Copyright 1999 Federal News Service, Inc.
Federal News Service
JULY 1, 1999, THURSDAY
SECTION: IN THE NEWS
LENGTH:
2987 words
HEADLINE: PREPARED STATEMENT OF
DR.
RICHARD F SELDEN
FOUNDER AND CHIEF EXECUTIVE OFFICER
TRANSKARYOTIC
THERAPIES, INC. (TKT)
BEFORE THE HOUSE JUDICIARY COMMITTEE
COURTS AND INTELLECTUAL PROPERTY SUBCOMMITTEE
SUBJECT - THE PROPOSED
LIMITATION OF THE HATCH-WAXMAN
SECTION 271(E)(1) SAFE
HARBOR FOR NEW DRUGS AND BIOLOGICS
BODY:
I.
Introduction
Mr. Chairman, Mr. Ranking Member, and other distinguished
Members of the Subcommittee, I want to begin by thanking you for providing an
opportunity for Transkaryotic Therapies, Inc. ("TKT") to address one of the most
important issues facing TKT and the biotechnology industry today: the proposed
limitation of the Hatch-Waxman safe harbor for new drugs and
biologics.
My name is Richard F Selden. I am TKT's Founder, President and
Chief Executive Officer. I received my undergraduate, medical and Ph.D. degrees
at Harvard University and subsequently served as an Instructor in pediatrics at
Harvard Medical School. In the early and mid-1980%, I became familiar with - and
concerned about - devastating diseases such as Fabry disease, Hemophilia A and
diabetes disorders which affect a great number of individuals but presently have
no cure. Millions of patients who need our help are counting on the
biotechnology industry to find answers and develop cures. That's why I feel
privileged to work in the biotech field today and am committed to the science
that TKT and others in our industry are pursuing.
Over the past decade, TKT
has established itself as a pioneering biotech company in Cambridge,
Massachusetts. TKT has about 180 employees and has entered into a collaborative
agreement with Hoechst- Marion Roussel, Inc. ("HMR") on the biologic that is the
center of the issue which brings me here today. If the Subcommittee pleases, I
will take the next few minutes to describe how the proposed restriction of the
Section 271 (e)(1) safe harbor poses a serious risk to new drug and biologic
research and development not only at TKT, but at hundreds of other companies
across the nation.
If. Background on Amgen v. TKT and HMR Litigation
Amgen holds a patent on a form of erythropoetin ("EPO"). Erythropoetin is a
hormone that stimulates the body's production of red blood cells and is used to
treat anemia (particularly in cases of kidney failure, cancer and AIDS). The
sale of EPO currently produces annual revenues of $3 billion or more for Amgen
and its licensees annually. These revenues are expected to more than double over
the next few years. There is currently no competition for the sale of EPO in the
United States.
TKT has pioneered, developed and obtained patents related to
a new EPO that is made in a fundamentally different way from Amgen's version of
EPO. The result of TKT's method is the production of a pure human protein
containing human sugars and amino acids instead of Amgen's hybrid protein which
contains hamster sugars and human amino acids. TKT's product is not a generic
drug and is currently undergoing the full series of FDA-regulated clinical
trials that is required for the approval of any new drug or biologic. If the
current Phase III clinical trials at FDA continue to be successful, a "Biologic
License Application ("BLA") will be filed seeking final approval to manufacture
and market TKT'-s new product. TKT's product would offer a competitive, and we
hope superior, alternative to Amgen's product if, and when, it is approved by
the FDA.
