infringing on other patents) for a
period of time.”); WILLIAM M. LANDES & RICHARD A. POSNER, THE ECONOMIC STRUCTURE OF INTELLECTUAL PROPERTY
LAW 24, (2003) (“If the fixed costs of intellectual property—the costs incurred before a single sale is made—are very
high and . . . the costs of duplication are slight, then in the absence of intellectual property rights either the intellectual
property will not be created or the government will have to finance it . . . .”) & id. at 317 (“In the case of new drugs . . .
the fixed costs of research and development are very high, in part because of stringent regulatory requirements, but the
marginal costs [of imitators] are very low.”).
15 Mazer v. Stein, 347 U.S. 201, 219 (1954).
16 See Sony, 464 U.S. at 429 (“[D]efining the scope of [patents and copyrights] involves a difficult balance between the
interests of authors and inventors in the control and exploitation of their writings and discoveries on the one hand, and
society’s competing interest in the free flow of ideas, information, and commerce on the other hand . . . .”); Mark A.
Lemley, Property, Intellectual Property, and Free Riding, 83 TEX. L. REV. 1031, 1031 (2005) (“[Traditionally,] the
proper goal of intellectual property law is to give as little protection as possible consistent with encouraging
innovation.”).
17 See, e.g., Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 730 (2002) (characterizing patents
as a “temporary monopoly”); Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 147 (1989) (characterizing
patents as a “limited monopoly”); Sony, 464 U.S. at 442 (characterizing copyright as a “statutory monopoly”). It should
be noted that this usage of “monopoly” is somewhat imprecise, because the exclusive rights provided by IP law do not
necessarily confer monopolistic market power in the economic sense—for example, there may be noninfringing
substitutes for a patented good in the relevant market. See LANDES & POSNER, supra note 14, at 22 (“[IP] protection
creates a monopoly, in the literal sense in which a person has a monopoly in the house he owns but [only] occasionally
in a meaningful economic sense as well because there may be no good substitutes for a particular intellectual work.”).
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Drug Pricing and Intellectual Property Law: A Legal Overview for the 116th Congress
for a set period of time.18 In some circumstances, this legal exclusivity may allow the patent
holder (or her licensees) to charge higher-than-competitive prices for goods made with the
patented process, as a monopolist would, because the patent effectively shields the patent holder
from competition.19
New pharmaceutical products generally benefit from two main20 forms of IP protection: patent
rights and regulatory exclusivities.21 These two sets of exclusive rights are distinct, yet often
confused. Patents, which are available to a wide variety of technologies beyond
pharmaceuticals,22 are granted by the U.S. Patent and Trademark Office (PTO) to inventions that
are new, useful, nonobvious, and directed at patentable subject matter.23 The holder of a valid
patent generally has the exclusive right to make, use, sell, or import a patented invention within
the United States for a period beginning when the patent is issued by the PTO and ending 20
years after the date of the patent application.24
The Food and Drug Administration (FDA) grants regulatory exclusivities upon the completion of
the FDA regulatory process necessary to market pharmaceutical products (i.e., drugs and
biological products).25 Exclusivities are granted only to certain pharmaceutical products such as
innovative products (e.g., a new active ingredient or new indication for an existing drug) or those
that serve a specific need (e.g., treating rare diseases).26 Regulatory exclusivities prevent FDA
from accepting or approving an application by a competitor for FDA approval of a follow-on
product (i.e., a generic or biosimilar version) of a previously approved pharmaceutical for a set
time period, and/or preclude a competitor from relying on safety and efficacy data submitted by
the original manufacturer for a period of time.27 Depending on the type of pharmaceutical product
18 35 U.S.C. §§ 154(b), 271(a).
19 See LANDES & POSNER, supra note 14, at 299-300; FTC v. Actavis, Inc., 570 U.S. 136, 147 (2013) (“[Patent rights]
may permit the patent owner to charge a higher-than-competitive price for the patented product.”).
20 Although patents and regulatory exclusivities are the most important forms of IP rights for pharmaceuticals, drugs
and biologics may be subject to other varieties of IP. For example, the brand name of a new drug is typically
trademarked, which prevents other manufacturers from using the same (or similar) name in a way that would confuse
consumers. See 15 U.S.C. § 1114(1).
21 Although not a traditional form of IP such as copyright or patent, regulatory exclusivities share many of the features
of traditional IP rights and are often characterized as a form of IP. See, e.g., John R. Thomas, The End of “Patent
Medicines”? Thoughts on the Rise of Regulatory Exclusivities, 70 FOOD & DRUG L.J. 39, 43 (2015) (describing
regulatory exclusivities as “FDA-administered intellectual property rights”); Rebecca S. Eisenberg, The Role of the
FDA in Innovation Policy, 13 MICH. TELECOMM. & TECH. L. REV. 345, 359 (2007) (describing FDA regulatory
exclusivities as “pseudo-patents”). Regulatory exclusivities are analogous to patent rights because they confer a limited
monopoly on the exclusivity holder to provide an incentive for drug manufacturers to undertake the investments
necessary to complete the FDA regulatory process. See Maxwell R. Morgan, Regulation of Innovation under Follow-on
Biologics Legislation: FDA Exclusivity As an Efficient Incentive Mechanism, 11 COLUM. SCI. & TECH. L. REV. 93, 98
(2010) (“Like patent law, an FDA-administered exclusivity period can effectively confer a monopoly on a market
entrant, and thereby act as an incentive mechanism for firms to invest in the generation and clinical development of
new medicines, and also in commercializing them.”).
22 In general, a patent may be granted on any “new and useful process, machine, manufacture, or composition of matter,
or any new and useful improvement thereof.” 35 U.S.C. § 101. However, “laws of nature, natural phenomena, and
abstract ideas are not patentable.” Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 216 (2014) (quoting Ass’n for
Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 589 (2013)).
23 See 35 U.S.C. §§ 101-103, 131. Patent applications must also conform to a number of requirements related to the
sufficiency of the technical disclosure in the patent itself. Id. § 112.
24 Id. §§ 154(a)(2), 271(a).
25 See infra “Food and Drug Administration (FDA) Law.”
26 See infra “Regulatory Exclusivities.”
27 Id.; see also Thomas, supra note 21, at 44-49.
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at issue and other factors, regulatory exclusivities may last anywhere from six months to 12
years.28 In overlapping ways, both patent rights and regulatory exclusivities can operate to deter
or delay the market entry of a generic drug or biosimilar.
The Department of Health and Human Services (HHS) has found that national spending on
pharmaceutical products has been rising in recent years, predicting that these expenditures would
continue to rise faster than overall health spending.29 Many factors other than IP rights contribute
to the price consumers pay for prescription drugs and biologics, including demand, manufacturing
costs, R&D costs, the terms of private health insurance, and the involvement of a government
insurance program such as Medicaid.30 That said, pharmaceutical products are frequently
protected by IP rights,31 and some studies have shown that IP rights are among the most important
factors driving high drug prices.32 For example, FDA has found that increased competition from
generic drug manufacturers is associated with lower prices for pharmaceuticals.33 Given that IP
rights may allow the rights holder to charge higher-than-competitive prices, and can deter or
delay the market entry of generic drug or biosimilar competitors, changes to IP rights or
otherwise facilitating competition is seen by some to offer a potential means of lowering prices
for pharmaceutical products.34 Accordingly, several current proposed congressional reforms to
lower drug prices would reform the existing legal structure of IP rights in the pharmaceutical
context.35
28 Thomas, supra note 21, at 48.
29 DEP’T OF HEALTH AND HUMAN SERVS., OBSERVATIONS ON TRENDS IN PRESCRIPTION DRUG SPENDING 1 (March 8,
2016), https://aspe.hhs.gov/sites/default/files/pdf/187586/Drugspending.pdf; see also CRS Report R44832, Frequently
Asked Questions About Prescription Drug Pricing and Policy, by Suzanne M. Kirchhoff, Judith A. Johnson, and Susan
Thaul, at 3-6.
30 See generally Kirchhoff et al., supra note 29, at 3-13; Joseph Antos & James C. Capretta, Prescription Drug Pricing:
An Overview of the Legal, Regulatory and Market Environment, AM. ENTER. INST. 4-12 (2018), https://www.aei.org/
wp-content/uploads/2018/07/Prescription-Drug-Pricing.pdf; Aaron S. Kesselheim et al., The High Cost of Prescription
Drugs in the United States: Origins and Prospects for Reform, 316 JAMA: J. AM. MED. ASS’N 858, 860-63 (2016).
31 See, e.g., LANDES & POSNER, supra note 14, at 313 (citing data that new drug manufacturers are unusually “avid in
seeking patent protection”); Emily Michiko Morris, The Myth of Generic Pharmaceutical Competition under the
Hatch-Waxman Act, 22 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 245, 252 (2012) (“[P]harmaceuticals are also
widely recognized as one of the industries most dependent on patent protection to recoup its enormous research,
development, regulatory, and post-marketing costs,”); Adi Gillat, Compulsory Licensing to Regulated Licensing:
Effects on the Conflict Between Innovation and Access in the Pharmaceutical Industry, 58 FOOD & DRUG L.J. 711, 722
(reviewing data “supporting relatively high dependency of the pharmaceutical industry on patent rights”).
32 See, e.g., Kesselheim et al., supra note 30, at 861 (“The most important factor that allows manufacturers to set high
drug prices for brand-name drugs is market exclusivity, which arises from 2 forms of legal protection against
competition [i.e., regulatory exclusivities and patent rights.]”); Generic Competition and Drug Prices, FOOD & DRUG
ADMIN. (Nov. 28, 2017), https://www.fda.gov/aboutfda/centersoffices/officeofmedicalproductsandtobacco/cder/
ucm129385.htm (finding association between generic competition and lower drug prices); see also America’s
Overspend: How the Pharmaceutical Patent Problem is Fueling High Drug Prices, I-MAK 1 (Oct. 2017),
https://www.i-mak.org/wp-content/uploads/2017/11/Excess-Costs-Briefing-Paper-FINAL_-2017-10-24.pdf (finding
that patenting strategies caused $55 billion in excess costs for the American health care system with respect to just
three drugs).
33 See Generic Competition and Drug Prices, supra note 32.
34 See, e.g., Robin Feldman & Evan Frondorf, Drug Wars: A New Generation of Generic Pharmaceutical Delay, 53
HARV. J. ON LEGIS. 499, 556-61 (2016) (urging “comprehensive overhaul” of pharmaceutical patent laws to curtail
strategies used by pharmaceutical companies to avoid competition and maintain monopoly pricing); Kesselheim et al.,
supra note 30, at 864 (proposing limits on secondary patents and increased policing of pay-for-delay patent settlements
as possible means to curtail high drug prices).
35 See infra “Selected Drug Pricing Proposals in the 115th and 116th Congresses.”
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Drug Pricing and Intellectual Property Law: A Legal Overview for the 116th Congress
This report explains how several of these congressional proposals to reduce drug prices would
interact with and/or alter existing IP law for pharmaceutical products. First, the report reviews the
basics of patent law, FDA law and regulatory exclusivities, and the interaction between patent
rights and FDA approval of pharmaceutical products. With this legal background in hand, the
report overviews the details of a number of current legislative proposals to change these laws in
order to reduce the drug prices paid by consumers.
Legal Background
Several different legal and regulatory regimes create or affect IP rights in pharmaceutical
products. As noted above, pharmaceuticals are subject to two principal forms of IP protection—
patents and regulatory exclusivities—which are generally distinct, but at times overlap and
interact. Complicating matters further is the fact that FDA regulates pharmaceutical products
differently depending on whether they derive from natural sources. In particular, before they can
be marketed or sold, nonbiological “drugs”36 must be approved by FDA under the Federal Food,
Drug, and Cosmetic Act (FD&C Act), whereas “biologics”37 must be licensed by FDA under the
Public Health Service Act (PHSA).38 Finally, patents on pharmaceutical drugs or biologics are
subject to specialized patent dispute resolution procedures that can affect a manufacturer’s ability
to bring a follow-on product (i.e., a generic drug or biosimilar) to market. Specifically, provisions
of the Drug Price Competition and Patent Term Restoration Act of 198439 (the Hatch-Waxman
Act) govern FDA approval and patent disputes for generic drugs, whereas the Biologics Price
Competition and Innovation Act of 200940 (BPCIA) governs FDA licensure and patent disputes
for biosimilars.
In light of these complexities, a fair amount of background is necessary to understand how IP
rights are obtained in pharmaceuticals, how these rights may impact drug prices, and the various
reforms that have been proposed in Congress to reduce drug prices for consumers. This section
provides this background, proceeding in three parts. First, it reviews patent law, including the
requirements for obtaining a patent, the rights granted to patent holders, and various limitations
on those rights.41 Second, it overviews FDA requirements for obtaining approval to market a drug
or biological product, the abbreviated pathways for generic drug approval under the HatchWaxman Act and biosimilar licensure under the BPCIA, and different regulatory exclusivities that
FDA grants to certain types of approved pharmaceutical products.42 Finally, this section describes
and compares the different specialized patent dispute procedures for generic drugs and
biosimilars under Hatch-Waxman and the BPCIA, respectively.43
36 Under the FD&C Act, a “drug” means, among other things, an article that is “intended for use in the diagnosis, cure,
mitigation, treatment, or prevention of disease in man or other animals.” 21 U.S.C. § 321(g)(1).
37 Under the PHSA, a “biological product” or “biologic” is a medical product derived from natural sources (human,
animal, microorganism) and applicable to the prevention, treatment, or cure of disease. 42 U.S.C. § 262(i)(1).
38 See infra “Food and Drug Administration (FDA) Law.”
39 Pub. L. No. 98-417, 98 Stat. 1585 (1984).
40 Pub. L. No. 111-148, Title VII, 124 Stat. 199, 804-21 (2010).
41 See infra “Patent Law.”
42 See infra “Food and Drug Administration (FDA) Law.”
43 See infra “Patent Dispute Procedures for Generic Drugs and Biosimilars.”
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Drug Pricing and Intellectual Property Law: A Legal Overview for the 116th Congress
Patent Law
Congress’s authority to grant patents derives from the IP Clause of the U.S. Constitution, which
grants Congress the power “[t]o promote the Progress of Science and useful Arts, by securing for
limited Times to . . . Inventors the exclusive Right to their . . . Discoveries.”44 The IP Clause was
included in the Constitution to create a national, uniform law governing IP rights.45 In the view of
the Framers, the states could not effectively protect copyrights or patents separately because
obtaining IP rights in multiple states with differing standards would be difficult and expensive for
authors and inventors, undermining the effectiveness of the legal regime.46
Patent rights do not arise automatically. Rather, to obtain patent protection under the Patent Act,47
an inventor must file a patent application with the PTO, and a PTO patent examiner must review
the application and conclude that the application meets the statutory requirements before the PTO
will issue a patent.48 This section briefly overviews the requirements for obtaining a patent, the
scope of the legal rights granted to the holder of a valid patent, and an important limitation on
patent rights: the authority of the federal government to grant compulsory licenses for a patent
under certain circumstances.
Requirements for Obtaining a Patent
Patents are generally available to anyone who “invents or discovers any new and useful process,
machine, manufacture, or composition of matter, or any new and useful improvement thereof.”49
To obtain a patent, the inventor must formally file an application for a patent with the PTO,
beginning a process called patent prosecution.50 During prosecution, a patent examiner at the PTO
evaluates the patent application to ensure that it meets all the applicable legal requirements to
merit the grant of a patent.51 In addition to requirements regarding the technical disclosure of the
invention,52 the claimed invention must be (1) directed at patentable subject matter, (2) new,
(3) nonobvious, and (4) useful.53 If granted, patents typically expire twenty years after the date of
the initial patent application.54
Patentable Subject Matter
The field of patentable inventions is broad, embracing nearly “anything under the sun that is
made by man.”55 By statute, patents are available on any new and useful “process, machine,
44 U.S. CONST. art. I, § 8, cl. 8.
45 Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 162 (1989) (“One of the fundamental purposes behind
the [IP Clause] was to promote national uniformity in the realm of intellectual property.”).
