SPEAKERS       CONTENTS       INSERTS    
 Page 1       TOP OF DOC
29–871 PDF

2006
A BILL TO AMEND TITLE 35, UNITED STATES CODE, TO CONFORM CERTAIN FILING PROVISIONS WITHIN THE PATENT AND TRADEMARK OFFICE

HEARING

BEFORE THE

SUBCOMMITTEE ON COURTS, THE INTERNET,
AND INTELLECTUAL PROPERTY

OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

ON
H.R. 5120

SEPTEMBER 14, 2006
 Page 2       PREV PAGE       TOP OF DOC

Serial No. 109–150

Printed for the use of the Committee on the Judiciary

Available via the World Wide Web: http://judiciary.house.gov

COMMITTEE ON THE JUDICIARY

F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois
HOWARD COBLE, North Carolina
LAMAR SMITH, Texas
ELTON GALLEGLY, California
BOB GOODLATTE, Virginia
STEVE CHABOT, Ohio
DANIEL E. LUNGREN, California
WILLIAM L. JENKINS, Tennessee
CHRIS CANNON, Utah
SPENCER BACHUS, Alabama
BOB INGLIS, South Carolina
JOHN N. HOSTETTLER, Indiana
MARK GREEN, Wisconsin
RIC KELLER, Florida
DARRELL ISSA, California
 Page 3       PREV PAGE       TOP OF DOC
JEFF FLAKE, Arizona
MIKE PENCE, Indiana
J. RANDY FORBES, Virginia
STEVE KING, Iowa
TOM FEENEY, Florida
TRENT FRANKS, Arizona
LOUIE GOHMERT, Texas

JOHN CONYERS, Jr., Michigan
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SÁNCHEZ, California
CHRIS VAN HOLLEN, Maryland
DEBBIE WASSERMAN SCHULTZ, Florida
 Page 4       PREV PAGE       TOP OF DOC

PHILIP G. KIKO, General Counsel-Chief of Staff
PERRY H. APELBAUM, Minority Chief Counsel

Subcommittee on Courts, the Internet, and Intellectual Property

LAMAR SMITH, Texas, Chairman
HENRY J. HYDE, Illinois
ELTON GALLEGLY, California
BOB GOODLATTE, Virginia
WILLIAM L. JENKINS, Tennessee
SPENCER BACHUS, Alabama
BOB INGLIS, South Carolina
RIC KELLER, Florida
DARRELL ISSA, California
CHRIS CANNON, Utah
MIKE PENCE, Indiana
J. RANDY FORBES, Virginia

HOWARD L. BERMAN, California
JOHN CONYERS, Jr., Michigan
RICK BOUCHER, Virginia
ZOE LOFGREN, California
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
 Page 5       PREV PAGE       TOP OF DOC
ROBERT WEXLER, Florida
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SÁNCHEZ, California

BLAINE MERRITT, Chief Counsel
DAVID WHITNEY, Counsel
JOE KEELEY, Counsel
RYAN VISCO, Counsel
SHANNA WINTERS, Minority Counsel

C O N T E N T S

SEPTEMBER 14, 2006

OPENING STATEMENT
    The Honorable Lamar Smith, a Representative in Congress from the State of Texas, and Chairman, Subcommittee on Courts, the Internet, and Intellectual Property

    The Honorable John Conyers, Jr., a Representative in Congress from the State of Michigan, and Member, Subcommittee on Courts, the Internet, and Intellectual Property

    The Honorable Howard L. Berman, a Representative in Congress from the State of California, and Ranking Member, Subcommittee on Courts, the Internet, and Intellectual Property
 Page 6       PREV PAGE       TOP OF DOC

    The Honorable William L. Jenkins, a Representative in Congress from the State of Tennessee, and Member, Subcommittee on Courts, the Internet, and Intellectual Property

WITNESSES

The Honorable Jon W. Dudas, Undersecretary of Commerce for Intellectual Property, Director of the U.S. Patent and Trademark Office
Oral Testimony
Prepared Statement

Mr. Clive Meanwell, Chief Executive Officer, The Medicines Company
Oral Testimony
Prepared Statement

Ms. Kathleen D. Jaeger, President and Chief Executive Officer, Generic Pharmaceutical Association
Oral Testimony
Prepared Statement

Mr. John R. Thomas, Professor of Law, Georgetown University Law Center
Oral Testimony
Prepared Statement

APPENDIX

 Page 7       PREV PAGE       TOP OF DOC
Material Submitted for the Hearing Record

    Statement of the Honorable Howard Berman, a Representative in Congress from the State of California, and Ranking Member, Subcommittee on Courts, the Internet, and Intellectual Property

    Statement of the Honorable Elton Gallegly, a Representative in Congress from the State of California, and Member, Subcommittee on Courts, the Internet, and Intellectual Property

    A letter to the Honorable Jonathan W. Dudas, Under Secretary for Intellectual Property and Director, U.S. Patent and Trademark Office (USPTO) from the Honorable Lamar Smith, a Representative in Congress from the State of Texas, and Chairman, Subcommittee on Courts, the Internet, and Intellectual Property, and the Honorable Howard Berman, a Representative in Congress from the State of California, and Ranking Member, Subcommittee on Courts, the Internet, and Intellectual Property

    A letter to the Honorable Lamar Smith, a Represetative in Congress from the State of Texas, and Chairman, Subcommittee on Courts, the Internet, and Intellectual Property in response to a letter requesting the United States Patent and Trademark Office (USPTO) analysis and assessment of H.R. 5120

    A letter to the Honorable Jon W. Dudas, Under Secretary for Intellectual Property and Director, U.S. Patent and Trademark Office (USPTO) from Jane A. Axelrad, Associate Director for Policy, Center from Drug Evaluation and Research, Department of Health & Human Services in regard to the March 24, 2003 letter from Karin Ferriter requesting FDA's assistance in preparing a response to a request for reconsideration in the application for patent term extension for U.S. Patent No. 5, 196, 404 filed by The Medicines Company
 Page 8       PREV PAGE       TOP OF DOC

    A paper on Critical Actions That Relate to The Medicines Company Application for patent Term Extension for U.S. Patent 5, 196, 404

    Requested submission from the Honorable William Jenkins, a Representative in Congress from the State of Tennessee; Letters from leading medical practitioners and consumer groups

    Letter from Lawrence Goffney

    Testimony from Thomas Schatz, President, Citizens Against Government Waste

A BILL TO AMEND TITLE 35, UNITED STATES CODE, TO CONFORM CERTAIN FILING PROVISIONS WITHIN THE PATENT AND TRADEMARK OFFICE

THURSDAY, SEPTEMBER 14, 2006

House of Representatives,
Subcommittee on Courts, the Internet,
and Intellectual Property,
Committee on the Judiciary,
Washington, DC.

    The Subcommittee met, pursuant to notice, at 11:14 a.m., in Room 2141, Rayburn House Office Building, the Honorable Lamar Smith (Chairman of the Subcommittee) presiding.
 Page 9       PREV PAGE       TOP OF DOC

    Mr. SMITH. The Subcommittee on Courts, the Internet, and Intellectual Property will come to order.

    I am going to recognize myself for an opening statement, then the Ranking Member of the full Judiciary Committee, Mr. Conyers, as well as Mr. Berman and as well as Mr. Jenkins, the author of the legislation on which we are having the hearing today.

    Thank you all for your interest. And we will proceed and then get to questions for our panelists as soon as we can.

    I will recognize myself for an opening statement.

    Today we begin an examination of H.R. 5120, a bill to amend title 35 of United States Code to conform certain filing provisions within the Patent and Trademark Office.

    This is an important hearing on a serious subject, and I look forward to the testimony of our witnesses.

    It is the tradition of our Subcommittee to ensure all stakeholders have an opportunity to be heard and have their concerns placed on the record. This is a critical step to take before we begin to consider what further steps, if any, may be appropriate.

    H.R. 5120 is a highly unusual bill. Its enactment will single out a specific company and their legal counsel for special consideration. I believe the proponents of the legislation have the burden to establish that a change in public law is necessary. At the same time, I want to compliment the company for its commitment to the regular legislative process.
 Page 10       PREV PAGE       TOP OF DOC

    And I appreciate Dr. Meanwell's willingness to respond to tough questions in a public forum, which I believe is necessary to assist the Members of the Subcommittee in understanding the circumstances that led this company and their counsel to this point.

    Their view is that the law is inflexible and, in their words, should be conformed to other provisions of the patent code that permit parties who have failed to meet statutory deadlines to be granted an extension. Further, they believe the public interest in spurring innovation and promoting public health is best served by providing for the retroactive application of such a change in the law in their case.

    Not unexpectedly, there are countervailing arguments. Opponents of this measure maintain there is no good reason the law requires amendment. They note that since this provision was first enacted more than two decades ago, only three of more than 700 applications have ever been denied in any part for having missed the 60-day filing deadline.

    Further, they assert there is substantial precedent in the Patent Act to support the view that no relief should be granted when certain statutory deadlines are not met and that relief should extend only to circumstances where it is objectively demonstrated that the failure to file was unavoidable rather than merely unintentional. In other words, they believe the proposed change would actually make this deadline inconsistent with other precedents in the Patent Act. This is just a preview of the various arguments that the Subcommittee Members will soon hear and need to weigh for themselves.

