The Role of Patents and Regulatory Exclusivities in Drug Pricing
Congressional research reportJan 30, 2024
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The Role of Patents and Regulatory
Exclusivities in Drug Pricing
Updated January 30, 2024
Congressional Research Service
https://crsreports.congress.gov
R46679
SUMMARY
The Role of Patents and Regulatory
Exclusivities in Drug Pricing
Intellectual property (IP) rights play an important role in the development and pricing of
prescription drugs and biologics. To encourage innovation, IP law grants inventors exclusive
rights in a particular invention or product, potentially enabling them to charge higher-thancompetitive prices. IP rights 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 U.S. Food and
Drug Administration (FDA). However, IP rights have been criticized as contributing to high
prices for pharmaceutical products in the United States by operating to deter or delay competition
from generic drug and biosimilar manufacturers.
R46679
January 30, 2024
Kevin J. Hickey
Legislative Attorney
Erin H. Ward
Coordinator of Research
Planning/ALD
Two main types of IP rights may protect pharmaceutical products: patents and regulatory exclusivities. Patents, which are
available for a wide range of technologies beyond pharmaceuticals, are granted by the U.S. Patent and Trademark Office
(PTO). Patents may claim chemical compounds in the pharmaceutical product, a method of using the product, a method of
making or administering 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. Pharmaceutical patent disputes are subject to certain specialized procedures under the Hatch-Waxman Act and the
Biologics Price Competition and Innovation Act (BPCIA), which can affect when generic and biosimilar manufacturers can
market their follow-on products.
In addition to patent protection, certain pharmaceuticals, such as innovative products or those that serve particular needs, may
qualify for periods of regulatory exclusivity when they are approved or licensed by FDA. Pharmaceutical products may only
be sold in the United States after FDA has determined they are safe and effective, based on submitted data, and has approved
or licensed them. FDA generally may not accept and/or approve a generic drug or biosimilar if the pharmaceutical product
being used as a reference to show the follow-on product is safe and effective is covered by an unexpired regulatory
exclusivity. Regulatory exclusivities vary in length from six months to 12 years, depending on the basis for the exclusivity.
Because the exclusivity that IP rights provide may enable the rights holder (e.g., a brand-name drug manufacturer) to charge
higher-than-competitive prices for a period of time, rights holders may have an incentive to lengthen that time period as much
as possible. Some commentators allege that certain brand-name drug manufacturers have engaged in patenting practices that
unduly extend the period of exclusivity. Critics argue that these patenting practices are used to keep drug prices high, without
significant benefits for consumers or innovation. Such patenting practices include so-called (1) patent “evergreening,” (2)
“product hopping,” (3) “patent thickets,” and (4) “pay-for-delay” settlements. Patent “evergreening” is the alleged practice of
filing for new patents on secondary features of a pharmaceutical as earlier patents expire, thereby extending effective patent
exclusivity past the original 20-year term. “Product hopping” is the alleged practice of a brand manufacturer attempting to
switch the market to a new, similar product covered by later-expiring patents before IP rights on an existing product expire.
“Patent thickets” refer to portfolios of numerous, overlapping patents on the same pharmaceutical, which allegedly deter
competition due to the risk of infringement and the high cost of patent litigation. “Pay-for-delay” or “reverse payment”
settlements resolve patent litigation through payments or other compensation from a brand to a generic or biosimilar
manufacturer to delay generic market entry. In some cases, these settlements may be anticompetitive because they allow the
brand to continue to charge high prices without risking invalidation of its patent.
Drug manufacturers counter that their patenting practices protect new and useful inventions as Congress intended when it
created the patent system. In their view, the terms for these practices are unfairly pejorative, or, at most, describe outlier
behavior by a few companies. Defenders of these patenting practices reject their characterization as anticompetitive and
emphasize that strong patent rights encourage innovation and life-saving research and development efforts.
Congressional Research Service
The Role of Patents and Regulatory Exclusivities in Drug Pricing
Contents
IP Rights in Pharmaceuticals: Incentives for Innovation Versus Cost and Access .......................... 3
FDA Approval and Licensure of Pharmaceutical Products ............................................................. 6
New and Generic Drug Approval .............................................................................................. 7
New Drug Approval ............................................................................................................ 7
Generic Drug Approval ....................................................................................................... 9
Biological Product and Biosimilar Licensure ......................................................................... 10
Biological Products ........................................................................................................... 10
Biosimilar or Interchangeable Products ............................................................................. 11
Regulatory Exclusivities ......................................................................................................... 12
New Drugs or Biological Products ................................................................................... 12
Generic Drug and Biosimilar Exclusivities ...................................................................... 14
Other Regulatory Exclusivities ......................................................................................... 15
Securing and Enforcing Patent Protections for Pharmaceuticals .................................................. 17
Types of Pharmaceutical Patent Claims .................................................................................. 18
Patent Enforcement ................................................................................................................. 21
Rights of Patent Holders ................................................................................................... 21
Patent Term and Effective Exclusivity Periods ................................................................. 22
Defenses to Claims of Patent Infringement ...................................................................... 23
Remedies for Patent Infringement .................................................................................... 24
The Patent Trial and Appeal Board ................................................................................... 24
Compulsory Licensing ............................................................................................................ 25
Patent Dispute Procedures for Generic Drugs and Biosimilars ..................................................... 28
Rationale for Specialized Pharmaceutical Patent Procedures ................................................. 29
The Hatch-Waxman Act: Patents and Generic Drug Approval ............................................... 31
Paragraph I-IV Certifications and Interaction with FDA Approval .................................. 31
Orange Book Patent Listings ............................................................................................ 33
Section viii Statements and “Skinny Labels” ................................................................... 34
The BPCIA: The “Patent Dance” and Biosimilar Licensure................................................... 35
Antitrust Law................................................................................................................................. 39
Section 1 of the Sherman Act .................................................................................................. 40
Section 2 of the Sherman Act .................................................................................................. 41
Enforcement ............................................................................................................................ 42
Pharmaceutical Patenting Practices ............................................................................................... 42
“Evergreening” ........................................................................................................................ 44
Definition .......................................................................................................................... 44
Debate ............................................................................................................................... 45
Current Law ...................................................................................................................... 47
“Product Hopping” .................................................................................................................. 48
Definition .......................................................................................................................... 48
Debate ............................................................................................................................... 50
Current Law ...................................................................................................................... 52
“Patent Thickets”..................................................................................................................... 52
Definition .......................................................................................................................... 52
Debate ............................................................................................................................... 53
Current Law ...................................................................................................................... 55
“Pay-for-Delay” or “Reverse Payment” Settlements .............................................................. 56
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The Role of Patents and Regulatory Exclusivities in Drug Pricing
Definition .......................................................................................................................... 56
Debate ............................................................................................................................... 57
Current Law ...................................................................................................................... 58
Combinations of Practices....................................................................................................... 59
Conclusion ..................................................................................................................................... 60
Figures
Figure 1. Patent Dispute Procedures for Generic Drugs ............................................................... 32
Figure 2. Patent Dispute Procedures for Biosimilars .................................................................... 38
Tables
Table 1. Regulatory Exclusivities for Pharmaceutical Products .................................................... 16
Table 2. Summary Comparison of Patents Versus Regulatory Exclusivities ................................ 29
Table 3. Summary Comparison of the Hatch-Waxman Act and the BPCIA ................................. 39
Contacts
Author Information........................................................................................................................ 60
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The Role of Patents and Regulatory Exclusivities in Drug Pricing
T
he prices consumers pay for prescription drugs has long been of significant
congressional interest. In recent Congresses, several House and Senate committees held
hearings on drug pricing issues,1 and Members introduced dozens of bills to address the
perceived high costs of prescription drugs and other pharmaceutical products.2 Growth
in U.S. expenditures on prescription drugs—which for decades rose at double-digit rates
annually—has moderated in recent years and is projected to continue to grow by about 5.5% per
year (roughly in line with increases in general health care spending).3 Despite recent fluctuations,
consumers in the United States generally pay significantly higher prices for prescription drugs as
compared to other developed countries.4
Many factors contribute to the prices consumers pay for drugs and biologics, including demand,
manufacturing costs, research and development (R&D) costs, the terms of private health
insurance, and the involvement of a government insurance program such as Medicaid or
Medicare.5 Pharmaceutical products are often protected by intellectual property (IP) rights,6 and
1 See, e.g., The Need to Make Insulin Affordable for All Americans: Hearing Before the S. Comm. on Health, Educ.,
Labor & Pensions, 118th Cong. (2023); Lower Drug Costs Now: Expanding Access to Affordable Health Care:
Hearing Before the H. Subcomm. on Health, Employment, Labor and Pensions of the H. Comm. on Educ. & Labor,
117th Cong. (2021); Why Does the US Pay the Highest Prices in the World for Prescription Drugs?: Hearing Before
the S. Comm. On Health, Educ., Labor & Pensions, 117th Cong. (2021); Unsustainable Drug Prices: Testimony from
the CEOs (Parts I and II): Hearing Before the H. Comm. on Oversight & Reform, 116th Cong. (2020); Intellectual
Property and the Price of Prescription Drugs: Balancing Innovation and Competition: Hearing Before the S. Comm.
on the Judiciary, 116th Cong. (2019); Drug Pricing in America: A Prescription for Change (Parts I–III): Hearing
Before the S. Comm. on Fin., 116th Cong. (2019); The Cost of Rising Prescription Drug Prices, Hearing Before the H.
Ways & Means Comm., 116th Cong. (2019); Examining the Actions of Drug Companies in Raising Prescription Drug
Prices: Hearing Before the H. Comm. on Oversight & Reform, 116th Cong. (2019).
Both the Biden and Trump administrations released plans and used executive authorities to plans to address rising drug
prices. See generally U.S. DEP’T OF HEALTH & HUMAN SERVS., COMPREHENSIVE PLAN FOR ADDRESSING HIGH DRUG
PRICES: A REPORT IN REPONSES TO THE EXECUTIVE ORDER ON COMPETITION IN THE AMERICAN ECONOMY (2021),
https://aspe.hhs.gov/sites/default/files/2021-09/Drug_Pricing_Plan_9-9-2021.pdf; U.S. DEP’T OF HEALTH & HUMAN
SERVS., AMERICAN PATIENTS FIRST: THE TRUMP ADMINISTRATION BLUEPRINT TO LOWER DRUG PRICES AND REDUCE
OUT-OF-POCKET COSTS (2018), https://www.hhs.gov/sites/default/files/AmericanPatientsFirst.pdf.
2 For an examination of some of these proposals, see CRS Report R46741, Drug Pricing and Intellectual Property: The
Legislative Landscape for the 117th Congress, by Kevin J. Hickey, Kevin T. Richards, and Erin H. Ward (2021).
3 DEP’T OF HEALTH & HUMAN SERVS., OBSERVATIONS ON TRENDS IN PRESCRIPTION DRUG SPENDING 1 (Mar. 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 et al., at 3–7 (2021).
4 See generally Kirchhoff et al., supra note 3, at 21–23. For studies on this issue, see for example, GAO, PRESCRIPTION
DRUGS: U.S. PRICES FOR SELECTED BRAND DRUGS WERE HIGHER ON AVERAGE THAN PRICES IN AUSTRALIA, CANADA,
AND FRANCE (2021), https://www.gao.gov/assets/gao-21-282.pdf (finding U.S. prices for 20 brand-name prescription
drugs were two to four times higher than selected comparison countries); Andrew WQ. Mulcahy et al., International
Prescription Drug Price Comparisons, RAND CORP. (2021), https://www.rand.org/pubs/research_reports/RR2956.html
(finding U.S. drug prices in 2018 were 2.56 times higher than 32 comparison countries); OECD, HEALTH AT A GLANCE
2021, at p. 237 fig. 9.2 (finding U.S. 2019 per capita expenditures on pharmaceuticals was the highest among all
countries studied and more than twice the OECD average).
5 See generally Kirchhoff et al., supra note 3, 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).
6 See, e.g., WILLIAM M. LANDES & RICHARD A. POSNER, THE ECONOMIC STRUCTURE OF INTELLECTUAL PROPERTY LAW
313 (2003) (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
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The Role of Patents and Regulatory Exclusivities in Drug Pricing
some studies suggest that IP rights are among the most important factors driving high drug
prices.7 For example, the U.S. Food and Drug Administration (FDA) has found that increased
competition from generic drug manufacturers is associated with much lower prices for
pharmaceuticals.8
Given that IP rights can deter or delay the market entry of generic drug or biosimilar competition,
and thus may allow the rights holder to charge higher-than-competitive prices, some see changing
IP rights as a potential way to lower prices for pharmaceutical products.9 Other stakeholders are
wary of undermining IP rights, which play an important role in facilitating development of new
pharmaceutical products.10 A key focus of this debate, then, is whether existing IP law properly
balances the need for innovation with the costs that IP rights may impose on consumers and the
public.11 Understanding the interplay between several complex legal regimes is necessary to
understand this debate.