46 See Goldstein v. California, 412 U.S. 546, 556 (1973); THE FEDERALIST NO. 43, at 238-39 (James Madison) (E.H.
Scott, ed. 1894).
47 See Patent Act of 1952, Pub. L. No. 82-593, 66 Stat. 792 (codified as amended at 35 U.S.C. §§ 1-390).
48 35 U.S.C. §§ 111, 131.
49 Id. § 101.
50 See General Information Concerning Patents, U.S. PATENT & TRADEMARK OFFICE (Oct. 2015),
https://www.uspto.gov/patents-getting-started/general-information-concerning-patents.
51 35 U.S.C. § 131.
52 See id. § 112.
53 See id. §§ 101-103.
54 Id. § 154(a)(2).
55 Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980) (quoting S. Rep. No. 1979, 82d Cong., 2d Sess., 5 (1952); H. R.
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manufacture, or composition of matter, or . . . improvement thereof.”56 Examples of technological
areas for patentable inventions include pharmaceuticals, biotechnology, chemistry, computer
hardware and software, electrical engineering, mechanical engineering, and manufacturing
processes.57 Although the subject matter of patents is wide-ranging, the Supreme Court has long
held that “laws of nature, natural phenomena, and abstract ideas are not patentable.”58 The Court
has reasoned that to permit a monopoly on the “‘basic tools of scientific and technological work’
. . . might tend to impede innovation more than it would tend to promote it.”59
In a series of recent cases, the Supreme Court has established a two-step test for patentable
subject matter, sometimes called the Alice test.60 The first step addresses whether the patent
claims are “directed to” ineligible subject matter, that is, a law of nature, natural phenomenon, or
abstract idea.61 If not, the invention is patentable. If it is directed at ineligible subject matter, the
invention is not patentable unless the patent claims have an “inventive concept” under the second
step of the Alice test. To have an “inventive concept,” the patent claims must contain elements
“sufficient to ensure that the patent in practice amounts to significantly more than a patent upon
the [ineligible concept] itself,” transforming the nature of the claim to a patent-eligible
application of ineligible subject matter.62
Novelty and Nonobviousness
Perhaps the most fundamental requirement for patentability is that the claimed invention must be
actually new. Specifically, the PTO will not issue a patent if “the claimed invention was patented,
described in a printed publication, or in public use, on sale, or otherwise available to the public
before the effective filing date of the claimed invention.”63 In other words, if every element of the
claimed invention is already disclosed in the “prior art”—the information available to the public
at the time of the patent application—then the alleged inventor “has added nothing to the total
stock of knowledge,” and no valid patent may issue to her.64
Even if a claimed invention is novel in the narrow sense that it is not “identically disclosed” in a
prior art reference (such as an earlier patent or publication), the invention must further be
Rep. No. 1923, 82d Cong., 2d Sess., 6 (1952)).
56 35 U.S.C. § 101.
57 See Patent Technology Centers Management, U.S. PATENT & TRADEMARK OFFICE, https://www.uspto.gov/patent/
contact-patents/patent-technology-centers-management (last visited April 3, 2019) (listing technological divisions for
PTO examiners).
58 Diamond v. Diehr, 450 U.S. 175, 185 (1981).
59 Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 71 (2012) (quoting Gottschalk v. Benson, 409
U.S. 63, 67 (1972)).
60 See Alice Corp. v. CLS Bank Int’l, 573 U.S. 208 (2014); Ass’n for Molecular Pathology v. Myriad Genetics, Inc.,
569 U.S. 576 (2013); Mayo, 566 U.S. at 66. The PTO recently issued revised guidelines for its patent examiners to
determine whether a patent application seeks to claim ineligible subject matter. See 2019 Revised Patent Subject Matter
Eligibility Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019).
61 Alice, 573 U.S. at 217.
62 Id. (quoting Mayo, 566 U.S. at 73).
63 35 U.S.C. § 102(a)(1). There are certain exceptions to this requirement when, for example, the prior art disclosure
derives from the inventor and the patent application is made within one year of the disclosure. Id. § 102(b)(1).
64 Great Atl. & Pac. Tea Co. v. Supermarket Equip. Corp., 340 U.S. 147, 153 (1950); Graham v. John Deere Co. of
Kan. City, 383 U.S. 1, 6 (1966) (“Congress may not authorize the issuance of patents whose effects are to remove
existent knowledge from the public domain, or to restrict free access to materials already available.”).
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nonobvious to be patentable.65 Specifically, an invention cannot be patented if “the differences
between the claimed invention and the prior art are such that the claimed invention as a whole
would have been obvious . . . to a person having ordinary skill” in the relevant technology.66
When determining obviousness, courts may evaluate considerations such as “commercial success,
long felt but unsolved needs, [or] failure of others . . . to give light to the circumstances
surrounding the origin of the subject matter sought to be patented.”67 By its nature, obviousness is
an “expansive and flexible” inquiry that cannot be reduced to narrow, rigid tests.68 Nonetheless, if
an invention does no more than combine “familiar elements according to known methods,”
yielding only “predictable results,” it is likely to be obvious.69
Utility
In addition to being novel and nonobvious, an invention must be useful to be patentable, that is, it
must have a specific and substantial utility.70 The utility requirement derives from the IP Clause’s
command that patent laws exist to “promote the Progress of . . . useful Arts.”71 The constitutional
purpose of patent law thus requires a “benefit derived by the public from an invention with
substantial utility,” where the “specific benefit exists in currently available form.”72 This standard
for utility is relatively low, however, requiring only that the claimed invention have some
“significant and presently available benefit to the public” that “is not so vague as to be
meaningless.”73
Disclosure Requirements
In addition to substantive requirements relating to the invention, the Patent Act imposes a number
of requirements relating to the form of the patent application. These provisions are intended to
ensure that the patent adequately discloses the invention to the public such that the public can use
the invention after the expiration of the patent term.74 Section 112 of the Patent Act requires that
patents must contain a “specification” that includes:
a written description of the invention, and of the manner and process of making and using
it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to
. . . make and use the same, and shall set forth the best mode contemplated by
the inventor or joint inventor of carrying out the invention.75
65 35 U.S.C. § 103.
66 Id. Patent law frequently relies on the concept of a “person having ordinary skill in the art,” a “hypothetical person”
with a typical level of skill in the relevant technology who is “presumed to be aware of all the pertinent prior art” in the
particular field. See Standard Oil Co. v. Am. Cyanamid Co., 774 F.2d 448, 454 (Fed. Cir. 1985).
67 Graham, 383 U.S. at 17-18.
68 KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 415-19 (2007).
69 Id. at 416.
70 Brenner v. Manson, 383 U.S. 519, 534-35 (1966); In re Fisher, 421 F.3d 1365, 1371 (Fed. Cir. 2005).
71 Stiftung v. Renishaw PLC, 945 F.2d 1173, 1180 (Fed. Cir. 1991) (citing Brenner, 383 U.S. at 528-29); see also
Graham, 383 U.S. at 5-6.
72 Brenner, 383 U.S. at 534-35.
73 In re Fisher, 421 F.3d at 1371-72.
74 See Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 480-81 (1974).
75 35 U.S.C. § 112(a).
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This statutory language yields three basic disclosure requirements for patentability.76 First, to
satisfy the written description requirement, the specification must “reasonably convey[] to those
skilled in the art that the inventor had possession of the claimed subject matter as of the filing
date” of the patent application.77 Second, to satisfy the enablement requirement, the specification
must contain enough information to teach a person skilled in the art how “to make and use the
invention without undue experimentation.”78 Finally, to satisfy the best mode requirement, the
specification must demonstrate that the inventor “possessed a best mode for practicing the
invention” at the time of the patent application, and disclose that preferred way of practicing the
invention.79
Patent Claims
If granted, the legal scope of the patent is defined by the patent claims, words which “particularly
point[] out and distinctly claim[] the subject matter which the inventor . . . regards as the
invention.”80 In essence, while the specification explains the invention in a technical sense, the
claims set forth the legal effect of the patent.81 Much as a deed may describe the boundaries of a
tract of land, the claims define the “metes and bounds” of the patent right.82 Patent claims must be
sufficiently definite to be valid—that is, when the claims are read in context, they must “inform,
with reasonable certainty, those skilled in the art about the scope of the invention.”83
Rights of Patent Holders
Once granted, the holder of a valid patent has the exclusive right to make, use, sell, or import the
invention in the United States until the patent expires.84 Any other person who practices the
invention (i.e., makes, uses, sells, offers to sell, or imports it) without permission from the patent
holder infringes the patent and is liable for monetary damages, and possibly injunctive relief, if
sued by the patentee.85 Patents have the attributes of personal property and may be sold or
assigned to by the patentee to a third party.86 A patentee may also license other parties to practice
the invention, that is, grant them permission to make, use, sell, or import the invention, usually in
exchange for consideration (such as monetary royalties).87
Patents thus provide a negative right to exclude another person from practicing the claimed
invention. However, patents do not grant the patentee any affirmative right to practice the
invention.88 In the pharmaceutical context, this means that even if a manufacturer has a patent on
76 See Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 736 (2002); Ariad Pharms., Inc. v. Eli
Lilly & Co., 598 F.3d 1336, 1344 (Fed. Cir. 2010) (en banc).
77 Ariad, 598 F.3d at 1351.
78 In re Wands, 858 F.2d 731, 735 (Fed. Cir. 1988).
79 Eli Lilly & Co. v. Barr Labs., Inc., 251 F.3d 955, 963 (Fed. Cir. 2001).
80 35 U.S.C. § 112(b).
81 See Ariad, 598 F.3d at 1347 (Fed. Cir. 2010); In re Vamco Mach. & Tool, Inc., 752 F.2d 1564, 1577 n.5 (Fed. Cir.
1985).
82 Corning Glass Works v. Sumitomo Elec. U.S.A., Inc., 868 F.2d 1251, 1257 (Fed. Cir. 1989).
83 Nautilus, Inc. v. Biosig Instruments, Inc., 572 U.S. 898, 901 (2014).
84 35 U.S.C. § 271(a).
85 Id. §§ 271, 281, 283-85.
86 Id. § 261.
87 License, BLACK’S LAW DICTIONARY (10th ed. 2014); 35 U.S.C. § 271(a).
88 Leatherman Tool Group v. Cooper Industries, Inc., 131 F.3d 1011, 1015 (Fed. Cir. 1997) (“[T]he federal patent laws
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a particular drug (or inventions related to making or using that drug), it nonetheless cannot market
that drug without FDA approval.89
With some exceptions, a patent is generally granted “for a term beginning on the date on which
the patent issues and ending 20 years from the date on which the application for the patent was
filed.”90 The Patent Act includes provisions that may modify the 20-year term, including to
account for excessive delays in patent examination at the PTO,91 or delays associated with
obtaining marketing approval from other federal agencies (including FDA).92 In the
pharmaceutical context, patents claiming a drug product or medical device (or a method of using
or manufacturing the same) may be extended for up to five years to account for delays in
obtaining regulatory approval, if certain statutory conditions are met.93
Patents are not self-enforcing: to obtain relief from infringement, the patentee must sue in court.94
Patent law is an area of exclusive federal jurisdiction,95 and the traditional forum for most patent
disputes is federal district court.96 Although patent suits may be filed in any district court across
the country with jurisdiction over the defendant and proper venue, all appeals in patent cases are
heard by a single specialized court, the U.S. Court of Appeals for the Federal Circuit (the Federal
Circuit).97
If the patentee succeeds in proving infringement, the patent holder may obtain two major forms of
judicial relief: monetary damages and injunctive relief.98 Damages must be “adequate to
compensate for the infringement,”99 and typically take the form of either (1) lost profits, that is,
do not create any affirmative right to make, use, or sell anything.”).
89 See infra “New and Generic Drug Approval.” The same is true of biological products. See infra “Biological Product
and Biosimilar Licensure.”
90 Id. § 154(a).
91 Id. § 154(b)(1).
92 Id. § 156.
93 See Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 670-71 (1990); Merck & Co. v. Hi-Tech Pharmacal Co., 482
F.3d 1317, 1320-21 (Fed. Cir. 2007); Stephanie Plamondon Bair, Adjustments, Extensions, Disclaimers, and
Continuations: When Do Patent Term Adjustments Make Sense?, 41 CAP. U. L. REV. 445, 460 (2013).
94 35 U.S.C. § 281.
95 28 U.S.C. § 1338.
96 In 2018, roughly 3,447 patent lawsuits were filed in federal district courts, as compared to 1,717 before the Patent
Trial and Appeal Board (PTAB). See 2018 Patent Dispute Report: Year in Review, UNIFIED PATENTS (Jan. 2, 2019),
https://www.unifiedpatents.com/news/2019/1/2/2018-patent-dispute-report-year-in-review [hereinafter 2018 Patent
Dispute Year in Review]. The third main forum for patent disputes is the International Trade Commission (ITC), which
has authority to conduct administrative trials (called “section 337 investigations”) into whether imported goods violate
patent and other IP rights. See 19 U.S.C. § 1337. The ITC may issue exclusion orders to stop such goods from entering
the United States. See About Section 337, U.S. INT’L TRADE COMM., https://www.usitc.gov/intellectual_property/
about_section_337.htm (last visited April 2, 2019); see generally Sapna Kumar, The Other Patent Agency:
Congressional Regulation of the ITC, 61 FLA. L. REV. 529, 534-40 (2009) (overviewing ITC procedures). In contrast to
the thousands of cases heard by the PTAB and district courts, the ITC typically conducts only several dozen section
337 investigations per year. See Section 337 Statistics: Number of New, Completed, and Active Investigations by Fiscal
Year, U.S. INT’L TRADE COMM. (Feb. 19, 2019), https://www.usitc.gov/intellectual_property/
337_statistics_number_new_completed_and_active.htm (reporting 74 new complaints in fiscal year 2018).
97 28 U.S.C. § 1295(a)(1).
98 35 U.S.C. §§ 283-84. A declaratory judgment (i.e., a judicial declaration of the rights of the parties) is another
important form of relief in patent suits that is sometimes available to patentees or accused infringers. See 28 U.S.C.
§ 2201; infra note 287.
99 Id. § 284.
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the net revenue “lost to the patentee because of the infringement,”100 or (2) a reasonable royalty,
which awards the amount that the patentee would have received in a “hypothetical negotiation” if
the patentee and the infringer had negotiated a license in good faith prior to the infringement.101
Courts have discretion to increase the damages “up to three times the amount found or
assessed,”102 but such enhanced damages are “generally reserved for egregious cases of culpable
behavior” by the infringer.103 Finally, courts have discretion to award attorneys’ fees in
“exceptional cases,”104 that is, ones that “stand[] out from others with respect to the substantive
strength of a party’s litigating position” or “the unreasonable manner in which the case was
litigated.”105
In addition to monetary damages, a patent holder may also ask courts to order various forms of
injunctive relief.106 At the outset of a patent litigation, a patent holder may seek a preliminary
injunction, a court order that prevents the defendant from committing the allegedly infringing acts
while the litigation proceeds.107 If a patent infringement lawsuit is successful, the patent holder
may seek a permanent injunction, an order prohibiting the defendant from infringing the patent in
the future.108
Parties accused of patent infringement may defend on several grounds. First, although patents are
subject to a presumption of validity, the accused infringer may assert that the patent is invalid.109
To prove invalidity, the accused infringer must show, by clear and convincing evidence, that the
patent should never have been granted by the PTO because it failed to meet the requirements for
patentability.110 Thus, for example, the accused infringer may argue that the invention lacks
novelty, is obvious, or claims nonpatentable subject matter; that the patent fails to enable the
invention; or that the patent claims are indefinite.111 Second, the accused infringer may claim an
“absence of liability” on the basis of noninfringement.112 In other words, even presuming the
patent is valid, the patentee may fail to prove that the activities of the accused infringer fall within
the scope of the patent claims.113 Finally, the accused infringer may argue that the patent is
100 Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1545 (Fed. Cir. 1995) (en banc).
