Passage of Patent Reform Bill is Just the Beginning

BioWorld Today Washington Editor

WASHINGTON – It took Congress nearly a decade to pass the first major patent reform bill in nearly 60 years. Now it could take another decade or so for the new act to be thoroughly fleshed out in the courts and the Patent and Trademark Office (PTO).

The America Invents Act, passed by the Senate 89 to 9 Thursday, represents "quite a scope of change" that is likely to unfold for many years as the courts interpret it in future patent lawsuits, said Stephen Maebius, a partner at law firm Foley & Lardner LLP and head of its intellectual property department. (See BioWorld Today, Sept. 9, 2011.)

"The work is just beginning," he told BioWorld Today, adding that "there are always these gray areas that have to be worked out."

The sweeping bill switches the U.S. from a first-to-invent to a first-to-file system like the rest of the world. It also keeps Congress from diverting patent fees, which will ensure the PTO has the funds it needs to do its job. The raid on patent fees has been blamed for a patent review backlog of more than 700,000 applications, which has delayed the timely granting of patents. (See BioWorld Today, March 10, 2011, and June 27, 2011.)

While it may take time to ferret out all the details of the bill, the PTO will begin to implement it as soon as President Barack Obama signs it into law. In a statement acknowledging Congress' work, PTO Director David Kappos said, "We intend to aggressively implement that mandate by immediately hiring new examiners, instituting new patent acceleration tools and aggressively modernizing our IT infrastructure."

The PTO's information technology (IT) will have a larger role under the reform. The bill calls for a new surcharge to be assessed on applications that aren't filed electronically, effective 60 days after the bill is enacted, Maebius said.

The bill also raises patent application fees 15 percent across the board and adds a third payment tier for "micro entities," he said.

Since biotechs tend to file as early as possible to protect their intellectual property, Maebius doesn't think the transition to the new system will be that big of a change. The bill's expansion of the prior use defense could help a biotech that is developing a product but isn't the first to file.

The bill specifically extends the prior use defense, and thus grants immunity from infringement claims, to products that had been used in clinical trials or FDA-related testing. This expansion "almost undercuts the first-to-file switch," Maebius said.

"So we haven't totally abandoned the idea of first to invent. We've just repackaged it," he added.

One area not addressed by the patent reform is Section 101, patent eligibility, which has been at the center of patent challenges involving method claims and isolated genes. Maebius said it will be up to the Supreme Court to resolve some of those issues when it hears Prometheus and possibly Myriad. (See BioWorld Today, July 6, 2010, June 27, 2011, and Aug. 2, 2011.)

Overall, the biotech industry is pleased with the America Invents Act. "The improvements made by the bill will benefit all sectors of the national economy by enhancing patent quality and the efficiency, objectivity, predictability and transparency of the U.S. patent system," Jim Greenwood, president and CEO of the Biotechnology Industry Organization, said in a statement.

Strong intellectual property protection is critical for small biotechs that rely heavily on their patents to attract investment to fund the lengthy and expensive R&D process, he added.

OIG Pushes for New CMS Part B Pricing Authority

The Centers for Medicare & Medicaid Services (CMS) should seek congressional authority to more effectively control Part B spending on drugs and biologics, according to a new government report.

The recommendation by Health and Human Services' Office of Inspector General (OIG) followed a review of Medicare Part B spending on Roche AG's Avastin (bevacizumab) and Lucentis (ranibizumab) as treatments for age-related macular degeneration (AMD) in 2008 and 2009.

During that period, Medicare Part B paid physicians $40 million for nearly 1 million off-label Avastin treatments and $1.1 billion for about 700,000 Lucentis treatments. Had the reimbursement for all beneficiaries treated with Avastin or Lucentis for wet AMD been paid at the Avastin rate, Medicare Part B would have saved about $1.1 billion and beneficiaries would have saved about $275 million in copayments, OIG said.

However, the OIG acknowledged that any action CMS takes to encourage the use of Avastin for wet AMD could be controversial. While Lucentis is approved to treat wet AMD, Avastin is not. Recently, the FDA issued a warning that repackaged intravitreal injections of Avastin had caused a cluster of serious eye infections in the Miami area. (See BioWorld Today, Sept. 6, 2011.)

CMS is required to reimburse most Part B-covered drugs at 106 percent of the average sales price. Thus, OIG said, there is little pressure for Roche to lower the sales price of Lucentis.

CMS should seek new authority as its "authority to limit reimbursement for the treatment of wet AMD to the rate of the least costly alternative is questionable," OIG said. The agency also lacks the authority to require price concessions or rebates from manufacturers under the Part B program, which covers physician-administered drugs.

Abbott Seeks Rulemaking for 505(b)(2) Path

Until the FDA develops and implements a rule on how it assigns therapeutic equivalence (TE) ratings for new drugs on the 505(b)(2) path, it should refrain from granting a TE rating to any drug that references testosterone-replacement drug AndroGel, Abbott Laboratories Inc. said in a recent citizen's petition.

The rulemaking should establish a coherent set of standards governing TE listings, describe legal processes available to parties interested in commenting on or challenging a proposed listing, and characterize the FDA's assignment and listing of TE ratings for 505(b)(2) drugs as orders or substantive rules.

The 505(b)(2) path "permits approval of applications other than those for duplicate products and permits reliance for such approvals on literature or on an agency finding of safety and/or effectiveness for an approved drug product," according to the FDA.

NORD Requests Review Policy for Rare Disease Treatments

The National Organization for Rare Disorders (NORD) submitted a citizen's petition asking the FDA to develop a guidance on the review of potential treatments for people with rare diseases.

"Basic research and clinical trials needed to develop treatments for these diseases are complicated by the fact that there are few patients and they are geographically dispersed," NORD President and CEO Peter Saltonstall said in a statement.

Although the FDA has been flexible in its review of potential treatments, NORD said the agency needs to document that flexibility in a guidance for future orphan drug reviews. The guidance should acknowledge that clinical trials for most orphan drugs are fundamentally different from trials for other drugs and, therefore, the FDA review of orphan drugs is different.

Published: September 12, 2011