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Infringement and Incentives

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The Use of the Hatch-Waxman Safe Harbor in Patent Infringement Cases

 

Infringement

By Ed Mantilla

The Utility of Patents and Infringement

Patent protection in the pharmaceutical industry is a very valuable tool used, not only to protect the property rights of a potential new drug, but also, to protect a potential revenue stream large enough to allow recovery of costs associated with the development of a drug.  This recovery may fund the development efforts of new drugs which helps maintain a healthy development pipeline for a company.  As such, pharmaceuticals, biotechnology, and biosimilar companies involved in the development of new treatments for the cure of many ailments take patent protection very seriously and vigorously defend on a worldwide scale any attempts by any company to encroach on those rights. In the US, patent infringement is codified in 35 U.S.C § 271(a), and it states that “whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.”

The Hatch-Waxman “Act” and Incentives

A generic drug company may take advantage of the provisions of the Drug Price Competition and Patent Term Restoration Act (colloquially known as the Hatch-Waxman Act) (“the Act”). This Act which was enacted in 1984 provides a legal framework to streamline the process for generic drug companies to gain approval by the Food and Drug Administration (“FDA”).  For example, the Act created abbreviated new drug application (ANDA) which expedite generic drug approvals and ensures that generic copies of previously approved branded drugs could be marketed immediately upon the expiration of any applicable patent protection on the originally approved drug.[1]  To promote innovation, the Act provides 180 days of market exclusivity to the first filer of an ANDA relative to any subsequent ANDA filers.

The Act also incentivize these companies to challenge patents owned by other pharmaceutical companies that allows them to develop generic drugs while patents for branded drugs are still in force. For instance, branded pharmaceutical companies are required under the Act to list the patents applicable to their drugs in the “Approved Drug Products with Therapeutic Equivalence Evaluations” or as it is mostly known the “Orange Book.” The Orange Book “identifies drug products approved on the basis of safety and effectiveness by the Food and Drug Administration (FDA) under the Federal Food, Drug, and Cosmetic Act (the Act) and related patent and exclusivity information.”[2] More importantly, and as a time-saving measure in the regulatory timeline, generic drug companies may rely on the branded drug’s clinical test results to establish the safety and efficacy of the generic drug candidate.

One of the provisions of the Act establishes a safe harbor for activities that would otherwise constitute patent infringement.  Section 271(e)(1) states

It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913) which is primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other processes involving site specific genetic manipulation techniques) 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 or veterinary biological products.[3]

 

Safe Harbor Patent Terms

Normally, the use of patented products or processes during the R&D stages of a drug may constitute patent infringement under 271(a).  However, using such products and processes is sometimes necessary to obtain approval by the FDA to market a product containing a small molecule, biologic, or a medical device. This safe harbor provision allows a generic company to perform experiments needed to obtain regulatory approval prior to the expiration of the patents covering the drug product.  Since a generic company may perform certain kinds of experiments, this, in essence maximizes their patent term as they do not have to wait until the expiration of the patents covering the drugs to begin experiments.

During the COVID-19 pandemic, there are current cases in the courts where defendants used the safe harbor exception to defend a patent infringement claim.  Recently, Regeneron Pharmaceuticals which is developing an experimental treatment for COVID-19, asked a federal judge to dismiss a lawsuit by San Diego-based Allele Biotechnology and Pharmaceuticals using the Act’s safe harbor provision in their argument.[4][5] Allele claims that Regeneron used their mNeonGreen (US Patent No. 10, 221, 221) protein technology and is seeking royalties for such use.

In response, Regeneron argues that since Allele relies on the National Institutes of Health’s definition of “research tools,” peptides as used in this case also fit the definition of research tools.[6] As defined, “research tools” include “tools that scientists use in the laboratory including cell lines, monoclonal antibodies, reagents, animal models, growth factors, combinatorial chemistry and DNA libraries, clones and cloning tools (such as PCR), methods, laboratory equipment and machines.”[7] Note that “research tools” as defined above are not explicitly listed as a category covered under the Act’s safe harbor. The question has been implicitly addressed by the courts, but still no bright line rule exists.[8]

 

Regeneron’s Rebuttal

Regeneron argued that the use of such research tools was confined to the development and submission of information to the FDA. [9]  Regeneron asserts that the use of mNeonGreen “were in connection with neutralization assays for testing the potency or efficacy of antibody candidates, including those chosen for REGEN-COV—uses squarely related to Regeneron’s FDA submission and immune under § 271(e)(1).”[10]

Here, although the use of peptides may be covered under the safe harbor provisions of the Act,[11] no explicit or clear court opinion exists. Whether the safe harbor applies is a fact-intensive inquiry with each use evaluated on a case-by-case basis. This approach may result in inconsistent opinions. As such, clearer guidance from the courts is required

 

 

[1] Hatch Amendment Would Preserve Balanced Incentives for Pharmaceutical Innovation And Drug Affordability,

https://www.healthaffairs.org/do/10.1377/hblog20181106.217086/full/

[2] https://www.fda.gov/drugs/drug-approvals-and-databases/approved-drug-products-therapeutic-equivalence-evaluations-orange-book

[3] 35 U.S.C § 271(e)(1)

[4] Allele Biotechnology v. Regeneron Pharmaceuticals, Case No. 7:20-cv-08255 (S.D.N.Y 2020).

[5] Regeneron Antibody Cocktail Used by Trump Faces Patent Suit, https://www.bloomberg.com/news/articles/2020-10-05/regeneron-antibody-cocktail-used-by-trump-faces-patent-suit

 

[6] [6] Regeneron’s Reply in Support of its Motion to Dismiss, page 7, Allele Biotechnology and Pharmaceuticals v. Regeneron Pharmaceuticals, Inc., Case 7:20-cv-08255.

[7] Id.

[8] See, Eli Lilly & Co. v Medtronic, Inc., 496 U.S 661 (1990); Proveris Scientific Corp v. Innovasystem, Inc., 536 F.3d 1256 (Fed.Cir. 2008); Integra Lifesciences I, Ltd., Merck KGaA, 331 F. 3d 860 (Fed Cir. 2003).

[9] Regeneron’s Reply in Support of its Motion to Dismiss, p.8.

[10] Id.

[11] Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193 (2005)

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