    That concludes my opening remarks. And the gentleman from Michigan, Mr. Conyers, is recognized for his.
 Page 11       PREV PAGE       TOP OF DOC

    Mr. CONYERS. I thank you, Chairman Smith. And I join you in welcoming all the witnesses: the Honorable Jon Dudas, a very dear friend of ours, Dr. Meanwell, and President Jaeger of Generic Pharmaceutical Association, and Professor Thomas.

    I wanted you to know as I head for the floor on a judiciary bill that is currently up for consideration that the proposal before us, legislation that would permit the Patent and Trademark Office to consider late applications for an extended term of patent protection or marketing exclusivity, currently if a patent owner files for an extension even 1 day late, then the PTO has no discretion to consider it.

    I understand that The Medicines Company faced this problem directly in 2002 when it sought patent term extension for its heart drug, Angiomax. If it was granted, the extension would have permitted the company to exclude competition to Angiomax for a longer period.

    The application for additional patent protection was due 60 days after the Food and Drug Administration approved the drug. But the application was filed on the 61st day. Because it has no discretion to review late filings, the PTO summarily rejected its consideration.

    Before us today is a proposal that would allow the PTO to consider the application. Contrary to how it has been portrayed, it would not automatically extend the term of exclusivity or automatically prevent competitors from entering the market. And in that regard, the bill appears equitable.

    And I look forward to returning to continue the discussion with these very able witnesses that are before us.
 Page 12       PREV PAGE       TOP OF DOC

    And I thank you for your courtesy, Chairman Smith.

    Mr. SMITH. Would the gentleman from Michigan yield to the gentleman from California, Mr. Berman, for his opening statement as well?

    Mr. CONYERS. Absolutely.

    Mr. BERMAN. Thank you, Mr. Chairman.

    And thank you, Mr. Ranking Member, for yielding.

    I appreciate scheduling this hearing on a bill giving the USPTO additional discretion to extend certain patent deadlines. While similar measures, bills that have specifically extended the Angiomax patent, have been attached to legislative vehicles in the past, I am glad that this issue is finally being reviewed by the Committee with jurisdiction over patent matters. It is important that this Subcommittee be able to analyze the impact of any changes this bill may make on the patent system.

    Patents are a cornerstone of innovation. The Constitution provides a limited period of time of protection in order to promote innovation. Therefore, the patent process provides the exclusive right for an invention for 17 to 20 years generating incentives for an inventor to continue to create after which the invention becomes available for public use.

    There is a delicate balance here: providing enough of an incentive to the inventor to spend the time, energy and money to create new inventions and on the other hand, the value of allowing the invention to be used by the public enabling others to develop new products or provide similar products for lower cost. Therefore, when considering the effect of allowing the PTO discretion to extend certain patent deadlines there is a natural tension between providing the flexibility to extend the deadline and maintaining a hard date for specific types of filings.
 Page 13       PREV PAGE       TOP OF DOC

    While providing greater elasticity may prevent Draconian results, does that come at the expense of stability in the market? There are to be other instances—there appears to be other instances where the PTO has discretion to extend deadlines. But the situation in this bill is designed to address is not one of those sections. Why? Is there something different about this type of filing that the PTO should not have discretion in this case?

    Unfortunately, the PTO, I am sorry to say, Jon, hasn't provided much guidance in its response to the letter from the Chairman and myself about the policy questions posed by this bill. So I look forward to this hearing to hear the witnesses discuss the policy implications of this bill on the patent system and possibly on Hatch-Waxman.

    Just to conclude, originally this legislation began as an effort to address one particular late filing of one patent. There has been no demonstrated need or request from any other patent owners, as far as I know, to provide discretion to the PTO for these types of filings. Moreover, from the way the bill has been written, it is clear this bill would affect the late filing of a particular company, which occurred about over 4 years ago. Some have even suggested that the better alternative to this bill is a private bill.

    However, this bill and this particular circumstance does raise some questions about why there are inconsistencies in the discretion afforded to the PTO to determine when filings are timely. I look forward to this opportunity to explore those issues.

    I yield back, Mr. Chairman.

 Page 14       PREV PAGE       TOP OF DOC
    Mr. SMITH. Thank you, Mr. Berman.

    The gentleman from Tennessee, Mr. Jenkins, is recognized for an opening statement.

    Mr. JENKINS. Thank you, Chairman Smith, for holding this hearing.

    And thank you, Mr. Berman, for your participation. I look forward to the views of our witnesses, like you, sir. And I am grateful for their appearance this morning.

    H.R. 5120 has drawn bipartisan sponsorship from 23 of our colleagues, including three Members of the full Judiciary Committee: Mr. Hyde, Mr. Delahunt, and Mr. Meehan. I introduced this measure because I believe it is both good patent policy and sound health care policy. It corrects an inequity in the patent law and will encourage important innovation in medical research, precisely the purpose that Congress sought to accomplish in enacting the Hatch-Waxman Act.

    In the course of this hearing, I hope that you will hear several examples of relief that is available for late payments, late filings and deficient filings. By enacting H.R. 5120 we are continuing to promote the basic purpose of Hatch-Waxman, and we are strengthening Hatch-Waxman. It is important to do this so that our nation will continue to lead the way in medical research and so that patients will not be denied promising new, innovative developments.

    Mr. Chairman, I am submitting letters from leading medical practitioners and consumer groups, including a letter from the Cleveland Clinic, the University of California at Los Angeles, and the Emory Health Care Center in Atlanta, Georgia, from across our country endorsing H.R. 5120 to include in the Committee report.
 Page 15       PREV PAGE       TOP OF DOC

    Their credentials and their views are impressive. They emphasize the health care advantages of this measure, particularly its effect on opening up new avenues of medical research to prevent and treat strokes.

    Mr. Chairman, I would like to ask unanimous consent to introduce these letters and that they be made a part of the record.

    Mr. SMITH. Okay. Without objection, those letters will be made a part of the record.

    [The letters follow in the Appendix]

    Mr. JENKINS. Thank you.

    H.R. 5120 is a narrowly tailored bill. It simply confers discretion on the patent office to consider an unintentionally late filed patent term restoration application submitted to the patent office within 5 days of the 60-day deadline in current law. It does not confer any substantive rights on any applicant but merely allows the applicant to present the facts surrounding the late filing to the patent office.

    The director of the patent office then has 30 days to rule on the petition. Honest mistakes should not cause irreparable hardship for innovators or patients. A few days unintentional late filing mistake at the patent office should not be a cause for blocking promising medical research that could lead to important health care advances.
 Page 16       PREV PAGE       TOP OF DOC

    Mr. Chairman, I appreciate all the efforts you and the Subcommittee have invested in preparing for this hearing. I hope that we can move as quickly as possible through the Committee process and proceed with the enactment of H.R. 5120. Thank you.

    Mr. SMITH. Thank you, Mr. Jenkins.

    And, without objection, other Members' opening statements will be made a part of the record, as well as a statement by Representative Elton Gallegly, a letter from Lawrence Goffney and testimony by Thomas Schatz, president of Citizens Against Government Waste.

    Mr. SMITH. Before I introduce our witnesses, I would like to ask you all to stand and be sworn in.

    [Witnesses sworn.]

    Thank you. Please be seated.

    Our first witness is Jon Dudas, who is the Undersecretary for Intellectual Property and Director of the United States Patent and Trademark Office. Mr. Dudas is the lead policy adviser to the Secretary of Commerce, the President of the United States and Administration agencies on intellectual property matters.

    As Director of the USPTO, he is responsible for administering the laws that relate to the issuance of patents and trademarks and day-to-day management of the agency's $1.7 billion budget and 8,000 employees.
 Page 17       PREV PAGE       TOP OF DOC

    Prior to joining the Administration, Mr. Dudas served 6 years as Counsel to this Subcommittee and as Staff Director and Deputy General Counsel to the Committee on the Judiciary. Mr. Dudas is a summa cum laude graduate of the University of Illinois where he earned a bachelor of science in finance. He is an honors law graduate from the University of Chicago.

    Our second witness is Clive Meanwell, who is the Chairman and Chief Executive Officer of The Medicines Company, a pharmaceutical company based in Parsippany, New Jersey that specializes in acute care hospital medicines. In 1996, Dr. Meanwell co-founded TMC to develop medicines for specialized patient populations.

    TMC's only product is marketed under the name Angiomax and is used to prevent blood clots in patients from cardiovascular disease. Dr. Meanwell oversaw the acquisition, development and successful regulatory review of Angiomax, which culminated with the Food and Drug Administration's approval in 2000. Dr. Meanwell holds both an M.D. and a Ph.D. from the University of Birmingham in the United Kingdom.

    Our next witness is Kathleen D. Jaeger, who has served as the President and CEO of the Generic Pharmaceutical Association since 2002. Before joining that organization, Ms. Jaeger was a partner in the Washington office of several law firms where she developed a specialty in food and drug practice. In addition to earning her J.D. from Catholic University Law School, Ms. Jaeger also has a bachelor of science in pharmacy and a minor in chemistry, which she earned at the University of Rhode Island.

    Our final witness is John R. Thomas, who is a professor of law at the Georgetown University Law Center. Professor Thomas formerly served as an associate or visiting professor on the faculties of George Washington University, Cornell Law School and the University of Tokyo. Professor Thomas has written extensively on intellectual property law co-authoring both a patent law case book and a one-volume treatise on intellectual property.
 Page 18       PREV PAGE       TOP OF DOC

    Welcome to you all.

    As you know, we have your entire written statements, which, without objection, will be made a part of the record. But please limit your testimony to 5 minutes.

    And, Mr. Dudas, we will begin with you.

TESTIMONY OF JON DUDAS, UNDERSECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY, DIRECTOR OF THE U.S. PATENT AND TRADEMARK OFFICE

    Mr. DUDAS. Thank you, Mr. Chairman, Ranking Member Berman, Congressman Jenkins and Congressmen Meehan and Delahunt, for inviting me to testify today on H.R. 5120.

    This bill would amend patent law to permit the USPTO to consider certain late-filed applications for patent extension under Hatch-Waxman if such applications are filed no later than 5 days after the current 60-day time period and applicants file a petition showing that the delay was unintentional.

    Mr. Chairman, the USPTO does not at this point have a position on this bill. Certainly, there could be some benefits and at least one direct beneficiary of providing the flexibility proposed in the bill. But there are also benefits to maintaining a certainty inherent in the current law.
 Page 19       PREV PAGE       TOP OF DOC

    While we have a sense of the potential impact on the possible direct beneficiary to this legislation and while we know very well our own abilities to enforce the law, we do not yet have a full sense of the impact on other interested parties. Therefore, I commend you for holding this hearing to help determine the potential impact and to otherwise examine the possible merits and limitations of this proposal.

    Although I am unable to give you a clear reading of support or opposition, I would like to share with you a number of observations that may be helpful to the Subcommittee as it reviews the bill.

    First, this type of legislation is not without precedent. As indicated in my written statement, current patent and trademark law provides the USPTO with discretionary authority to accept late-filed submissions in a number of situations.

    Also, while we currently do not believe the legislation requires additional restrictions or limitations in order to ensure a neutral application if enacted, further review of the issue may be helpful as the legislative process continues.

    In terms of application, we are aware of one current application for patent term extension that would immediately benefit from enactment of the bill. You will be hearing from the owner of that patent shortly. But our review of the over 700 applications for patent term extensions filed since 1984 indicates that one other application filed 5 days late may have benefited from this bill if it had been in effect.

 Page 20       PREV PAGE       TOP OF DOC
    So after a review of 700 applications since 1984, there are a total of four patent term extension requests that were over 60 days, two that were within 65 days but older than 60 days and one that is currently pending.

    I should note that it is not unprecedented for newly enacted patent legislation to apply to issued patents and pending applications. But prospective or retrospective discretionary authority as proposed in this bill should involve a careful balancing of all relevant interests involved. Again, we are pleased that the Subcommittee is reviewing input with an eye toward that balancing.

    Mr. Chairman, if granted the authority proposed in the bill, I would not foresee any implementation problems at the USPTO. The USPTO would, of course, follow the policies reflected in our administration of areas currently subject to discretionary review of delayed filings.

    Mr. Chairman, in closing I want to thank you, Ranking Member Berman, and the Members of this Subcommittee for your continuing and strong support for the USPTO operations and for your efforts to maintain and improve our system of intellectual property protection and enforcement. And I look forward to answering your questions.

    [The prepared statement of Mr. Dudas follows:]

PREPARED STATEMENT OF THE HONORABLE JON W. DUDAS

    Chairman Smith, Ranking Member Berman, and Members of the Subcommittee:
 Page 21       PREV PAGE       TOP OF DOC

    Thank you for inviting me to testify today on H.R. 5120, a bill ''to amend title 35, United States Code, to conform certain filing provisions within the Patent and Trademark Office.''

    The bill would amend patent law to permit the USPTO to consider certain late-filed applications for patent extension under section 156 of title 35 if such applications are filed not later than five days after the current 60-day time period and the applicants file a petition that shows that the delay in filing the application was unintentional.

    Mr. Chairman, as indicated in our recent letters to you and Ranking Member Berman, the United States Patent and Trademark Office (USPTO) does not at this time have a position on this proposed legislation.

    While there could be some benefits, and at least one direct beneficiary, of providing the type of additional flexibility provided by the proposal, there are also benefits to maintaining the certainty inherent in the current law in this area.

    While we have a sense of the potential impacts on the possible direct beneficiary to this legislation, we do not yet have a full sense of the impact on others in the invention, manufacturing, consumer, and intellectual property communities.

    Accordingly, we commend you for holding this hearing to help determine the potential impact on all interested parties and to otherwise examine the possible merits and limitations of the proposal.
 Page 22       PREV PAGE       TOP OF DOC

    I am pleased to share with you a number of our observations that may be helpful as the Subcommittee reviews the bill.

PRECEDENT

    This type of legislation is not without precedent. Currently, patent laws provide the USPTO with discretionary authority to accept late-filed submissions in a number of situations, including: payment of maintenance fees (35 USC §41(c)(1)); abandonment of applications (35 USC §133); and payment of issue fees (35 USC §151). The trademark laws have similar language, for example, regarding timely filing of a verified statement of use (15 USC §1051(d)(4)) and abandonment of an application for failure to reply or amend (15 USC §1062(b)).

    Similarly, while we currently do not believe the legislation requires additional restrictions or limitations in order to ensure neutral application if enacted, further exploration of the issue may be informative as the legislative process continues.

PREVIOUS APPLICANTS THAT WOULD BENEFIT FROM ENACTMENT

    We are aware of one current application for patent term extension that would immediately benefit from enactment of the bill. That application is related to patent number 5,196,404 owned by the company represented at the table here today. More generally, a review of our records indicates that, of the over 700 applications for patent term extension filed since 1984, three other applications were not granted due, at least in part, to timeliness issues. One of these applications was filed within 65 days of the ''approval date,'' and thus may have been eligible for a petition to have the delay excused, if the proposed provision had been in effect.
 Page 23       PREV PAGE       TOP OF DOC

PROSPECTIVE VS. RETROSPECTIVE

    It is not unprecedented for newly enacted patent legislation to apply to issued patents and pending applications. That fact noted, prospective or retrospective discretionary authority, as proposed in the bill, would have to involve a careful balancing of all relevant interests involved. We are unable to make a particular recommendation in this regard because we are unaware of any substantive input by interested parties, other than the 404 patent owner.

EXERCISE OF DISCRETION

    With respect to the circumstances under which we would expect to exercise discretion under this bill, we believe it is premature to attempt to list or identify particular examples at this point. We would, of course, if granted the subject authority, be likely to follow the policies reflected in the administration of areas currently subject to discretionary review of delayed filings.

PATENT REFORM

    Although our survey of patent term extension applications reveals few issues related to timeliness, this legislation would be of use to at least one current applicant and could be utilized by future applicants who miss the patent term extension application deadline due to unintentional delay. As noted above, the discretionary authority contemplated by H.R. 5120 is similar to other deadline-extending provisions in patent law.
 Page 24       PREV PAGE       TOP OF DOC

    As indicated in testimony before your Subcommittee in April, the USPTO supports enactment of two patent proposals pending before the Subcommittee that are widely supported throughout the intellectual property community, namely, a post-grant review procedure and a new procedure for submission of prior art. We continue to review other proposals before the Subcommittee.

    Thank you.

    Mr. SMITH. Thank you, Mr. Dudas.

    Dr. Meanwell.

TESTIMONY OF CLIVE MEANWELL, CHIEF EXECUTIVE OFFICER, THE MEDICINES COMPANY

    Mr. MEANWELL. Thank you, Mr. Chairman and Members of the Committee. I am pleased to be here and appreciate the Committee's invitation to testify. My name is Clive Meanwell. I come before you today both as a physician and as the chairman and CEO of The Medicines Company, a young company devoted to developing medicines for acutely ill patients.

    The subject of today's hearing may seem dry and technical, but, as you know, it is actually about ensuring the potential to save lives and reduce health care costs. Our company serves as a poster child for why this legislation is needed. Relying on incentives in the patent law, we spent more than $200 million developing Angiomax, an intravenous blood thinner that has proven to be effective and safe for patients while actually saving hospitals an average of $400 per use compared with more established therapies.
 Page 25       PREV PAGE       TOP OF DOC

    Once FDA approved Angiomax, we applied for patent term restoration to recover time lost while seeking approval. The 60-day deadline was mistaken for a 2-month limit, and the application was filed 1 day late. Unlike most other patent provisions, current law gives the PTO no discretion to accept a late filing. So our application was denied.

    This drastic penalty took away 4 1/2 years of patent rights we had earned and cut off our ability to invest tens of millions of dollars more in research to confirm promising new uses of Angiomax in open heart surgery and stroke.

    Mr. Chairman, this is a good bill for three principle reasons.

    First, the existing deadline provision imposes hugely disproportionate penalty like having your home repossessed when you are a day late with the last mortgage payment. Deadlines are important, but most patent law provisions like Federal court rules recognize that human beings make mistakes and that catastrophic consequences should not flow from them.

    Second, this legislation is consistent with most patent laws and regulations, which allow minor mistakes to be excused.

    Third, the bill could benefit millions of seriously ill patients. Only companies with a period of exclusivity can make the large-scale investments necessary to develop new uses of the drug beyond the scope of its initial FDA approval.

    Some critics suggest this bill will disrupt the decision making process of generic manufacturers who pursue their own applications on relatively tight timelines. I am on the board of a company that sells generics, and I know how important these tight timelines are. But they have nothing to do with the patent term restoration—with when patent term restoration applications are filed. The only dates really important to a generic firm are the date of FDA approval and the date a patent expires.
 Page 26       PREV PAGE       TOP OF DOC

    Similarly, the claim that this bill might interfere with settled expectations is a fallacy. There are no settled expectations 60 days after a drug has been approved, nor would the time added by this bill, a maximum of 35 days, have the slightest impact on a generic's business plans. It is the pioneers' settled expectations that get blown to bits if its patent rights are lost over a minor filing error.

    It is also suggested that since the filing of Hatch-Waxman application triggers an elaborate sequence for calculating the registration period—the restoration period, ensuring that this triggering event happens in a seasonable manner is somehow important. But calculating the restoration term typically takes 3 years after the application is filed. So the few extra days this bill could add at the start of the process are just trivial.

    This bill will not—and let me repeat that—will not upset the delicate balance that Hatch-Waxman strikes between innovators and generics. In fact, it preserves the balance. Generics retain all their rights. And the patent owners get nothing more than the restoration period that they already earned under Hatch-Waxman. Without this bill, however, an innovator who makes an unintentional filing mistake loses what Congress intended to provide: an opportunity to recover time lost during FDA approval.

    I just don't believe that Congress intended to throw this careful balance overboard in the event that an innovator trips on their way to the patent office. Some say this is a single company bill. But that is a red herring. This bill would fix a legal pothole for all other patent holders and could potentially help millions of patients who will benefit from new drugs and new uses of drugs.
 Page 27       PREV PAGE       TOP OF DOC

    In summary, this bill enhances the fundamental bargain struck by Hatch-Waxman. It removes a Draconian penalty for minor error. It is consistent with current law. And it will potentially improve the lives of millions of needy patients.

    Thank you very much.

    [The prepared statement of Mr. Meanwell follows:]

PREPARED STATEMENT OF CLIVE MEANWELL

    Thank you Mr. Chairman and Members of the Committee.

    My name is Clive Meanwell, and I am the Chairman and Chief Executive Officer of The Medicines Company, a young pharmaceutical company based in New Jersey where we develop acute care medicines for hospital patients, a small segment of the market often considered unattractive by big drug companies. I am also a doctor. And I am pleased to be here and appreciate the Committee's invitation to testify.

    Mr. Chairman, the subject of today's hearing—filing deadlines for certain patent applications—might seem like a dry and technical one, but it is actually about creating the potential to save lives. It is about amending a provision of the Hatch-Waxman Act that, if left unchanged, will right now kill the further development of a drug that is helping thousands of heart disease patients every month and has the promise to help hundreds of thousands more patients with life-threatening cardiovascular conditions, including stroke victims. Beyond our case, if the provision is left unchanged, it will also put at risk the development of other drugs that will save lives in the future.
 Page 28       PREV PAGE       TOP OF DOC

    The purpose of this hearing, at least as I see it, is to weigh the distinct benefit of the proposed filing amendment against whatever benefit there may be to retaining the existing, inflexible provision. In my view, what H.R. 5120 does, in a nutshell, is to preserve the fundamentally sound bargain Congress struck in the Hatch-Waxman Act between encouraging innovation and bringing generic drugs to market. In preserving Hatch-Waxman's incentive to develop new drugs and new uses for drugs—without curtailing provisions that benefit generic manufacturers—this bill also stands solidly on the side of patients.

BACKGROUND

    To date, The Medicines Company's only marketed product is a new blood thinning drug called Angiomax. The FDA has already approved Angiomax for use in angioplasty—a procedure often used to treat coronary artery disease, including heart attacks. Catheters, inflatable balloons, and stents are used to open up a coronary artery that is narrowed or blocked by arteriosclerosis or blood clots. Approximately one million angioplasties are performed each year in the United States, and in this setting Angiomax has been shown effective and safe, and is also associated with a significant reduction in bleeding complications compared to other treatments. More than 250,000 patients benefited from Angiomax last year alone. These positive results have been seen in both clinical trials and real-world use, in many different groups of patients, from diverse ethnic backgrounds, with a range of risk factors and a variety of life-threatening coronary artery disease states. And Angiomax—a product of high technology research—is particularly useful for people who cannot tolerate heparin, an extract of pig intestines discovered in 1916, that until the last decade was the only injectable anticoagulant available.
 Page 29       PREV PAGE       TOP OF DOC

    In addition to its established effectiveness in coronary angioplasty, Angiomax may also have important uses in patients undergoing cardiac surgery, those with pre-heart attacks and those with strokes. Each of these conditions represents enormous public health problems in the United States today. Coronary artery disease and stroke combine to kill well over a half million Americans each year—more than the deaths caused by all cancers combined, and therefore by far the leading cause of death in this country. The initial promise of Angiomax in these new research areas is exciting. For example, results of an Angiomax pilot trial in open heart surgery were reported in the Annals of Thoracic Surgery in 2004, where an expert commentator stated, ''bivalirudin [i.e., Angiomax] could be the 'holy grail' eagerly sought by cardiac surgeons and anesthesiologists (and hematologists). . . .'' Ann. Thorac. Surg. 2004; 77:925–31. In another example, early studies involving carotid artery stenting—a procedure used to unblock the arteries in the neck that can throw off blood clots to the brain—have shown that Angiomax can reduce the risks of bleeding and effectively prevent embolic strokes during this delicate life-saving procedure.

    We have already committed, and hope to continue committing, substantial resources to research and development of these significant new uses for Angiomax. And that brings me to the point of my testimony today.

    Our company serves, I am sorry to say, as a poster child for why this bill is needed.

    In developing Angiomax, we did what research-based biotech and pharmaceutical companies regularly do in responding to the incentives of the U.S. patent system: we spent large amounts of time and money to bring a new product to market. In total, development of Angiomax for angioplasty took eight years and cost more than $200 million. We anticipate that the clinical trials needed to establish the safety and effectiveness of Angiomax in patients for cardiac surgery and for stroke will take at least 4 more years and cost tens of millions of dollars. These investments are not viable without the patent exclusivity provided by the Hatch-Waxman Act.
 Page 30       PREV PAGE       TOP OF DOC

    As you know, the U.S. patent law framework—including Hatch-Waxman—is designed to provide incentives for the investment of such time and money. Hatch-Waxman, of course, enables research-based pharmaceutical companies to recoup some of the time spent in the FDA approval process so that the patent exclusivity period is not unfairly curtailed. Often, it is the possibility of qualifying for Hatch-Waxman patent term restoration that provides innovators with the incentive to invest in drugs that no one else wants to develop. Moreover, once such restoration has been granted, innovators have added incentive to pursue further research on drugs to broaden their approved use, an important step in the development process, since it is not unusual for FDA to grant a narrow approval in the first instance.

    The FDA approved Angiomax for the narrow initial use in coronary angioplasty on December 15, 2000. Under the Hatch-Waxman formula, we calculated that we were entitled to a restoration period of approximately 4 1/2 years. We quickly set about preparing our application for patent restoration, completing a first draft of the 100-plus page application package by the first week of January 2001 and then working steadily along with our counsel on further drafts. But then human error intervened. The current filing provision of Hatch-Waxman requires an application to be filed within 60 days of FDA's approval of the drug in question. Unfortunately, the 60-day requirement was evidently mistaken for a two-month requirement, and our patent restoration application was filed on February 14, 2001, within a two-month window, but one day late for the actual 60-day deadline. Unlike other filing provisions of the patent laws, this provision of Hatch-Waxman does not allow for any discretion to accept late applications, no matter the reason and no matter how close to the actual deadline. So, the Patent and Trademark Office denied the petition as untimely. We filed a motion for reconsideration which is still pending, but the PTO lacks the authority to grant it.
 Page 31       PREV PAGE       TOP OF DOC

    So, because of an inadvertent administrative error, The Medicines Company—and the patients who could be helped by Angiomax—are facing a drastic and disproportionate penalty. The basis for a $200 million investment that powered development of a life-saving drug in coronary angioplasty has been completely cut out from under us. And our hope of extending the benefit of Angiomax into critically important new areas is in tatters. Without patent restoration, our patent will expire in 2010, not nearly enough time to make possible the investment of years and tens of millions of dollars needed to confirm the efficacy of Angiomax in treating stroke and serious heart disease to the satisfaction of ourselves, the FDA and medical practitioners. And others who make accidental filing mistakes in the future, may face a similar predicament.

    Making the consequences of a minor mistake so catastrophic, both to a patent owner and the public, simply cannot be good or wise public policy.

H.R. 5120-WEIGHING THE BENEFITS

    H.R. 5120 is a modest bill that would correct this unduly harsh result for us and for any other innovators who make the same mistake. The bill would not give a patent owner anything other than what it has already earned under the Hatch-Waxman system—a credit for the portion of a patent term effectively lost while seeking FDA approval. The bill would not, by its own terms, grant patent term restoration. It would simply give the PTO authority to accept an application that was filed late on account of an unintentional error.

    Mr. Chairman, I think a reasoned analysis of the potential costs and benefits of this legislation argues powerfully in its favor. Let me begin with the benefits of modifying the existing deadline provision.
 Page 32       PREV PAGE       TOP OF DOC

    First, the effect of the existing provision is like having your home repossessed for making your mortgage payment a day late—a completely disproportionate punishment for a minor, administrative mistake. As a matter of wise public policy, this does not make sense. Years of highly valuable, hard earned patent rights—in our case more than a third of our total patent period—should not be forfeited on account of a minor clerical error.

    Second, this legislation is entirely consistent with typical patent law and practice and supports the purpose of Hatch-Waxman. Recognizing the obvious importance of patent rights and the national interest in promoting pharmaceutical innovation, the great majority of relevant patent laws and regulations actually do give the PTO discretion to excuse inadvertent mistakes. For example: if an applicant files an incomplete application for patent term restoration, the PTO can grant up to two extra months to correct the errors in the application. This is not an isolated example. There are more than 30 such examples where the PTO has the authority to excuse errors that could otherwise deprive an applicant of its rights. We have submitted a memorandum detailing these examples to the Committee. Thus, the rigid statutory 60-day deadline, allowing PTO no discretion to excuse an inadvertent error is, in fact, an anomaly, which this bill would rightly correct. Moreover, by preventing the automatic forfeit of years of patent protection for minor clerical errors, the bill supports an important purpose of the Hatch-Waxman system—to make sure patent owners have an opportunity to recover the portion of their exclusivity period that would otherwise be lost while awaiting FDA approval.

    Third, this bill would potentially benefit millions of seriously ill patients. Only a company that can assure itself of a significant period of exclusivity will take the risks and make the substantial investment necessary to obtain the approval of new uses of a drug beyond the scope of its initial FDA approval. In our case, no generic manufacturer would do what we are prepared to do—invest years and tens of millions of dollars to test promising new uses of Angiomax for heart disease and stroke—because the manufacturer would have no financial incentive to do so. If the initial promise we have seen for such applications is realized, Angiomax could potentially provide vital help to hundreds of thousands of seriously ill patients. And what is true for us will be true for others in the future. So this is an important, potentially life-saving bill for patients.
 Page 33       PREV PAGE       TOP OF DOC

    Now, I understand that concerns have also been raised about this bill, but they do not, individually or together, begin to measure up to the bill's substantial benefits.

    Settled expectations/certainty. First, it has been said that H.R. 5120 might interfere with settled expectations about when a drug would come off patent, and that there are legitimate benefits to maintaining the certainty inherent in current law. In principle, there are of course benefits to certainty in laws. But the interest of ''settled expectations'' is more effectively served by this bill than by the status quo.

    The fact that a patent owner might get an additional 5 days to file a patent restoration application, and that the PTO could take 30 days to decide whether to grant this additional time, will not have the slightest impact on the business plans a generic manufacturer has or has not made to enter a new market. The truth is that neither generics manufacturers nor anyone else can know what the duration of a possible patent term restoration period might be until the proposed patent term extension is published for public comment, often years after the application is filed. That is the first notice that a generic manufacturer is likely to rely on in terms of its own planning, and this bill would have no impact on the content or timing of such notice.

    I am very sympathetic to the value of generics companies in our healthcare system—indeed I sit on the board of directors of one, and I am proud of what we do there. But the claimed disturbance to certainty and settled expectations entailed in H.R. 5120 would not even amount to a ripple upon the water for a generic firm.

 Page 34       PREV PAGE       TOP OF DOC
    By contrast, the settled business expectations that are obliterated are those of a patent holder that devises its business and investment strategy in reliance on the opportunity for Hatch-Waxman restoration, if those rights are lost on account of a minor filing error.

    The delicate balance. Second, some have said that enacting this bill would upset the delicate balance in Hatch-Waxman between (a) spurring innovation by assuring that a patent holder retains its exclusivity rights despite the years it takes to get FDA approval, and (b) allowing generic manufacturers to produce cheaper drugs. I'm neither a lawyer nor a legislator, but it seems to me that the ''balance'' argument cuts in favor of H.R. 5120, not against it.

    The Hatch-Waxman balance was premised, as I understand it, on the following five elements: first, a generic manufacturer can study a drug during the patent term without infringing the patent; second, a generic manufacturer can rely upon the investment and testing done by the innovator, rather than incurring the time and expense required to test the drug itself; third, a generic manufacturer who files an ANDA (Abbreviated New Drug Application) successfully challenging an existing patent is eligible for a six-month period of marketing exclusivity; and fourth, generic manufacturers benefit from the five-year limit on the patent restoration term and the 14-year cap on the overall patent term; while, fifth, the innovator is provided an incentive—through the grant of patent term restoration—to undertake the risk, expense, and delay of drug testing and FDA approval.

    Under H.R. 5120, this balance is fully preserved. Generic manufacturers would retain all of the benefits I just described—study during patent term, benefiting from others' R&D investments, ANDA opportunity, and limited patent terms—and the innovator would retain its benefit of term restoration in exchange for conducting clinical testing. Without this bill, however, an innovator who makes a minor, inadvertent filing error loses its entire Hatch-Waxman benefit—the opportunity to seek the patent term restoration that was already earned.
 Page 35       PREV PAGE       TOP OF DOC

    I simply cannot believe that, as Congress constructed this careful balance, it meant to throw it overboard in the event that the innovator tripped on the way to the Patent Office. That was manifestly not part of the bargain Congress intended to strike.

    Deadlines. Third, some say simply that 60 days means 60 days, full stop. I understand the importance of deadlines, and I understand that penalties are an important way to enforce deadlines. But, the problem here is that the punishment does not remotely fit the crime. As I have noted, the PTO has extensive discretion to extend deadlines in most situations encountered in patent examinations. And I understand that a similar rule applies in federal civil litigation, where the relevant rule (6(b)) gives judges broad discretion to extend a deadline or permit a filing ''where the failure to act was the result of excusable neglect.'' The flexibility found in the patent law and the rules of civil procedure is built on a fundamental and simple recognition—that people are human and sometimes make inadvertent mistakes, and thus draconian consequences ought not to flow from such errors. An argument that comes down to the claim that a rule is a rule and should not be changed no matter how inappropriate its effect seems to me unworthy of this great legislative body. The PTO, of course, cannot change such a rule in a statute, but Congress can if it concludes, as a matter of policy, that a wise amendment is available. I think H.R. 5120 constitutes just such an amendment.

    Single company. Fourth, the notion that this is just a bill to help one company is a red herring. Of course, our company would potentially be helped by the bill, since the PTO would then have the discretion to accept our filing and consider our application on the merits if it so chose. But, as the PTO has noted, others in the past have had timeliness problems with regard to Hatch-Waxman filings, and, because people will always make mistakes, others will have this problem in the future. Our company is the one that has stumbled, inadvertently, into this legal pothole. But that does not change the reality that the pothole ought to be fixed. Most laws passed by Congress benefit some companies and disadvantage others—that is just a fact of life. If there is any difference here, it is that most of the beneficiaries of this law will be found in the future and no one is likely to be disadvantaged.
 Page 36       PREV PAGE       TOP OF DOC

    Going to court. Finally, some have said to me that we should just file a lawsuit rather than advocating an amendment to Hatch-Waxman. But that course of action would fail in fundamental ways that I care about a great deal. First, there is a bona fide public policy problem here. This really is not just one company's concern. The immense disproportion between a relatively trivial mistake and the enormous consequences that flow from it is just not right—not for us and not for any other companies that follow in our wake.

    In addition, I care deeply about pursuing the promise of Angiomax to heart and stroke applications, which as I have explained, we will not be able to do absent patent term restoration. As I said at the outset, I am not just a businessman, I am also a doctor. I have made a lifelong commitment to improve patient care, and I would hate to let that promise go unexplored. Money that we might recover in a lawsuit would be useful to the company, but it would not save a single life. So that is not the answer to this problem even for us, much less for future patent owners.

CONCLUSION

    In summary, this is a small but important piece of legislation. I think the answer to the question I posed at the start of my of my testimony—whether the benefits of the bill outweigh the benefits of the status quo—is clear. H.R. 5120 would provide palpable benefits both to innovators and to patients in a manner that is fully consistent with patent law and practice. The only harms identified—a negligible effect on certainty and the loss of an unintended, unplanned and unearned windfall for generic manufacturers—in my judgment are definitively outweighed by those benefits.
 Page 37       PREV PAGE       TOP OF DOC

    Mr. Chairman, I have been impressed by the thorough and diligent manner in which this Subcommittee has carried on its work. I hope that, with a single-minded focus on the public interest, the Subcommittee will see fit to move the bill forward toward ultimate enactment.

    Thank you very much and I look forward to your questions.

    Mr. SMITH. Thank you, Dr. Meanwell.

    Ms. Jaeger.

TESTIMONY OF KATHLEEN JAEGER, PRESIDENT AND CHIEF EXECUTIVE OFFICER, GENERIC PHARMACEUTICAL ASSOCIATION

    Ms. JAEGER. Chairman Smith, Ranking Member Berman and Members of this Committee, my name is Kathleen Jaeger, and I am the president and CEO of the Generic Pharmaceutical Association. On behalf of GPhA and our 130 members, I want to thank you for convening this hearing and allowing GPhA to express its views on H.R. 5120.

    Mr. Chairman and Members of this Committee, what we are essentially discussing here this morning is playing by the rules and whether Congress is willing to turn its back on the rules because one company decided it just didn't want to play by those rules.

    The fact is that Congress established specific criteria in both title 1 and title 2 of the Hatch-Waxman amendments on how brand and generic pharmaceutical companies should operate when in the Hatch-Waxman system, including how and when a brand company could apply for a patent term extension, or a PTE.
 Page 38       PREV PAGE       TOP OF DOC

    Congress worked hard to ensure that they established a system that addressed two competing yet equally important goals: encouraging innovation and expediting the public's access to more affordable generic medicine. The system was designed to foster both goals, and a process was put in place that hundreds of companies have been following since 1984.

    As with any system, the Hatch-Waxman system is replete with rules and deadlines. And they need to be followed to achieve these important public health goals. In the case of The Medicines Company, it simply chose not to follow the rules that says there is a deadline for submitting the PTE application. And now it is asking for a change of the rules because it didn't follow them.

    Mr. Chairman, that is simply not the way the system works. We all know the rules, and we all know that if we don't play by them we could be benched, we could be penalized or lose an extraordinary opportunity.

    Congress cannot create a system where if a company misses a deadline it can come running to Congress to fix it. If that was the case, I daresay this Committee would have an even busier hearing calendar than it does now.

    For example, several brand companies have lost the opportunity to secure a 30-month automatic stay under title 1 of Hatch-Waxman because the brand companies failed to file a lawsuit against a generic patent challenger within the statutory mandated 45-day deadline.

    Likewise on our side of the industry, a generic company is eligible for 180 days of generic exclusivity provided that among other things, the company is the first to file a generic application with FDA that contains a paragraph four patent challenge. If another company files 1 day after the first generic company filed its application, that subsequent firm gets nothing because those are the rules.
 Page 39       PREV PAGE       TOP OF DOC

    If Congress approves this legislation, rules go out the window. You would basically be saying that the deadlines don't mean anything. Under this legislation, the PTO would be given a discretion to accept a P.T. application filed up to 5 days after expiration of statutory deadline. And by its terms, this bill would have the practical effect of automatically extending a deadline to 65 days.

    This extension not only undermines the intent of Congress, it ultimately delays the ability of more affordable generic drugs to be brought to consumers. And this Committee needs to ask itself what happens when some other company misses the new deadline and files on day 66. Do we extend the deadline again? And what are the consequences to the health care system when several of the Hatch-Waxman system deadlines get extended and the system unravels?

    Now, this legislation has been labeled, ''Sorry I am Late, the Dog Ate My Homework Act,'' by Citizens Against Government Waste. While this label is quite amusing, there is nothing funny about the consequences of this legislation. It isn't as simple as saying my dog ate my homework.

    This is a major change in the law with enormous negative implications, a change that would offset the delicate balance Congress created under the Hatch-Waxman Act between the brand and generic pharmaceutical companies. That balance has stimulated pharmaceutical innovation while ensuring that consumers are able to receive safe, effective and affordable medicines in a timely manner.

    In the end, statutory deadlines have meaning. They have consequences. Allowing 5 extra days to file a patent term extension application renders that deadline meaningless and treats certain patentees differently than everyone else who respects statutory deadlines. And all to the benefit of one company who by its own inactions failed to file a simple form within the statutory timeframe.
 Page 40       PREV PAGE       TOP OF DOC

    Mr. Chairman and Members of this Committee, we thank you for giving GPHA the opportunity to present our concerns about this legislation. This legislation opens a Pandora's Box that simply should not be opened because one company didn't get its paperwork done on time. Thank you.

    [The prepared statement of Ms. Jaeger follows:]

PREPARED STATEMENT OF KATHLEEN JAEGER

[Note: Image(s) not available in this format. See PDF version of this file for complete hearing record.]

    Mr. SMITH. Thank you, Ms. Jaeger.

    Professor Thomas.

TESTIMONY OF JOHN THOMAS, PROFESSOR OF LAW, GEORGETOWN UNIVERSITY LAW CENTER

    Mr. THOMAS. Thank you, Mr. Chairman and other distinguished Members of the Subcommittee. I am pleased to testify today on my personal behalf. My views are my own rather than those of Georgetown University or other institutions with which I am affiliated.

    The Hatch-Waxman Act represents an effort to refine within the pharmaceutical industry the central problem of any intellectual property regime: encouraging the labors that lead to innovation on one hand and disseminating the fruits of those labors on the other. Thus the Hatch-Waxman Act created an expedited generic marketing approval protocol, but also called for term extensions for patents on approved drugs.
 Page 41       PREV PAGE       TOP OF DOC

    Patent term extension is unquestionably a fundamental part of the Hatch-Waxman Act, a statute that for all its perceived flaws has been highly successful in both encouraging the generic drug industry and promoting the discovery and development of new drugs by brand name firms.

    As the Committee considers modifications to the 60-day period provided by section 156, the term extension statute, a few basic subjects and points may be worthy of review.

    First, the Federal circuit has long interpreted the 60-day deadline strictly. Its 1989 decision in Unimed v. Quigg held that an NDA holder was not entitled to patent term extension even though it filed promptly after having the drug cleared by the Drug Enforcement Administration.

    It held that, in fact, the date for term extension calculation was the FDA approval date, which had occurred more than a year before. It is a 17-year-old case, and I simply know of no other circumstance during that period in which anyone has come to Congress requesting a term extension.

    Second, U.S. PTO regulations already provide some flexibility in meeting the deadline standards. And so, there is already some ability for NDA holders to follow an expedited application that can then be filled out.

    Third, term extension determinations do not entail merely a ministerial calculation. The filing of an application for term extension potentially triggers a fairly elaborate proceeding potentially involving the USPTO, Secretary of Health and Human Services, Secretary of Agriculture, the patent proprietor and third hearings—third parties. There may even be an informal hearing to discuss qualifications for the term extension.
 Page 42       PREV PAGE       TOP OF DOC

    And that somewhat distinguishes this case from other sorts of deadlines that the USPTO deals with, for example, responding to an office action. So ensuring that these deadlines are met promptly would arguably serve important administrative goals.

    Finally, it is true that some deadlines of the USPTO can be waived or extended. Though, of course, many of those extensions entail third party rights, for example, user rights in favor of those who may have a reliance interest on the expiration of diminution of patent rights.

    As you know, the Patent Reform Act of 2005 retains the 1-year deadline. Anyone who discloses an invention more than a year before filing forfeits their patent rights. And that is a provision that can work very hard against independent inventors and small firms.

    The Hatch-Waxman Act is replete with deadlines that impose even tighter timeframes. A brand name firm has to file a patent infringement suit within 45 days of receipt of notice of a paragraph four ANDA, otherwise it loses its entitlement to a 3-month stay by the FDA.

    On the generic side, a paragraph four ANDA applicant who files 1 day after another such applicant potentially loses its entitlement to a 180-day period of generic exclusivity. So there already are a lot of tight deadlines and even shorter deadlines in the Hatch-Waxman Act.

    Now, in view of those principles, allow me to offer a few observations.

 Page 43       PREV PAGE       TOP OF DOC
    First, one question is the extent of the problem. How many times has this occurred? Is this a recurring issue or one that we think might change?

    Second, what is the standard for the USPTO to resolve whether there ought to be an extension or not? The statute right now says the delay in—or the bill says that whether the delay in filing the application is unintentional.

    I am sort of reminded of Aristotle and the Nicomedian ethics. No one can suffer injustice voluntarily because no one can wish to be harmed, Aristotle says. Well, if that is so, what does this mean? Is this an automatic 5-day deadline for everyone? If that is so, better just to change the period to 61 days, 65 days or something else.

    If, in fact, the USPTO is supposed to do a malpractice style inquiry, I would suggest this is not a situation where the USPTO is well suited. And it ought to retain its core responsibilities.

    There are a lot of other section 156 issues that seem to me to be more compelling. For example, the applicability of patent term extension to combination therapies. And the Committee may wish to consider that.

    Thank you again for the opportunity to submit this testimony. I would be delighted to answer any questions.

    [The prepared statement of Mr. Thomas follows:]

 Page 44       PREV PAGE       TOP OF DOC
PREPARED STATEMENT OF JOHN R. THOMAS

[Note: Image(s) not available in this format. See PDF version of this file for complete hearing record.]

    Mr. SMITH. Thank you. Thank you, Professor Thomas.

    And let me say this is the first panel where every witness has kept within their 5-minute limit. So that is appreciated. It is appreciated in part because we have a Judiciary Committee bill on the House floor right now. We are actually trying to expedite this hearing.

    Mr. Dudas, let me direct my first question to you. The PTO has had under consideration for 4 years now a request by The Medicines Company for reconsideration. You have also said that the statute is clear and you have your hands tied. Why is it that the PTO has not acted in 4 years on the request by The Medicines Company?

    Mr. DUDAS. Thank you. We have acted within 4 years, and I will explain.

    This is a rather administrative procedure back and forth between the USPTO and other agencies, the FDA and Department of Agriculture. But that question came up in my mind as well. How many of these do we have that are over 4 years old? How long does this process take?

    I talked to the woman who is in charge of this process. The average time period is a little bit over 3 years. It is a series of back and forths with the FDA and the Department of Agriculture. We now have 30 cases. I have a list of them that I had compiled—30 cases where they are active over 4 years old.
 Page 45       PREV PAGE       TOP OF DOC

    The second question is, well, do we want things to be active for 4 years. We are very careful in every case measuring everything at the USPTO to make certain we protect rights.

    Mr. SMITH. And you are just as careful in issuing patents as well, right?

    Mr. DUDAS. Absolutely, absolutely. And so, the answer to that is basically both referred to it here. These are patent term extensions. The date that really matters is when the patent term originally expires. So you look at this case. It is the year 2010, 2015, et cetera.

    Mr. SMITH. Yes, right.

    Mr. DUDAS. So the back and forth—certainly, if we get close to that time period we accelerate the process.

    Mr. SMITH. Okay. Thank you, Mr. Dudas.

    Mr. DUDAS. Sure.

    Mr. SMITH. Dr. Meanwell, this is a particularly litigious society that we have today. I am sure there are any number of plaintiff's attorneys who would be happy to file a malpractice suit, contingency fee or not, on your behalf. Why haven't you simply resorted to those means and filed a malpractice suit?
 Page 46       PREV PAGE       TOP OF DOC

    Mr. MEANWELL. Mr. Chairman, a lawsuit won't solve this problem. We will still be left with the underlying pothole in the law. I think there is a real policy problem to solve here.

    Of course, I would like the money. The money would be useful to help me build my company. But it wouldn't save a single life. I don't think at this stage that a lawsuit is going to move any of us forward. Certainly, it is not going to move forward the well-being of any patient.

    So for us, at this point, we would rather come here and debate the merits of fixing this hole in the law than suing our law firm.

    Mr. SMITH. Okay. Thank you, Dr. Meanwell.

    Ms. Jaeger, you said in your written and opening statement that severe harm would be caused to both consumers and taxpayers if this legislation were to be passed. That is in distinction to what Dr. Meanwell has said where he said that actually consumers would be benefited by having an extension to the patent.

    You made that assertion. Can you support it with evidence that consumers and taxpayers would be harmed by passing this legislation?

    Ms. JAEGER. Absolutely, Mr. Chairman.

 Page 47       PREV PAGE       TOP OF DOC
    There are two issues here. The first one is the broader piece on harm having to do with the statutory framework of Hatch-Waxman. As I said in my testimony, the Hatch-Waxman system is a very complex system. And it is based on an intellectual property-based generic approval system. In that system, there are numerous rules and deadlines.

    We were very concerned that with respect to this particular issue we start moving deadlines, they start to be very clouded. We do not, well, actually we will not have a system. The system will totally unravel to the detriment of the generic industry and to consumers. These deadlines need to be met, and they need to be there for the administration of the orderly conduct of all parties in the system.

    Mr. SMITH. Right. But wouldn't consumers be benefited by the continuing research and development of additional benefits that might accrue from this particular type of drug? And would that be halted by The Medicines Company not getting their extension or reconsideration?

    Ms. JAEGER. I think the broader issue is that the rules need to be followed is more imperative to consumers. Again, we have had situations where other deadlines in the Hatch-Waxman system have been missed by brand companies even by 1 day. Yet they did not get the benefit and the opportunity of that other provision.

    And again, it goes to the benefit of consumers and ensuring that everyone plays by the rules. And in this instance, what we are talking about also, getting down to more of a specific issue, is we do have a situation where the patent will expire in 2010.

 Page 48       PREV PAGE       TOP OF DOC
    Our members do a lot of research and development many years prior to bringing a generic to the marketplace. They rely on that information that has been posted. They are relying on the information that the PTE extension has been rejected. They have made business decisions on reliance on that decision.

    Mr. SMITH. Okay. Thank you, Ms. Jaeger.

    Professor Thomas, would you respond to two issues that I brought up so far, that being the possibility of and the advisement of filing a malpractice suit? And second of all, whether you think real harm is being done to consumers if we do not grant discretion to the patent holder.

    Mr. THOMAS. Yes, sir. The malpractice suit is part of patent practice. As someone who used to spend his time prosecuting patent applications, my experience was the docketing clerk was the most important colleague I had. And he would come and tell me, ''Look, you have got a deadline up here, and it is irremediable.''

    And so, any first-year associate at a patent law firm is advised about this in no uncertain terms. And you can read the law books. They are full of malpractice cases where regrettably deadlines have been missed. So that has traditionally been the method of compensation for those who have missed deadlines. Alternatively, shareholder suits against company management——

    Mr. SMITH. And what about harm?

 Page 49       PREV PAGE       TOP OF DOC
    Mr. THOMAS. Harm to patients?

    Mr. SMITH. Harm to consumers if extension is not granted.

    Mr. THOMAS. Well, we are deciding here, I guess, essentially is wealth transfer between patient populations that will pay lower prices for generic versions of drugs versus, you know, surplus that would go to the firm due to its super-competitive profits that are based on a patent. Harm to patients, it is hard to say. We have already got this medication in hand.

    But the patent law is about incentives. We have got the patent in hand. The question is how The Medicines Company chooses to use its resources and whether, in fact, it is the best actor to further develop this medication.

    Mr. SMITH. Okay. Thank you, Professor Thomas.

    The gentleman from California, Mr. Berman, is recognized for his questions.

    Mr. BERMAN. Well, thank you, Mr. Chairman. I guess I have a set of questions for Dr. Meanwell and Ms. Jaeger.

    Ms. Jaeger, I thought maybe your testimony went a little far in saying that the company chose not to meet the deadline. My guess is they don't feel they chose not to meet the deadline. Somebody screwed up big time. Maybe somebody at the company screwed up by not watching who was in charge of not screwing up. And bad things happened. And this is clearly a case.
 Page 50       PREV PAGE       TOP OF DOC

    But the central public policy point from not the company's well-being or the shareholders' well-being—but, Dr. Meanwell, when you came a long time ago, I think it was, to my office, you made the point, which you have repeated here, that not having what was your settled expectation regarding the delays caused by the FDA and added on to your patent term is going to keep you from investing the funds to do the trials and the research in the trials to find where you think there are beneficial uses from this drug or some slight variation of this drug and that you believe that that is the real harm to the public in a way that you see, apart from your own interests, your company's interests, your shareholders' interests, that a new use of this drug will be precluded.

    And I guess what I am asking is you originally developed Angiomax based on raising funds to do the research and trial runs for the blood thinning use that it is now used for. Why can't you do that same process for the new uses of this particular drug, even though I recognize a huge amount of revenue, if nothing changes, is going to be lost to you by not having what was your settled expectation of exclusivity?

    And maybe, because my time might run out, let me just ask Ms. Jaeger very specifically. Apart from all the generalized talk, what generic drug company thought that this patent term would expire 4, 4 1/2 years earlier than you would have normally assumed and has made an investment based on what didn't happen on the 60th day to produce an alternative that is going to end up in a lower cost drug?

    I would like you to be specific about your members that you sort of generalized have made investments based on their, what you claim to be, their settled expectation of when this thing would come on the market, especially given that at least for, it seems like, years, but maybe it is only two since there has been a great deal of public discussion about this issue that would unsettle anyone's expectations about anything.
 Page 51       PREV PAGE       TOP OF DOC

    So those are my two questions.

    Mr. MEANWELL. Thank you for the question. Indeed, there has been quite a lot of public disclosure about this. It is not so much the loss of money and revenue, Mr. Berman. It is the loss of time that is the critical component in research here.

    By not having the extension that we had expected, I cannot launch the kind of programs that are required today to prove that this drug, to my satisfaction, to the satisfaction of the FDA, to the satisfaction of doctors and their patients, will meet the needs of patients with, for example, stroke or undergoing open heart surgery. I need several years to do that in.

    It was our plan that we would follow—and this is not unusual for hospital products—the initial research program with the FDA.

    Mr. BERMAN. Explain that to me.

    Mr. MEANWELL. Yes, sir.

    Mr. BERMAN. Why does the fact that the patent will expire in 2010 if nothing is done have anything to do with the time needed to run the clinical tests to determine if there are other uses?

    Mr. MEANWELL. Because, sir, if I start the trials today—and some of them have preliminarily started—and then we held it, I would have 2, 3, 4 years to do it, 1 year to get it through the FDA and, at that point, would happily hand over those indications to my colleagues in the generic industry. I would not benefit from them at all. And I simply don't have time to get them done.
 Page 52       PREV PAGE       TOP OF DOC

    Mr. BERMAN. Don't you need a patent for new uses of——

    Mr. MEANWELL. No, sir. But I need an FDA approval in order to promote those new uses, and I don't have that today. I need to work hard to get a new indication for the drug beyond its existing use. And I don't have time to do that unless the patent term is restored, which, of course, is what under Hatch-Waxman we believe we had earned in the normal way.

    So our expectations were to get that. We set our programs up sequentially. We now cannot pursue that research in what looked like very promising new indications in important illnesses.

    Mr. BERMAN. Thank you. I have to say, I think it is me, but I am not fully understanding why. But just to get my second question answered——

    Ms. JAEGER. May I just add, Ranking Member Berman, regarding that issue, is that a number of companies, a lot of brand companies, do actually pursue their brand products to subsequent clinical trials and do get new indications of use. When they do bring those indications of use, and the Food and Drug Administration does approve those new indications of use, they will get 3 years of exclusivity under the Hatch-Waxman system.

    At the same time, there are also generally speaking, on average, there are also some patents that also will be issued protecting that particular product for that new indication of use. Generally speaking, there will be new I.P. protection for those new indications of use as they bring those products to the marketplace.
 Page 53       PREV PAGE       TOP OF DOC

    As to your question, I cannot sit here and tell you specifically one company, or if there are 10 companies in our industry. Unfortunately, our pipelines, our companies' pipelines, are proprietary information.

    What I can tell you is what they do utilize for business decisions and that is the CEOs and their R&D teams are looking at what we call the Orange Book, which is a publication by FDA that puts forth all the products as approved by FDA, the market exclusivity that is generated that protects the brand company, the 5 years to 3 years, as well as all patents that the brand company claimed this particular—that claim to protect this particular product and that are eligible for listing in that system. We look at those patents based upon that information, we then turn around and make business decisions on what products we will start our R&D investment on.

    A 2010 product is something our companies are considering and have been considering for many years. That is something they are now looking at and will bring a product through the appropriate R&D process and do the necessary application process to have something ready to go when that, when that patent expires in 2010.

    Mr. BERMAN. —perhaps 10 generic drug companies are spending money on research in developing this generic product in the hope that one of those 10—each one of those 10 will be the first guy to file that thing and get the 180 days exclusivity? That seems like high-risk ventures.

    Ms. JAEGER. No, there is two different issues here in Hatch-Waxman. What happens is there is a patent challenge process. And what the patent challenge process is, that Congress, in their wisdom, basically said the brand companies are to file all patents they deem that claim that particular drug product with FDA.
 Page 54       PREV PAGE       TOP OF DOC

    If there is a patent that gets filed with the Food and Drug Administration that a generic company believes is either filed wrongly, or it is frivolous, or it is questionable, meaning that they believe their product will be outside the scope of that patent, then they will file a paragraph four challenge, which means they are challenging the patent. And then we go into a very complicated Hatch-Waxman patent challenge process. However, if a generic company looks at a patent and believes it is valid, it may not challenge it.

    What the companies are going to do then is under the statute file a paragraph three patent certification, which basically says to the Food and Drug Administration, we will not be seeking approval until that patent expires. But indeed, these companies are looking at the patents. They are looking at the market, and they are making determinations many years prior to the patent expiring.

    As you imagine, our generic companies want to get FDA approval the day the relevant patent expires. So they are going to back in at least 2 years of FDA review of a generic application, which is 2008.

    Their application has to be in by 2008. We are in 2006 now. That means a lot of R&D work has to be done now or could have been done last year as well.

    So our systems are, we back in from where patent expiration and the market exclusivity periods will expire. We back in at least 2 years for FDA review of a generic application. And then we back in our R&D schedules.

 Page 55       PREV PAGE       TOP OF DOC
    Mr. SMITH. Thank you, Mr. Berman.

    The gentleman from Tennessee, Mr. Jenkins, is recognized for his questions.

    Mr. JENKINS. Thank you, Mr. Chairman.

    Mr. Dudas, you mentioned several instances in which relief can be given for the late payment of fees, late filings or deficient filings. I have been told that there may be as many as 30 instances under our patent law in which this is the case. Is that a pretty accurate number of cases where relief can be given for late filings?

    Mr. DUDAS. We have not compiled each and every one of them, but that seems very much a reasonable estimate of how many there are.

    Mr. JENKINS. Now, well, let me ask Ms. Jaeger.

    Ms. Jaeger, you have been in law school much more recently than I have. But my memory is—and I am sure you will correct me if I misspeak—but in England, there was a court known as the keeper of the king's conscience. What was it, exchequer came to us in our country as the chancellory system. And it was basically a system where there was no laches adequate remedy at law. And it brought with it the doctrine of—now, I am not recommending that be applied in this instance.

    But I would ask you with the prospect of this particular medicine—and it has not been denied, and there is ample medical evidence that the prospects for it in the treatment of strokes and heart disease are very promising.
 Page 56       PREV PAGE       TOP OF DOC

    So I would ask you, what is wrong with 30 instances under our patent laws where relief can be given, what is wrong with us departing from the rigidity that you stick with and going to a more humane situation where we can go ahead, this company can spend those tens of millions of dollars that they spoke about and get on with the prospect of benefiting?

    You know, some of us—and you may feel this way when you get older, but some of us have family backgrounds that kind of indicate that we need to be on the lookout for strokes coming on one of these days. And millions and millions of Americans would welcome any prospect to have their prospects for the future improved.

    So what is wrong with us departing from rigidity? We already have flexibility in the law in, I say, at least 30 instances. So what is wrong with us departing and seizing this opportunity that we have? We seize too few in this country in advancing genuine and good. We seize many, but there are many that we miss.

    What is wrong with us departing from rigidity and going to a more humane system? Would you not, would you not be an advocate of a—and perhaps we are the keeper in this instance of the king's conscience. And so, would you fault us then if we went to a more humane system?

    Ms. JAEGER. To that question I have three points. And I think the first point is, it is quite important that with respect to the PTE filing deadline, it is truly consistent with other substantive statutory provisions that establish deadlines for patentees seeking to expand the scope or lengthen the term of the patent.
 Page 57       PREV PAGE       TOP OF DOC

    For example, a patentee seeking to enlarge the scope of the claims in the original patent by invoking PTO's reissuance proceedings must apply within 2 years from the grant of the original patent. Likewise, a patentee seeking to claim priority to the date of an early filed foreign patent must file with the U.S. within 12 months of the earliest day on such foreign application was filed. And these governing statutes do not allow PTO to extend those deadlines much like the PTE applications.

    And then, too, these statutes don't have what we call equitable tolling provisions. Now, GPHA is not supporting nor endorsing the concept of moving forward an equitable tolling statute for this particular situation. But even assuming that there was an equitable tolling statute here, this situation would not rise to that level.

    Unfortunately, it is an administrative error. An administrative error would not rise to a level of inequitable conduct, in an equitable tolling statute, much like that for the Federal circuit, and there we are talking about the Federal rules of civil procedures, which state a failure to take the proper steps at the proper time not in consequence of the party's own carelessness, inattention or willful disregard of the process of the court but in consequence of some unexpected or unavoidable hindrance or accident or reliance on the care of his counsel or a promise made by an adverse party. In that situation, we apply just a general equitable tolling statute or this particular civil rule of procedure.

    Under either scenario, this situation doesn't rise to that level. And therefore, redress was not appropriate. We do believe—my third point is that redress should not be found here with respect to a retroactive amendment, but that there are other recourses that the company can pursue outside this Committee.
 Page 58       PREV PAGE       TOP OF DOC

    Mr. SMITH. Thank you, Mr. Jenkins.

    The gentleman from Massachusetts, Mr. Meehan?

    Mr. MEEHAN. Thank you, Mr. Chairman.

    And to the Ranking Member, thank you very much for putting this hearing together. I think we all can agree that somebody didn't file a form on time, whether it is incompetently or—I doubt they intentionally didn't file it. And I can only assume that whoever failed to file is somewhere in an unemployment line somewhere.

    I am interested—because we all agree it wasn't filed on time. And we could go on and on about that, although I am—it is interesting how when we have a Conference Committee how we reach these magical numbers, whether it be 50 or 60 or 45. I can assure you it is usually the House wants one number, the Senate wants another, and we split the difference in the middle.

    But in any event, I think it would be important, Dr. Meanwell, just for the record, that you could talk about the public health benefits of this drug and what it means for the future. Because I really haven't heard it for the record here. And if you could do that.

    Mr. MEANWELL. Yes, I will do that. I would like to also add something I said to Mr. Berman, which I missed in my attempt to be brief. But let me first get to the point of the drug.
 Page 59       PREV PAGE       TOP OF DOC

    This is an intravenous blood thinner. It is a very unique, high-technology product. It is one which has proven in heart procedures called angioplasty to be highly effective and to substantially reduce the risk of bleeding among these patients. Typically patients today are receiving a mix of powerful blood thinners in a hospital intravenously. And the big risk is bleeding. And the other big risk is having a heart attack. And then there is a minor risk, if you wish, of dying.

    This drug has reduced all of those: bleeding, dying and heart attacks relative to the alternative therapy, which in this case is heparin, which is a 60-year-old product made of pig intestines and which has a lot of side effects, most notably, bleeding and allergies. We have basically knocked out all of those issues.

    Now, we found in the course of our research in coronary angioplasty that doctors started to try to experiment with the drug in stroke and cardiac surgery. One report from a doctor described this drug as—and I quote, and I am willing to put this into the record—''the holy grail of drugs for cardiac surgery in patients who are allergic to heparin.''

    We cannot complete that research right now because we don't have the money, the time, the incentive that Hatch-Waxman originally saw we would and which we expected to get but for our error in filing.

    As far as stroke is concerned, it is one of the biggest causes of death in Americans today. It affects all ethnic groups, particularly African-Americans, as we know. It is a deadly disease, of course, and something that really needs to be worked on. We have shown that this drug in preliminary trials can enable the positioning of the carotid stents, stents in the neck to prevent stroke better than any other product that is currently out there. Most experts believe this is a drug that should be developed extensively in that situation.
 Page 60       PREV PAGE       TOP OF DOC

    Mr. MEEHAN. Thank you.

    Secretary Dudas, I want to make sure that I understand the current law correctly. As I understand it, an application which contains a number of technical errors submitted on time within the 60 days can be returned to the applicant who has a number of months to correct these mistakes. But a perfectly filed and complete patent resolution application mistakenly filed 1 day late—and I have been counting how many days have—how many months have 30 days and how many have 31, which apparently is part of the problem. