Pharma's contentious inter partes reviews come under Supreme Court scrutiny

The Supreme Court is set to decide whether the contentious inter partes review process violates the Constitution.

As several blockbuster drugs have faced patent challenges in recent years, many top drugmakers have pulled no punches in their opposition to the U.S. Patent and Trademark Office's inter partes review process. Now, the issue is coming under Supreme Court scrutiny in a case that could have widespread implications for pharma. 

In Monday arguments, attorneys for Oil States Energy Services and Greene’s Energy Group clashed over whether the process violates the Constitution, according to SCOTUSblog. Critics, top drugmakers among them, say the process uses a legal standard that's more likely to invalidate patents than challenges argued in jury trials. 

The inter partes review system came to be as part of the America Invents Act and was intended to be a cheaper, easier alternative to lawsuits to strike flawed patents. Proponents of the process, including tech giant Apple, say it's appropriate for the federal agency to fix its own mistakes through IPRs, according to Bloomberg, but others say it's unconstitutional to strike down intellectual property outside of the courts.

RELATED: Allergan, author of the 'social contract,' stirs up hornet's nest with controversial IP deal

Naveen Modi and Igor Timofeyev, two partners at the law firm Paul Hastings LLP, attended the arguments Monday and said they believe the decision could be split based on the questioning.

"I think if you look at the questions from the Justices, many of them were comfortable with the IPR system and its safeguards," Timofeyev told FiercePharma. "Others have misgivings, some potential concerns, (and were) probing situations where the system would lead to a problematic outcome." 

The court's decision is expected around March or April, according to the partners. Modi said if the Supreme Court does find the IPR process unconstitutional, he "would expect Congress to step in and try to find a fix to the system."

Pharma companies—including Allergan in recent months—have expressed serious concerns that the process disadvantages patent holders and disrupts the balance struck by the Hatch-Waxman Act. IPR reviews are separate from patent challenges in federal courts.

RELATED: With new bill, Sen. McCaskill looks to end 'brazen' tribal licensing strategy Allergan started 

As industry watchers know, Allergan signed its controversial Restasis licensing deal with the Saint Regis Mohawk Tribe back in September to try and sidestep an IPR, sparking up instant controversy. In defending the deal, CEO Brent Saunders said his company did the IP transfer to defend against a "flawed" patent review system that amounts to a "double jeopardy." 

That argument didn't win over the company's critics, who ranged from patient advocates to lawmakers in Washington, D.C. Some members of Congress initiated an investigation, while Sen. Claire McCaskill introduced legislation to close the "brazen loophole."

Weighing in during that episode, a spokesperson for industry trade group PhRMA said "the threat of inter partes reviews, coupled with having to defend patents in multiple venues under different standards, creates significant business uncertainty for biopharmaceutical companies that rely on the assurance of their patents to justify long-term investments needed to discover new treatments and cures." 

The group's representative said that "PhRMA continues to support reforms to the IPR process that better protect the rights of legitimate patent holders and will foster innovation." An Allergan spokesperson added that "experts across the legal, biopharmaceutical and business communities have called on Congress to fix the flaws inherent within IPR."

RELATED: Bye-bye Bass? In the end, 'consumers pay,' he warns of thwarted patent challenges 

Even before the Allergan deal, the inter partes review process routinely grabbed pharma headlines because of the efforts of Kyle Bass. Bass and his Coalition for Affordable Drugs challenged several important patents for drugmakers, drawing a response from industry that the hedge funder was making money on the reviews by shorting pharma stocks.

Bass, for his part, maintained he was challenging the patents to fight high drug prices and patent abuses in pharma. But he came away unsuccessful in those challenges and wrote in an email to Bloomberg earlier this year that "Medicare and U.S. consumers pay the ultimate price for the evergreening of bad patents by the pharma cabal.”

Even though many drugmakers have expressed concerns with the IPR process, Financial Times reported early this month that they often use it against each other to try and invalidate patents from competitors. Pfizer, Merck, Novartis and Sanofi have used the process the most, in order, according to the publication.

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