In an attempt to block TKT from developing its new, competing
product, Amgen brought suit in April 1997 against TKT and HMR (1) claiming that
TKT's EPO, and the process used to make it, infringes three Amgen patents that
were issued only shortly before the commencement of the lawsuit - the
applications for all three of Amgen's patents are "submarine"patents that had
been filed in the U.S. Patent Office in 1983; and (2) asking the Court for a
declaratory judgement that TKT will infringe on Amgen's patents when commercial
sales of TKT's product begin. In April 1998, the U.S. District Court in Boston
granted TKT's Motion for Summary Judgment of non-infringement, stating that the
company's activities in developing GA-EPO were reasonably related to submissions
seeking regulatory approval from the U.S. Food and Drug Administration (FDA) and
were thus protected under the safe harbor provision of 35 U.S.C. ()271 (e)(1)
(the Price Competition and Patent Term Restoration Act of 1984, or
"Hatch-Waxman Act"). The Court also ordered Amgen's declaratory
judgment claim with respect to future patent infringement "administratively
closed, to be reopened upon motion of either party for good cause shown."
With the litigation on administrative hold, pending TKT's continued research
into GAEPO, Amgen turned to Congress in an attempt to reverse the court's
adverse ruling. Numerous different proposals were floated by Amgen during the
closing weeks of the 105th Congress, each of which would have had the effect of
reversing the court's April 1998 decision. Fortunately, none of these proposals
were enacted but, as witnessed today, these efforts continue. Moreover, we note
that, to date, none of these proposals have ever been introduced, including the
most recent proposal that has been shared with us.
TKT is now well into
Phase III of its clinical trials at FDA. It recently filed a motion to reopen
the litigation. Amgen agreed that the litigation should be reopened, thus
guaranteeing the question of Amgen's patent rights relative to TKT's GA-EPO will
now be decided by the court -on the merits of the case.
As a result of these
developments, the litigation related dispute that brought Amgen to Congress is
now behind us. The proposed legislation to amend the safe harbor provisions will
have absolutely no impact on TKT's ability or inability to go to market with its
GA-EPO product. The legislation would, however, have an impact on the
development of other drug and biologic products, whether developed at TKT or at
any other company. It is for this reason that TKT remains adamantly opposed to
the proposal.III. Background on Hatch-Waxman Act Section
271(e)(1) Safe Harbor
As the Members of the Subcommittee know, the
Hatch-Waxman Act provides a limited safe harbor in 35 U.S.C.
Section 271(e)(1) under U.S. patent law that enables companies to research and
develop innovative medical products, including drugs, biologic and devices,
without fear of premature patent litigation. Section 271 (e)(1) provides, in
pertinent part:
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.., 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.
In 1990, the
Supreme Court in Lilly v. Medronic 1 held that Section 271 (e)(l)'s safe harbor
should be interpreted broadly to protect a wide range of medical products that
are required to undergo pre- clinical and clinical testing pursuant to FDA
regulations, including medical devices. The federal courts have similarly held
that Section 271 (e)(1)'s safe harbor protects development and testing
activities conducted with respect to other types of non-generic medical
products, including drugs and biologics.
2
Since the
Hatch-Waxman Act's safe harbor provision was enacted over 15
years ago, medical product manufacturers have been able to plan and conduct
research and development activities with the knowledge and expectation that
these activities will be protected from premature patent infringement suits.
This protected zone for research has fostered unparalleled advances in medical
science, including the development of potent cancer and AIDS therapies and the
emergence of the biotech industry. Companies like TKT and others in the biotech
industry, in particular, have been extremely active in researching innovative
therapies that promise to revolutionize the health care industry in the coming
decade.
IV. The Fairness in Pharmaceutical Testing Act of 1999
The most
recent draft proposal we have been provided would significantly restrict the
scope of the Hatch-Waxman safe harbor. The so-called "Fairness
in Pharmaceutical Testing Act of 1999" proposal would amend
Hatch-Waxman by specifying that section 271(e)(1) "does not
apply to the development or submission of information under a new drag
application ... or biologics license application." If adopted, a safe harbor
would continue to exist for generic drugs, for new medical devices and food
additives, but would no longer protect research and development activities
leading to innovative new drugs or biologics.
V. Restricting
Hatch-Waxman Safe Harbor Would Be Harmful to the Public
Interest
The proposal to restrict the safe harbor, if enacted, would
profoundly impact the current and future development of other pipeline drug and
biologic products.