101 Lucent Techs., Inc. v. Gateway, Inc., 580 F. 3d 1301, 1324 (Fed. Cir. 2009).
102 35 U.S.C. § 284.
103 Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1932 (2016).
104 35 U.S.C. § 285.
105 Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014).
106 35 U.S.C. § 283.
107 In deciding whether to exercise their discretion to grant a motion for a preliminary injunction, courts weigh four
factors: (1) the likelihood that the plaintiff will succeed on the merits of the lawsuit; (2) whether the plaintiff is likely to
suffer irreparable harm in the absence of a preliminary injunction; (3) the balance of equities; and (4) whether an
injunction is in the public interest. See Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1375-76 (Fed. Cir.
2009) (citing Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)).
108 35 U.S.C. § 283. Courts may grant permanent injunctions to remedy patent infringement as justified by traditional
equitable principles, but injunctions are not issued solely because the patent holder succeeds in proving infringement.
See eBay, Inc. v. MercExchange LLC, 547 U.S. 388, 394 (2006).
109 35 U.S.C. § 282(a)-(b).
110 Id. § 282(b)(2)-(3); Microsoft Corp. v. i4i Ltd. P’ship, 564 U.S. 91, 95-96 (2011).
111 See supra “Requirements for Obtaining a Patent.”
112 35 U.S.C. § 282(b)(1).
113 To prove direct infringement, the plaintiff must show that each element contained in a patent claim is practiced by
the alleged infringer, either literally or by an equivalent. Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S.
17, 29-30 (1997). Often, whether or not the accused infringer’s activities fall within the patent claims depends upon
claim construction, that is, how the words used in the patent claims are interpreted. See generally Markman v.
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unenforceable based on the inequitable or illegal activities of the patent holder, such as obtaining
the patent through fraud on the PTO.114
Following the passage of the 2011 Leahy-Smith America Invents Act (AIA),115 the Patent Trial
and Appeal Board (PTAB) has become an increasingly important forum for patent disputes.116
The AIA created several new administrative procedures for challenging patent validity,117
including (1) post-grant review (PGR), which allows petitioners to challenge patent validity based
on any of the requirements of patentability if the PGR petition is filed within nine months of the
patent’s issuance;118 (2) inter partes review (IPR), which allows any person other than the
patentee to challenge patent validity on limited grounds (novelty or obviousness based on prior
patents or printed publications) at any time after nine months following the patent’s issuance;119
and (3) a transitional program for covered business method patents (CBM), a PGR-like process
limited to certain patents claiming “business methods” that will be available only through
September 2020.120 Of these procedures, IPR is by far the most widely used.121
Types of Pharmaceutical Patents
If a person is the first to synthesize a particular chemical believed to be useful for the treatment of
human disease, she may file for a patent on that chemical itself, and—presuming that the
application meets all requirements for patentability—the PTO will grant the patent.122 Patents on
a pharmaceutical product’s active ingredient may be of particular value to the manufacturer
because these patents are unusually difficult, if not impossible, to “invent around” (i.e., develop a
competing product that does not infringe the patent).123 However, active ingredient patents are
hardly the only patents relating to pharmaceuticals and not necessarily the most important to
manufacturers as a practical matter.124 Indeed, in the case of biological products, if the active
Westview Instruments, Inc., 517 U.S. 370, 372-74 (1996); Phillips v. AWH Corp., 415 F.3d 1303, 1312-19 (Fed. Cir.
2005) (en banc).
114 Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1285, 1290-91 (Fed. Cir. 2011) (en banc).
115 Pub. L. No. 112-29, 125 Stat. 284 (2011).
116 See generally Rochelle Cooper Dreyfuss, Giving the Federal Circuit a Run for Its Money: Challenging Patents in the
PTAB, 91 NOTRE DAME L. REV. 235, 249 (2015); CRS Report R44962, Patent Law: A Primer and Overview of
Emerging Issues, by Kevin J. Hickey and Kathryn B. Armstrong, at 6-9.
117 Prior to the AIA, the PTO administered two earlier administrative mechanisms to challenge patents. The first, inter
partes reexamination, was generally considered to be “underutilized” and has been replaced by IPR. See Dreyfuss,
supra note 116, at 235 n.2; Brian J. Love & Shawn Ambwani, Inter Partes Review: An Early Look at the Numbers, 81
U. CHI. L. REV. DIALOGUE 93, 95-96 (2014). The second, ex parte reexamination, which was left unchanged by the
AIA, permits the PTO to reopen patent prosecution if a “substantial question of patentability” is presented based on
certain prior art cited by a third party to the PTO. 35 U.S.C. §§ 301-307.
118 35 U.S.C. §§ 321-329.
119 Id. §§ 311-319.
120 Pub. L. No. 112-29, § 18, 125 Stat 284, 329-30 (2011) (not codified in U.S.C.).
121 See 2018 Patent Dispute Year in Review, supra note 96 (finding that IPRs constituted 93.9% of petitions submitted
to the PTAB in 2018).
122 See supra “Requirements for Obtaining a Patent”; 35 U.S.C. § 101 (allowing patents on “any new and useful . . .
composition of matter”).
123 See Margaret K. Kyle, Competition Law, Intellectual Property, and the Pharmaceutical Sector, 81 ANTITRUST L.J.
1, 2 (2016) (“[A]t least one type of pharmaceutical patent, the product patent on the molecule itself, is particularly hard
to invent around.”).
124 See Kyle, supra note 123, at 6 (“[T]he primary patent on the molecule is rarely the only one associated with a drug.
Typically, the innovator (or others) files additional patent applications [that] may cover methods of manufacturing the
chemical or biological substance, purified forms, new salts or esters, new uses of the substance, new combinations, new
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ingredient is naturally occurring, it may not be legally possible to patent the biologic itself
because it constitutes patent-ineligible subject matter.125
Pharmaceutical patents may cover many different features of a drug or biologic beyond a claim
on the active ingredient itself.126 Such patents may claim, among other things:
1. a formulation of the drug (e.g., an administrable form and dosage);
2. a method of using the pharmaceutical (e.g., an indication or use for treating a
particular disease);
3. technologies used to administer the pharmaceutical or a method of
administration;
4. a method of manufacturing or manufacturing technology used to make the
pharmaceutical;
5. other chemicals related to the active ingredient, such as crystalline forms,
polymorphs, intermediaries, salts, and metabolites.127
To be patentable, all of these types of inventions must be new, useful, and nonobvious, and
sufficiently described in the patent application, like any other invention.128
In addition, if a person invents an improvement on any of these technologies—for example, a
more effective formulation of the drug, a new use, a different manufacturing process, etc.—then
the inventor can file for a patent on that improvement, which receives its own patent term.129 To
be patentable, the improvement must be new and nonobvious, that is, “more than the predictable
use of prior art elements according to their established functions.”130 Any person wishing to
practice the improved form of the invention will need permission from both the holder of the
patent on the original technology and the holder of the improvement patent (who need not be the
same entity), if neither patent has yet expired.131 In the case where the original patent has expired
delivery routes, etc.”).
125 See generally Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 580, 589-96 (2013)
(discussing “natural phenomena” category of patent-ineligible subject matter and holding that a “naturally occurring
DNA segment is a product of nature and not patent eligible”); Priti Deka Phukan, Patenting Proteins After Myriad, 23
FED. CIRCUIT B.J. 619, 621 (2014) (analyzing “whether synthetically produced biological compounds,” such as
therapeutic proteins and hormones, are patentable “when the synthetic compound is indistinguishable from the
naturally occurring compound”).
126 Indeed, studies have found that active ingredient patents are a minority of pharmaceutical patents. See Amy
Kapczynski et al., Polymorphs and Prodrugs and Salts (Oh My!): An Empirical Analysis of “Secondary”
Pharmaceutical Patents, 7 PLoS ONE 1, 4-6 (2012) (surveying patents listed in FDA’s Orange Book for new chemical
entities and finding that secondary patents such as formulations and methods of use were more common than active
ingredient patents); Tahir Amin & Aaron S. Kesselheim, Secondary Patenting of Branded Pharmaceuticals: A Case
Study of How Patents on Two HIV Drugs Could Be Extended for Decades, 31 HEALTH AFF. 2286, 2289 (2012) (finding
that only about 1% of the 108 patents covering particular HIV drugs claimed the active ingredient, with around 39%
claiming formulations and related chemicals, 32% claiming manufacturing processes, 15% claiming methods of
treatment, and 13% claiming other aspects).
127 See JOHN R. THOMAS, PHARMACEUTICAL PATENT LAW 46-64 (3d ed. 2015) (overviewing these and other categories
of pharmaceutical patent claims).
128 See supra “Requirements for Obtaining a Patent.”
129 35 U.S.C. § 101 (“Whoever invents or discovers any new and useful process, machine, manufacture, or composition
of matter, or any new and useful improvement thereof, may obtain a patent therefor . . . .”) (emphasis added).
130 KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398, 417 (2007); see also supra notes 65-69 and accompanying text
(discussing the nonobviousness requirement).
131 See Robert Merges, Intellectual Property Rights and Bargaining Breakdown: The Case of Blocking Patents, 62
TENN. L. REV. 75, 80-82 (1994) (analyzing “blocking patents” situation where holder of improvement patent and holder
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but the improvement patent has not, permission from the improvement patentee is required to
practice the improved version, but as a matter of patent law any person is free to make and use the
original, unimproved version.132
Because many different aspects of pharmaceutical products (and improvements thereon) are
patentable, some pharmaceutical products are protected by dozens of different patents. For
example, one recent study of the top 12 drugs by gross U.S. revenue found that pharmaceutical
manufacturers had obtained an average of 71 patents on each of these drugs.133 AbbVie, the maker
of the top-selling arthritis biologic Humira, was found to have filed 247 patent applications
relating to that product, resulting in 132 issued patents claiming methods of treatment,
formulations, methods of manufacturing, and other related inventions.134
The number and timing of nonactive ingredient patents (sometimes called “secondary” patents)
have contributed to long-standing concerns by some commentators about so-called patent
“evergreening.” Evergreening, also known as patent “layering” or “life-cycle management,” is an
alleged practice by which “drug innovators [seek] to prolong their effective periods of patent
protection [through] strategies that add new patents to their quivers as old ones expire.”135 Critics
of evergreening maintain that, by obtaining later patents on improvements or ancillary aspects of
a pharmaceutical, pharmaceutical manufacturers effectively extend patent protection beyond the
term set by Congress, deterring follow-on competitors and keeping prices high.136 In the view of
evergreening critics, many secondary pharmaceutical patents are of questionable value and
validity.137
of the original patent need each other’s permission before either can practice the improved invention).
132 Id. at 91; see also Mark A. Lemley, The Economics of Improvement in Intellectual Property Law, 75 TEX. L. REV.
989, 991, 1010 (1997).
133 See Overpatented, Overpriced: How Excessive Pharmaceutical Patenting Is Extending Monopolies and Driving Up
Drug Prices, I-MAK 6-8 (Aug. 2018), https://www.i-mak.org/wp-content/uploads/2018/08/I-MAK-OverpatentedOverpriced-Report.pdf. However, the number of patents per product is likely much smaller for less-valuable
pharmaceuticals. See Lisa Larrimore Ouellette, How Many Patents Does It Take to Make a Drug? Follow-On
Pharmaceutical Patents and University Licensing, 17 MICH. TELECOMM. & TECH. L. REV. 299, 314 (2010) (finding, on
average, 2.97 patents listed per drug in FDA’s Orange Book); but see infra notes 307-308 (discussing the limitations on
the types of patents that may be listed in the Orange Book).
134 Overpatented, supra note 133, at 7; see also Cynthia Koons, This Shield of Patents Protects the World’s BestSelling Drug, BLOOMBERG BUSINESSWEEK, Sept. 7, 2017, https://www.bloomberg.com/news/articles/2017-09-07/thisshield-of-patents-protects-the-world-s-best-selling-drug (finding that AbbVie has secured “more than 100 patents” on
Humira and that “[m]any of those patents were issued over the past few years as the expiration of Humira’s [primary]
patent grew closer”).
135 Eisenberg, supra note 21, at 354; see Julian W. Marrs, Forever Green? An Examination of Pharmaceutical Patent
Extensions, 18 OR. REV. INT’L L. 81, 83-89 (2008); Michael Enzo Furrow, Pharmaceutical Patent Life-Cycle
Management After KSR v. Teleflex, 63 FOOD & DRUG L.J. 275, 276 (2008).
136 See, e.g., Marrs, supra note 135, at 83-86; Feldman & Frondorf, supra note 34, at 555 (“Pharmaceutical company
behavior [such as evergreening] that extends the period in which the company can hold off competition runs contrary to
the patent bargain [leading to] losses to society in the form of higher prices.”); Robin Feldman, May Your Drug Price
Be Evergreen, J.L. & BIOSCI. 8 (forthcoming 2019), https://doi.org/10.1093/jlb/lsy022 (criticizing drug companies for
‘recycling and repurposing old [medicines]” to stifle competition).
137 See, e.g., Aaron S. Kesselheim, Think Globally, Prescribe Locally: How Rational Pharmaceutical Policy in the U.S.
Can Improve Global Access to Essential Medicines, 34 AM. J.L. & MED. 125, 136 (2008) (“Loose interpretation of
patent laws has permitted patent evergreening, where overly broad or otherwise inappropriate patents have been
granted on peripheral aspects of pharmaceutical products . . . .”); Eisenberg, supra note 21, at 354 (noting that although
“innovating firms have succeeded in getting [secondary] patents issued by the PTO,” “[t]he industry’s track record in
actually winning these infringement claims, however, has been considerably worse.”); see also C. Scott Hemphill &
Bhaven V. Sampat, Evergreening, Patent Challenges, and Effective Market Life in Pharmaceuticals, 21 J. HEALTH
ECON. 327 (2012) (finding that later-issued patents relating to ancillary aspects of a drug are more frequently challenged
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A similar, but distinct, concern voiced by some commentators is the notion of a patent “thicket.”
This term is used in two slightly different ways, both relating to products with a high number of
patents. First, a patent thicket may describe the situation where multiple parties have overlapping
patent rights on one product, such that a “potential manufacturer must negotiate licenses with
each patent owner in order to bring a product to market without infringing.”138 Patent thickets, in
this sense, raise concerns about inefficient exploitation of a technology because the multiplicity of
owners increases transaction costs and creates coordination challenges.139 Second, the term may
be used in a looser sense to describe an incumbent manufacturer’s practice of amassing of a large
volume of patents relating to a single product, with the intent to intimidate follow-on competitors
from entering the market (or to make it too costly and risky to do so).140 AbbVie’s Humira patent
portfolio has been alleged to be an example of this sort of patent thicket.141
Although some critics deride patent thickets and evergreening, others assert that these are unfairly
pejorative terms for legitimate uses of the patent system.142 On this view, much innovation is
incremental in nature, and sound public policy permits patents on improvements: like any other
form of technology, society ought to provide incentives to develop more effective formulations of
a drug, methods of treatment, and the like.143 Secondary pharmaceutical patents may represent
inventions with true medical benefits to patients, in which case the effect they may have on
competition is arguably justified.144 Finally, even presuming that some improvement patents
by generic firms).
138 Stu Woolman at al., Evidence of Patent Thickets in Complex Biopharmaceutical Technologies, 53 IDEA: INTELL.
PROP. L. REV. 1, 2 (2013); Carl Shapiro, Navigating the Patent Thicket: Cross Licenses, Patent Pools, and StandardSetting, 1 INNOVATION POL’Y & ECON. 119, 119 (2001).
139 See Gavin D. George, What Is Hiding in the Bushes? eBay’s Effect on Holdout Behavior in Patent Thickets, 13
MICH. TELECOMM. & TECH. L. REV. 557, 558-60 (2007) (summarizing the economic literature); see generally Shapiro,
supra note 138; Michael A. Heller & Rebecca Eisenberg, Can Patents Deter Innovation? The Anticommons in
Biomedical Research, 280 SCI. 698, 698 (1998).
