Copyright 1999 Federal News Service, Inc.
Federal News Service
AUGUST 4, 1999, WEDNESDAY
SECTION: IN THE NEWS
LENGTH:
3292 words
HEADLINE: PREPARED STATEMENT OF
PETER
BARTON HUTT
BEFORE THE SENATE COMMITTEE ON THE JUDICIARY
SUBJECT - THE PATENT TERM RESTORATION REVIEW
PROCEDURE ACT OF 1999
BODY:
Mr. Chairman and Members of the
Committee, I am Peter Barton Hurt. I am a panner in the Washington, D.C. law
firm of Covington & Burling.
I have been asked by the Committee to
present testimony on patent term restoration and S. 1172. For almost forty
years, I have been engaged in the practice of food and drug law. During
1971-1975, I served as Chief Counsel for the Food and Drug Administration (FDA).
I am the co- author of the casebook used to teach food and drug law in law
schools throughout the country.1 I teach a full course on food and drug law
during Winter Term at Harvard Law School and I have taught the same course
during Spring Term at Stanford Law School. When the Drug Price Competition and
Patent Term Restoration Act of 1984 was being considered during 1983-1984, I
served as counsel to the Pharmaceutical Manufacturers Association (now the
Pharmaceutical Research and Manufacturers of America) and was deeply involved in
the development, negotiation, and drafting of the provisions in that statute.2 I
have published articles on the subject of patent term restoration both before/3
and after/4 enactment of the 1984 Act. Finally, I have twice before testified on
legislation intended, and ultimately enacted, to provide patent term restoration
for specific products as a matter of fairness and equity?/
THE ORIGIN AND
PURPOSE OF THE DRUG PRICE COMPETITION AND PATENT TERM RESTORATION ACT OF 1984
In 1962, Congress enacted new legislation to increase the regulatory
requirements for new drugs. The Drug Amendments of 19626/replaced the 1938
requirement of premarket notification with a more stringent requirement of
premarket approval, and added a requirement of proof of effectiveness to the
1938 requirement of proof of safety. In the years that followed, the time
required to obtain the necessary evidence of safety and effectiveness increased,
and the time required for FDA review and approval of a new drug application
(NDA) also increased. As a result, instead of receiving the full statutory
patent term of seventeen years, the effective patent life for a new drug
gradually was reduced to less than ten years and at times to zero. The longer it
took a company to prove safety and effectiveness and the longer it took FDA to
review and approve the NDA, the shorter the effective patent life became.
By
1980, the average effective patent life of new drugs had deteriorated to such an
extent that many concluded it required remedial legislation. During 1981 and
1982, Congress considered legislation relating solely to patent term
restoration. This legislation narrowly missed enactment in September 1982.
Following enactment of the Drug Amendments of 1962, FDA approved the
marketing of generic versions of pioneer drugs under abbreviated NDAs for those
pioneer new drugs first marketed before the 1962 Amendments, but not for new
drugs with NDAs approved after the 1962 Amendments. For two decades, generic
versions of post-1962 new drugs were virtually precluded from the market. Both
administrative and legislative approaches were considered during this time to
permit FDA approval of generic drugs, but none was successful.
In 1983 and
1984, the pending patent term restoration legislation was combined with
legislation authorizing FDA approval of generic versions of post-1962 new drugs
through an abbreviated NDA. That legislation was ultimately enacted in September
1984 as the Drug Price Competition and Patent Term Restoration Act of 1984
(which is shortened in this testimony to the "Patent Term Restoration Act" or
the "1984 Act").7/
The 1984 Act was an attempt to balance two competing
interests. The research-based drug industry, obtained up to five years of patent
term restoration for pioneer new drugs, to compensate for part of the diminished
effective patent life resulting from the FDA requirements for the investigation
and approval of a new drug. The generic drug industry received the assurance
that generic versions of a pioneer drug would be approved by FDA following
expiration of applicable patents and market exclusivity through an abbreviated
NDA that did not require duplicative testing for safety and effectiveness.
THE PIPELINE DRUG EXCEPTION
As noted above, the general rule under the
Patent Term Restoration Act of 1984 was that the pioneer drug received up to
five years of patent term restoration. There was, however, one important
exception to this general rule. A pipeline drug was limited to two years of
patent term restoration. Pipeline drugs are defined in what is now 35 U.S.C.
