Senator Hatch Proposes Legislation Forcing Challengers to Choose Between Filing a Hatch-Waxman Action or Filing an IPR

On June 13, Senator Orrin Hatch, co-author of the Hatch-Waxman Act, proposed an amendment in the Senate Judiciary Committee to modify the inter partes review (“IPR”) process for pharmaceuticals. The senator published a press release summarizing and explaining the proposed legislation. The amendment, titled the Hatch-Waxman Integrity Act of 2018, intends to “restore the careful balance the Hatch-Waxman Act struck to incentivize generic drug development” by “prevent[ing] alternative procedures for challenging drug patents from tilting the playing field contrary to Hatch-Waxman’s design.”

The proposed legislation would amend Sections 505(b)(2) and 505(j)(2)(A) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. §§ 355(b)(2) and 355(j)(2)(A) respectively) to require the applicant to certify to the FDA that “neither the applicant nor any party in privity with the applicant, has filed, or will file, a petition to institute inter partes review” in order to be eligible for abbreviated regulatory approval under the Hatch-Waxman Act. The applicant would further need to certify that it “is not relying in whole or in part on any decision issued by the Patent Trial and Appeal Board in an [IPR]” in making the certification that the relevant listed patent is invalid or will not be infringed.

According to Senator Hatch, the impetus for the proposed amendment is that IPRs are “producing unintended consequences in the Hatch-Waxman context.” Although the Patent Trial and Appeal Board (PTAB) review system is a critical tool to the tech community, Senator Hatch remarked, it “threatens to upend the careful Hatch-Waxman balance by enabling two separate paths to attack a brand patent.” The first path is “Hatch-Waxman litigation, which contains numerous carefully calibrated requirements affecting timing, market exclusivity, and FDA approval.” The second “is IPR, which is a much blunter instrument than Hatch-Waxman and which contains none of the important industry-specific balancing features that come into play in Hatch-Waxman litigation.” The proposed amendment solves this issue by “forc[ing] a party that wishes to challenge a brand patent to choose: the party can file a Hatch-Waxman suit, which carries the benefits of being able to rely on the brand company’s safety and efficacy studies for FDA approval, or it can file an IPR proceeding, which is cheaper, faster, and easier to win.” But the challenger cannot file both. The amendment would also apply to post-grant review and to biologics under the Biologics Price Competition and Innovation Act (BPCIA).

As a practical matter, the amendment is intended to “prevent companies from using IPR to put added litigation pressure on innovators above and beyond what Hatch-Waxman already provides” and to “prevent a company that rightfully loses a Hatch-Waxman suit from getting a second bite at the apple” at the PTAB. Given the benefits of the abbreviated regulatory pathway provided by the Hatch-Waxman Act, as well as the unrestricted nature of the patent challenge, generics companies will typically choose the abbreviated approval of their products over being able to file or rely on an IPR to overcome an Orange Book listed patent.

Gibbons will continue to monitor proposed changes to inter partes review proceedings, particularly as applied to pharmaceutical companies.

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