The scope and enforcement of IP rights in pharmaceutical products depends upon several
underlying legal and regulatory regimes, including FDA law, patent law, and antitrust law. In
addition to patent protection, certain pharmaceuticals, such as innovative products or those that
serve particular needs, may qualify for periods of regulatory exclusivity when they are approved
or licensed by FDA.12 FDA regulates pharmaceutical products differently if they derive from
biological, as opposed to chemical, sources. In particular, under the Federal Food, Drug, and
Cosmetic Act (FD&C Act), FDA must approve nonbiological “drugs” before they can be
marketed or sold,13 whereas “biologics”14 must be licensed by FDA under the Public Health
Service Act (PHSA).15
This regulatory distinction has patent law consequences because patents on pharmaceutical drugs
or biologics are subject to different specialized patent dispute resolution procedures, which can
affect another manufacturer’s ability to bring a generic drug or biosimilar version of an existing
product to market. Provisions of the Drug Price Competition and Patent Term Restoration Act of
Pharmaceutical Industry, 58 FOOD & DRUG L.J. 711, 722 (reviewing data “supporting relatively high dependency of
the pharmaceutical industry on patent rights”).
7 See, e.g., Kesselheim et al., supra note 5, 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. (Sept. 12, 2022), https://www.fda.gov/about-fda/center-drug-evaluation-and-research-cder/genericcompetition-and-drug-prices (finding association between generic competition and lower drug prices).
8 See Generic Competition and Drug Prices, supra note 7 (showing sharp price decreases associated with the number
of generic producers of a drug).
9 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 5, at 864 (proposing limits on secondary patents and increased policing of pay-for-delay patent settlements
as possible means to curtail high drug prices).
10 See Henry G. Grabowski et al., The Roles of Patents and Research and Development Incentives in
Biopharmaceutical Innovation, 34 HEALTH AFFS. 302, 302 (2015) (“Patents and other forms of intellectual property
protection are generally thought to play essential roles in encouraging innovation in biopharmaceuticals.”).
11 See infra notes 34–43 (discussing economic rationale for IP and the costs and benefits that it may impose on the
public).
12 See infra “Regulatory Exclusivities.”
13 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).
14 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).
15 See infra “FDA Approval and Licensure of Pharmaceutical Products.”
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1984 (the Hatch-Waxman Act)16 govern FDA approval and patent disputes for generic drugs,
whereas the Biologics Price Competition and Innovation Act of 2009 (BPCIA)17 governs FDA
licensure and patent disputes for biosimilars.
Given these complexities, a fair amount of legal background is necessary to understand how drug
manufacturers obtain and enforce IP rights in pharmaceuticals and how IP rights may impact drug
prices. This report provides this background, proceeding in five parts. First, it provides an
overview of the economic rationale for intellectual property in the pharmaceutical context and IP
law’s fundamental policy tradeoff between providing incentives for innovation without unduly
increasing prices for consumers. Second, the report overviews FDA requirements for obtaining
approval to market a drug or biological product, the abbreviated pathways for generic drug
approval under the Hatch-Waxman Act and biosimilar licensure under the BPCIA, and different
regulatory exclusivities that FDA grants to certain approved pharmaceutical products.18 Third, it
reviews patent law, including the requirements for obtaining a patent, the rights granted to patent
holders, and various limitations on those rights.19 Fourth, the report describes and compares the
different specialized patent dispute procedures for generic drugs and biosimilars under the HatchWaxman Act and the BPCIA, respectively.20 Finally, it overviews antitrust law and describes its
application to several patenting practices used by pharmaceutical companies to enforce their IP
rights, and overviews the debates between various stakeholders over such practices.21
IP Rights in Pharmaceuticals: Incentives for
Innovation Versus Cost and Access
In general, IP law comprises a set of exclusive rights that prevent others from making, copying, or
using certain intangible creations of the human mind.22 Federal law provides legal protection for
several different varieties of IP.23 Each form of IP covers a different type of intellectual creation,
has a different procedure for obtaining rights, and grants the IP owner legal rights that vary in
scope and duration.24
New pharmaceutical products generally benefit from two primary forms25 of IP protection: patent
rights and regulatory exclusivities.26 These two sets of exclusive rights are distinct, yet often
16 Pub. L. No. 98-417, 98 Stat. 1585 (1984) (codified as amended in relevant part at 21 U.S.C. § 355 and 35 U.S.C.
§§ 156, 271(e)).
17 Pub. L. No. 111-148, tit. VII, 124 Stat. 199, 804–21 (2010) (codified as amended in relevant part at 42 U.S.C. § 262
and 35 U.S.C. § 271(e)).
18 See infra “FDA Approval and Licensure of Pharmaceutical Products.”
19 See infra “Securing and Enforcing Patent Protections for Pharmaceuticals.”
20 See infra “Patent Dispute Procedures for Generic Drugs and Biosimilars.”
21 See infra “Pharmaceutical Patenting Practices.”
22 Cf. Intellectual Property, BLACK’S LAW DICTIONARY (10th ed. 2014) (“A category of intangible rights protecting
commercially valuable products of the human intellect.”).
23 See generally CRS In Focus IF10986, Intellectual Property Law: A Brief Introduction, by Kevin J. Hickey (2022).
24 See id.
25 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 a similar) name in a way that would confuse
consumers about the source of goods or services. See 15 U.S.C. § 1114(1); see generally CRS In Focus IF12456, An
Introduction to Trademark Law in the United States, by Christopher T. Zirpoli (2023).
26 Although not a traditional form of IP such as a copyright or patent, regulatory exclusivities share many of the
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The Role of Patents and Regulatory Exclusivities in Drug Pricing
confused. In overlapping ways, both patent rights and regulatory exclusivities can operate to
prevent or delay the market entry of a generic drug or biosimilar version of a brand-name drug or
biologic.
Patents, which are available to many technologies beyond pharmaceuticals,27 are granted by the
U.S. Patent and Trademark Office (PTO) for inventions that are new, useful, nonobvious,
and directed at patentable subject matter.28 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 PTO issues the patent and ending twenty years after the filing date of
the patent application.29
Regulatory exclusivities are granted to qualifying pharmaceutical products upon being approved
or licensed for marketing by FDA.30 Only 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), receive such exclusivities.31 Regulatory exclusivities
generally prevent FDA from accepting or approving an application for a follow-on product (i.e., a
generic or biosimilar version) of a previously approved pharmaceutical that relies on safety and
efficacy data submitted by the original manufacturer for a period of time.32 Depending on the type
of pharmaceutical product and other factors, regulatory exclusivities may last anywhere from six
months to twelve years.33
Although each of these forms of IP is legally distinct, they broadly share a common motivation:
encouraging innovation.34 Patents are typically justified by a utilitarian rationale that exclusive
features of traditional IP rights and thus 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.”).
27 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)); see generally CRS Report R45918, PatentEligible Subject Matter Reform: Background and Issues for Congress, by Kevin J. Hickey (2022).
28 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; see generally CRS Report R46525, Patent Law: A
Handbook for Congress, coordinated by Kevin J. Hickey (2020), at 8–17 (reviewing patentability requirements).
29 35 U.S.C. §§ 154(a)(2), 271(a).
30 See infra “FDA Approval and Licensure of Pharmaceutical Products.”
31 See infra “Regulatory Exclusivities”; see generally CRS In Focus IF11217, Drug Pricing and the Law: Regulatory
Exclusivities, by Erin H. Ward (2019).
32 Ward, supra note 31.
33 Id.
34 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
Property, 77 GEO. L.J. 287, 296–314 (1988) (articulating justification for intellectual property as natural right deriving
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rights are necessary to provide incentives to produce new creative works and technological
inventions.35 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, thereby reducing the incentive to create in the first place.36 IP incentives are said to be
particularly necessary for products, such as pharmaceuticals, that are costly to develop but easily
copied once marketed.37 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.”38 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.39 Regulatory
exclusivities, too, ideally seek to balance encouraging innovation and encouraging competition.40
By design, IP rights may lead to increased prices for IP-protected goods or services. IP rights are
often said to grant a temporary “monopoly” to the rights holder.41 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 until the patent expires.42 In
from the author’s labor); id. at 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).
35 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.”).
36 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.”).
37 See Grabowski et al., supra note 10, 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.”); LANDES & POSNER, supra note 6, at 24 (“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.”).
38 Mazer v. Stein, 347 U.S. 201, 219 (1954).
39 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.”).
40 See infra notes 110–112 and accompanying text.
41 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”). Notably,
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 6, 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.”).
42 35 U.S.C. §§ 154, 271.
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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.43
As a result, a patent holder, such as a drug manufacturer, may have an incentive to prolong the
period of exclusivity, such as by filing for additional patents to cover a product.44 In the
pharmaceutical context, critics argue that some brand-name drug and biological product
manufacturers (the brands) use patenting strategies to “game[] the patent system” to maximize
profits and forestall competition from generic drug or biosimilar manufacturers (the generics).45
Others contend that these practices are a legitimate use of the patent system and are necessary to
incentivize the billions of dollars in R&D that lead to new, life-saving drugs.46 As these
pharmaceutical patenting practices may affect drug prices, they have attracted congressional
interest. Several legislative proposals seek to curtail these patenting practices by reducing their
effectiveness or outlawing them entirely.47 Proponents see such legislation as a potential way to
lower pharmaceutical prices.48 Later sections of this report discuss four such alleged patenting
practices: “evergreening,” “product hopping,” “patent thickets,” and “pay-for-delay”
settlements.49
FDA Approval and Licensure of Pharmaceutical
Products
The FD&C Act generally promotes public health by protecting consumers from pharmaceuticals
that are adulterated, misbranded, unsafe, or ineffective.50 To this end, new drugs and biologics
cannot be marketed in the United States without FDA approval.51 FDA law also balances
encouraging advancements in medicine through innovation against the benefits of competition,
43 See LANDES & POSNER, supra note 6, 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.”).
44 See infra “Pharmaceutical Patenting Practices.”
45 See, e.g. Press Release, Office of Sen. Dick Durbin, Durbin, Cassidy Introduce REMEDY Act To Lower Drug Prices
By Curbing Patent Manipulation, Promoting Generic Competition (Apr. 11, 2019), https://www.durbin.senate.gov/
newsroom/press-releases/durbin-cassidy-introduce-remedy-act-to-lower-drug-prices-by-curbing-patent-manipulationpromoting-generic-competition (“Americans are facing skyrocketing prescription drug costs in part because brandname pharma manufacturers have gamed the patent system to extend their monopolies and avoid competition from
lower-cost generic drugs.”) (quoting Sen. Durbin); Press Release, Office of Sen. John Cornyn, Cornyn, Blumenthal
Introduce Bill to Prevent Drug Companies from Abusing Patent System (May 9, 2019) (“Drug companies have taken
advantage of the patent system to maintain their monopoly on certain drugs and prevent generics from coming to
market.”) (quoting Sen. Cornyn).
46 See, e.g., infra notes 394–416 and accompanying text.
47 See generally Hickey et al., supra note 2.
48 See, e.g., Feldman & Frondorf, supra note 9, at 556–61 (urging “comprehensive overhaul” of pharmaceutical patent
laws to curtail strategies pharmaceutical companies allegedly use to avoid competition and maintain monopoly
pricing); Kesselheim et al., supra note 5, at 864 (proposing limits on secondary patents and increased policing of payfor-delay patent settlements as possible means to curtail high drug prices).
49 See infra “Pharmaceutical Patenting Practices.”
50 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.
51 21 U.S.C. § 355(a); 42 U.S.C. § 262(a)(1).
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similar to patent law.52 To that end, federal law provides certain regulatory exclusivities—
generally awarded upon approval—for pharmaceutical products that meet the requisite criteria.53
FDA determines which drugs and biologics may be marketed in the United States through similar
but distinct approval processes.54 This section first overviews the approval processes for new and
generic drugs, and then discusses the processes for new and follow-on 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.”55 New drugs, as the term is used in the FD&C Act, are those drugs that scientific
experts do not generally recognize as safe and effective for their intended use.56 A new drug may
contain an active ingredient that FDA has not previously approved, or may contain a previously
approved active ingredient with the drug modified in one or more other aspects from the
approved 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 in the
United States.57
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,”58 including clinical
trials, demonstrating the drug’s safety59 and effectiveness60 for humans.61 Clinical trials,
conducted after the company has completed basic research and nonclinical testing, assess the
safety, efficacy, and effectiveness of the drug in volunteer human subjects under carefully
controlled conditions.62 When the company is ready to begin clinical trials, it submits an
52 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).
53 See infra “Regulatory Exclusivities.”
54 See generally 21 U.S.C. § 355; 42 U.S.C. § 262.
55 21 U.S.C. § 321(g).