156(g)(6)(C) as any drug for which a patent had been issued and an
investigational new drug (IND) application had been submitted to FDA prior to
the date of enactment of the 1984 Act, which was September 24, 1984.
Accordingly, there was a full three years difference in patent term restoration
between two new drugs that were being developed at the same time, simply by
reason of the fact that either (1) the IND for one was submitted shortly before
the enactment date and the other was submitted shortly after the enactment date
or (2) the patent for one went through the patent process quickly and was issued
before the enactment date and the other went through the patent process slowly
and was issued after the effective date.
THE CONGRESSIONAL RATIONALE FOR THE
REDUCED PATENT TERM RESTORATION FOR PIPELINE DRUGS
The three-year disparity
between the two years of patent term restoration provided where an IND had been
submitted before the date of enactment and the five years provided for all other
new drugs has provoked substantial interest and concern. Two years ago, the
Chief Counsel for the Senate Committee on Government Affairs asked about the
origin of this disparity. I provided a letter in May 1997 describing the two
reasons for the two-year limitation on pipeline drugs. A copy of that letter is
attached to this testimony.As already noted, I participated in the development,
negotiation, and drafting of the 1984 Act on behalf of the industry trade
association. My clear recollection of the reasons for the two-year limitation
for pipeline drugs, as set forth in that May 1997 letter, are as follows:
There were two fundamental reasons why the two-year limitation was included
for pipeline drugs in what is nov,, 35 U.S.C. 156(g)(6)(C). These reasons were
frequently discussed among those of us who were involved in the daily
negotiations.
First, it was felt that the pipeline drugs would be approved
by FDA shortly after enactment of the 1984 legislation. Accordingly, it was
thought that the five year period of patent term restoration granted to all
post-enactment drugs would be unjustified for pipeline drugs, and that a twoyear
period of patent term restoration would more appropriately reflect the
anticipated short period of time between the date of enactment and the date of
FDA approval for pipeline drugs.
(While this assumption has in large
part proved to be true, I understand that for a handful of pipeline drugs the
time between date of enactment and FDA approval has extended beyond the time
needed for approval of postenactment drugs and has in fact exceeded ten years -
something clearly not contemplated by any of us when we were drafting the
legislation in 1984.)
Second, it was felt that, for any drug for which an
IND had been submitted to FDA prior to the date of enactment, the manufacturer
had already made the decision to invest resources in the drug and therefore less
of an economic incentive was needed to assure continued pursuit of the drug to
final FDA approval -- particularly when it was anticipated that approval would
come not long after enactment of the legislation. Accordingly it was concluded
that two years, rather than five, would provide sufficient economic incentive to
assure that a pipeline drug would not be abandoned.These were the two
considerations that led to the two-year limitation on patent term restoration
for pipeline drugs, as contrasted with the five-year grant of patent term
restoration for post-enactment drugs, in the 1984 Act. To the best of my
recollection, they were the only two considerations that were discussed at that
time.
In October 1997, I discussed this matter with John P. McLaughlin when
I saw him at a meeting and then sent him my May 1997 letter to ask his
recollection. Mr. McLaughlin had served as Counsel to the Subcommittee on Health
and the Environment of the House Committee on Energy and Commerce, and was
involved in the legislation on a daily basis, throughout 1983 and 1984. At the
time I wrote him, Mr. McLaughlin was Executive Vice President of Genentech, a
highly successful biotechnology company. Genentech has no interest of any kind
in any pipeline drug. Mr. McLaughlin wrote back to confirm my recollection of
the above reasons for the pipeline drug limitation. Copies of my letter to Mr.
McLaughlin and his reply are also attached to this testimony.
THE OUTLIER
PIPELINE DRUGS
For most of the pipeline drugs, the assumption that FDA
approval would come shortly after enactment of the 1984 Act turned out to be
accurate. At that time, the average time for FDA approval of an NDA was
approximately 2.25 years.-8/
For a few outliers, however, this assumption
turned out to be quite inaccurate. For these outlier pipeline drugs, the time
for FDA review and approval of an NDA was more than twice the average, and they
therefore suffered an even greater reduction in effective patent life. A number
of post-1984 new drugs that received a full five years of patent term
restoration were in fact approved by FDA before the agency approved these
pre-1984 outlier pipeline drugs that received only two years of patent term
restoration. This produced the anomalous result that the outlier pipeline drugs,
whose NDA approval time was more than twice the average, received less than half
the normal patent term restoration. None of us who participated in the drafting
of the 1984 Act anticipated or intended this result.
