The pharmaceutical industry is closely watching a case that went before the U.S. Supreme Court on Monday over who should potentially have the upper hand in many patent battles between generic and brand-name drug makers.
The case, Cuozzo Speed Technologies v. Lee comes as scrutiny over drug prices builds.
The industry group Pharmaceutical Research and Manufacturers of America wants the justices to reverse a lower court's decision that it says could make it more difficult for them to invest in developing new drugs.
Meanwhile, the Generic Pharmaceutical Association and insurance industry group America's Health Insurance Plans say the lower court ruling helps ensure more lower-priced generics will be available to consumers.
The case isn't actually over drugs—it's about an invention that alerts drivers when they're speeding. But it has major implications for many patent disputes in general.
In 2011, Congress created a system for resolving challenges over the validity of patents, meant as an alternative to engaging in costly and lengthy fights in federal court. Under this new system, such challenges can now be brought to the U.S. Patent and Trademark Office's Patent Trial and Appeal Board. The board, however, has been using a broader standard than federal courts when it comes to interpreting patent claims, making it easier for challengers to invalidate them, many argue.
PhRMA and others say the board should use the same narrower standard as the federal courts.
In a brief (PDF) filed in the case, PhRMA said the broader standard creates uncertainty for manufacturers.
“Uncertainty regarding the scope of patent claims and their validity is costly to the inventive community and discourages innovation,” PhRMA wrote in its brief.
PhRMA says in cases before the patent board that used the broader standard, 87% of final decisions found at least some claims unpatentable. In federal court, where the narrower standard is used, those challenging patents' validity won 42% of the time.
AHIP and the generics association, however, said in their brief (PDF) that the broader standard is “largely working as intended by providing a more cost-effective avenue to challenge weak patents.”
It calls the current process “a critical consumer protection against abusive patent extensions that limit patient access to more affordable treatment options, delay market entry of less expensive generic therapies, and drive up drug costs.”
They say that without the current process, healthcare costs would rise by at least $73 billion between 2018 and 2037, as calculated by the Center for Economic and Policy Research.
Generic drug company Mylan Pharmaceuticals also filed a brief in the case supporting the current process, using the broader standard.
Janelle Waack, a member at Bass Berry & Sims who represents pharmaceutical companies, said if the Supreme Court adopts the narrower standard, challenging patents before the Patent Trial and Appeal Board will become more difficult.
“It would tend to tilt the playing field in favor of the patent owners,” Waack said.
It could create a higher barrier for generics trying to get to market, she said.
“It's remarkable because you're changing the standard of a fundamental issue in anti-patent disputes,” Waack said of the case.
The Supreme Court heard oral arguments in the case Monday, and a decision is likely by June.