56 Id. § 321(p).
57 Id. § 355(a).
58 FTC v. Actavis, 570 U.S. 136, 142 (2013).
59 “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 (2023).
60 “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.
61 21 C.F.R. § 314.50(d)(5).
62 21 U.S.C. §355(i); 21 C.F.R. § 312.21. As amended by the Consolidated Appropriations Act, 2023, the FD&C Act
(continued...)
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investigational new drug (IND) application to FDA.63 The IND application provides FDA with
information about the drug as well as a proposed clinical study design that has been reviewed and
approved by an Institutional Review Board (IRB).64 Unless FDA objects within 30 days of
receiving the IND application, clinical investigations may proceed.65
Clinical testing occurs in three phases.66 Phase I clinical trials generally test the drug in a small
number of subjects and focus on evaluating the drug’s safety.67 During Phase I clinical trials, the
sponsor 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 of the drug.68 Phase II and Phase III clinical trials evaluate the drug’s efficacy in addition
to continuing to evaluate safety.69 These trials generally use a larger group of test subjects who
have the characteristic, condition, or disease the drug treats.70 Phase II studies generally are still
well-controlled and “usually involv[e] no more than several hundred subjects,” whereas Phase III
studies may include expanded controlled and uncontrolled trials and “usually include from
several hundred to several thousand subjects.”71
Once clinical trials are complete, the sponsor may submit the results to FDA’s Center for Drug
Evaluation and Research (CDER) in an NDA.72 The NDA also includes information about the
drug, proposed labeling, and planned manufacturing process.73
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.74 Section 505(d) of the FD&C Act defines substantial evidence to mean “adequate and wellcontrolled investigations” based on which qualified scientific experts could “fairly and
responsibly” conclude that the product has the purported effect.75 FDA assesses both the quality
provides that nonclinical tests used to support evidence of a drug’s safety or effectiveness may include any in vitro, in
silico, or in chemico test, or a nonhuman in vivo test, before or during the clinical trial phase, including cell-based
assays, organ chips and microphysiological systems, computer modeling, other nonhuman or human biology-based test
methods, and animal tests. 21 U.S.C. § 355(z).
63 21 C.F.R. § 312.20.
64 Id. § 312.23.
65 Id. §§ 312.40, 312.42.
66 Id. § 312.21.
67 Id. § 312.21(a).
68 Id.
69 Id. § 312.21(b)–(c).
70 Id.
71 Id.
72 21 U.S.C. § 355(b). The FD&C Act provides for two types of NDAs in section 505(b), depending on whether the
application includes only studies to which the company has a right of reference (under 505(b)(1)) or includes studies to
which the company does not have a right of reference (e.g., published literature or FDA’s finding of safety and efficacy
for a related approved drug) (a so-called “paper NDA” under 505(b)(2)). Id.; see also 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.
73 21 U.S.C. § 355(b).
74 21 U.S.C. § 355(d).
75 Id.
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and quantity of the data provided when determining whether a product meets this standard.76 The
agency also reviews the proposed labeling and the manufacturing controls.77
FDA sends a letter to the drug sponsor with the agency’s determination.78 If the NDA meets the
requirements for approval, FDA sends an approval letter or, if patent rights or exclusivities bar
immediate approval, a tentative approval letter.79 FDA may impose conditions on its approval of
an NDA, such as requiring the company to conduct additional post-market clinical studies,
referred to as Phase IV clinical trials.80 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 might be remedied.81
Generic Drug Approval
Before the Hatch-Waxman Act was enacted in 1984, every new drug submitted to FDA for
preapproval required a complete application under Section 505(b) supported by clinical trial data
demonstrating safety and effectiveness.82 To encourage generic drug entry, the Hatch-Waxman
Act established a pathway for abbreviated new drug applications (ANDAs),83 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.84 The ANDA pathway allows generic manufacturers to avoid the long, expensive
process of conducting their own clinical trials.85 The generic manufacturer need only conduct
studies with its generic product and samples of the RLD to demonstrate that the generic drug is
pharmaceutically equivalent86 and bioequivalent87 to the RLD.88 The ANDA also includes the
generic manufacturer’s proposed labeling, which must be identical to the RLD’s labeling except
76 U.S. FOOD & DRUG ADMIN., DEMONSTRATING SUBSTANTIAL EVIDENCE OF EFFECTIVENESS FOR HUMAN DRUG AND
BIOLOGICAL PRODUCTS: DRAFT GUIDANCE FOR INDUSTRY 3 (Dec. 2019), https://www.fda.gov/media/133660/
download77 Id. Manufacturing information includes the manufacturer’s name and address, manufacturing methods and
process controls, and specifications to ensure a product’s integrity for both the marketed drug substance and any drug
components used to manufacture the drug. 21 C.F.R. § 314.50(d)(1).
77 Id. Manufacturing information includes the manufacturer’s name and address, manufacturing methods and process
controls, and specifications to ensure a product’s integrity for both the marketed drug substance and any drug
components used to manufacture the drug. 21 C.F.R. § 314.50(d)(1).
78 21 C.F.R. § 314.105.
79 Id.
80 Id.
81 Id. § 314.110.
82 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. 27396, 27396 (May 19, 1981).
83 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).
84 21 C.F.R. §§ 314.92, 314.94.
85 Actavis v. FTC, 570 U.S. 136, 142 (2013).
86 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.
87 Bioequivalence means the drugs work the same way inside the body; that is, 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. Id. § 320.1(e).
88 21 U.S.C. § 355(j)(2)(A); 21 C.F.R. §§ 314.94, 320.21.
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for manufacturing information and any FDA-approved changes.89 ANDA filers submit
information on pharmaceutical equivalence and bioequivalence studies, proposed labeling, and
any patent certifications90 to FDA to obtain approval.91
Biological Product and Biosimilar Licensure
A biological product is derived from biological material, such as a virus, toxin, blood component,
or protein, and used for “the prevention, treatment, or cure of a disease or condition of human
beings.”92 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.”93
“Inherent variations” between different batches of the same biological product are “normal and
expected.”94 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 development of small molecule drugs.”95 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.96 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.97 The BLA must
include, among other things, data from nonclinical and clinical studies, information about the
manufacturing methods and locations, proposed labels and containers to be used, and (if
applicable) a proposed Medication Guide.98 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.99
89 21 U.S.C. § 355(j)(2)(A)(v).
90 See infra “The Hatch-Waxman Act: Patents and Generic Drug Approval.”
91 21 U.S.C. § 355(j)(2)(A).
92 42 U.S.C. § 262(i); 21 C.F.R. § 600.3.
93 U.S. FOOD & DRUG ADMIN., BIOLOGICAL PRODUCT DEFINITIONS, https://www.fda.gov/downloads/Drugs/
DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/
TherapeuticBiologicApplications/Biosimilars/UCM581282.pdf (last visited Jan. 26, 2024)
94 Id.
95 Id.
96 42 U.S.C. § 262(a)(1).
97 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,
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.
98 21 C.F.R. § 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.
99 Id. § 601.20.
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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.”100 As with drug approvals, FDA either
issues the license or issues a complete response letter detailing the reasons for denying the
license.101 After approval, BLA holders must notify FDA of any changes to “the product,
production process, quality controls, equipment, facilities, responsible personnel, or labeling.”102
Biosimilar or Interchangeable Products
As with the Hatch-Waxman Act, Congress created an abbreviated approval process for biological
products through 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.”103
Along with its 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.”104 “[T]he condition or conditions of use
prescribed, recommended, or suggested in the labeling” must have been approved for the
reference product.105 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.106 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.”107
Along with 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.”108 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 or switching between the biosimilar product and reference product than if the
reference product was used alone.109 Interchangeable products “may be substituted for the
reference product without the intervention of the health care provider who prescribed the
reference product.”110
100 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 product’s nature 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).
101 21 C.F.R. §§ 601.3, 601.4.
102 Id. § 601.12.
103 42 U.S.C. § 262(k).
104 Id. § 262(i)(2).
105 Id. § 262(k)(2)(A)(i)(III).
106 Id. § 262(k)(2)(A)(i)(II) & (IV).
107 Id. § 262(k)(2)(A)(i)(V).
108 Id. § 262(k)(4).
109 Id. § 262(k)(4).
110 Id. § 262(i)(3).
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Regulatory Exclusivities
To balance increasing competition—which the abbreviated approval pathways aim to facilitate—
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.111 These regulatory exclusivities aim to encourage companies to incur the
expense of generating clinical data and other information needed to support an NDA or BLA for
new drugs or biological products.112 They also encourage follow-on product manufacturers to
submit abbreviated applications as soon as permissible.113
There are two general categories of regulatory exclusivity: (1) data exclusivity, which precludes
other 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 a follow-on product’s safety and
effectiveness; 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.114 During a period of data exclusivity, a company
could submit an NDA or BLA for the same pharmaceutical product and use if it conducted its
own clinical trials.115 Functionally, 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 is or the nature of the treatment population.
For new drugs, an NDA filer who 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.116 During that period, no ANDA or
505(b)(2) NDA (i.e., applications that, by definition, would reference the NDA data) containing
the same active ingredient as the RLD may be submitted to FDA.117 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 patent listed in the
111 See, e.g., King Drug Co. of Florence, Inc. v. Smithkline Beecham Corp., 791 F.3d 388, 394 (3d Cir. 2015)
(“[Through] Hatch-Waxman, Congress attempted to balance the goal of ‘mak[ing] available more low cost generic
drugs,’ with the value of patent monopolies in incentivizing beneficial pharmaceutical advancement[.]” (internal
citations omitted)); Heled, supra note 52. For a comparison of regulatory exclusivities and patent exclusivities, see
infra Table 2.
112 Heled, supra note 52, at 427–30, 440.
113 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 52, at 428–29.
114 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
approach that ascribes distinct meanings to the terms. See generally Heled, supra note 52, at 436 n.67.
115 Id.
116 21 U.S.C. § 355(c)(3)(E)(ii), (j)(5)(F)(ii); 21 C.F.R. § 314.108(b)(2).
117 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.
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“Orange Book”—an FDA publication that catalogs the patents associated with each approved
drug118—for the RLD is either invalid or would not be infringed by the generic drug.119
NDA or supplemental NDA (sNDA)120 sponsors who obtain approval for drugs that contain
approved chemical entities, but are sufficiently changed from the approved drug (e.g., a new
indication or formulation) to require additional clinical studies to be approved, are eligible for
three years of data exclusivity running from the time of NDA approval.121 Unlike the 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.122 The three-year
exclusivity relates to when FDA may approve such applications.123 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.124 In other words,
the sponsor must have conducted or sponsored additional clinical trials that were necessary to
obtain approval of the new drug in order to benefit from the three-year exclusivity for that new
condition. As a result, three-year exclusivity is generally limited to new drugs that are
significantly changed from approved drugs, rather than to minor modifications of those products.
For brand-name biological products, the BPCIA establishes two applicable periods of exclusivity.
First, for new biological products (i.e., reference products), no biosimilar applications can be
submitted for four years “after the date on which the reference product was first licensed.”125
Second, approval of biosimilar applications cannot become effective until twelve years “after the
date on which the reference product was first licensed.”126 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 cannot approve any biosimilar application until twelve 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.127 Supplemental
118 U.S. FOOD & DRUG ADMIN., APPROVED DRUG PRODUCTS WITH THERAPEUTIC EQUIVALENCE EVALUATIONS (43 ed.
2023), https://www.fda.gov/media/71474/download [hereinafter the “Orange Book”]; see also
https://www.accessdata.fda.gov/scripts/cder/ob/index.cfm (searchable version of the Orange Book).
119 21 U.S.C. § 355(c)(3)(E)(ii), (j)(5)(F)(ii); 21 C.F.R. § 314.108(b)(3). For more information on paragraph IV
certifications, see infra “The Hatch-Waxman Act: Patents and Generic Drug Approval.”
120 Under FDA regulations, changes to a drug’s label, dosage, strength, or manufacturing methods require an sNDA. 21
C.F.R. § 314.70. sNDAs must include post-market information such as commercial marketing experience and reports in
scientific literature, in addition to descriptions and analyses of clinical studies. Id. § 314.50(d)(5)(iv). sNDA sponsors
are only eligible for three-year exclusivity because sNDAs amend existing NDAs with approved chemical entities. Id.
§ 314.108(b).
121 21 U.S.C. § 355(c)(3)(E)(iii)–(iv), (j)(5)(F)(iii)–(iv).
122 Compare id. with id. § 355(c)(3)(E)(ii), (j)(5)(F)(ii).
123 Id. § 355(c)(3)(E)(iii)–(iv), (j)(5)(F)(iii)–(iv).
124 Id.
125 42 U.S.C. § 262(k)(7)(B).