FDA approval of the
outlier pipeline drugs was not completed until April 1993 which was more than
eight years after enactment of the 1984 Act. Within that eight year period, many
other drugs received FDA approval together with a full five years of patent term
extension. Like the pipeline drugs, these other drugs that received five years
of patent term extension also began development prior to the enactment date. The
average time from first pharmacological testing to the filing of an IND in the
1980s was 5.2 years.9 Thus, drugs that were approved by FDA prior to the outlier
pipeline drugs, yet received a full five years of patent term extension, were
undergoing active research for more than five years before the enactment date of
the 1984 Act.
In testimony before the House Judiciary Subcommittee on Courts
and Intellectual Property on July 1, 1999, on legislation (H.R. 1598) that is
similarly designed to address the inequity suffered by outlier pipeline drugs,
Representative Henry Waxman presented the following rationale for the pipeline
drug provision in the 1984 Act: The pipeline drugs were not made eligible for
five years of patent extension precisely because the point of
the patent extensions was to encourage the research and
development of future products. All products which had not yet undergone testing
or review- by the FDA were judged to be appropriately eligible for the full five
years of patent extension.
This statement is demonstrably
inaccurate. Dozens of drugs that had already undergone testing prior to the date
of enactment received the full five years of patent
extension.10 It was no more necessary to provide five years of
patent extension to these drugs, in order to encourage the
research and development of future products, than it was for the pipeline drugs
that received only two years of patent extension. If Mr. Waxman
were correct, none of the drugs that were being tested and were under
development before the enactment date would have received the five years of
patent term extension that they in fact received.
Thus, contrary to Mr.
Waxman's contention, the criteria in the 1984 Act that define a pipeline drug --
the filing of an IND and the issuance of a patent prior to the enactment date --
were completely arbitrary. As Mr. Waxman's counsel at that time has verified,
the rationale for these arbitrary criteria was the assumption that the pipeline
drugs would be approved by FDA shortly after enactment. For the outlier pipeline
drugs, however, that has proved to be an erroneous assumption.
These outlier
situations, with approval times more than double the average, reflect the large
new drug review workload imposed on FDA in the late 1980s and early 1990s, the
increasingly restricted resources available to the agency to do this work, and
thus the growing shortfall in the personnel assigned to these tasks. FDA was
doing everything it could to meet its new drug review obligations throughout
this time. But the resources simply were not there to satisfy the workload
needs.
Congress squarely faced this issue in the early 1990s and found a
solution in the Prescription Drug User Fee Act of 1992. 11 Using the additional
funds made available under the 1992 Act, FDA hired approximately 650 new
employees to handle NDAs in a more expeditious manner. As a result, the time for
NDA approval was cut in half. If this approach had been adopted earlier, there
would have been no outlier pipeline drugs and no need for legislation to redress
the inequity in patent term restoration that has in fact occurred for these
drugs.
LEGISLATIVE ATTEMPTS TO REDRESS THE INEQUITY FOR OUTLIER PIPELINE
DRUGS
The two-year limitation for pipeline drug patent term restoration in
the 1984 Act was intended to deal with the expected FDA average approval time of
about 2.25 years. It made no attempt to address unusual or unique situations of
lengthy regulatory review for which accepted principles of fairness and equity
would justify exceptions.
As a result, Congress has on seven specific
occasions enacted legislation to address particular FDA-regulated products where
application of the general rules in the 1984 Act would have been unfair and
inequitable. Two of those occurred in the middle of the congressional
consideration of the 1984 Act, two occurred at the end of the congressional
consideration of the 1984 Act and were enacted a month later, and the remaining
three occurred in 1988, 1993, and 1996. In all seven instances, Congress
concluded that the general rules applicable under the 1984 Act were insufficient
to address the particular situations involved, and thus that legislation was
necessary and appropriate. The following table lists those seven statutes:
Statutory Patent Term Restorations Since 1980 Product Statute Aspartame
(food additive) 95 Stat. 2049, 2065 (January 4, 1982) Forane (new drug) 97 Stat.
831,832 (October 13, 1983) Impro (new animal drug) 98 Stat. 3430 (October 19,
1984) Glyburide (new' drug) 98 Stat. 3434 (October 19, 1984) Lopid (new drug)
102 Stat. 1107, 1569 (August 23, 1988) Olestra (food additive) 107 Stat. 2040
(December 3, 1993) Daypro (new drug) 110 Stat. 1321, 1321- 320 (April 26,
1996)In a number of other instances, similar legislation has been considered by
Congress for other FDA-related products but has not been enacted.