Amgen argues that, notwithstanding the established
practice of the past 15 years and Supreme Court precedent to the contrary,
Congress intended Section 271(e)(1) to apply only to generic drugs when it was
enacted in 1984. Amgen further argues that the safe harbor harms patent holders
by restricting their access to the courts during the early stages of research
and development of new medical products. In seeking to insulate its market-share
from legitimate competition, Amgen contends that it is unfair and contrary to
the public interest to require it to wait to commence a patent infringement suit
until a competitor like TKT begins final preparations to bring its product to
market.
In support of its position, Amgen offers an inconclusive analysis of
1984 congressional intent. TKT does not presume to know the intentions of the
members of Congress in 1984; it notes, however, that the language in Section
271(e)(1) could not be more clear. As written, Section 271 (e)(1) applies to all
drugs and biologics. Even Amgen's weak congressional intent argument, however,
misses the mark because the latest proposal would end the safe harbor
protections for only drag and biologic research, but not for medical devices or
food additives. Thus, the proposal fails to conform the patent statute to what
Amgen argues was Congress' original intent.
The proposal to restrict the
Section 271 (e)(1) safe harbor would be harmful to the public interest for the
following reasons:
A. It Will Stifle Innovation - If the safe harbor is
restricted as proposed, pioneer drug and biotech companies will face costly and
time-consuming patent infringement lawsuits early in the development process.
Many of these lawsuits will be "strike suits" filed by opportunists seeking a
quick pay-off from companies that are anxious to proceed with their research
unimpeded. Regardless of the motives, early-stage patent suits will siphon
scarce resources from research and development activities, thereby constricting
or delaying the amount of R&D actually undertaken by health care companies.
The upshot of this statutory tinkering will be (1) less R&D by drug and
biologic companies, (2) slower development of innovative new medical products,
(3) less competition in the pharmaceutical industry; (4) a general stifling of
innovation in the health care field, and (5) harm to the public health.
innovation occurs at small firms that have limited financial resources. The mere
existence of a lawsuit against a small company - regardless of the merits of the
case - seriously impairs its ability to raise the investment capital it needs to
continue operations. Moreover, most small biotech firms do not have the
resources to conduct R&D, to meet FDA's stringent regulatory requirements,
AND to defend a hugely expensive patent infringement lawsuit all at the same
time. By making small companies vulnerable to premature patent suits, the
limitation of Section 271 (e)(1) will provide large companies with a powerful
anticompetitive weapon that can and will be used to drive smaller companies out
of business.
C. It Will Encourage Unnecessary Litigation - The limitation of
the safe harbor will produce a large amount of unnecessary litigation. It will
allow litigation to begin even before a new product has been tested and proven
safe and effective on human subjects. Since many new products do not achieve the
beneficial results that are envisioned by their sponsors, limiting the safe
harbor will result in patent litigation over products that will never reach the
market. Also, drugs and biologic change in the course of development. If
litigation begins too soon, the "product" that is the subject of the litigation
will often be different from the product that reaches the market. This is one
more reason why limiting the safe harbor will spawn useless, resource-draining
litigation.
These public policy considerations have been repeatedly noted by
judges who have been faced with real cases in this area. There have been many
cases decided under Section 271(e)(1). In most of these cases, the plaintiff
argues, first, that the protections of Section 271(e)(1) do not apply to the
defendant's activities, and second, that, even if the safe harbor applies, the
court should exercise its declaratory judgment jurisdiction to decide whether
the defendant's product, when it is sold commercially, will infringe the
plaintiff's patent. In virtually every case, the court has declined to exercise
declaratory judgment jurisdiction for precisely the reasons outlined above. 3
In Amgen Inc. v. Hoechst Marion Roussel, Inc. the Court declined to exercise
declaratory judgment jurisdiction, saying among others things:
Not only is
FDA approval uncertain but the process or the product itself may be altered
during the interval (prior to FDA approval) in ways that are material to an
infringement analysis. Any declaration issued by the Court now may be rendered
moot by such alterations? Judge Young's comments are applicable to virtually
every new drug and biologic during its development phase.