126 Id. § 262(k)(7)(A).
127 This issue has been the subject of discussions between FDA and some lawmakers. See Letter from Rep. Anna G.
Eshoo et al., to FDA (Dec. 21, 2010), http://patentdocs.typepad.com/files/letter-to-fda.pdf (signed by Reps. Barton,
Eshoo, and Inslee); Letter from Sen. Sherrod Brown et al., to Dr. Margaret Hamburg, Comm’r, FDA (Jan. 24, 2011),
http://patentdocs.typepad.com/files/senator-letters-exclusivity.pdf (signed by Sens. 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 FDA may consider the exclusivity periods to provide only data exclusivity. U.S. FOOD &
(continued...)
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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 twelveyear regulatory exclusivity periods.128
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 an RLD has one or
more patents listed in the Orange Book that have not expired, potential ANDA applicants have
two choices: (1) wait until all listed patents have expired to apply for approval or (2) file a
paragraph IV certification129 asserting that any active patents are invalid or would not be infringed
by the generic product.130 The potential for ensuing patent litigation raises the anticipated costs
for the first ANDA filer with a paragraph IV certification, as compared to subsequent ANDA
filers.131 Accordingly, to incentivize generic manufacturers to be the first filer and to challenge
listed patents purportedly covering an RLD, the Hatch-Waxman Act provides a 180-day
exclusivity to the first ANDA applicant who successfully challenges an unexpired patent listed for
the RLD using a paragraph IV certification, either by the RLD manufacturer declining to initiate
litigation within forty-five days of receiving notice from the ANDA applicant of the paragraph IV
certification or by obtaining a settlement or court ruling finding the challenged patent is invalid or
not infringed.132 This exclusivity period precludes FDA from approving another ANDA for the
same RLD during the 180-day period after the first commercial marketing of the generic drug.133
180-day exclusivity may be forfeited for a number of reasons, such as failing to commercially
market the drug within a certain timeframe.134
The BPCIA similarly awards regulatory exclusivity to the first interchangeable biological product
for a particular reference product.135 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
of a relevant patent dispute.136 Specifically, the exclusivity period ends at the earlier of
•
•
•
one year after the commercial marketing of the first interchangeable product;
eighteen months after a final court decision in a patent infringement action
against the first applicant or the dismissal of such an action;
forty-two months after approval if the first applicant has been sued and the
litigation is still ongoing; or
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.
128 42 U.S.C. § 262(k)(7)(C).
129 ANDA applicants must provide one of four certifications for each listed patent for the RLD. 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.”
130 See infra “Patent Dispute Procedures for Generic Drugs and Biosimilars.”
131 Id.
132 21 U.S.C. § 355(j)(5)(B)(iv), (j)(5)(D)(iii)(II).
133 Id. § 355(j)(5)(B)(iv).
134 Id. § 355(j)(5)(D).
135 42 U.S.C. § 262(k)(6).
136 Id.
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•
eighteen months after approval if the first applicant has not been sued.137
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, Congress
passed the Orphan Drug Act in 1983 to encourage development of drugs and biologics to treat
rare diseases and conditions, called “orphan drugs.”138 Because these drugs 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.139 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 applicant generates its own safety and efficacy data.140
To receive the orphan-drug exclusivity, (1) the drug must be intended to treat a “rare disease or
condition,”141 and (2) FDA must not have previously approved the same drug “for the same use or
indication.”142 To meet the first condition, a sponsor may request, before submitting an NDA or
BLA, that FDA designate its drug as one for a rare disease or condition.143 To designate an orphan
drug, FDA must determine—when the designation is requested—the disease or condition the drug
will treat “(A) affects less than 200,000 persons in the United States or (B) affects more than
200,000 in the United States and for which there is no reasonable expectation than 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.”144 Drugs so designated are entitled to the
seven-year exclusivity if they also meet the second condition.
In addition, the FD&C Act provides a 180-day exclusivity to ANDAs for drugs designated by
FDA (pursuant to the ANDA filer’s request) as a “competitive generic therapy” (CGT) due to
“inadequate generic competition.”145 To receive the exclusivity, the ANDA must be the first filed
for the CGT.146 The ANDA must also have been submitted when there were “no unexpired patents
137 Id.
138 Pub. L. No. 97-414, § 1, 96 Stat. 2049 (1983) (codified as amended at 21 U.S.C. §§ 360aa–360ff-1)
139 21 U.S.C. § 360cc(a).
140 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).
141 Id. §§ 360bb, 360cc.
142 Id. § 360cc; 21 C.F.R. § 316.3(b)(12). However, an NDA or BLA filer may receive exclusivity for an alreadyapproved drug designated for the same rare disease or condition if it can demonstrate clinical superiority. 21 U.S.C.
§ 360cc(c).
143 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.” Id. § 360bb(a)(2).
144 Id.
145 Id. § 356h(b).
146 Id. § 355(j)(5)(B)(v).
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or exclusivities listed in the Orange Book for the relevant RLD.”147 Finally, the applicant must
commercially market the drug within seventy-five days of approval.148
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 population and the
filer completes pediatric studies at FDA’s request.149 Pediatric exclusivity adds six months to any
existing exclusivity the NDA or BLA filer has obtained.150 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.151
Table 1. Regulatory Exclusivities for Pharmaceutical Products
Type of
Exclusivity
Length
Criteria
Effect
New Chemical
Entity
21 U.S.C.
§ 355(c)(3)(E)(ii),
(j)(5)(F)(ii), (u)
5 years
(4 years if
ANDA contains
a paragraph IV
certification)
Application for drug containing an active
moiety that has never been approved; or
application for a drug that contains as an
active ingredient a single enantiomer (each
of a pair of molecules that are mirror
images of one another) of a previously
approved racemic drug (a mixture of both
enantiomers) that treats a different
therapeutic category and does not rely on
the racemic drug’s data
FDA cannot accept an
abbreviated application
for the same active
moiety that relies on
the data in the
reference drug
application
New Clinical
Investigation
21 U.S.C.
§ 355(c)(3)(E)(iii)–
(iv), (j)(5)(F)(iii)–(iv)
3 years
Application for a change to an approved
drug that contains at least one new clinical
investigation that is “essential to the
approval” of the application and is
conducted or sponsored by the applicant
FDA cannot approve
an application that
relies on the data in
the reference drug
application for 3 years
First to File
Paragraph IV
Certification
21 U.S.C.
§ 355(j)(5)(B)(iv)
180 days
First to file an ANDA with a paragraph IV
certification that a patent listed for the
reference drug is invalid or not infringed by
the generic product
FDA cannot approve
an ANDA for the same
drug until 180 days
after first commercial
marketing of first filer
Competitive
Generic Therapy
21 U.S.C.
§§ 355(j)(5)(B)(v),
356h(b)
180 days
Designation as competitive generic therapy
by FDA based on finding of “inadequate
generic competition” (only one active
approved drug);
No unexpired patents or exclusivities for
reference product
Once first approved
applicant commences
commercial marketing,
FDA cannot approve
an ANDA for the same
reference product for
180 days after first
commercial marketing
Drugs
Biologics
147 U.S. FOOD & DRUG ADMIN., COMPETITIVE GENERIC THERAPIES (2019), https://www.fda.gov/ucm/groups/fdagov-
public/@fdagov-drugs-gen/documents/document/ucm631401.pdf.
148 21 U.S.C. § 355(j)(5)(B)(v), (j)(5)(D)(iv); COMPETITIVE GENERIC THERAPIES, supra note 147, at 18.
149 21 U.S.C. § 355a(b)–(c); 42 U.S.C. § 262(m).
150 21 U.S.C. § 355a(b)–(c); 42 U.S.C. § 262(m).
151 21 U.S.C. § 355a(b)–(c).
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Type of
Exclusivity
Biologic
Reference
Product
42 U.S.C.
§ 262(k)(7)(A), (B)
Length
Criteria
Effect
4 years
(application)
and 12 years
(approval) after
date of first
licensure
First licensure of a biological product that is:
FDA cannot accept an
abbreviated BLA
referencing the
product for first 4
years;
FDA cannot approve
an abbreviated BLA
referencing the
product for 12 years
1. Not a supplemental application;
2. Not a change resulting in a new
indication, route of administration, dosing
schedule, dosage form, delivery system,
delivery device, or strength; and
3. Not a modification to structure of
product that does not result in a change in
safety, purity, or potency
Interchangeable
Biologic
42 U.S.C. § 262(k)(6)
12–42 months
(see Effects
column)
First interchangeable biologic approved for a
reference product;
Interchangeable means the product is
biosimilar to the reference product,
produces the same clinical result in any
given patient, and a patient can switch
between the interchangeable and reference
products over multiple doses without
altering risk
FDA cannot determine
another product is
interchangeable with
the reference product
for any condition of
use until the earliest of:
(1) 1 year after
commercial marketing;
(2) 18 months after
approval if not sued; or
(3) if sued, 18 months
after decision or 42
months after approval
Pediatric Studies
21 U.S.C. § 355a(b),
(c)
42 U.S.C. § 262(m)
6 months
FDA requests that applicant conducts
pediatric studies and such studies are
completed
Extends other
exclusivities by 6
months;
Delays approval for 6
months after listed
patents expire
Orphan Drug
21 U.S.C. § 360cc
7 years
FDA designation as an orphan drug: a drug
that treats a disease or condition that affects
less than 200,000 people in the United
States, or affects more than 200,000 people
in the United States but there is no
reasonable expectation that the cost of
developing and making the drug would be
recovered
FDA cannot approve
another application for
the same drug for the
same disease or
condition for 7 years,
with limited exceptions
Qualified
Infectious Disease
Product
21 U.S.C. § 355f
5 years
FDA designation as a qualified infectious
disease product (QIDP): an antibacterial or
antifungal drug intended to treat serious or
life-threatening infections, including those
caused by qualifying or resistant pathogens
Extends other
exclusivities by 5 years
Other Purposes
Source: CRS.
Securing and Enforcing Patent Protections for
Pharmaceuticals
Pharmaceutical manufacturers often seek to obtain patents on various aspects of their products.
Congress’s power to create the patent system derives from the IP Clause of the U.S. Constitution,
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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.”152
Congress has exercised this power since the early days of the Republic to make patent protection
available to inventors.153 The currently operative patent statute is the Patent Act of 1952 (the
Patent Act),154 as amended by laws such as the 2011 Leahy-Smith America Invents Act (AIA).155
This section overviews general patent law principles as they apply to pharmaceutical products,
including common types of pharmaceutical patent claims, the legal rights granted to the holder of
a valid patent, and the authority of the federal government to grant “compulsory licenses” for
patents.
Patent Law Basics
Patents are generally available to anyone who invents a new and useful process, machine, manufacture, or
composition of matter, or any new and useful improvement thereof. To obtain a patent, an inventor must file a
patent application with the U.S. Patent and Trademark Office (PTO). A PTO patent examiner then evaluates the
patent application to determine whether it meets all applicable statutory requirements to merit the grant of a
patent. This process is called patent examination or patent prosecution.
To be patentable, the claimed invention must be (1) directed at patentable subject matter, (2) new, (3)
nonobvious, and (4) useful. Although patentable subject matter is broad, federal courts have held that “products of
nature” may not be patented, which may preclude patenting of unmodified biological material used in
pharmaceuticals. The novelty and nonobviousness requirements preclude patenting inventions that are already
known in the relevant field, or are a trivial variation on what is already known. The usefulness or utility
requirement demands only that the invention have some practice use, and not that the invention be “better” than
the state of existing technology.
Along with these substantive requirements relating to the invention, the Patent Act imposes several requirements
relating to the form of the patent application and the technical information it provides about the claimed invention.
Those provisions ensure that a granted patent adequately discloses the invention to the public so that anyone can
use the invention after the patent term expires.
If granted, the patent’s legal scope is defined by the patent claims. Patent claims must be sufficiently clear and
definite to inform people skilled in the relevant technical field precisely what is covered by the patent, and what is
not,
If granted, patents typically expire 20 years after the date the initial patent application was filed. During this time,
no one else may make, use, sell, or import the invention in the United States without the permission of the patent
holder. A person who practices the invention without the permission of the patent holder is said to infringe the
patent and may be liable in court for monetary damages and other legal remedies.
Sources: 35 U.S.C. §§ 101, 102–103, 111–112, 154, 271; CRS Report R46525, Patent Law: A Handbook for
Congress, coordinated by Kevin J. Hickey (2020).
Types of Pharmaceutical Patent Claims
To be patentable, like any other invention, pharmaceutical-related inventions must be new, useful,
and nonobvious, and they must be sufficiently described in the patent application.156 While
pharmaceutical-related inventions may take a variety of forms, there are several types of claims
often made in connection with pharmaceutical products. For example, if a person is the first to
152 U.S. CONST. art. I, § 8, cl. 8. See generally Cong. Rech. Serv, ArtI.S8.C8.1 Overview of Congress’s Power Over
Intellectual Property, CONSTITUTION Annotated, https://constitution.congress.gov/browse/essay/artI-S8-C8-1/
ALDE_00013060/ (last visited Jan. 29, 2024).
