SCOTUS backs biopharma's most-hated patent challenges

U.S. Supreme Court at night

Biopharma companies looking for relief from the new-style drug patent challenges will have to continue waiting. The U.S. Supreme Court on Monday upheld the Patent and Trademark Office’s ability to implement the inter partes review process that has opened the door to a slew of drug patent challenges.

The case itself involved a tech company rather than a drugmaker, but by validating the PTO’s discretion on the IPR process, it essentially means that the status quo will remain the status quo. The SCOTUS ruling also protects the patent office’s Patent Trial and Appeal Board (PTAB) from court challenges if it decides to take up an IPR petition.

And because proposed changes to inter partes review are off Congress’ current to-do list, any legislative effort will be on hold until the next Congress.

Meanwhile, some high-profile challenges are making their way through the PTAB’s review process. Just last month, the PTAB said it would review a key patent on AbbVie’s top-selling drug, Humira, which biosimilar developers are chasing hard. Biogen faces challenges to the patent protections on its multiple sclerosis blockbusters Tecfidera and Tysabri. And last year, the PTAB board nixed some patent protections on Novartis’ $2.5 billion MS med Gilenya; that decision could make Gilenya vulnerable to generic rivals in 2019.

The industry associations PhRMA and BIO back an IPR overhaul that would make the process more favorable to patent holders. In a statement on the ruling, BIO said the high court “missed an opportunity” to rein in the PTAB’s invalidation of “many patents under looser standards than would apply in federal court.”

But the Supreme Court’s opinion says those differing standards are irrelevant, at least for now. “[T]hough the application of one standard in inter partes review and another in district court proceedings may produce inconsistent outcomes, that structure is inherent to Congress’ regulatory design,” Justice Stephen Breyer wrote in the opinion, “and it is also consistent with past practice, as the patent system has long provided different tracks for the review and adjudication of patent claims."

Challengers to drug patents via inter partes review say the process benefits the public by putting “low quality” intellectual property protections in jeopardy. An analysis last year by the Congressional Budget Office concluded that scrapping IPR would stall some generic drugs on their way to market, costing federal health programs an additional $1.3 billion over 10 years.

One of the most active challengers, hedge fund executive Kyle Bass, has coupled his patent challenges with short sales on drug stocks. His IPR petitions have had mixed results at the PTAB, with the board refusing some requests for patent review and granting others. Bass’ Coalition for Affordable Drugs was behind the Tecfidera IPR challenge, for instance.

But drugmakers looking to sell knockoffs of branded meds have also used the IPR pathway. Boehringer Ingelheim has petitioned for review of several Humira patents, for instance.

BIO looked for a silver lining in the Supreme Court’s decision. “The Court also made clear in its opinion that the PTO or Congress could choose to change that standard to address the policy concerns that have been raised by amici, such as BIO,” the organization said in its statement. “We continue to urge the PTO and Congress to do just that.”

- see BIO’s statement
- check out the SCOTUS decision

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