D. It Places U.S.
Companies at a Competitive Disadvantage - Many other countries, including Japan,
Germany and France, have created a safe harbor for research and development
activities like the Section 271(e)(1) safe harbor. If the safe harbor is
restricted as proposed, U.S. companies that are developing new drugs and
biologics will be placed at a competitive disadvantage visa vis companies who
conduct research and development in countries like Japan and Germany and
incentives will have been created to move U.S. research activities offshore.
That cannot be in the best interests of the United States.
E. It is
Unnecessary - The current safe harbor does not result in disadvantage to patent
holders in the health care industry as compared to patent holders in other
industries. As a practical matter, patent holders in virtually every other
industry cannot sue for infringement until a potentially infringing product is
sold to the public. Prior to that time, the patent holder is usually unaware of
the existence of the potentially infringing product. The situation with medical
products such as drugs and biologic is different. Because of the FDA approval
process, which often involves public advisory committee meetings and other
public disclosures, most patent holders can learn about investigational products
and file infringement suits long before a new drug or biologic reaches the
market. By precluding litigation until a product is approved by the FDA, the
current law imposes on drug and biologic patent holders no greater disadvantage
than exists for other patent holders. Moreover, current law permits drug and
biologic patent holders to seek the full range of legal remedies available to
other patent holders, including: (1) preliminary injunctions; (2) permanent
injunctions; and (3) treble damages. Indeed, a patent holder can file suit as
soon as the FDA approves a competing drug or biologic and, if it can convince a
judge of its likelihood of success on the merits, it can be awarded a
preliminary injunction, thus preventing the competing product from ever coming
on the market.
VI. Conclusion
The U.S. District Court will soon address
the question of whether TKT's product and process infringes Amgen's patents -
well in advance of TKT's product going to market. Accordingly, it is difficult
to see how Amgen or any other company will be prejudiced by the current
interpretation of the Hatch-Waxman safe harbor.
In
conclusion, I would urge Congress to not disadvantage research companies by
limiting the safe harbor provision. Instead, Congress should allow the biotech
industry to continue to move forward in their efforts to develop the next wave
of cutting edge weapons for combating devastating diseases and not take a step
backwards by restricting the safe harbor protections for new drugs and
biologics.
Thank you for providing me with this opportunity to present my
views on this critical issue.
FOOTNTOES:
1 496 U.S. 661 (1990).
2
See, e.g., Amgen, Inc. v. Chugai Pharmaceutical Co. Ltd., 13 U.S.P.Q.2d 1737,
1780 (erythropoietin); NeoRX Corp. v. Immunomedics, Inc., 877 F. Supp. 202
(D.N.J. 1994) (processes and resultant products for labeling proteins, such as
antibodies, with radioactive metal isotopes to detect and treat cancer); Elan
Transdermal Ltd. v. Cygmus Therapeutic Systems, 24 U.S.P.Q.2d 1926 (N.D. Cal.
1992) (transdermal delivery of nicotine). B. It is Anticompetitive - The
proposed limitation of the safe harbor will be used by large, established
companies to drive smaller drug and biotech companies out of business, thereby
further limiting innovation and reducing competition in health care. A great
deal of biotech
3 Examples of judicial reluctance to devote court resources
to the adjudication of patent disputes with respect to products that are still
in a developmental stage include Electronics Pacing Systems, Inc. v Ventritex,
982 F.2d 1520, 1527 (Fed. Cir. 1992); NeoRX Corp. v. Immunomedics, Inc., 877 F.
Supp. 202, 214 (D.N.J. 1994); Upjohn Co. v. Monsanto Co., 1192 U.S. DIST. Lexis
14917 ('11); and Amgen Inc. v. Hoechst Marion Roussel, Inc., 3 Fed. Supp.2d 104,
112 (D. Mass. 1998).
4 3 F. Supp.2d at 1 12.
END
LOAD-DATE: July 2, 1999 