153 See An Act to Promote the Progress of Useful Arts, Pub. L. No. 1-7, 1 Stat. 109 (1790).
154 See Patent Act of 1952, Pub. L. No. 82-593, 66 Stat. 792 (codified as amended at 35 U.S.C. §§ 1–390).
155 Pub. L. No. 112-29, 125 Stat. 284 (2011) (codified in scattered sections of U.S.C. title 35).
156 See 35 U.S.C. §§ 101–103, 112. For more information on the general requirements to obtain a patent, see Hickey,
supra note 28, at 8–17.
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synthesize a particular chemical that she believes to be useful for treating disease, she may obtain
a patent on that chemical itself, generally referred to as the active ingredient.157 Manufacturers
may find patents on a pharmaceutical product’s active ingredient particularly valuable because
these patents may be difficult to “invent around” (i.e., develop a competing product that does not
infringe the patent).158 However, manufacturers of some biological products may not be able to
patent unmodified naturally-occurring active ingredients if they are patent-ineligible subject
matter.159
Manufacturers often obtain many other types of patents relating to a pharmaceutical product
beyond active ingredient patents.160 Pharmaceutical patents may cover many different features of
a drug or biologic beyond a claim on the active ingredient itself.161 Such patents may claim,
among other things,
1. formulations of a pharmaceutical (e.g., an administrable form and dosage, or a
combination of active and other ingredients);
2. methods of using the pharmaceutical (e.g., an indication or use of the drug for
treating a particular disease);
3. technologies and methods used to administer the pharmaceutical (e.g., an inhaler
or injector device);
4. technologies and methods for manufacturing the pharmaceutical (e.g., a
manufacturing process);
5. other chemicals related to the active ingredient, such as crystalline forms,
polymorphs, intermediaries, salts, and metabolites.162
157 See 35 U.S.C. § 101 (allowing patents on “any new and useful . . . composition of matter”).
158 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.”).
159 See generally Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 580, 589–96 (2013)
(discussing the “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. CIR. 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”). Biologics that derive from biological organisms, but are genetically modified or otherwise modified by
man into a non-naturally occurring form, are generally patent-eligible. See Diamond v. Chakrabarty, 447 U.S. 303,
309–10 (1980) (upholding patent on genetically engineered bacterium).
160 See Kyle, supra note 158, 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
delivery routes, etc.”).
161 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 AFFS. 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); see also Robin Feldman, May Your Drug Price Be Evergreen, 5 J.L. & BIOSCI. 590, 637 tbl. 9 (2018)
(finding that most patents added to the Orange Book were associated not with newly approved drugs, but with existing
ones).
162 See JOHN R. THOMAS, PHARMACEUTICAL PATENT LAW 46–64 (3d ed. 2015) (overviewing these and other categories
of pharmaceutical patent claims).
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In addition, if a person invents an improvement on any of these technologies—for example, a new
formulation of the drug, a new use for an existing drug, or a different manufacturing process—
then the inventor can file for a patent on that improvement, which receives its own patent term.163
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.”164 While it must be
new and nonobvious, the “improvement” need not be actually better than the existing state of the
art to be patentable.165 Any person wishing to practice the improved form of the invention would
need permission from both the patent holder of the original technology and the holder of the
improvement patent (who need not be the same entity), if neither patent has yet expired.166 If the
original patent has expired but the improvement patent has not, permission from the improvement
patentee is needed to practice the improved version, but as a matter of patent law, any person is
free to make and use the original, unimproved version.167
Because many different aspects of pharmaceutical products (and improvements thereto) are
patentable, dozens of different patents may protect some pharmaceutical products. On average,
studies typically find that each drug in the Orange Book is associated with around three listed
patents,168 although recent studies have found that this average has increased over the past
decade.169 This number may understate the size of some pharmaceutical patent portfolios for
several reasons: (1) only some patents relating to a drug may be included in the Orange Book;170
(2) most studies focus on chemical drugs and exclude biologics; and (3) there is evidence that
patent portfolios tend to be larger for particularly lucrative pharmaceutical products.171 Studies
that include biologics, non-Orange Book patents, or focus on top-selling products therefore tend
to find larger average patent portfolios.172
163 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)).
164 KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398, 417 (2007).
165 See Gene Quinn, The Successful Inventor: Patenting Improvements, IPWATCHDOG (May 3, 2014),
https://ipwatchdog.com/2014/05/03/the-successful-inventor-patenting-improvements/id=49396/ (“[T]here is not a
requirement that an invention actually be an improvement in any real world sense in order for it to be patented . . .
when patent attorneys and patent agents talk about an improvement patent we are typically talking about inventions that
build upon and/or somehow relate to the prior art.”).
166 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 of the original patent need each other’s permission before either can practice the improved invention).
167 Id. at 91; see also Mark A. Lemley, The Economics of Improvement in Intellectual Property Law, 75 TEX. L. REV.
989, 991, 1010 (1997).
168 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); C. Scott Hemphill & Bhaven N. Sampat, Evergreening, Patent Challenges,
and Effective Market Life in Pharmaceuticals, 31 J. HEALTH ECON. 327, 330 (2012) finding 2.7 patents per drug for
drugs subject to generic entry between 2001 and 2010).
169
See Dr. Omar Robles et al., Economics in Life Sciences: What the Orange Book Reveals About Trends in Patent
Density, Evergreening, and Exclusivity, NAT’L ECON. RSCH. ASSOCS. (June 26, 2020), https://www.nera.com/content/
dam/nera/publications/2020/PUB_LS-Orange-Book_062620.pdf (finding increase in number of over listed patents per
drug over 2011-2018, up to a high of 8 patents per drug in 2018); C. Scott Hemphill & Bhaven N. Sampat, When Do
Generics Challenge Drug Patents, 8 J. EMPIRICAL LEGAL STUD. 613, 620 fig. 1 (2011) (finding increase in number for
Orange Book patents per drug from 2 for drugs approved in 1985 to 4 for drugs approved in 2002).
170 See infra notes 283–284 and accompanying text.
171 See, e.g., Amy Kapczynski et al., Polymorphs and Prodrugs and Salts (Oh My!): An Empirical Analysis of
‘‘Secondary’’ Pharmaceutical Patents, 7 PLoS One 1, 8 tbl. 4 (Dec. 2012).
172 See I-MAK, OVERPATENTED, OVERPRICED (Sept. 2022) (finding 74 patents per product, on average, for the top ten
(continued...)
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To take one well known example, AbbVie obtained over 100 patents related to its biologic,
Humira, covering various formulations, methods of using the biologic, methods of manufacturing
the biologics, and the like.173 As discussed below, there is a significant public policy debate over
such patent portfolios, particularly over the number, timing, and enforcement of nonactive
ingredient patents (sometimes called “secondary” patents).174
Patent Enforcement
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.175 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.176 Patents have the attributes of personal property, so the patentee may sell
or assign the patent to another person.177 A patentee may also license other persons to practice the
invention, granting them permission to make, use, sell, or import the invention, usually in
exchange for consideration (such as monetary royalties).178
Patents thus provide a negative right to prevent another person from practicing the claimed
invention. But patents do not grant the patentee any affirmative right to practice the invention.179
In the pharmaceutical context, this means that even if a manufacturer has a patent on a particular
drug (or inventions related to making or using that drug), it still cannot market that drug without
FDA approval.180
Patents are not self-enforcing: to obtain relief from infringement, the patentee must typically sue
in court.181 Patent law is an area of exclusive federal jurisdiction,182 and the traditional forum for
most patent disputes is federal district court.183 Although patent suits may be filed in any district
best-selling drugs and biologics), https://www.i-mak.org/wp-content/uploads/2022/09/Overpatented-Overpriced-2022FINAL.pdf. I-MAK’s methodology, particularly its use of patent applications in determining potential years of
exclusivity, has been criticized by some scholars and Members of Congress. See Adam Mossoff, Unreliable Data Have
Infected the Policy Debates over Drug Patents, HUDSON INST. (Jan. 19, 2022), https://www.hudson.org/technology/
unreliable-data-have-infected-the-policy-debates-over-drug-patents; Letter from Sen. Thom Tillis to Tahir Amin, CoExecutive Director, I-MAK (Jan 31. 2022), https://ipwatchdog.com/wp-content/uploads/2022/02/1.31.2022-LTR-fromSenator-Tillis-to-IMAK-re-Patent-Data-Sources.pdf.
173 Mayor and City Council of Baltimore v. AbbVie Inc., 42 F.4 th 709, 710 (7th Cir. 2022).
174 See infra “Pharmaceutical Patenting Practices.”
175 35 U.S.C. § 271(a).
176 Id. §§ 271, 281, 283–85.
177 Id. § 261.
178 License, BLACK’S LAW DICTIONARY (10th ed. 2014); 35 U.S.C. § 271(a).
179 Leatherman Tool Grp. v. Cooper Indus., Inc., 131 F.3d 1011, 1015 (Fed. Cir. 1997) (“[T]he federal patent laws do
not create any affirmative right to make, use, or sell anything.”).
180 See supra “New and Generic Drug Approval” and “Biological Product and Biosimilar Licensure.”
181 35 U.S.C. § 281.
182 28 U.S.C. § 1338.
183 Along with district court and the Patent Trial and Appeal Board (PTAB), see infra “The Patent Trial and Appeal
Board,” 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
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court across the country with jurisdiction over the defendant and proper venue,184 all appeals in
patent cases are heard by a single specialized court, the U.S. Court of Appeals for the Federal
Circuit.185
Patent Term and Effective Exclusivity Periods
With some exceptions, a patent is 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.”186 The
Patent Act includes provisions that may modify the 20-year term, including to account for
excessive delays in patent examination at the PTO,187 or delays associated with obtaining
marketing approval from other federal agencies (including FDA).188 In the pharmaceutical
context, the PTO may extend the term of patents claiming a drug product or medical device (or a
method of using or manufacturing the same) for up to five years to account for delays in
obtaining regulatory approval, if certain statutory conditions are met.189
Precisely when generic or biosimilar competition occurs for any given product depends on a
complex interplay of market incentives, patents, regulatory exclusivities, FDA processes, and—
not infrequently—litigation.190 New drugs and biologics are commonly protected by both patents
and FDA regulatory exclusivities. Although patents can last up to 20 years, some of the patent
term is taken up by the patent application process itself or occurs prior to market approval for a
drug or biologic, particularly for patents granted early in a product’s life cycle.191 In addition,
although patents carry a presumption of validity,192 they may be challenged by generic and
biosimilar manufacturers, as discussed in detail below.193
States. See About Section 337, U.S. INT’L TRADE COMM., https://www.usitc.gov/intellectual_property/
about_section_337.htm (last visited Jan. 26, 2024); 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 initiates 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. (Oct. 15. 2020), https://www.usitc.gov/intellectual_property/
337_statistics_number_new_completed_and_active.htm (reporting 58 new complaints in Fiscal Year 2019).
184 Patent cases must be brought in a judicial district where the defendant resides (i.e., its state of incorporation), or has
a regular and established place of business. See 28 U.S.C. § 1400(b); TC Heartland v. Kraft Foods Grp. Brands, 581
U.S. 258, 262 (2017); In re Cray, 871 F.3d 1355, 1362–64 (Fed. Cir. 2017).
185 28 U.S.C. § 1295(a)(1).
186 35 U.S.C. § 154(a)(2).
187 Id. § 154(b)(1).
188 Id. § 156.
189 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); see generally Stephanie Plamondon Bair, Adjustments, Extensions, Disclaimers,
and Continuations: When Do Patent Term Adjustments Make Sense?, 41 CAP. U. L. REV. 445 (2013).
190 See CRS In Focus IF11214, Drug Pricing and the Law: Pharmaceutical Patent Disputes, by Kevin J. Hickey
(2019).
191 See generally Aaron S. Kesselheim et al., Determinants of Market Exclusivity for Prescription Drugs in the United
States, 177 JAMA INTERNAL MED. 1658, 1658–59 (2017), https://jamanetwork.com/journals/jamainternalmedicine/
fullarticle/2653014. Patent term extensions may compensate for lost effective exclusivity period consumed by
regulatory review. See 35 U.S.C. § 156.
192 See Microsoft Corp. v. i4i Ltd., 564 U.S. 91, 95 (2011).
193 See infra “Patent Dispute Procedures for Generic Drugs and Biosimilars.”
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In practice, empirical studies usually find that the average effective market exclusivity period for
new drugs (i.e., the average time before actual generic entry) is between 12 and 15 years.194
Although data is limited, some studies show that average effective exclusivity periods are longer
for biologics.195 This may be due to market and patenting factors, or the longer general regulatory
exclusivity period (12 years) for new biologics.196
Defenses to Claims of Patent Infringement
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.197
To prove invalidity, the accused infringer must show, by clear and convincing evidence, that the
PTO should not have granted the patent because it failed to meet the requirements for
patentability.198 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 sufficiently
describe or enable the invention; or that the patent claims are indefinite.199 Second, the accused
infringer may argue that it is not liable based on noninfringement.200 In other words, even
presuming the patent is valid, the patentee may fail to prove that the actions of the accused
infringer fall within the scope of the patent claims.201 Finally, the accused infringer may argue the
patent is unenforceable based on the patent holder’s inequitable or illegal activities, such as
obtaining the patent through fraud on the PTO.202
194 See Henry Grabowski et al., Continuing Trends in U.S. Brand-name and Generic Drug Competition, 24 J. MED.
ECON. 908, 908 (2021) (finding average market exclusivity period of 14.1 years for all drugs with generic entry between
2017 and 2019, and an average of 13 years for drugs with sales over $250 million); Benjamin N. Rome et al., Market
Exclusivity Length for Drugs with New Generic or Biosimilar Competition, 2012–2018, 109 CLINICAL PHARM &
THERAPEUTICS 367 (2020) (finding average market exclusivity of 14.4 years); Erika Lietzan & Kristina M.L. Acri née
Lybecker, Distorted Drug Patents, 95 WASH. L. REV. 1317, 1363 (2020) (finding an average effective market
exclusivity period of 12.6 years for drugs with restored patent terms under the Hatch-Waxman Act); Henry Grabowski
et al., Updated Trends in U.S. Brand-Name and Generic Drug Competition, 19 J. MED. ECON. 836, 836 (2016) (finding
average effective exclusivity period of 13.6 years for all drugs with generic entry between 1995 and 2014, and an
average of 12.5 years for drugs with sales over $250 million); Bo Wang et al., Variations in Time of Market Exclusivity
Among Top-Selling Prescription Drugs in the United States, 175 JAMA INTERNAL MED. 635, 636 (2015) (finding an
average effective market exclusivity of 12.5 years for top-selling drugs between 2000 and 2012); Hemphill & Sampat,
supra note 168, at 336 (finding an average market exclusivity of 12.2 years that was “stable” over the decade studied).
195 See Rome et al., supra note 194, at 368 (finding average effective market exclusivity of 21.56 years for the four
biologics in the study).
196 42 U.S.C. § 262(k)(7).
197 35 U.S.C. § 282(a)–(b).
198 Id. § 282(b)(2)–(3); Microsoft Corp. v. i4i Ltd. P’ship, 564 U.S. 91, 95–96 (2011).
199 See 35 U.S.C. §§ 101, 102–03, 112, 282(b)(2)–(3).
200 Id. § 282(b)(1).
201 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.
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).
202 See Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1285, 1290–91 (Fed. Cir. 2011) (en banc).
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Remedies for Patent Infringement
If the patentee succeeds in proving infringement, the patent holder may obtain two major forms of
judicial relief: monetary damages and injunctive relief.203 Damages must be “adequate to
compensate for the infringement.”204 Typically, courts will award either (1) lost profits (the net
revenue “lost to the patentee because of the infringement”),205 or (2) a reasonable royalty (the
amount the patentee would have received in a “hypothetical negotiation” if the patentee and the
infringer had negotiated a good-faith license).206 Courts may increase these damages “up to three
times the amount found or assessed,”207 but such enhanced damages are “generally reserved for
egregious cases of culpable behavior” by the infringer.208 Finally, courts may award attorneys’
fees in “exceptional cases”209 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.”210
A patent holder may also ask a court to order various forms of injunctive relief.211 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.212 If a
patentee prevails in an infringement lawsuit, the patent holder may seek a permanent injunction, a
final order prohibiting the defendant from infringing the patent in the future.213
The Patent Trial and Appeal Board
Following its creation through the AIA in 2011, the PTO’s Patent Trial and Appeal Board (PTAB)
has become an increasingly important forum for patent disputes.214 The AIA created several new
administrative procedures for challenging patent validity,215 including (1) post-grant review
(PGR), which allows petitioners to challenge patent validity based on any of the requirements of
203 35 U.S.C. §§ 283–284. A judicial declaration of the parties’ rights—known as a declaratory judgment—is another
important form of relief in patent suits that is sometimes available to patentees or accused infringers. 28 U.S.C. § 2201;
see also infra note 263.
204 35 U.S.C. § 284.
205 Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1545 (Fed. Cir. 1995) (en banc).
206 Lucent Techs., Inc. v. Gateway, Inc., 580 F. 3d 1301, 1324 (Fed. Cir. 2009).
207 35 U.S.C. § 284.
208 Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93, 104 (2016).
209 35 U.S.C. § 285.
210 Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014).
211 35 U.S.C. § 283.
212 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)).
213 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).
214 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); Hickey, supra note 28, at 24–28 (reviewing PTAB proceedings).
215 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 214, 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 the patentee or a third party to the PTO. 35 U.S.C. §§ 301–307.
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The Role of Patents and Regulatory Exclusivities in Drug Pricing
patentability if the PGR petition is filed within nine months of the patent’s issuance;216 and (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.217 PTAB may institute
a PGR or IPR when a petition filed with PTAB establishes a reasonable likelihood that the
petitioner would prevail with respect to at least one of the claims challenged (although the PTAB
retains discretion to deny a petition).218 Of these two procedures, IPR is by far the most widely
used.219
According to a PTO analysis, the majority of IPR petitions concern patents on computer and
electronical technologies.220 About 4% of IPR petitions filed between 2012 and 2023 concern
patents listed in the Orange Book, with an additional 2% concerning biologic patents.221 These
averages are down in recent years from a FY2016 peak of 7.5% IPR petitions challenging Orange
Book patents, and a peak of 3.9% of IPRs challenging biologic patents in FY2017.222 IPR
petitions challenging drug and biologic patents are instituted at lower rates than the overall
average.223
Compulsory Licensing
As explained above, a patent holder generally has the exclusive right to practice an invention.
Any other person who wishes to make, use, sell, or import the invention would ordinarily need a
license (i.e., permission) from the patent holder, or else be exposed to legal liability.224 In certain
cases, however, patents may be subject to a “compulsory license,” which allows another person to
use the invention without the patent holder’s prior consent.225
Compulsory licenses are typically authorized by statute and usually require the sanction of a
governmental entity and payment of compensation to the patent holder.226 Compulsory licenses
differ from ordinary patent 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 generally determined by operation of law, not by private contractual
negotiations between the licensee and the patent holder.
Current federal law contains several provisions that may be characterized as compulsory licenses
for patents.227 One, 28 U.S.C. § 1498, is sometimes described as an “eminent domain” provision
216 35 U.S.C. §§ 321–329.
217 Id. §§ 311–319.
218 Id. §§ 314, 324.
219 See PTO, PTAB TRIAL STATISTICS: JANUARY 2023 IPR, PGR 3 (2023), https://www.uspto.gov/sites/default/files/
documents/ptab_aia_20230131_.pdf (98% of recently filed PTAB petitions are IPRs).
220 See PTO, PTAB ORANGE BOOK PATENT/BIOLOGIC PATENT STUDY 4 (updated March 31, 2023),
https://www.uspto.gov/sites/default/files/documents/orange_book_biologics_study_update_thru_march__2023_.pdf.
221 Id.
222 Id. at 5–6.
223 Id. at 10.
224 Id. § 271.
225 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.”).
226 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).
227 See generally Jesse S. Chui, To What Extent Can Congress Change the Patent Right Without Effecting a Taking?,
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for patents.228 Section 1498 allows the U.S. government to use any patented invention “without
license.”229 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.230 A
court, though, would not issue an injunction against the United States to prevent its use of the
invention.231 In effect, then, section 1498 allows the United States to issue itself a compulsory
license to use any patented invention without obtaining the patentee’s permission in exchange for
the payment of reasonable compensation.232 This compulsory license may extend to federal
contractors, subcontractors, and any person acting “with the authorization or consent of the [U.S.]
Government.”233 The federal government relies on section 1498 authority with some frequency,234
particularly in the defense context.235 In the pharmaceutical context, however, the United States
has not used section 1498 in recent decades.236
Compulsory licensing is also available for inventions made with federal funding under the BayhDole Act.237 In general, Bayh-Dole permits certain government contractors to obtain patents on
inventions produced with federal funding.238 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 the patent holder’s failure to practice
the patented invention or health or safety needs.239 A license granted under Bayh-Dole’s march-in
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).
228 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).
229 28 U.S.C. § 1498(a).
230 Id.
231 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.
232 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).
233 28 U.S.C. § 1498(a).
234 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’s use of section 1498 as “routine” and citing a
number of examples); but see Adam Mossoff, The False Promise of Breaking Patents to Lower Drug Prices ST. JOHN’S
L. REV. (forthcoming 2024), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4348499 (manuscript at 7–12)
(arguing that section 1498 cannot be used to lower drug prices because it does not apply to goods sold to private
parties).
235 See, e.g., FastShip, LLC v. United States, 892 F.3d 1298 (Fed. Cir. 2018); Beacon Adhesives, Inc. v. United States,
134 Fed. Cl. 26 (2017); Ensign-Bickford Aerospace & Def. Co. v. United States, 118 Fed. Cl. 363 (2014).
236 Brennan et al., supra note 234, at 303–07 (describing various uses of section 1498 by the federal government to
purchase pharmaceutical drugs in the 1960s, but observing 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.
237 See Pub. L. No. 96-517, § 6, 94 Stat. 3015, 3019–27 (1980).
238 35 U.S.C. § 202(a).
239 35 U.S.C. § 203(a)(1)–(4). 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). There is a longstanding debate over whether high drug prices could support
the exercise of march-in rights. Compare, e.g., Mossoff, supra note 234, at 23–30 (arguing that the statute does not
authorize march-in based on high prices) with Peter S. Arno & Michael H. Davis, Why Don’t We Enforce Existing
Drug Price Controls? The Unrecognized and Unenforced Reasonable Pricing Requirements Imposed upon Patents
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provisions must be “upon terms that are reasonable under the circumstances,” which may require
the licensee to pay some compensation to the patentee.240 The federal government has never
exercised its march-in rights under Bayh-Dole.241
Some stakeholders and Members of Congress have urged the federal government to make greater
use of these compulsory licensing authorities as a means to authorize generic competition and
potentially lower prices for certain drugs.242 Others argue that these statutory authorities do not
support compulsory licensing as a means to control drug prices, or that using them in this way
would undermine incentives for innovation in drug development.243 In December 2023, the
National Institute of Standards and Technology (which has relevant regulatory authority to
implement the Bayh-Dole Act) published draft guidance suggesting that agencies may consider
the patented product’s price, among other factors, when deciding whether to exercise march-in
rights.244 The Biden Administration touted the draft guidance as a way to promote competition
and lower prescription drug costs.245 Critics contended that Bayh-Dole does not permit agencies
to consider pricing and that the potential use of march-in rights would undermine pharmaceutical
innovation and investment in R&D.246
Deriving in Whole or in Part from Federally Funded Research, 75 TULANE L. REV. 631, 649–53 (arguing that high
prices can be used as the basis to invoke march-in rights). See generally Glenn Kessler, The Claim That the U.S.
Government Already Has the Power to Lower Drug Prices, WASH. POST (Sept. 8, 2021),
https://www.washingtonpost.com/politics/2021/09/08/claim-that-us-government-already-has-power-lower-drug-prices/
(overviewing this legal debate).
240 35 U.S.C. § 203(a); Penman & Quigley, supra note 239, at 178.
241 Penman & Quigley, supra note 239, at 199.
242 See, e.g., Brennan et al., supra note 234, at 353–54 (arguing that section 1498 should be used to lower prices and
increase access to life-saving medicines); Letter from Sen. Elizabeth Warren, Sen, Angus S. King, and Rep. Lloyd
Doggett to Xavier Becerra, Secretary of the Department of Health and Human Services (Feb. 17, 2022),
https://www.warren.senate.gov/imo/media/doc/
2022.02.17%20Letter%20to%20Sec.%20Becerra%20on%20Xtandi%20March-in%20Petition%20(2).pdf (urging the
government to exercise march-in rights in order to lower prices for the prostate cancer drug enzalutamide).
243 See, e.g., Mossoff, supra note 234, at 4-5 (arguing that neither section 1498 nor the Bayh-Dole Act authorizes the
use of compulsory licensing to impose price controls); BAYH-DOLE COALITION, ISSUE BRIEF: MARCH-IN RIGHTS UNDER
THE BAYH-DOLE ACT (2023), https://bayhdolecoalition.org/wp-content/uploads/2023/02/BDC-Issue-Brief-March-inRights.pdf (arguing that invoking march-in rights to control prices would be highly detrimental to innovation).
244 See NIST, Request for Information Regarding the Draft Interagency Guidance Framework for Considering the
Exercise of March-In Rights, 88 Fed. Reg. 85593 (Dec. 8, 2023).
245 Press Release, FACT SHEET: Biden-Harris Administration Announces New Actions to Lower Health Care and
Prescription Drug Costs by Promoting Competition (Dec. 7, 2023), https://www.whitehouse.gov/briefing-room/
statements-releases/2023/12/07/fact-sheet-biden-harris-administration-announces-new-actions-to-lower-health-careand-prescription-drug-costs-by-promoting-competition/.
246 See, e.g., Joel Zinberg, Biden Decides to “March In” on Drug Prices, WALL ST. J. (Dec. 12, 2023),
https://www.wsj.com/articles/biden-decides-to-march-in-on-drug-patents-price-control-biotech-research-3e327f6b
(arguing that the guidance “will stifle pharmaceutical innovation and harm Americans’ health”); Joseph Allen, New
March-in Guidelines Threaten U.S. Innovation, IPWATCHDOG (Dec. 10, 2023), https://ipwatchdog.com/2023/12/10/
new-march-guidelines-threaten-u-s-innovation/id=170491/.
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Patent Dispute Procedures for Generic Drugs and
Biosimilars
As Table 2 summarizes, patent rights granted by the PTO and regulatory exclusivities granted by
FDA are legally distinct.247 They are motivated by similar purposes. Patents seek to encourage
innovation by providing an economic incentive for inventors to invest their time and resources in
developing novel inventions.248 Analogously, regulatory exclusivities granted by FDA249 provide
an incentive for pharmaceutical manufacturers to undertake the investments necessary to
complete the FDA approval process and bring new drugs and biologics to market.250
In some circumstances, patent rights can affect when a manufacturer can market a generic drug or
biosimilar. For example, if a court hearing a patent dispute grants an injunction that prohibits a
manufacturer from infringing by making a generic drug, the manufacturer cannot bring that
product to market until after the patent expires and the injunction terminates.251 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.252 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 anticipated costs of
challenging them.253
247 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).
248 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.”).
249 See supra “Regulatory Exclusivities.”
250 See Ward, supra note 31, at 1; Morgan, supra note 26, at 98.
251 See supra “Rights of Patent Holders.”
252 See infra “The Hatch-Waxman Act: Patents and Generic Drug Approval.”
253 If these existing patents are valid, such deterrence is the object of a functioning patent system. In some cases,
patents may deter competition even if a court was likely to hold the patents invalid 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 of “irrelevant” patents).
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Table 2. 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
Patent & Trademark Office (PTO)
Food & Drug Administration (FDA)
Requirements
New, useful, nonobvious, and sufficiently
disclosed invention
Completion of FDA regulatory process for a
particular drug or biological product
Term
Generally 20 years from the date the
relevant patent application was filed
Variable (six months to 12 years) based on
drug type, prior approvals, and other factors
Effect
Third parties cannot make, use, sell, or
import the invention without the
patentee’s permission
Third parties cannot seek, obtain, and/or use
data for FDA approval with respect to
particular product
Enforcement
By the patentee, usually through a 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 patent law’s interaction with FDA premarketing requirements for
drugs and biologics.254 The first distortion affected new drug manufacturers: because obtaining
FDA marketing approval may take years, regulatory requirements shorten the effective patent
term (i.e., the period during which the patentee can derive profit from the invention).255 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.256
The other distortion concerned the end of the patent term and affected generic-drug
manufacturers. In general, once a patent expires, the patented invention should be available for
anyone to use.257 In the pharmaceutical context, generic manufacturers should, in theory, be able
to enter the market shortly after the applicable patents and regulatory exclusivities have expired.
Prior to the Hatch-Waxman Act, however, some judicial decisions held that uses of a patented
drug necessary to obtain FDA approval, such as conducting tests on a patented drug, constituted
patent infringement.258 Thus, as a practical matter, generic manufacturers could often not even
begin seeking FDA approval until the applicable patents expired.259 The result was an “effective
extension of the patent term” based on the “combined effect of the patent law and the premarket
254 Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 669 (1990).
255 Id. at 669–70.
256 Id. at 670; 35 U.S.C. § 156. The patent term extension applies, among other things, to patents that claim a drug or
medical device, a method of using a drug or medical device, or a method of manufacturing a drug or medical device.
See id. § 156(a), (f)(1).
257 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.”).
258 See, e.g., Roche Prods. v. Bolar Pharm. Co., 733 F.2d 858, 863 (Fed. Cir. 1984).
259 Eli Lilly, 496 U.S. at 670.
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regulatory approval requirement.”260 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.261
A potential side effect of this safe harbor 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.262 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
marketed, after the completion of the FDA approval process.263 Earlier resolution of patent
disputes is usually regarded as beneficial, as it provides greater legal certainty to both the brandname and generic-drug manufacturers.264 In particular, generic manufacturers can obtain clarity
on patent issues before they market a drug and expose themselves to monetary damages.265
To facilitate early patent dispute resolution, the Hatch-Waxman Act made the filing of an ANDA
or paper NDA an “artificial” act of patent infringement.266 The BPCIA contains an analogous
provision making the filing of a biosimilar or interchangeable BLA an artificial act of patent
infringement.267 Functionally, these artificial acts of infringement enable the brand-name
manufacturer to sue for patent infringement at the time of the follow-on application, allowing
litigation of patent disputes before the generic drug or biosimilar is marketed.268
For all these reasons, both the Hatch-Waxman Act and the BPCIA enacted specialized patent
dispute resolution procedures that complement the abbreviated pathways for the regulatory
approval for follow-on products. This section reviews these procedures.
260 Id.
261 35 U.S.C. § 271(e)(1); Merck KGaA v. Integra Lifescis. I, Ltd., 545 U.S. 193, 200 (2005) (describing this provision
as a “safe harbor”).
262 Eli Lilly, 496 U.S. at 678.
263 Even in the absence of an actual act of infringement, either party could generally 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). 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 Md. Cas. Co. v.
Pac. 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 pharmaceutical patents in some circumstances. 28 U.S.C. § 2201(b).
264 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.”).
265 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.”).
266 Eli Lilly, 496 U.S. at 678; see 35 U.S.C. § 271(e)(2)(A).
267 35 U.S.C. § 271(e)(2)(C).
268 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
Paragraph I-IV Certifications and Interaction with FDA 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.269 FDA
includes information on listed patents in the Orange Book.270 When a generic drug manufacturer
files an ANDA, it must provide a certification for each patent listed in the Orange Book for the
RLD.271 Figure 1 diagrams the patent dispute process under the Hatch-Waxman Act.
In particular, with some exceptions,272 the generic applicant must make one of four certifications
for each listed patent:
(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 or not infringed by the generic applicant’s product.273
Paragraph I and II certifications do not affect FDA’s ability to approve the ANDA.274 If the
generic applicant makes a paragraph III certification, FDA may not approve the ANDA until the
patent at issue has expired.275
A paragraph IV certification triggers Hatch-Waxman’s specialized patent dispute procedures,
often leading to litigation.276 First, the generic applicant must give notice of the ANDA and the
paragraph IV certification to the patentee and the NDA holder, including “a detailed statement of
the factual and legal basis” for patent invalidity or noninfringement.277 The NDA or patent holder
then has 45 days to sue the generic applicant for patent infringement.278 If the NDA or patent
holder declines to sue by the deadline, the generic applicant may file a “civil action to obtain
patent certainty” to obtain a declaratory judgment that the Orange Book-listed patents are invalid
or not infringed.279
If the patent holder timely files suit after being notified of the paragraph IV certification, this
lawsuit triggers the “30-month stay”: FDA generally cannot approve the ANDA for 30 months
269 21 U.S.C. § 355(b)(1); see also 21 C.F.R. § 314.53(b).
270 See Orange Book, supra note 118.
271 21 U.S.C. § 355(j)(2)(A)(vii). While this summary discusses the patent dispute procedures with respect to an
ANDA, NDAs that rely on reports and data to which they have no right of reference (e.g., published studies) are subject
to a parallel certification and notification process. See id. § 355(b)(2)–(3), (c)(3).
272 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 a listed patent. Id. § 355(j)(2)(A)(viii). See
infra “Section viii Statements and ‘Skinny Labels’”.
273 Id. § 355(j)(2)(A)(vii)(I)–(IV).
274 Id. § 355(j)(5)(B)(i).
275 Id. § 355(j)(5)(B)(ii).
276 Id. § 355(j)(5)(B)(iii); Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 566 U.S. 399, 407 (2012).
277 21 U.S.C. § 355(j)(2)(B)(i)–(iv).
278 Id. § 355(j)(5)(B)(iii).
279 Id. § 335(j)(5)(C)(i); 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).
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while the parties litigate their patent dispute.280 If, before the expiration of the 30-month stay, the
district court concludes the patent is invalid or not infringed by the ANDA filer, FDA may
approve the ANDA as of the date of the court’s judgment or a settlement order to that effect.281 If
the court finds the patent is infringed (and the ANDA filer does not appeal that decision), then the
effective date of ANDA approval must be “not earlier than the date of the expiration of the patent
which has been infringed.”282 FDA approval of a generic drug application can thus be
significantly delayed based on patent rights asserted by the NDA holder.
Figure 1. Patent Dispute Procedures for Generic Drugs
The Hatch-Waxman Notice-and-Certification Process
Source: CRS.
280 See 21 U.S.C. § 355(j)(5)(B)(iii); Caraco Pharm., 566 U.S. at 407–08. Following amendments to the Hatch-
Waxman Act in 2003, the NDA holder may receive 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 Hatch-Waxman Act, the 2003 Amendments, and Beyond, 66 FOOD & DRUG L.J. 417, 439 (2011)
(“[The 2003 amendments] effectively limited an innovator company to one thirty-month stay per ANDA.”).
281 21 U.S.C. § 355(j)(5)(B)(iii)(I).
282 35 U.S.C. § 271(e)(4)(A); 21 U.S.C. § 355(j)(5)(B)(iii)(II). If a judgment of infringement is appealed by the ANDA
filer and reversed by the court of appeals (i.e., the Federal Circuit), FDA may approve the application as of the date of
an appellate decision in favor of the ANDA filer. 21 U.S.C. § 355(j)(5)(B)(II)(aa)(AA).
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Orange Book Patent Listings
By statute, NDA filers must list patents that either (1) “claim[] the drug” that is the subject of the
NDA or (2) claim “a method of using such drug.”283 FDA regulations make clear that “drug
substance (active ingredient) patents, drug product (formulation and composition) patents, and
method-of-use patents” must be listed, while “[p]rocess patents, patents claiming packaging,
patents claiming metabolites, and patents claiming intermediates” must not be listed.284 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. (Because only certain patents relating to a drug are listed in
the Orange Book, some patent litigation concerning generic drugs takes place outside the
specialized notice-and-certification procedures of the Hatch-Waxman Act.)
FDA does not actively police the patent information listed in the Orange Book, viewing its role as
merely “ministerial.”285 This approach has raised concerns among some commentators that NDA
holders may list inapplicable patents in the Orange Book as a means to deter generic
competition.286 FDA does offer an administrative process 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 and seek
correction of the patent information.287 With 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 potentially relevant patents.288 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, however.289
Given the advantages of listing patents in the Orange Book and the FDA’s ministerial approach to
policing patents listed in the Orange Book, NDA holders and generic manufactures sometimes
283 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.
284 21 C.F.R. § 314.53(b)(1).
285 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. 36676, 36683 (June 18, 2003) (codified at 21 C.F.R. pt. 314)
(“[FDA’s] patent listing role remains ministerial.”) (citing aaiPharma Inc. v. Thompson, 296 F.3d 227, 242–43 (4th Cir.
2002)).
286 See, e.g., Eisenberg & Crane, supra note 253, at 260 (arguing that “the lack of administrative oversight” by FDA
“has allowed innovators to defer competition through the listing of irrelevant patents”). Some Members of Congress
have echoed this criticism and urged FDA to clarify the types of patents that can be listed in the Orange Book and to
enforce those guidelines. See, e.g., Letter from Sen. Elizabeth Warren and Rep. Pramila Jayapal to Dr. Robert M.
Califf, Comm’r of FDA, (Aug. 28, 2023), https://www.warren.senate.gov/imo/media/doc/
2023.08.28%20Letter%20to%20FDA%20re%20drug%20patents.pdf.
287 21 C.F.R. § 314.53(f)(1). Generally, FDA will not change the patent information in the Orange Book unless the
NDA holder amends or corrects the information in response to a 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. & INDUS. REP. 4–5 (July 3, 2018), https://www.finnegan.com/print/content/
65249/Requirements-Benefits-and-Possible-Consequences-of-Listing-Patents-in-FDAs-Orange-Book.pdf. An ANDA
filer may also make a counterclaim in patent infringement litigation to correct or delete patent information listed by the
NDA holder. 21 U.S.C. § 355(j)(5)(C)(ii)(I).
288 See Winkler et al., supra note 287, at 3 (“Having a patent listed in the Orange Book provides significant benefits to
the NDA holder.”).