140 Koons, supra note 134 (using “patent thicket” to refer to large patent portfolio amassed on one product by single
biologics manufacturer); America’s Overspend, supra note 32, at 4 (using term “thicket of patents” to refer to large
patent portfolio claiming aspects of a single drug); Robin Feldman, “One-and-Done” for New Drugs Could Cut Patent
Thickets and Boost Generic Competition, STAT, Feb. 11, 2019, https://www.statnews.com/2019/02/11/drug-patentprotection-one-done/ (“[D]rug companies build massive patent walls around their products, extending the protection
over and over again.”).
141 See AbbVie Inc. v. Boehringer Ingelheim Int’l GmbH, No. 17-CV-01065-MSG-RL, 2019 WL 917990, at *4 (D.
Del. Feb. 25, 2019) (summarizing allegation that AbbVie created a “thicket of dubious and overlapping patents to delay
biosimilar competition”).
142 See, e.g., GlaxoSmithKline, Evergreening (Jan. 2014), https://www.gsk.com/media/2949/evergreening-policy.pdf
(rejecting “evergreening” as an “inherently pejorative term . . . used by some to convey the false impression that
research-based pharmaceutical companies abuse the patent system by obtaining patents on what are characterized as
‘minor’ improvements to existing medicines”).
143 See, e.g., Christopher M. Holman, In Defense of Secondary Pharmaceutical Patents: A Response to the UN’s
Guidelines for Pharmaceutical Patent Examination, 50 IND. L. REV. 759, 760-61 (2017) (arguing that secondary
pharmaceutical patent claims are necessary for incentivizing pharmaceutical innovation and neither inherently less
legitimate and nor less worthy of protection than primary patents).
144 See GlaxoSmithKline, supra note 142, at 3 (“[B]y allowing patents for secondary developments, the patent system
provides incentives for companies which may not have the commercial or scientific capability to invent and develop
new chemical entities to engage in incremental innovation.”).
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granted by the PTO are obvious or not truly innovative,145 defenders of evergreening may point
out that existing law already has several mechanisms to challenge the validity of patents.146
Compulsory Licensing
As explained above, the patent holder generally has the exclusive right to practice the invention.
Thus, any other person who wishes to make, use, sell, or import the invention will ordinarily need
a license (i.e., permission) from the patent holder, or else be exposed to legal liability.147 In certain
cases, however, patents may be subject to a “compulsory license,” which allows another person to
use the invention without the prior consent from the patent holder.148 Compulsory licenses are
typically a creation of statute and usually require the sanction of a governmental entity and the
payment of compensation to the patent holder.149 Compulsory licenses differ from ordinary
licenses in two important respects: (1) the person seeking to use the invention need not seek
advance permission from the patent holder; and (2) the compensation paid to the patentee is
ordinarily determined by operation of law, not by private contractual negotiations between the
licensee and the patent holder.
Current federal law contains a number of compulsory license provisions for patents.150 For
example, under 28 U.S.C. § 1498, which is sometimes described as an “eminent domain”
provision for patents,151 the U.S. government has the authority to use any patented invention
“without license.”152 The patentee, however, has the right to sue in the U.S. Court of Federal
Claims for “reasonable and entire compensation” for the government’s use of the patented
invention.153 In no event, however, will a court issue an injunction against the United States to
prevent its use of the invention.154 In effect, then, section 1498 allows the United States to issue
itself a compulsory license to use any patented invention without obtaining the permission of the
patentee, in exchange for the payment of reasonable compensation.155 The federal government
145 Defenders of evergreening contest this notion. Holman, supra note 143, at 759 (“[The] assumption that many types
of pharmaceutical inventions are inherently obvious and undeserving of patent protection is incorrect and based on an
oversimplified view of how these inventions come about.”).
146 See, e.g., 35 U.S.C. §§ 311-319 (inter partes review); id. §§ 321-329 (post-grant review).
147 Id. § 271.
148 Compulsory License, BLACK’S LAW DICTIONARY (10th ed. 2014) (“A statutorily created license that allows certain
people to pay a royalty and use an invention without the patentee’s permission.”).
149 See generally Subhasis Saha, Patent Law and Trips: Compulsory Licensing of Patents and Pharmaceuticals, 91 J.
PAT. & TRADEMARK OFF. SOC’Y 364, 366-67 (2009).
150 See generally Jesse S. Chui, To What Extent Can Congress Change the Patent Right Without Effecting a Taking?,
34 HASTINGS CONST. L.Q. 447, 462-66 (2007) (reviewing examples of compulsory licensing provisions in existing law,
including 28 U.S.C. § 1498, and provisions of the Clean Air Act, Atomic Energy Act, Invention Secrecy Act, and Plant
Variety Protection Act).
151
See Motorola, Inc. v. United States, 729 F.2d 765, 768 (Fed. Cir. 1984); Leesona Corp. v. United States, 599 F.2d
958, 964 (Ct. Cl. 1979).
152 28 U.S.C. § 1498(a).
153 Id.
154 Advanced Software Design Corp. v. Fed. Reserve Bank of St. Louis, 583 F.3d 1371, 1375 (Fed. Cir. 2009)
(“[Section 1498] has the effect of removing the threat of injunction . . . .”); Motorola, 729 F.2d at 768 n.3.
155 Amanda Mitchell, Tamiflu, the Takings Clause, and Compulsory Licenses: An Exploration of the Government’s
Options for Accessing Medical Patents, 95 Cal. L. Rev. 535, 541-42 (2007) (analogizing section 1498 to a compulsory
license).
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uses its section 1498 authority with some frequency,156 although it has not been used recently in
the pharmaceutical context.157
Compulsory licensing is also available for inventions made with federal funding under the
provisions of the Bayh-Dole Act.158 In general, the Bayh-Dole Act permits certain government
contractors to obtain patents on inventions produced with federal funding.159 However, the federal
government retains the authority to “march in” and grant compulsory licenses to third parties for
federally funded inventions under certain specified circumstances, such as a failure to practice the
patented invention or health or safety needs.160 A license granted pursuant to Bayh-Dole’s marchin provisions must be “upon terms that are reasonable under the circumstances,” which may
require some compensation to be paid by the licensee to the patentee.161 The federal government
has never exercised its march-in rights under Bayh-Dole.162
Food and Drug Administration (FDA) Law
Unlike patent law, which is centrally motivated by promoting innovation, FDA law generally
arose to promote public health by protecting consumers from pharmaceuticals that are
adulterated, misbranded, unsafe, or ineffective.163 To this end, new drugs and biologics cannot be
marketed without FDA approval.164 FDA regulates which drugs and biologics may be marketed in
the United States through similar but distinct approval processes.165
Nonetheless, the principle of balancing advancement through innovation against the benefits of
competition applies to FDA law as well as patent law.166 To that end, federal law provides certain
regulatory exclusivities for companies that obtain approval for pharmaceutical products that meet
the requisite criteria.167
156 Hannah Brennan et. al., A Prescription for Excessive Drug Pricing: Leveraging Government Patent Use for Health,
18 YALE J.L. & TECH. 275, 302 (2016) (characterizing the government use of section 1498 as “routine” and citing a
number of examples).
157 Id. at 303-07 (describing various uses of section 1498 by the federal government to purchase pharmaceutical drugs
in the 1960s but observing that this practice “tailed off in the 1970s”). The only recent invocation of section 1498 in the
health context occurred in 2001, when Tommy Thompson, then Secretary of HHS, threatened to (but ultimately did
not) rely on this authority to purchase generic versions of Cipro during the anthrax scare. Id. at 303.
158 See Pub. L. No. 96-517, § 6, 94 Stat. 3015, 3019-27 (1980).
159 35 U.S.C. § 202(a); see generally Jennifer Penman & Fran Quigley, Better Late than Never: How the U.S.
Government Can and Should Use Bayh-Dole March-in Rights to Respond to the Medicines Access Crisis, 54
WILLAMETTE L. REV. 171, 177-78 (2017).
160 35 U.S.C. § 203(a)(1)-(4).
161 Id. § 203(a); Penman & Quigley, supra note 159, at 178.
162 Penman & Quigley, supra note 159, at 199.
163 See generally Wallace F. Janssen, The Story of the Laws Behind the Labels, FOOD & DRUG ADMIN. (1981),
https://www.fda.gov/downloads/aboutfda/history/forgshistory/evolvingpowers/ucm593437.pdf.
164 21 U.S.C. § 355(a); 42 U.S.C. § 262(a)(1).
165 See generally 21 U.S.C. § 355; 42 U.S.C. § 262.
166 See, e.g., King Drug Co. of Florence, Inc. v. Smithkline Beecham Corp., 791 F.3d 388, 394 (3d Cir. 2015)
(“Congress attempted to balance the goal of ‘mak[ing] available more low cost generic drugs, H.R. Rep. No. 98-857,
pt. 1, at 14-15 (1984), reprinted in 1984 U.S.C.C.A.N. 2647, 2647-48, with the value of patent monopolies in
incentivizing beneficial pharmaceutical advancement, see H.R. Rep. No. 98-857, pt. 2, at 30 (1984), reprinted in 1984
U.S.C.C.A.N. 2686, 2714.”); Yaniv Heled, Patents v. Statutory Exclusivities in Biological Pharmaceuticals—Do We
Really Need Both?, 18 MICH. TELECOMM. & TECH. L. REV. 419, 427-30, 434-36 (2012).
167 See infra “Regulatory Exclusivities.”
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This section provides an overview of the approval processes for new and follow-on drugs and
biologics. It also describes the exclusivities Congress has created to encourage research and
development of new pharmaceutical products as well as competition from follow-on products.
New and Generic Drug Approval
Drugs are articles, generally chemical compounds, “intended for use in the diagnosis, cure,
mitigation, treatment, or prevention of disease” or “intended to affect the structure or any function
of the body.”168 New drugs are those drugs that scientific experts do not generally recognize as
safe and effective for their intended use.169 A new drug may contain an active ingredient that FDA
has not previously approved or contain a previously approved active ingredient but modify
another aspect of the drug, such as the indication, patient population, formulation, strength,
dosage form, or route of administration. All new drugs require FDA approval before they are
marketed.170
New Drug Approval
New drugs are approved through the new drug application (NDA) process. To obtain approval for
a new drug, a sponsor must conduct “costly and time-consuming studies”171 demonstrating the
drug’s safety172 and effectiveness173 for humans.174 Clinical trials, conducted after the company
has completed basic research and animal testing, test the safety, efficacy, and effectiveness of the
drug in volunteer human subjects under carefully controlled conditions.175 When the company is
ready to begin clinical trials, it submits an investigational new drug (IND) application to FDA.176
The IND application provides FDA with information about the drug, including what the drug
does, the condition(s) and population(s) the drug is intended to treat, and any data from and
analysis of animal studies with the drug.177 It also includes a proposed clinical study design and
written approval from an Institutional Review Board, which reviews the study design.178 FDA has
30 days to review the IND application and object before clinical investigations proceed.179
168 21 U.S.C. § 321(g).
169 Id. § 321(p).
170 Id. § 355(a).
171 FTC v. Actavis, 570 U.S. 136, 142 (2013).
172 Safety in the FDA context is measured by the number and seriousness of adverse events and reactions in persons
exposed to the drug. See, e.g., 21 C.F.R. § 312.32.
173 Efficacy refers to whether the drug performs better than a placebo under controlled conditions. See generally Amit
Singal, Peter Higgins, & Akbar Waljee, A Primer on Effectiveness and Efficacy Trials, 5(1) J. CLINICAL &
TRANSLATIONAL GASTROENTEROLOGY e45 (2014), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3912314/.
Effectiveness examines how the drug performs under real-world conditions where it may not be prescribed or taken as
intended or may interact with other drugs or health conditions. Id.
174 21 C.F.R. § 314.50(d)(5).
175 Id. § 312.21.
176 Id. § 312.20.
177 Id. § 312.22-23.
178 Id. § 312.23.
179 Id. §§ 312.40, 312.42.
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Clinical testing occurs in three phases.180 Phase I clinical trials test the drug in a small number of
subjects and focus on evaluating the safety of the drug.181 During Phase I clinical trials, the
company evaluates how the drug is processed (metabolized and excreted) in the body, determines
the highest tolerable dose and optimal dose of the drug, and identifies any acute adverse side
effects from the drug.182 Phase II and Phase III clinical trials evaluate the drug’s efficacy and
effectiveness in addition to safety.183 These trials use a larger group of test subjects who have the
characteristic, condition, or disease the drug treats.184
Once clinical trials are complete, the company submits the results in an NDA to FDA’s Center for
Drug Evaluation and Research (CDER), along with a list of articles used as components of the
drug; a statement of the drug’s composition; a description of manufacturing methods, facilities,
and controls; specimens of the proposed labeling; any required pediatric assessments; and patient
information.185 In general, an NDA also contains the product description, the indication(s) (i.e.,
the disease or condition and population for which the drug will be used), information about the
manufacturing process, and proposed labeling.186 The NDA may also include a proposed Risk
Evaluation and Mitigation Strategy as needed.187
The FD&C Act provides for two types of NDAs: 505(b)(1) and 505(b)(2).188 Both types include
“full reports of investigations of safety and effectiveness.”189 However, the nature of the
company’s relationship to the underlying studies differs. For 505(b)(1) NDAs, the company has a
right to all of the studies that support the investigational reports, either because the studies were
conducted by or for the company, or because the company obtained the right to reference or use
the studies from the person who conducted them.190
For 505(b)(2) NDAs, by contrast, at least some of the information contained in the application
relies on studies that were not conducted by or for the company and for which the company has
not obtained a right of reference or use.191 This information to which the company does not have
reference takes two forms: (1) published literature where the applicant has not obtained a right to
the underlying studies or (2) the FDA’s finding of safety and effectiveness for an approved
drug.192 The 505(b)(2) pathway is used to obtain approval for modifications of approved drugs—
drugs that are “neither ‘entirely new’ nor ‘simply a generic version of a branded drug.’”193
180 Id. § 312.21.
181 Id. § 312.21(a).
182 Id.
183 Id. § 312.21(b)-(c).
184 Id.
185 21 U.S.C. § 355(b).
186 21 C.F.R. § 314.50.
187 21 U.S.C. § 355-1(a)(1).
188 Id. § 355(b).
189 U.S. FOOD & DRUG ADMIN., DRAFT GUIDANCE FOR INDUSTRY: APPLICATIONS COVERED BY SECTION 505(B)(2)
(1999), https://www.fda.gov/downloads/Drugs/Guidances/ucm079345.pdf [hereinafter FDA 505(B)(2) GUIDANCE].
190 Id.; compare 21 U.S.C. § 355(b)(1) with id. § 355(b)(2).
191 Id. § 355(b)(2).
192 See FDA 505(B)(2) GUIDANCE, supra note 189.
193 Takeda Pharm., U.S.A., Inc. v. Burwell, 78 F. Supp. 3d 65, 72 (D.D.C. 2015) (quoting Ethypharm S.A. France v.
Abbott Laboratories, 707 F.3d 223, 227 (3d Cir. 2013), vacated in part, aff’d in part, Takeda Pharm. U.S.A., Inc. v.
Burwell, 691 F. App’x 634 (D.C. Cir. 2016).
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FDA regulations also permit NDA holders to make changes to the drug or label after approval.194
Minor changes require only notice, but changes to the drug’s label, dosage, strength, or
manufacturing methods require a supplemental NDA (sNDA).195 Because the sNDA relates to a
drug already on the market, sNDAs must include post-market information, such as commercial
marketing experience and reports in scientific literature and unpublished scientific papers, in
addition to descriptions and analyses of clinical studies.196
FDA reviews the NDA to determine whether there is substantial evidence that the drug is safe and
effective for the proposed use, including whether the benefits of the drug outweigh the risks.197
The agency also reviews the proposed labeling and the manufacturing controls.198
When FDA completes its review, it sends a letter to the company with the agency’s
determination.199 If the NDA meets the requirements for approval, FDA sends an approval letter
or, if patent rights or exclusivities bar approval, a tentative approval letter.200 FDA may impose
conditions on its approval of the NDA, such as requiring the company to conduct additional postmarket clinical studies referred to as Phase IV clinical trials.201 If the NDA does not meet the
requirements for approval, FDA sends a “complete response letter” explaining the deficiencies
FDA identified in the NDA and how they could be remedied.202
Generic Drug Approval
Before the Hatch-Waxman Act was enacted in 1984, every new drug submitted to the FDA for
preapproval required a complete application under Section 505(b) supported by clinical trial data
demonstrating safety and effectiveness.203 To encourage generic drug entry, the Hatch-Waxman
Act established a pathway for abbreviated new drug applications (ANDAs),204 which allows
generic manufacturers to rely on FDA’s prior approval of another drug with the same active
ingredient—the reference listed drug (RLD)—to establish that the generic drug is safe and
effective.205 The ANDA pathway allows generic manufacturers to avoid the long, expensive
process of conducting their own clinical trials.206 Instead, the generic manufacturer need only
conduct studies with its generic product and samples of the RLD207 to demonstrate that the
194 21 C.F.R. § 314.70.
195 Id.; see also Drugs@FDA Glossary of Terms, FOOD & DRUG ADMIN. (Nov. 14, 2017), https://www.fda.gov/Drugs/
InformationOnDrugs/ucm079436.htm (entry for “Supplement Type”).
196 21 C.F.R. § 314.50(d)(5)(iv).
197 21 U.S.C. § 355(d).
198 Id. Manufacturing information includes the name and address of the manufacturer, manufacturing methods and
process controls, and specifications to ensure the integrity of the product for both the marketed drug substance and any
drug components used to manufacture the drug. 21 C.F.R. § 314.50(d)(1).
199 21 C.F.R. § 314.105.
200 Id.
201 Id.
202
Id. § 314.110.
203 21 U.S.C. § 355(b) (1982). FDA did permit applicants to rely on published studies to meet the “full reports of
investigations” requirement through its Paper NDA policy. See Publication of “Paper NDA” Memorandum, 46 Fed.
Reg. 27,396, 27,396 (May 19, 1981).
204 Drug Price Competition and Patent Term Restoration Act, Pub. L. No. 98-417, § 101, 98 Stat. 1585 (1984) (referred
to as the Hatch-Waxman Act).
205 21 C.F.R. §§ 314.92, 314.94.
206 Actavis v. FTC, 570 U.S. 136, 142 (2013).
207 The FD&C Act and FDA regulations presuppose that generic manufacturers have access to the brand-name drug to
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generic drug is pharmaceutically equivalent208 and bioequivalent209 to the RLD.210 The ANDA
also includes the generic manufacturer’s proposed labeling, which must be identical to the RLD
labeling except for manufacturing information and any approved changes from the RLD
specifications.211 ANDA filers submit this information, its proposed labeling, and any patent
certifications212 to FDA to obtain approval.213
Biological Product and Biosimilar Licensure
A biological product is derived from biological material, such as a virus, toxin, vaccine, blood
component, or protein, and used for “the prevention, treatment, or cure of a disease or condition
of human beings.”214 Biological products “are generally large, complex molecules” that “may be
produced through biotechnology in a living system, such as a microorganism, plant cell, or
animal cell.”215 “Inherent variations” between different batches of the same biological product are
“normal and expected.”216 According to FDA, the complexity and variability of biological
products “can present challenges in characterizing and manufacturing these products that often do
not exist in the manufacture of small molecule drugs.”217 FDA’s process for approving biological
products and generic versions of previously approved products aims to account for these
challenges.
Biological Products
To be marketed in the United States, a biological product must be (1) covered by a valid biologics
license; and (2) marked with the product’s proper name; the manufacturer’s name, address, and
applicable license number; and the product’s expiration date.218 A biological product
manufacturer may obtain a biologics license by submitting a biologics license application (BLA)
to FDA’s Center for Biologics Evaluation and Research (CBER) or CDER for approval.219 The
BLA must include, among other things:
conduct these studies. They do not provide any mechanisms for the generic manufacturer to force an NDA holder to
provide samples of its brand-name drug.
208 Drugs are pharmaceutically equivalent if they have the same active ingredient(s), strength, dosage form, and route of
administration. 21 C.F.R. § 314.3. Other elements that do not impact safety or effectiveness, such as the drug’s inactive
ingredients, may be different. Id.
209 Bioequivalence means the drugs work the same inside the body; there is no significant difference in the rate at
which and extent to which the drug’s active ingredient reaches the place in the body where the drug is active, when
administered at the same dose and under similar conditions. 21 C.F.R. § 320.1(e).
210 21 U.S.C. § 355(j)(2)(A); 21 C.F.R. §§ 314.94, 320.21.
211 21 U.S.C. § 355(j)(2)(A)(v).
212 See infra “The Hatch-Waxman Act: Patents and Generic Drug Approval.”
213 21 U.S.C. § 355(j)(2)(A).
214 42 U.S.C. § 262(i); 21 C.F.R. § 600.3.
215 U.S. FOOD & DRUG ADMIN., BIOLOGICAL PRODUCT DEFINITIONS, https://www.fda.gov/downloads/Drugs/
DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/
TherapeuticBiologicApplications/Biosimilars/UCM581282.pdf (last visited Apr. 1, 2019).
216 Id.
217 Id.
218 42 U.S.C. § 262(a)(1).
219 21 C.F.R. § 601.2(a). An intercenter agreement between CBER and CDER governs which center reviews a
particular product application and regulates the product if approved. Intercenter Agreement Between the Center for
Drug Evaluation and Research and the Center for Biologics Evaluation and Research, FOOD & DRUG ADMIN. (Oct. 25,
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“data derived from nonclinical laboratory and clinical studies”;
“[a] full description of manufacturing methods; data establishing stability of the
product through the dating period”;220
representative samples of the product; the proposed labels, enclosures, and
containers to be used;
“the address of each location involved in the manufacture of the biological
product”; and
if applicable, a proposed Medication Guide.221
FDA must also be able to examine the product and determine that it “complies with the standards
established” in the BLA and other requirements, including good manufacturing practices.222
To approve a BLA, FDA must determine that the biological product is “safe, pure, and potent”
and that the production and distribution process “meets standards designed to assure that the
biological product continues to be safe, pure, and potent.”223 As with drug approvals, FDA either
issues the license or issues a complete response letter detailing the reasons for denying the
license.224 After approval, BLA holders must notify FDA of any changes to “the product,
production process, quality controls, equipment, facilities, responsible personnel, or labeling.”225
Biosimilar or Interchangeable Products
As with the Hatch-Waxman Act, Congress created an abbreviated approval process for biological
products through the BPCIA. Under the abbreviated process, a company can obtain a license to
market a biological product if it can demonstrate that the product is biosimilar to, or
interchangeable with, an approved biological product, referred to as the “reference product.”226 To
obtain a BLA for a biosimilar, the manufacturer must submit data demonstrating that its product
is “highly similar to the reference product notwithstanding minor differences in clinically inactive
components” with no “clinically meaningful differences” between the two products “in terms of
the safety, purity, and potency of the product.”227 “[T]he condition or conditions of use prescribed,
1991), https://www.fda.gov/CombinationProducts/JurisdictionalInformation/ucm121179.htm. In 2003, FDA transferred
some therapeutic biological products from CBER to CDER. See Transfer of Therapeutic Biological Products to the
Center for Drug Evaluation and Research, FOOD & DRUG ADMIN. (June 30, 2003), https://www.fda.gov/
CombinationProducts/JurisdictionalInformation/ucm136265.htm.
220 The “dating period” is the “period beyond which the product cannot be expected beyond reasonable doubt to yield
its specific results.” 21 C.F.R. § 600.3(l).
221 Id. § 601.2(a). FDA requires Medication Guides for products that “pose a serious and significant public health
concern,” necessitating patient labeling to inform patients of serious adverse risks and ensure safe and effective use of
the product. Id. § 208.1. Generally, FDA requires Medication Guides for “prescription drug products used on an
outpatient basis without direct supervision by a health professional.” Id.
222 Id. § 601.20.
223 42 U.S.C. § 262(a)(2)(C). A product is safe when it is “relative[ly] free[] from harmful effect to the persons
affected, directly or indirectly, by a product when prudently administered,” accounting for the nature of the product and
the recipient’s condition. 21 C.F.R. § 600.3(p). A pure product is “relative[ly] free[] from extraneous matter in the
finished product,” regardless of whether the extraneous matter is harmful. Id. § 600.3(r). Finally, the potency of the
product depends on its “specific ability or capacity . . . to effect a given result,” as demonstrated through “appropriate
laboratory tests or by adequately controlled clinical data.” Id. § 600.3(s).
224 21 C.F.R. § 601.3, 601.4.
225 Id. § 601.12.
226 42 U.S.C. § 262(k).
227 Id. § 262(i)(2).
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recommended, or suggested in the labeling” must have been approved for the reference
product.228 The biosimilar product must use “the same mechanism or mechanisms of action” to
treat any applicable conditions and have the same route of administration, dosage form, and
strength as the reference product.229 Finally, the biosimilar product license application must
demonstrate that the production and distribution facilities meet “standards designed to assure that
the biological product continues to be safe, pure, and potent.”230
To obtain a BLA for an interchangeable product, the manufacturer must submit data
demonstrating that the product is biosimilar to the reference product and “can be expected to
produce the same clinical result as the reference product in any given patient.”231 Additionally, for
a biological product administered to an individual more than once, the manufacturer must also
show that the product does not create a greater “risk in terms of safety or diminished efficacy”
from alternating from or switching between the biosimilar product and reference product than if
the reference product was used alone.232 Interchangeable products “may be substituted for the
reference product without the intervention of the health care provider who prescribed the
reference product.”233
Regulatory Exclusivities
In order to balance interests in competition—which the abbreviated approval pathways aim to
encourage—with the countervailing interest in encouraging innovation, federal law establishes
periods of regulatory exclusivity that limit FDA’s ability to approve generic drugs and biosimilars
under certain circumstances.234 This right to exclusivity aims to encourage new drug or biologics
applicants to undertake the expense of generating clinical data and other information needed to
support an NDA or BLA.235 It also encourages follow-on product manufacturers to submit
abbreviated applications as soon as permissible.236
There are two general categories of regulatory exclusivity: (1) data exclusivity, which precludes
applicants from relying on FDA’s safety and effectiveness findings for the reference product
(based on the NDA or BLA holder’s data) to demonstrate the safety and effectiveness of the
follow-on product; and (2) marketing exclusivity, which precludes FDA from approving any other
application for the same pharmaceutical product and use, regardless of whether the applicant has
generated its own safety and effectiveness data.237 During a period of data exclusivity, a company
228 Id. § 262(k)(2)(A)(i)(III).
229 Id. § 262(k)(2)(A)(i)(II) & (IV).
230 Id. § 262(k)(2)(A)(i)(V).
231 Id. § 262(k)(4).
232 Id. § 262(k)(4).
233 Id. § 262(i)(3).
234 See, e.g., King Drug Co. of Florence, Inc. v. Smithkline Beecham Corp., 791 F.3d 388, 394 (3d Cir. 2015)
(“Congress attempted to balance the goal of ‘mak[ing] available more low cost generic drugs, H.R. Rep. No. 98-857,
pt. 1, at 14-15 (1984), reprinted in 1984 U.S.C.C.A.N. 2647, 2647-48, with the value of patent monopolies in
incentivizing beneficial pharmaceutical advancement, see H.R. Rep. No. 98-857, pt. 2, at 30 (1984), reprinted in 1984
U.S.C.C.A.N. 2686, 2714.”); Heled, supra note 166. For a comparison of regulatory exclusivities and patent
exclusivities, see infra Table 1.
235 Heled, supra note 166, at 427-30, 440.
236 21 U.S.C. § 355(j)(5)(B)(iii), (iv); 42 U.S.C. § 262(k)(6); see also Actavis v. FTC, 570 U.S. 136, 143-44 (2013);
Heled, supra note 166, at 428-29.
237 There is no standard terminology for regulatory exclusivities. Some commentators use terms such as “data
protection” and “marketing exclusivity” synonymously with “regulatory exclusivity.” This report follows a second
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could submit an NDA or BLA for the same pharmaceutical product and use.238 Functionally,
however, data exclusivity and marketing exclusivity may generate the same result due to the
investment required to generate the necessary data.
New Drugs or Biological Products
Federal law provides regulatory exclusivities for new drug and biological products that differ
based on such factors as how innovative the product was or the nature of the treatment
population. For new drugs, an NDA filer that obtains approval for a drug that contains a new
chemical entity (i.e., a new active ingredient) for which no other drug has been approved is
eligible for five years of data exclusivity running from the time of NDA approval.239 During that
period, no ANDA or 505(b)(2) NDA (i.e., applications that, by definition, would reference the
NDA data) containing that same active ingredient may be submitted to FDA.240 The one
exception is that after four years, FDA may accept for review an ANDA or 505(b)(2) application
for the same active ingredient if the application contains a paragraph (IV) certification that a
listed patent for the RLD is invalid or not infringed by the generic drug.241
NDA or sNDA242 sponsors that obtain approval for significant changes to approved chemical
entities that require additional clinical studies are eligible for three years of data exclusivity
running from the time of NDA approval.243 Significant changes would include new indications for
or formulations of chemical entities that FDA previously approved.244 Unlike five-year
exclusivity for new chemical entities, FDA may accept ANDA and 505(b)(2) submissions that
reference the changes meriting exclusivity during the three year time period.245 The three-year
exclusivity relates to when FDA may approve such applications.246 To obtain such three-year
exclusivity, the NDA or sNDA must “contain[] reports of new clinical investigations (other than
bioavailability studies)” that were “essential to the approval” of the application.247 In other words,
the sponsor must have conducted or sponsored additional clinical trials that were necessary to
obtain approval of the new use or formulation of the active ingredient in order to benefit from the
three-year exclusivity for that new condition.
For brand-name biological products, the BPCIA establishes two applicable periods of exclusivity.
First, no biosimilar applications can be submitted for four years “after the date on which the
approach that ascribes distinct meanings to the terms. See generally Heled, supra note 166, at 436 n.67.
238 Id.
239 21 U.S.C. § 355(c)(3)(E)(ii), (j)(5)(F)(ii); 21 C.F.R. § 314.108(b)(2).
240 This five-year new drug exclusivity, however, would not prevent FDA from accepting and approving a duplicate
version of the same drug product if the duplicate version is the subject of its own NDA with its own safety and efficacy
data. See Small Business Assistance: Frequently Asked Questions for New Drug Product Exclusivity, FOOD & DRUG
ADMIN. (Feb. 11, 2016),
https://www.fda.gov/drugs/developmentapprovalprocess/smallbusinessassistance/ucm069962.htm.
241 21 U.S.C. § 355(c)(3)(E)(ii), (j)(5)(F)(ii); 21 C.F.R. § 314.108(b)(3).
242 sNDA sponsors are only eligible for three-year exclusivity because sNDAs amend existing NDAs with approved
chemical entities. 21 C.F.R. § 314.108(b).
243 21 U.S.C. § 355(c)(3)(E)(iii)-(iv), (j)(5)(F)(iii)-(iv).
244 Id.
245 Compare id. with id. § 355(c)(3)(E)(ii), (j)(5)(F)(ii).
246 Id. § 355(c)(3)(E)(iii)-(iv), (j)(5)(F)(iii)-(iv).
247 Id.
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reference product was first licensed.”248 Second, approval of biosimilar application cannot
become effective until 12 years “after the date on which the reference product was first
licensed.”249 Together, these exclusivity periods mean that for the first four years after a reference
biological product is licensed, FDA does not accept any biosimilar applications for review; for the
next eight years, FDA accepts biosimilar applications for review, but it would not approve any
biosimilar application until 12 years after the date on which the reference product was first
licensed. FDA has not adopted a formal position on whether these exclusivity periods are data or
marketing exclusivity periods.250 Supplemental BLAs, for example to change the “indication,
route of administration, dosing schedule, dosage form, delivery system, delivery device, or
strength,” are not eligible for these four and 12-year regulatory exclusivity periods.251
Generic Drug and Biosimilar Exclusivities
In addition to providing incentives for innovation, regulatory exclusivities are also used to
promote competition by encouraging the entry of follow-on products. When a patent listed for an
RLD has not expired, potential ANDA applicants have two choices: (1) wait until the patent
expires to be approved or (2) file a paragraph (IV) certification252 that the patent is invalid or not
infringed by the generic product.253 The potential for ensuing patent litigation raises the expected
costs for the first ANDA filer with a paragraph (IV) certification as compared to other ANDA
filers.254 To incentivize generic manufacturers to be the first filer and challenge listed patents, the
Hatch-Waxman Act provides 180 days of exclusivity to the first ANDA applicant that
successfully challenges an active patent listed for the RLD using a paragraph (IV) certification
that the patent is invalid.255 This exclusivity period precludes FDA from approving another
ANDA for the same RLD during the 180-day period.
The BPCIA similarly awards regulatory exclusivity to the first interchangeable biological product
for a particular reference product.256 This exclusivity precludes FDA from making an
interchangeability determination for a subsequent biologic relying on the same reference product
for any condition of use until such exclusivity expires, the timing of which depends on the status
248 42 U.S.C. § 262(k)(7)(B).
249 Id. § 262(k)(7)(A).
250 This issue has been the subject of discussions between FDA and some lawmakers. See Letter from Representative
Anna G. Eshoo et al., to FDA (Dec. 21, 2010), http://patentdocs.typepad.com/files/letter-to-fda.pdf (signed by
Representatives Barton, Eshoo, and Inslee); Letter from Senator Sherrod Brown et al., to Dr. Margaret Hamburg,
Commissioner, FDA (Jan. 24, 2011), http://patentdocs.typepad.com/files/senator-letters-exclusivity.pdf (signed by
Senators Brown, Harkin, McCain, and Schumer). If the exclusivity periods are marketing exclusivities, they would
more broadly prevent even an application supported by its own, full clinical trial data from being approved during the
12-year period. More recently, FDA issued guidance that describes the exclusivity periods as limiting approval of an
application “referencing [the reference] product,” which indicates that FDA may consider the exclusivity periods to
provide data exclusivity. U.S. FOOD & DRUG ADMIN., INTERPRETATION OF THE “DEEMED TO BE A LICENSE” PROVISION
OF THE BIOLOGICS PRICE COMPETITION AND INNOVATION ACT OF 2009: GUIDANCE FOR INDUSTRY 3 (2018),
https://www.fda.gov/ucm/groups/fdagov-public/@fdagov-drugs-gen/documents/document/ucm490264.pdf.
251 42 U.S.C. § 262(k)(7)(C).
252 ANDA applicants must provide one of four certifications for each listed patent for the reference listed drug. 21
U.S.C. § 355(j)(2)(vii). Paragraph (IV) certifications assert that the listed patent has not expired but is invalid or will
not be infringed by the generic product. Id. § 355(j)(2)(vii)(IV); see also infra “The Hatch-Waxman Act: Patents and
Generic Drug Approval.”
253 See infra “Patent Dispute Procedures for Generic Drugs and Biosimilars.”
254 Id.
255 21 U.S.C. § 355(j)(5)(B)(iv), (j)(5)(D)(iii)(II).
256 42 U.S.C. § 262(k)(6).
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of a relevant patent dispute.257 Specifically, the exclusivity period ends at the earlier of one year
after the commercial marketing of the first interchangeable product, 18 months after a final court
decision in a patent infringement action against the first applicant or dismissal of such an action,
42 months after approval if the first applicant has been sued and the litigation is still ongoing, or
18 months after approval if the first applicant has not been sued.258
Other Regulatory Exclusivities
There are also a number of regulatory exclusivities aimed at encouraging entry into markets that
serve smaller or underserved populations or have limited competition. For example, the FD&C
Act provides a 180-day exclusivity to an ANDA filer if—at the applicant’s request—FDA
designates the drug as a “competitive generic therapy” (CGT) due to “inadequate generic
competition.”259 To receive the exclusivity, the first ANDA approved for the CGT drug must have
submitted the ANDA when there were “no unexpired patents or exclusivities listed in the Orange
Book for the relevant RLD,”260 and the applicant must commercially market the drug within 75
days of approval.261
In addition, Congress passed the Orphan Drug Act in 1983 to encourage the development of drugs
and biologics to treat rare diseases and conditions.262 Because these drugs—called “orphan
drugs”263—often treat small patient populations and thus may provide fewer financial incentives
for pharmaceutical manufacturers to develop them, the law (among other measures) provides a
seven-year marketing exclusivity for companies that obtain approval for these drugs.264 During
the seven-year period, FDA cannot approve an NDA or BLA for the same drug or biologic to treat
the same disease or condition, even if the second application generates its own safety and efficacy
data.265 To receive this exclusivity, (1) the drug must treat “rare diseases or conditions,”266 and (2)
FDA must not have approved another drug “for the same use or indication.”267
To encourage manufacturers to evaluate the safety and effectiveness of their pharmaceutical
products for children, NDA and BLA filers may obtain a “pediatric exclusivity” if FDA
determines the drug or biological product “may produce health benefits” in the pediatric
257 Id.
258 Id.
259 21 U.S.C. § 356h(b).
260 U.S. FOOD & DRUG ADMIN., COMPETITIVE GENERIC THERAPIES (2019), https://www.fda.gov/ucm/groups/fdagov-
public/@fdagov-drugs-gen/documents/document/ucm631401.pdf.
261 21 U.S.C. § 355(j)(5)(B)(v), (j)(5)(D)(iv).
262 Pub. L. No. 97-414, § 1, 96 Stat. 2049 (1983).
263 An orphan drug is one that treats a “rare disease or condition” that either (1) “affects less than 200,000 persons in
the United States” or (2) “affects more than 200,000 persons in the United States and for which there is no reasonable
expectation that the cost of developing and making available in the United States a drug for such disease or condition
will be recovered from sales in the United States of such drug.” 21 U.S.C. § 360bb(a)(2).
264 Id. § 360cc(a).
265 Id. § 360cc. This exclusivity is subject to two exceptions: (1) if the exclusivity holder “cannot ensure the availability
of sufficient quantities of the drug to meet the needs of persons with the disease or condition for which the drug was
designated,” and (2) if the NDA or BLA holder consents to the approval of another application for the same drug. Id.
§ 360cc(b).
266 21 U.S.C. §§ 360bb, 360cc.
267 21 C.F.R. § 316.3(b)(12); see also 21 U.S.C. § 360cc. However, an NDA or BLA filer may receive exclusivity for
an already-approved drug designated for the same rare disease or condition if it can demonstrate clinical superiority. 21
U.S.C. § 360cc(c).
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population and the filer completes pediatric studies at FDA’s request.268 Pediatric exclusivity adds
six months to any existing exclusivity the NDA or BLA filer has obtained.269 For example, if the
NDA filer obtains a five-year exclusivity for a new active ingredient and conducts the requested
pediatric studies, it is entitled to five and a half years of exclusivity.270
Patent Dispute Procedures for Generic Drugs and Biosimilars
As Table 1 summarizes below, patent rights granted by the PTO and regulatory exclusivities
granted by FDA are legally distinct as a general matter.271 They are, however, motivated by
similar purposes. Patents are designed to encourage innovation by providing an economic
incentive for inventors to invest their time and resources in the development of novel
inventions.272 Analogously, regulatory exclusivities granted by FDA273 can be viewed as
providing an incentive for pharmaceutical manufacturers to undertake the investments necessary
to complete the FDA approval process and bring new drugs and biologics to market.274
In some circumstances, patent rights can affect when a follow-on generic or a biosimilar can be
marketed. For example, if a court hearing a patent dispute grants an injunction against a generic
drug manufacturer that prohibits that manufacturer from infringing by making the generic drug,
that product cannot be brought to market until after the patent expires.275 In addition, as discussed
below, the Hatch-Waxman Act’s specialized patent dispute procedures can affect FDA’s ability to
approve an ANDA, even prior to a judicial decision.276 Patent rights may also affect follow-on
market entry indirectly, if a generic or biosimilar manufacturer declines to seek FDA approval
because of the number of existing patents relating to a product or the costs of challenging them.277
268 21 U.S.C. § 355a(b)-(c); 42 U.S.C. § 262(m).
269 21 U.S.C. § 355a(b)-(c); 42 U.S.C. § 262(m).
270 21 U.S.C. § 355a(b)-(c).
271 See generally Rebecca S. Eisenberg, Patents and Regulatory Exclusivity, in THE OXFORD HANDBOOK OF THE
ECONOMICS OF THE BIOPHARMACEUTICAL INDUSTRY 167-200 (Patricia M. Danzon & Sean Nicholson eds., 2012).
272 See Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 480 (1974) (“The patent laws promote [the progress of the
useful arts] by offering a right of exclusion for a limited period as an incentive to inventors to risk the often enormous
costs in terms of time, research, and development.”).
273 FDA administers more than a dozen different regulatory exclusivities. See Thomas, supra note 21, at 42 n.40.
274 See id. at 46; Morgan, supra note 21, at 98.
275 See supra “Rights of Patent Holders.”
276 See infra “The Hatch-Waxman Act: Patents and Generic Drug Approval.”
277 Of course, if these patents are valid, such deterrence is the intended result of a patent system. However, in some
cases, patents may deter competition even if the patents are invalid, inapplicable, or not infringed. See generally
Christopher R. Leslie, The Anticompetitive Effects of Unenforced Invalid Patents, 91 MINN. L. REV. 101, 113-39 (2006)
(arguing that even invalid patents can deter market entry of competitors based on fear of litigation and high litigation
costs); Rebecca S. Eisenberg & Daniel A. Crane, Patent Punting: How FDA and Antitrust Courts Undermine the
Hatch-Waxman Act to Avoid Dealing with Patents, 21 MICH. TELECOMM. & TECH. L. REV. 197, 260-62 (2015) (arguing
that pharmaceutical companies may deter or delay competition through assertion or listing of “irrelevant patents”).
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Table 1. Summary Comparison of Patents Versus Regulatory Exclusivities
Patents
Regulatory Exclusivities
Purpose
Provide incentives to encourage creation
of new technologies
Balance pharmaceutical innovation and
generic competition
Specific to
Pharmaceuticals?
No; available to any “process, machine,
manufacture, or composition of matter”
Yes
Relevant Agency
U.S. Patent & Trademark Office (PTO)
Food & Drug Administration (FDA)
Basic Requirements
Invention that is new, useful,
nonobvious, and sufficiently disclosed in
patent application
Successful completion of FDA regulatory
process for a particular drug or biological
product
Term
Generally 20 years from the date of the
relevant patent application
Variable based on drug type and whether
FDA approval has been previously
obtained with respect to that product
Effect
Third parties cannot may, use, sell, or
import the invention without the
permission of the patentee
Third parties cannot seek, obtain, and/or
use data for FDA approval with respect to
particular product
Enforcement
By the patentee, usually in a judicial
patent infringement lawsuit
By FDA
Source: CRS.
Rationale for Specialized Pharmaceutical Patent Procedures
One of the core aims of the Hatch-Waxman Act was to correct “two unintended distortions” in the
patent term resulting from the interaction between the temporally limited patent monopoly and
FDA premarketing requirements for products such as prescription drugs.278 The first distortion
affected new drug manufacturers: because obtaining FDA marketing approval could take years,
the effective patent life (i.e., the period during which the patentee can derive profit from the
invention) was shortened by FDA regulatory requirements.279 In response, the Hatch-Waxman Act
granted a patent term extension for certain inventions relating to drug products or medical devices
based on delays in obtaining regulatory marketing approval.280
The other distortion concerned the end of the patent term and affected generic manufacturers. In
general, once a patent is expired, the patented invention should be available for anyone to use.281
As a result, in the pharmaceutical context, generic manufacturers can (at least in theory) enter the
market once the applicable patents and/or regulatory exclusivities have expired. However, prior to
the Hatch-Waxman Act, some judicial decisions had held that uses of a patented drug necessary to
obtain FDA approval, such as conducting tests on a patented drug, constituted patent
infringement.282 Thus, as a practical matter, generic manufacturers could not even begin the
process of seeking FDA approval until the applicable patents expired.283 The result was an
“effective extension of the patent term” based on the “combined effect of the patent law and the
278 Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 669 (1990).
279 Id. at 669-70.
280 Id. at 670; 35 U.S.C. § 156.
281 Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 230 (1964) (“[W]hen the patent expires the monopoly created by
it expires, too, and the right to make the article . . . passes to the public.”).
282 See, e.g., Roche Products v. Bolar Pharm. Co., 733 F.2d 858, 863 (Fed. Cir. 1984).
283 Eli Lilly, 496 U.S. at 670.
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premarket regulatory approval requirement.”284 In response, the Hatch-Waxman Act created a
“safe harbor,” providing that making, using, or selling an invention “solely for uses reasonably
related to the development and submission of information under a federal law which regulates the
manufacture, use, or sale of drugs” is not patent infringement.285
A potential side effect of this safe harbor, however, was to limit the ability of a pharmaceutical
patent holder to file a lawsuit for patent infringement prior to the generic manufacturer’s
marketing of the follow-on product.286 If actions relating to the FDA approval process are no
longer infringing, patent litigation against an ANDA filer might not occur until the generic or
biosimilar is actually marketed, following the completion of the FDA approval process.287
However, earlier resolution of such patent disputes is often considered beneficial, as it provides
greater legal certainty to the parties.288 In particular, generic manufacturers can obtain clarity on
patent issues before they market a drug and expose themselves to monetary damages.289
For this reason, the Hatch-Waxman Act made the filing of an ANDA or paper NDA itself an
“artificial” act of patent infringement.290 For its part, the BPCIA contains an analogous provision
making the filing of a biosimilar or interchangeable BLA an artificial act of patent
infringement.291 Functionally, these artificial acts of infringement enable the original
manufacturer, in some circumstances, to sue for patent infringement at the time of the follow-on
application, enabling patent disputes to be litigated prior to the marketing of the follow-on
product.292
In short, both of the laws that created an abbreviated pathway for the regulatory approval for
follow-on products enacted specialized patent dispute resolution procedures intended to facilitate
the early resolution of patent issues. This section reviews these procedures.
284 Id.
285 35 U.S.C. § 271(e)(1); Merck KGaA v. Integra Lifesciences I, Ltd., 545 US 193, 200 (2005) (describing this
provision as a “safe harbor”).
286 Eli Lilly, 496 U.S. at 678.
287 In general, even the absence of an actual act of infringement, either party could file a lawsuit seeking a declaratory
judgment, asking a court to “declare the rights and other legal relations” between the parties, such as whether a patent is
invalid or noninfringed. 28 U.S.C. § 2201(a). However, for a court to have jurisdiction, there must be an actual and
“substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant
the issuance of a declaratory judgment.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) (quoting
Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941)); see also Teva Pharm. USA, Inc. v.
Novartis Pharm. Corp., 482 F.3d 1330, 1336-39 (Fed. Cir. 2007). In addition, both the Hatch-Waxman Act and the
BPCIA limit declaratory judgement jurisdiction for drug patents in some circumstances. 28 U.S.C. § 2201(b).
288 See Natalie M. Derzko, The Impact of Recent Reforms of the Hatch-Waxman Scheme on Orange Book Strategic
Behavior and Pharmaceutical Innovation, 45 IDEA: INTELL. PROP. L. REV. 165, 239 (2005) (“From society’s
perspective, early resolution of such patent disputes is generally considered beneficial since it helps clear the way for
generic drug entry if a patent is in fact invalid. . . . Such resolution provides an early signal to the generic company of
this fact before substantial resources are expended in launching, marketing and selling its generic copy of the brandname drug.”).
289 See id. at 239-40; Laura J. Robinson, Analysis of Recent Proposals to Reconfigure Hatch-Waxman, 11 J. INTELL.
PROP. L. 47, 78 (2003) (“[If patent issues are not resolved,] the generic [company] cannot go to market without risking
a later infringement suit with substantial damages.”).
290 Eli Lilly, 496 U.S. at 678; see 35 U.S.C. § 271(e)(2)(A).
291 35 U.S.C. § 271(e)(2)(C).
292 Eli Lilly, 496 U.S. at 678; see generally Elizabeth Stotland Weiswasser & Scott D. Danzis, The Hatch-Waxman Act:
History, Structure, and Legacy, 71 ANTITRUST L.J. 585, 595 (2003) (“The Hatch-Waxman Act created a system that
enabled the resolution of patent infringement disputes prior to the entry of generic competition.”).
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The Hatch-Waxman Act: Patents and Generic Drug Approval
Under the Hatch-Waxman Act, a drug manufacturer must list as part of its NDA any patent that
claims the drug that is the subject of the application, or a method of using that drug. 293 FDA
includes information on listed patents in a publication known as the Orange Book.294 When a
generic drug manufacturer files an ANDA, it must provide a certification for each patent listed in
the Orange Book with respect to the referenced listed drug (RLD).295 In particular, with some
exceptions,296 the generic applicant must provide one of four certifications:
(I) there is no patent information listed;
(II) the patent has expired;
(III) the date the patent will expire; or
(IV) the patent is invalid and/or not infringed by the generic applicant’s product.297
Paragraph (I) and (II) certifications do not affect FDA’s ability to approve the ANDA.298 If the
generic applicant makes a paragraph (III) certification, however, FDA may not approve the
ANDA until the patent at issue has expired.299 A paragraph (IV) certification triggers HatchWaxman’s specialized patent dispute procedures, often resulting in litigation.300 First, the generic
applicant must give notice of the ANDA and the paragraph (IV) certification to the patentee and
the NDA holder.301 The patent holder then has 45 days in which to bring a lawsuit against the
generic applicant.302 If the patent holder declines to file suit by the deadline, the ANDA applicant
may file a “civil action for patent certainty” to obtain a declaratory judgment that the Orange
Book-listed patents are invalid or not infringed.303
If the patent holder timely files suit after being notified of the paragraph (IV) certification, this
lawsuit triggers the so-called “thirty-month stay”: FDA generally cannot approve the ANDA for
30 months while the parties litigate their patent dispute.304 If, prior to the expiration of the 30month stay, the district court concludes that the patent is invalid or not infringed by the ANDA
293 21 U.S.C. § 355(b)(1); see also 21 C.F.R. § 314.53(b).
294 U.S. FOOD & DRUG ADMIN., APPROVED DRUG PRODUCTS WITH THERAPEUTIC EQUIVALENCE EVALUATIONS (2019),
https://www.fda.gov/downloads/drugs/developmentapprovalprocess/ucm071436.pdf [hereinafter Orange Book]; see
also https://www.accessdata.fda.gov/scripts/cder/ob/ (searchable form of the Orange Book).
295 21 U.S.C. § 355(j)(2)(A)(vii). While this summary discusses the patent dispute procedures with respect to an
ANDA, paper NDAs are subject to a parallel certification and notification process. See id. § 355(b)(2)-(3), (c)(3).
296 With respect to patents that claim a method of using a drug, the generic applicant may file a “section viii” statement
when the applicant is seeking approval only for a use that is not claimed in listed patent. Id. § 355(j)(2)(A)(viii).
297 Id. § 355(j)(2)(A)(vii)(I)-(IV).
298 Id. § 355(j)(5)(B)(i).
299 Id. § 355(j)(5)(B)(ii).
300 Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 566 U.S. 399, 407 (2012).
301 21 U.S.C. § 355(j)(2)(B)(i)-(iv).
302 Id. § 355(j)(5)(B)(iii).
303 Id. § 335(j)(5)(C); see generally Caraco Pharm., 527 F.3d at 1285. In civil actions for patent certainty, federal
courts have subject-matter jurisdiction so long as it is “consistent with the Constitution.” 35 U.S.C. § 271(e)(5).
304 See id.; Caraco Pharm., 566 U.S. at 407-08. Following 2003 amendments to the Hatch-Waxman Act, the NDA
holder may receive only one 30-month stay based on patents listed in the Orange Book with respect to an ANDA. See
21 U.S.C. § 355(c)(3)(C), (j)(5)(B)(iii); Colleen Kelly, The Balance Between Innovation and Competition: The HatchWaxman Act, the 2003 Amendments, and Beyond, 66 FOOD & DRUG L.J. 417, 439 (2011) (“[The 2003 amendments]
effectively limited an innovator company to one 30-month stay per ANDA.”).
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applicant, FDA may approve the ANDA as of the date of the court’s judgment or settlement order
to that effect.305 If the court concludes that the patent is infringed (and that decision is not
appealed or affirmed), then the effective date of ANDA approval must be “not earlier than the
date of the expiration of the patent which has been infringed.”306 FDA approval of a generic drug
application can thus be significantly delayed based upon patent rights asserted by the NDA
holder.
By statute, the only patents that must be listed with an NDA are those that either (1) “claim[] the
drug” that is the subject of the NDA or (2) claim “a method of using such drug.”307 FDA
regulations make clear that “drug substance (active ingredient) patents, drug product (formulation
and composition) patents, and method-of-use patents” must be listed, whereas “[p]rocess patents,
patents claiming metabolites, and patents claiming intermediates” must not be listed.308 As a
result, patents on a process for manufacturing a drug, for example, should not be included in the
NDA or listed in the Orange Book. However, FDA does not actively police the patent information
listed in the Orange Book, viewing its role as merely “ministerial.”309 This approach has raised
concerns among some commentators that irrelevant or inapplicable patents may be listed by NDA
holders and included in the Orange Book as a means to deter generic competition.310
Because of the availability of the 30-month stay and the requirement that ANDA filers make a
certification for each patent listed in the Orange Book, it is generally in the interest of NDA
holders to list all relevant patents.311 However, there is no statutory provision providing that the
patentee or NDA holder forfeits the right to sue if she fails to list the applicable patents.312 In
addition, because only certain types of patents relating to a drug may be included in the Orange
305 21 U.S.C. § 355(j)(5)(B)(iii)(I).
306 Id. § 355(j)(5)(B)(iii)(II); 35 U.S.C. § 271(e)(4)(A).
307 21 U.S.C. § 355(b)(1). Additionally, the listed patents must be such that “a claim of patent infringement could
reasonably be asserted if a person not licensed by the owner engaged in the manufacture, use, or sale of the drug.” Id.
308 21 C.F.R. § 314.53(b)(1).
309 See Applications for FDA Approval to Market a New Drug: Patent Submission and Listing Requirements and
Application of 30-Month Stays on Approval of Abbreviated New Drug Applications Certifying That a Patent Claiming
a Drug Is Invalid or Will Not Be Infringed, 68 Fed. Reg. 36,676, 36,683 (June 18, 2003) (codified at 21 C.F.R. pt. 314)
(“[FDA’s] patent listing role remains ministerial.”) (citing aaiPharma v. Thompson, 296 F.3d 227, 242-43 (4th Cir.
2002)). However, FDA does have an administrative procedure through which “any person [who] disputes the accuracy
or relevance of patent information [in the Orange Book], or believes that an NDA holder has failed to submit required
patent information” may notify the agency of this issue. 21 C.F.R. § 314.53(f)(1). Generally, however, FDA will not
change the patent information in the Orange Book unless the NDA holder amends or corrects the information in
response to the patent listing dispute. Id. § 314.53(f)(1)(i); see generally Ashley M. Winkler et al., Requirements,
Benefits, and Possible Consequences of Listing Patents in the FDA’s Orange Book, BNA PHARM. L. & INDUSTRY REP.
4-5 (July 3, 2018), https://www.finnegan.com/print/content/65249/Requirements-Benefits-and-Possible-Consequencesof-Listing-Patents-in-FDAs-Orange-Book.pdf. An ANDA applicant may also file a counterclaim in infringement
litigation to correct or delete patent information listed by the NDA holder. 21 U.S.C. § 355(j)(5)(C)(ii)(I).
310 See, e.g., Eisenberg & Crane, supra note 277, at 260 (arguing that “the lack of administrative oversight” by FDA
“has allowed innovators to defer competition through the listing of irrelevant patents”).
311 See Winkler et al., supra note 309, at 3 (“Having a patent listed in the Orange Book provides significant benefits to
the NDA holder.”).
312 See id. at 4-5 (discussing the “possible consequences” of not listing or late listing, including the potential loss of the
30-month stay, but not a loss of patent rights); Brian D. Coggio & Ron Vogel, Can Reference Sponsor Forfeit Right to
Sue under BPCIA?, LAW360 (July 25, 2016), https://www.law360.com/articles/820197, at n.32 (“It is worth noting that
the Hatch Waxman Act does not have a “list it or lose it” provision. A patentee can choose to assert any patents listed
in the Orange Book, but it does not forfeit the right to later assert patents that were not part of the original litigation.”).
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Book,313 some patent litigation concerning generic drugs takes place outside the specialized
procedures of the Hatch-Waxman Act.
The BPCIA: Patents and Biosimilar Licensure
A different patent dispute resolution scheme applies to biological products and biosimilars, which
are subject to regulatory licensure under the PHSA, as amended by the BPCIA.314 Under the
BPCIA, regulatory approval of biologics is not directly contingent on resolution of patent
disputes. In contrast to the Hatch-Waxman approach, a BLA filed need not list any patent
information as part of its BLA.315 As a result, no patent information is currently listed in the
Purple Book, FDA’s list of approved biological products that is the biologics analog of the
Orange Book.316 Table 2 summarizes the key differences between the patent dispute resolution
regimes for drugs under Hatch-Waxman and for biologics under the BPCIA.
Instead of the Hatch-Waxman certification process, patent disputes regarding biosimilars may be
resolved through the BPCIA’s “patent dance.”317 The patent dance is “a carefully calibrated
scheme for preparing to adjudicate, and then adjudicating, claims of infringement.”318 The first
step in the patent dance process is triggered when, not later than 20 days after FDA accepts a
biosimilar BLA, the biosimilar applicant provides its application to the reference product sponsor
(i.e., the brand-name biologic manufacturer), along with information on how the biosimilar is
manufactured.319 “These disclosures enable the [reference product] sponsor to evaluate the
biosimilar for possible infringement of patents it holds on the reference product (i.e., the
corresponding biologic).”320 The biosimilar applicant and reference product sponsor then engage
in a series of back-and-forth information exchanges regarding the patents that each party believes
are relevant, as well as the parties’ positions as to the validity and infringement of those
patents.321 Depending on their participation in this information exchange, each party has the
opportunity to litigate the patents in two phases: either at the conclusion of the patent dance, or
313 See supra notes 307-308 and accompanying text.
314 See supra “Biological Product and Biosimilar Licensure.”
315 See 42 U.S.C. § 262(a); Daniel M. Scolnick, FDA’s ‘Purple Book’ for Biologics: Patents Not Included
PEPPERHAMILTON LLP 1 (Sept. 9, 2014), https://www.pepperlaw.com/resource/159/26J3.
316 Scolnick, supra note 315; Purple Book: Lists of Licensed Biological Products with Reference Product Exclusivity
and Biosimilarity or Interchangeability Evaluations, U.S. FOOD & DRUG ADMIN. (March 20, 2019),
https://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/
ApprovalApplications/TherapeuticBiologicApplications/Biosimilars/ucm411418.htm [hereinafter the Purple Book].
FDA maintains two separate lists of approved biological products, depending on the center within FDA that regulates
them: either CDER or CBER. See Background Information: Lists of Licensed Biological Products with Reference
Product Exclusivity and Biosimilarity or Interchangeability Evaluations (Purple Book), U.S. FOOD & DRUG ADMIN.
(March 5, 2015), https://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/
ApprovalApplications/TherapeuticBiologicApplications/Biosimilars/ucm411424.htm. Unlike the Orange Book, FDA is
not required by statute to publish the Purple Book, but it has chosen to do so voluntarily. See id.
317 See 42 U.S.C. § 262(l).
318 Sandoz Inc. v. Amgen Inc., 137 S. Ct. 1664, 1670 (2017) (holding that injunctive relief to compel participation in
the patent dance is not available under federal law); Amgen Inc. v. Sandoz Inc., 877 F.3d 1315, 1326-30 (Fed. Cir.
2017) (holding that the BPCIA preempts state law remedies for failure to commence the patent dance).
319 42 U.S.C. § 262(l)(2).
320 Sandoz, 137 S. Ct. at 1670-71.
321 Id. at 1671-72.
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when the applicant provides a notice of commercial marketing no later than 180 days before the
date that the biosimilar will be marketed.322
BLA holders cannot obtain injunctive relief to compel the biosimilar applicant to engage in the
patent dance.323 In practice, this limitation means that biosimilar applicants can choose whether or
not they wish to commence the patent dance. However, if the biosimilar applicant chooses not to
commence the patent dance, the BPCIA “authorizes the [reference product] sponsor, but not the
applicant, to bring an immediate declaratory-judgment action for artificial [patent]
infringement.”324 Thus, although the biosimilar applicant need not immediately reveal his
manufacturing information if he chooses not to commence the patent dance, he exposes himself
to an immediate lawsuit for a declaratory judgment of patent infringement.325
Unlike patent listing under Hatch-Waxman, the BPCIA contains an express statutory penalty for
failing to list relevant patents during the patent dance. If the biosimilar applicant commences the
patent dance, the reference product sponsor must provide a list of all “patents for which the
reference product sponsor believes a claim of patent infringement could reasonably be asserted
. . . if a person not licensed by the reference product sponsor engaged in the making, using,
offering to sell, selling, or importing [the biological product at issue]” without permission of the
patentee.326 Under the “list it or lose it” requirement, the patent holder may forfeit his right to sue
if this list is not submitted or is incomplete.327 Specifically, if a patent “should have been included
in the list [as required during the patent dance], but was not timely included in such list,” then the
patent owner “may not bring an action under this section for infringement of the patent with
respect to the biological product.”328
322 Id. at 1672.
323 Id. at 1675.
324 Id.; see 42 U.S.C. § 262(9)(C).
325 Sandoz, 137 S. Ct. at 1675. In general, there are complicated tradeoffs for biosimilars applicants in deciding whether
to initiate the patent dance. See generally Limin Zheng, Shall We (Patent) Dance?—Key Considerations for Biosimilar
Applicants, BIOSIMILAR DEV., Feb. 27, 2018, https://www.biosimilardevelopment.com/doc/shall-we-patent-dance-keyconsiderations-for-biosimilar-applicants-0001.
326 42 U.S.C. § 262(l)(3)(A)(i).
327 See Krista Hessler Carver et al., An Unofficial Legislative History of the Biologics Price Competition and
Innovation Act of 2009, 65 FOOD & DRUG L.J. 671, 760 (2010) (describing this provision as the “list it or lose it”
requirement); Coggio & Vogel, supra note 312 (same).
328 35 U.S.C. § 271(e)(6)(C). The statute is not clear as to whether the holder of a patent that was not timely listed loses
his right to sue the biosimilar applicant just during the premarketing period (i.e., only with respect to the “artificial” act
of infringement), or forfeits the right to sue on that patent for post-marketing infringement as well. See Coggio &
Vogel, supra note 312 (analyzing the potential ambiguity as to whether the patentee is “precluded from asserting
infringement of the nonlisted patent(s) under all subsections of section 271, or just subsection 271(e)(2)”); but see
Hessler Carver et al., supra note 327, at 760 (describing the “list it or lose it” provision as reaching infringements both
“before or after marketing of the biosimilar”).
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Table 2. Summary Comparison of Hatch-Waxman and BPCIA
Follow-on Regulatory Pathways and Patent Dispute Procedures
Feature
Hatch-Waxman and Generic Drug
Approval
BPCIA and Biosimilar (or
Interchangeable) Licensure
Regulatory Statute
FD&C Act
PHSA
Scope
A “drug” is, inter alia, a chemical
compound “intended for use in the
diagnosis, cure, mitigation, treatment, or
prevention of disease.” 21 U.S.C.
§ 321(g)(1).
A “biologic” is a medical product derived
from natural resources (human, animal,
microorganism) and applicable to the
prevention, treatment, or cure of disease. 42
U.S.C. § 262(i)(1).
Example
Aspirin: C9H8O4
Adalimumab (a.k.a. Humira):
C6428H9912N1694O1987S46
Terminology
Drug is approved by FDA
Biological product is licensed by FDA
General Regulatory
Standard
Safe and effective
Safe, pure, and potent
New Product Pathway
New drug application (NDA). 21 U.S.C.
§ 355(b).
Biologics license application (BLA). 42 U.S.C.
§ 262(a).
Abbreviated Pathway
Abbreviated new drug application
(ANDA). 21 U.S.C. § 355(j).
Biosimilar (or interchangeable) BLA. 42
U.S.C. § 262(k).
Relationship Between
New and Follow-on
Product
Chemical identity: the active ingredient of
the new drug is “the same as” that of the
listed drug (if only one ingredient). 21
U.S.C. § 355(j)(2)(A)(ii).
Biosimilarity: “highly similar to the reference
product” without “clinically meaningful
differences.” 42 U.S.C. § 262(i)(2); see also
42 U.S.C. § 262(k)(4) (interchangeability).
General Exclusivity
Term for New Product
Five-year new chemical entity exclusivity
(three years for other new products)
Twelve-year new biologic exclusivity
Follow-On Exclusivity
180-day patent challenge exclusivity or
180-day competitive generic exclusivity
12-to-42-month exclusivity for first
interchangeable product
Patent Listing
Requirements
Required to list in NDA any patent that
“claims the drug or a method of using the
drug that.” 21 C.F.R. § 314.53(b); 21
U.S.C. § 355(b)(1).
Not required to list patents in BLA.
If patent dance is initiated, BLA holder must
list patents “for which the [BLA holder]
believes a claim of patent infringement could
reasonably be asserted.” 42 U.S.C.
§ 262(l)(3)(A)(i).
Patent Listing
Consequences
ANDA applicant need not certify; NDA
loses opportunity for 30-month stay
“List it or lose it.” 35 U.S.C. § 271(e)(6)(C).
FDA List of Approved
Products
The Orange Book (includes patents)
The Purple Book (does not include patents)
Patent Dispute
Procedures
Patent Certification/Notice. 21 U.S.C.
§ 355(b)(2)-(3), (c)(3), (j)(2)(A)-(B), (j)(5).
The “Patent Dance.” 42 U.S.C. § 262(l).
Approval Contingent
on Patent Disputes?
Yes, e.g., via the 30-month stay
No
Source: CRS.
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Selected Drug Pricing Proposals in the 115th and
116th Congresses
This section reviews a number of legislative proposals in the 115th and 116th Congresses that seek
to reduce pharmaceutical drug and biological product prices through reforming IP laws and/or
facilitating increased competition from generic drug and biosimilar manufacturers. This review is
not intended to be comprehensive, nor does it evaluate the merits of these proposals. Rather,
proposals are reviewed merely as representative examples of the various types of legal changes
under consideration. Related or similar proposals are referenced in the footnotes.329
As noted above, IP rights are only one factor that may contribute to consumer prices in a highly
complex pharmaceutical market.330 Thus, congressional proposals related to IP rights are merely
one potential means to reduce drug prices that is currently under consideration in Congress. Other
legislative proposals seeking to reduce drug prices would, for example, permit the Secretary of
HHS (the Secretary) to negotiate drug prices for Medicare Part D,331 allow consumers to import
(often cheaper) pharmaceuticals from Canada under certain circumstances,332 or reform health
insurance requirements to institute a cap on consumers’ out-of-pocket costs for prescription
drugs.333 Because these and other similar proposals relate only indirectly to IP rights in
pharmaceuticals, they are outside the scope of this report.
In part due to the complexity of the legal regimes governing IP rights in pharmaceutical products,
there are many different approaches that legislators seeking to reduce drug and biologic prices
might take. These approaches include efforts to facilitate generic and biosimilar market entry,
curtail practices perceived to be anticompetitive, limit IP rights based on pricing behavior, and
increase patent transparency. This section surveys some of the specific means used in existing
legislative proposals.
Facilitating Follow-On Product Entry: The CREATES Act of 2019
For many looking at how to reduce drug prices, encouraging the entry of follow-on products—
which provide lower-cost alternatives to brand products—is often an area of focus.334
Accordingly, proposals have been made to overcome perceived barriers to follow-on product
entry. One such proposal is the CREATES Act of 2019,335 which aims to facilitate the timely entry
329 See infra notes 335, 394, 469 and 478.
330 See supra note 30; see generally AMERICAN PATIENTS FIRST, supra note 1, at 12-18 (overviewing “complex U.S.
pharmaceutical market”); Henry Waxman et al., Getting to the Root of High Prescription Drug Prices, THE
COMMONWEALTH FUND 6-10 (2017) (same).
331 See, e.g., Medicare Negotiation and Competitive Licensing Act of 2019, H.R. 1046, 116 th Cong.; Empowering
Medicare Seniors to Negotiate Drug Prices Act of 2019, S. 62, 116th Cong.
332 See, e.g., Safe and Affordable Drugs from Canada Act of 2019, S. 61, 116 th Cong.
333 See, e.g., Capping Prescription Costs Act of 2018, S. 3194, 115 th Cong.
334 See, e.g., Statement from FDA Commissioner Scott Gottlieb, M.D. on New Steps to Facilitate Efficient Generic Drug
Review to Enhance Competition, Promote Access and Lower Drug Prices, U.S. FOOD & DRUG ADMIN. (Jan. 3, 2018),
https://www.fda.gov/newsevents/newsroom/pressannouncements/ucm591184.htm.
335 Identical bills have been introduced in the House of Representatives, see H.R. 965, 116th Cong., and the Senate, see
S. 340, 116th Cong. For simplicity, all citations herein are to the Senate version as of April 2, 2019. In addition to the
CREATES Act, the FAST Generics Act of 2019, H.R. 985, 116th Cong. § 505-2(f) (2019) would also authorize a
generic product manufacturer to sue the brand manufacturer for refusal to timely provide brand samples. The
CREATES Act is discussed here simply as an example of the proposals addressing the sample refusal concern.
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of certain follow-on products by addressing the concern that some brand manufacturers have
improperly restricted the distribution of their products to deny follow-on product manufacturers
access to samples of brand products (i.e., the reference drug or biological product).336 Because
brand samples are necessary to conduct certain comparative testing required for an ANDA or
biosimilar BLA,337 some have attributed the inability to timely obtain samples as a cause of delay
in the entry of generic products.338
Restricted Distribution and Sample Denial
While follow-on product manufacturers can usually obtain brand samples by purchasing them
from licensed wholesalers, some brand products are subject to restricted distribution that limits
how they can be sold.339 This restriction can occur in one of two ways. First, a brand
manufacturer can voluntarily place its products into restricted distribution in order to have more
control over who can purchase them.340 Second, some high-risk drugs are subject to restricted
distributions under statute and FDA regulations.341
Under the FD&C Act, as amended by the Food and Drug Administration Amendments Act of
2007 (FDAA Act),342 where a pharmaceutical product entails serious safety concerns (e.g.,
potentially acute side effects that may warrant special monitoring), FDA may require the sponsor
of the NDA or BLA to submit a proposed Risk Evaluation and Mitigation Strategies (REMS),343 a
risk-management plan that uses strategies beyond labeling to ensure that the benefits of a drug or
biological product outweigh its risks.344 Examples of less restrictive REMS requirements include
medication guides for patients and communication plans for health care providers.345 More
restrictive REMS programs have elements to assure safe use (ETASU), which can include
prescriber and dispenser certification requirements, patient monitoring or registration, or
controlled distribution that limits how the product can be sold.346 If a brand product is subject to
REMS with ETASU, the brand manufacturer and the generic or biosimilar manufacturers
generally must agree on a single, shared REMS system before the generic product goes on the
336 See, e.g., Antitrust Concerns and the FDA Approval Process: Hearing Before the H. Comm. on the Judiciary, 114th
Cong. (2017) (statement of Scott Gottlieb, Comm’r of Food and Drug Admin.) [hereinafter Gottlieb Statement],
available at https://www.fda.gov/NewsEvents/Testimony/ucm568869.htm; SPECIAL S. COMM. ON AGING, 113TH CONG.,
REP. ON SUDDEN PRICE SPIKES IN OFF-PATENT PRESCRIPTION DRUGS: THE MONOPOLY BUSINESS MODEL THAT HARMS
PATIENTS, TAXPAYERS, AND THE U.S. HEALTH CARE SYSTEM 113-16 (2016) [hereinafter SPECIAL S. COMM. ON AGING
REP.], https://www.aging.senate.gov/imo/media/doc/Drug%20Pricing%20Report.pdf.
337 See supra “Food and Drug Administration (FDA) Law.”
338 Gottlieb Statement, supra note 336; SPECIAL S. COMM. ON AGING REP., supra note 336, at 113-16.
339 See Gottlieb Statement, supra note 336; SPECIAL S. COMM. ON AGING REP., supra note 336, at 113-15.
340 See Gottlieb Statement, supra note 336; SPECIAL S. COMM. ON AGING REP., supra note 336, at 114-15.
341 See 21 U.S.C. § 355-1(a)(1); 21 C.F.R. § 312.300. See also Gottlieb Statement, supra note 336; SPECIAL S. COMM.
ON AGING REP., supra note 336, at 115-16.
342 Pub. L. No. 110-85, 121 Stat. 823 (2007).
343 See U.S. FOOD & DRUG ADMIN., Risk Evaluation and Mitigation Strategies (REMS) (Feb. 2, 2018),
https://www.fda.gov/drugs/drugsafety/rems/default.htm.
344 21 U.S.C. § 355-1(a)(1); 42 U.S.C. 262(k)(5)(C).
345 21 U.S.C. § 355-1(e).
346 Id. § 355-1(f)(3).
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market.347 However, FDA can waive the shared REMS requirement and allow the use of a
different, comparable system by the generic or biosimilar manufacturer.348
Since the enactment of the FDAA Act, some generic manufacturers349 have complained that they
have been improperly denied access to samples through restricted distribution.350 Some brand
manufacturers have implemented voluntary, contractual restrictions that target generic
manufacturers.351 Alternatively, if their products are subject to REMS with ETASU, some brand
manufacturers have either (1) invoked the restricted distribution component of a REMS with
ETASU to deny sales to generic manufacturers, or (2) used the existence of REMS with ETASU
to substantially prolong negotiations over the sale of samples or the development of a single,
shared REMS system.352
Existing Law Governing Sample Denials
The existing statutory and regulatory framework provides limited legal recourse to generic
manufacturers who have been denied access to or experience long delays in obtaining samples.
As an initial matter, there are no statutes or regulations that specifically prohibit a company from
imposing voluntary distribution restrictions on its products. For products subject to REMS, the
brand manufacturers are generally prohibited from using their REMS to “block or delay approval
of an application . . . to a drug that is subject to the abbreviated new drug application.”353 The
statute, however, does not expressly authorize FDA to enforce this provision.354 Accordingly,
consistent with FDA’s long-standing view that “issues related to ensuring that marketplace
actions are fair and do not block competition would be best addressed by [the Federal Trade
Commission],”355 FDA has not asserted that it has the authority to compel the sale of samples for
comparative testing.356
Given the lack of recourse under federal drug law, generic manufacturers have attempted to seek
relief by suing withholding brand manufacturers for violations of antitrust law. Specifically, they
argue that the brand manufacturer’s refusal to sell samples or its delay in selling samples
constitutes an anticompetitive effort to maintain a monopoly in the brand product market in
violation of section 2 of the Sherman Act.357 Whether this conduct violates antitrust law, however,
347 Id. § 355-1(i)(1)(C).
348 Id.
349 To date, concerns about sample refusal have primarily been raised by generic drug manufacturers. See Gottlieb
Statement, supra note 336. However, biosimilar manufacturers can potentially face similar issues because biological
products may also be subject to REMS. See 42 U.S.C. 262(k)(5)(C).
350 Gottlieb Statement, supra note 336.
351 See id.
352 See id.
353 21 U.S.C. § 355-1(f)(8).
354 See id.
355 See, e.g., U.S. FOOD & DRUG ADMIN., Letter Response to Dr. Reddy’s Lab.’s Citizen Petition 7 (Aug. 7, 2013),
available at https://www.regulations.gov/document?D=FDA-2013-P-0572-0003.
356 See U.S. FOOD & DRUG ADMIN., HOW TO OBTAIN A LETTER FROM FDA STATING THAT BIOEQUIVALENCE STUDY
PROTOCOLS CONTAIN SAFETY PROTECTIONS COMPARABLE TO APPLICABLE REMS FOR RLD: DRAFT GUIDANCE FOR
INDUSTRY (2014), https://www.fda.gov/downloads/drugs/guidancecomplianceregulatoryinformation/guidances/
ucm425662.pdf.
357 See, e.g., In re Thalomid and Revlimid Antitrust Litig., 2015 WL 9589217, at *14-16 (D.N.J. Oct. 29, 2015); Mylan
Pharm. v. Celgene Corp., 2014 WL 12810322, at *3-4 (D.N.J. Dec. 23, 2014); CRS Legal Sidebar LSB10272, The
CREATES Act of 2019 and Lowering Drug Prices: Legal Background & Overview, by Wen S. Shen, at 2-3.
Congressional Research Service
37
Drug Pricing and Intellectual Property Law: A Legal Overview for the 116th Congress
is unclear because courts have not defined a clear standard for when a refusal to deal is
anticompetitive.358 A generic manufacturer’s ability to obtain relief for sample denial under
antitrust law is therefore uncertain under existing law.
The Proposed Bill
The CREATES Act seeks to address the uncertainties in the existing legal framework by creating
a private cause of action that follow-on product developers can use to initiate expedited litigation
to obtain needed brand samples. Instead of asserting an antitrust claim, the bill would allow a
follow-on product developer to sue to compel the provision of brand samples if specific statutory
elements are met.
For brand products not subject to a REMS with ETASU (including a product that is subject to
voluntary restrictive distribution imposed by the brand manufacturer), the follow-on product
developer would need to show that:
1. it had made a request for samples;
2. the brand manufacturer failed to deliver, on commercially reasonable, marketbased terms, sufficient quantities of the samples within 31 days of receiving the
request; and
3. as of the filing date of the action, the follow-on product developer is still unable
to obtain sufficient quantities of the needed samples on commercially reasonable,
market-based terms.359
For products subject to REMS with ETASU, the bill would create a process by which the followon product developer can request from FDA an authorization to obtain sufficient quantities of the
relevant samples.360 FDA would issue the authorization if it determines that the follow-on product
developer has agreed to comply with or otherwise met the safety conditions or requirements
deemed necessary by FDA.361 In this situation, the follow-on product developer would need to
show the first and third elements above, and that the brand manufacturer failed to deliver, on
commercially reasonable, market-based terms, sufficient quantities of samples either within 31
days of receiving the request or within 31 days of receiving notice of FDA’s authorization,
whichever is later.362
If a follow-on product developer prevails under either cause of action, the bill would require the
court to issue injunctive relief compelling the brand manufacturer to provide the samples without
delay and award attorney’s fees and costs.363 If the court finds that the brand manufacturer
delayed providing the samples without a “legitimate business justification,” the court could also
award monetary damages.364 Monetary damages are not to exceed the revenue the brand
manufacturer earned on the product during the period beginning on the day that is 31 days after
358 Compare In re Thalomid, 2015 WL 9589217, at *14-16 and Mylan, 2014 WL 12810322, at *3-4 (denying motions
to dismiss section 2 claims alleging refusal to sell samples by brand manufacturer), with In re Suboxone
(Buprenorphine Hydrochloride and Naloxone) Antitrust Litig., 64 F. Supp. 3d 665, 685-88 (E.D.
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