I
have in the past supported this type of legislation, because I believe it is
entirely appropriate for Congress to enact legislation addressing the inequities
that inevitably arise in the application of general rules to unique situations.
It is, however, time-consuming and inefficient for Congress to examine and take
action on each specific product where a general problem has been identified,
such as outlier pipeline drugs. During a Senate hearing held in August 1991 to
consider patent term restoration bills for three specific products, Bruce
Lehman, who later served as Commissioner of Patents and Trademarks, offered the
thoughtful suggestion that Congress establish some type of new administrative
procedure to consider identified problems of fairness and equity rather than to
handle each individual product on an ad hoc legislative basis.12 As Mr. Lehman
pointed out at that time, this alternative way' of approaching the matter offers
substantial advantages. This approach for outlier pipeline drugs has been
discussed since 1991, and legislation incorporating it has recently been
introduced as S. 1172.
CONCLUSION
Without doubt, outlier pipeline drugs
have not been treated fairly. These drugs received only two years of patent term
restoration, whereas competitors who submitted their IND applications later but
received their NDA approvals earlier received a full five years of patent term
restoration. This result cannot be justified on any principled basis. The
assumptions on which the two-year pipeline drug limitation was based have turned
out to be erroneous for this limited category of drugs. Under these
circumstances, Congress has in the past enacted legislation to redress the
resulting inequity. In the case of outlier pipeline drugs, this could be
accomplished either by drug- specific legislation or, more efficiently, by
establishing a new administrative procedure to evaluate the few remaining
outlier pipeline drugs involved as set forth in S. 1172.
FOOTNOTES:
1/
Peter Barton Hutt & Richard A. Merrill, Food and Drug Law: Cases and
Materials (lst ed. 1980 & 2d ed. 1991).
2/ See, e.g., my testimony on
behalf of PMA in "Patent Term Extension and Pharmaceutical Innovation," Hearing
before the Subcommittee on Investigations and Oversight of the Committee on
Science and Technology. U.S. House of Representatives, 97th Cong., 2d Sess. 123
(1982).
3/ Peter Barton Hurt, The Importance of Patent Term Restoration to
Pharmaceutical Innovation, 1 Health Affairs, No. 2, at 6 (Spring 1982).
4/
Ellen J. Flannery & Peter Barton Hutt, Balancing Competition and Patent
Protection in the Drug Industry: The Drug Price Competition and Patent Term
Restoration Act of 1984, 40 Food Drug Cosmetic Law Journal, No. 3, at 269 (July
1985).
5/ "Lopid Patent Term Restoration and Fairness Act of 1987," Hearing
before the Subcommittee on Courts. Civil Liberties. and the Administration of
Justice of the Committee on the Judiciary. House of Representatives, 100th Cong.
1st Sess. 41, 72 (1987), 101 Stat. 1107, 1569 (August 23, 1988); "Patent
Extension Hearing," Hearing before the Subcommittee on Patents.
Copyrights and Trademarks of the Committee on the Judiciary. United States
Senate, 102d Cong., 1st Sess. 44 (1991), 107 Stat. 2040 (December 3, 1993).
6/ 76 Star. 780 (1962).
7/ 98 Stat. 1585 (1984).
8/ FDA, New Drug
Evaluation Statistical Report 53 (October 1985) (FDA mean approval time of 26.9
months for new' molecular entities approved in 1984).
9/ Tufts Center for
the Study of Drug Development, Time From First Pharmacological Testing to New
Drug Approval. 1963-1997 (1998).f
10/ Mr. Alfred B. Engelberg makes an even
more inaccurate statement in his letter to Senator Hatch dated June 11, 1999,
where he states that five years of patent term extension was reserved for "drugs
which were first developed after the new law' was enacted." Initial
"development" of a drug occurs prior to pharmacological testing, and thus even
more drugs that received a full five years of patent term extension were under
development prior to enactment of the 1984 Act.
11/ 106 Stat. 4491 (1992).
The 1992 Act, which was limited to five years, was reauthorized for an
additional five years in the Food and Drug Administration Modernization Act of
1997, 111 Star. 2296, 2298 (1997).
12/ "Patent Extension
Hearing," note 5 supra, at 218.
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