289 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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dispute whether certain types are pharmaceutical patents were properly listed by NDA holders in
the Orange Book. For example, generic drug manufacturers have made successful legal
challenges to device patents and patents relating to risk evaluation and mitigation strategies
(REMS) as improperly included in the Orange Book.290 In 2022, FDA released a report collecting
public comments on patent information in the Orange Book and indicated that it has convened a
working group to “evaluate whether additional clarity is needed regarding the types of patents,
patent information, or other patent-related information that should be included in, or removed
from, the Orange Book, consistent with the current statutory requirements.”291
In 2023, the Federal Trade Commission (FTC) issued a policy statement concerning brand-name
drug manufacturers’ “improper listing of patents” in the Orange Book.292 The intent of the
statement was to “put market participants on notice that the FTC intends to scrutinize improper
Orange Book listings to determine whether these constitute unfair methods of competition in
violation of Section 5 of the Federal Trade Commission Act.”293 FTC observed that improperly
listed patents “may disincentivize investments in developing a competing product and increase
the risk of delayed generic and follow-on product entry, reducing patient access to more
affordable prescription drugs and increasing costs to the healthcare system.”294 A few months
later, FTC announced that it had invoked FDA’s regulatory process to challenge more than 100
patents as improperly listed in the Orange Book, including patents relating to drug-delivery
devices such as asthma inhalers and epinephrine autoinjectors.295
Section viii Statements and “Skinny Labels”
For patents that claim a method of using a drug (as opposed to a claim on the drug itself), FDA
regulations require NDA holders to include a description of listed method-of-use patents,
including information on whether the patent claims one or more FDA-approved methods of using
the drug.296 This description must be “adequate” to assist potential ANDA filers in determining
whether a listed patent covers a particular approved use or indication.297 The NDA holder must
also identify the sections of the approved drug label that describe the method(s) of use claimed by
that patent.298 FDA uses this information to create use codes for method-of-use patents, which are
290 See, e.g., Jazz Pharms. v. Avadel CNS Pharms., 60 F.4 th 1373 (Fed. Cir. 2023) (holding that patent on a computer-
implemented REMS system should not have been listed in the Orange Book because it did not claim a method of using
a drug); In re Lantus Direct Purchaser Antitrust Litig., 950 F.3d 1, 8 (1 st Cir. 2020) (holding that patent on device used
in an injector should not have been listed in Orange Book because the patent claims “do not mention the drug”).
291 FDA, Report to Congress: The Listing of Patent Information in the Orange Book ii (2022), https://www.fda.gov/
media/155200/download.
292 FTC, Federal Trade Commission Statement Concerning Brand Drug Manufacturers’ Improper Listing of Patents in
the Orange Book (Sept. 14, 2023), https://www.ftc.gov/system/files/ftc_gov/pdf/
p239900orangebookpolicystatement092023.pdf.
293 Id.
294 Id. at 4.
295 Press Release, FTC, FTC Challenges More Than 100 Patents as Improperly Listed in the FDA’s Orange Book (Nov.
7, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/11/ftc-challenges-more-100-patents-improperlylisted-fdas-orange-book. Some companies have responded to the FTC’s actions by removing these patents from the
Orange Book. See Kate Goodwin, Three Companies Relent to FTC Demands, Delist Patents from FDA’s Orange Book,
BIOSPACE (Dev. 22, 2023), https://www.biospace.com/article/three-companies-relent-to-ftc-demands-delist-patentsfrom-fda-s-orange-book-/.
296 21 C.F.R. § 314.53(c)(2)(i)(O), (ii)(P)
297 See id. § 314.53(c)(2)(ii)(P)(3).
298 See id. § 314.53(c)(2)(ii)(P)(2).
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also listed in the Orange Book.299 As with all patent information in the Orange Book, FDA does
not independently verify the accuracy of use codes, but instead merely publishes the information
submitted to it by NDA holders.300
When one approved method of using the drug is still covered by a patent, but another use is
unpatented or no longer patented, the Hatch-Waxman Act allows ANDA applicants to file a
“section viii statement” instead of a paragraph I–IV certification with respect to that method-ofuse patent.301 In a section viii statement, the ANDA filer avers that it is not seeking approval for
the patented use, but only for other approved uses of the drug not covered by the patent.302 The
ANDA filer must also submit proposed labeling that omits the portions of the brand-name drug’s
label corresponding to the still-patented use.303 For this reason, generics relying on section viii
statements are said to “carve out” the patented use, resulting in a “skinny label.”304 Unlike a
paragraph III or IV certification, a section viii statement does not delay FDA’s ability to approve
the ANDA.305
Some stakeholders question whether the Hatch-Waxman Act’s skinny-label provisions are
effective in facilitating partial generic competition when some, but not all, uses of a drug are
patented. Because the FDA does not independently verify use-code accuracy, an “overly broad”
use code (and the limited ability for generics to challenge use codes) may interfere with an ANDA
applicant’s ability to use section viii statements.306 In addition, because generics relying on the
skinny-label procedure may still be sued for induced patent infringement based on the
purportedly carved out uses,307 the pathway may carry some risk for generic manufacturers.308
The BPCIA: The “Patent Dance” 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.309 Unlike the
Hatch-Waxman approach, FDA’s licensure of biosimilars under the BPCIA is not directly
contingent on resolution of patent disputes, and a BLA filer need not list patent information as
part of its BLA.310 Under the Purple Book Continuity Act of 2020, BLA holders are required to
299 See Caraco Pharm. Labs v. Novo Nordisk, 566 U.S. 399, 405 (2012).
300 Id. at 405–06; see generally aaiPharma Inc. v. Thompson, 296 F.3d 227, 239–41 (4th Cir. 2002).
301 21 U.S.C. § 355(b)(2)(B), (j)(2)(A)(viii).
302 Id.; see also Caraco Pharm., 566 U.S. at 406.
303 See 21 C.F.R. § 314.94(a)(8)(iv).
304 See Caraco Pharm., 566 U.S. at 406 (“If the ANDA applicant [uses section (vii)], it will propose labeling for the
generic drug that ‘carves out’ from the brand’s approved label the still-patented methods of use.”); GSK v. Teva
Pharms. USA, 7 F.4th 1320, 1328 (Fed. Cir. 2021) (using the term “skinny label”).
305 AstraZeneca LP v. Apotex, Inc., 633 F.3d 1042, 1046 (Fed. Cir. 2010).
306 See Caraco Pharm., 566 U.S. at 426–28 (Sotomayor, J., concurring); S. 1128, 118th Cong. (proposing new cause of
action to correct Orange Book use codes).
307 See GlaxoSmithKline LLC v. Teva Pharms. USA, Inc., 7 F.4 th 1320, 1338 (Fed. Cir. 2021), cert. denied sub nom.
Teva Pharms. USA, Inc. v. Glaxo-SmithKline LLC, 143 S. Ct. 2483 (2023).
308 See, e.g., Sara W. Koblitz, Ding Dong: Is the Skinny Label (Effectively) Dead?, FDA LAW BLOG (Sept. 7, 2021),
https://www.thefdalawblog.com/2021/09/ding-dong-is-the-skinny-label-effectively-dead/ (arguing that uncertainty
created by the Federal Circuit’s decision in GSK v. Teva renders the process too uncertain for a “risk-averse generic
sponsor”).
309 See supra “Biological Product and Biosimilar Licensure.”
310 See 42 U.S.C. § 262(a); Background Information: Lists of Licensed Biological Products with Reference Product
Exclusivity and Biosimilarity or Interchangeability Evaluations (Purple Book), U.S. FOOD & DRUG ADMIN. (Aug. 3,
(continued...)
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provide to FDA information on patents asserted against a biosimilar company during the so-called
“patent dance” discussed below.311 As a result, the “Purple Book”—FDA’s list of approved
biological products that is the biologics analogue of the Orange Book—contains only limited
patent information.312
Instead of the Hatch-Waxman Act’s certification process, patent disputes over biosimilars may be
resolved through the BPCIA’s patent dance.313 The patent dance is “a carefully calibrated scheme
for preparing to adjudicate, and then adjudicating, claims of infringement” by reference product
sponsors (i.e., the brand-name biologic manufacturers) against biosimilar applicants.314
Depending on their participation in the patent dance, each party has an opportunity to litigate
relevant patents in two phases. The first (“phase one”) is at the conclusion of the patent dance—
roughly six months after the biosimilar applicant files its BLA.315 The second (“phase two”) is
when the biosimilar applicant provides a notice of commercial marketing, no later than 180 days
before the date the biosimilar will be marketed.316
The first step in the patent dance process occurs when, not later than 20 days after FDA accepts a
biosimilar BLA, the biosimilar applicant provides its application to the reference product sponsor,
along with information on how the biosimilar is manufactured.317 “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).”318 The biosimilar applicant and
reference product sponsor next 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 on the
validity and infringement of those patents.319 No later than 60 days after the initial disclosure by
the biosimilar applicant, the reference product sponsor provides a list of patents that it reasonably
believes it could assert, and whether it is willing to license them.320 No later than 60 days
thereafter, the biosimilar applicant provides its factual and legal basis for why the patents are
invalid or not infringed, or whether it would accept a license.321 After the reference product
sponsor responds to the biosimilar applicant’s invalidity and infringement contentions,322 the
parties engage in “good faith negotiations” over which patents (and how many) should be
2020), https://www.fda.gov/drugs/biosimilars/background-information-list-licensed-biological-products-referenceproduct-exclusivity-and [hereinafter Purple Book Background Information].
311 Pub. L. No. 116-260, div. BB, tit. III, subtit. C, § 325(a), 134 Stat. 2936.
312 Purple Book: Lists of Licensed Biological Products with Reference Product Exclusivity and Biosimilarity or
Interchangeability Evaluations, FOOD & DRUG ADMIN. (last updated Oct. 24, 2023), https://purplebooksearch.fda.gov/
[hereinafter Purple Book].
313 See 42 U.S.C. § 262(l).
314 Sandoz Inc. v. Amgen Inc., 582 U.S. 1, 8 (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).
315 Sandoz, 582 U.S. at 10.
316 Id.
317 42 U.S.C. § 262(l)(2).
318 Sandoz, 582 U.S.. at 7–9.
319 Id. at 8.
320 42 U.S.C. § 262(l)(3)(A).
321 Id. § 262(l)(3)(B)(ii)–(iii). The biosimilar applicant may also choose to supplement the reference product sponsor’s
list of relevant patents. See id. § 262(l)(3)(B)(i).
322 Id. § 262(l)(3)(C).
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litigated immediately.323 Once the parties determine the set of patents for “phase one” litigation,
the reference product sponsor has 30 days to bring an action for infringement of those patents.324
“Phase two” litigation under the BPCIA begins once the biosimilar applicant gives notice to the
reference product sponsor “not later than 180 days” before the first commercial marketing of the
biosimilar product.325 After receiving this notice, the reference product sponsor may seek a
preliminary injunction for infringement of patents that were included on its initial patent list but
not selected for phase-one litigation.326 The biosimilar applicant may choose to give this “phase
two” notice prior to FDA licensure of the biosimilar, so long as the notice is given 180 days
before commercial marketing.327 Thus, the biosimilar applicant can opt to “collapse” the two
phases of litigation, if it so chooses.328
Reference product sponsors cannot obtain injunctive relief to compel the biosimilar applicant to
engage in the patent dance.329 In practice, this limitation means that biosimilar applicants can
choose whether or not they wish to engage in the patent dance. 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.”330 Thus, although the biosimilar applicant need not immediately reveal its
manufacturing information if it chooses not to commence the patent dance, it exposes itself to an
immediate declaratory-judgment lawsuit for patent infringement.331 Biosimilar applicants thus
may face complicated strategic tradeoffs in deciding whether to initiate the patent dance.332
Unlike patent listings in the Orange Book under the Hatch-Waxman Act, 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 [of the biological product at issue].”333
Under the “list it or lose it” requirement, the patent holder may forfeit his right to sue on patents
that are not included on this list.334 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
323 Id. § 262(l)(4)(A), (l)(6). The BPCIA provides a procedure for a simultaneous exchange of patent lists if the parties
cannot agree on the patents that should be litigated immediately. Id. § 262(l)(5).
324 Id. § 262(l)(6).
325 Id. § 262(l)(8)(A).
326 Id. § 262(l)(8)(B).
327 Sandoz Inc. v. Amgen Inc., 582 U.S. 1, 19 (2017).
328 See Thomas J. Sullivan, The Patent Dance, EUR. BIOPHARM. REV. 70–74 (July 2018), https://www.finnegan.com/en/
insights/articles/the-patent-dance-article.html (“A second mechanism to shorten a suit under the BPCIA would be to
collapse the two phases of litigation . . . where the biosimilar applicant provides its 180-day notice of commercial
marketing contemporaneously with its notificati
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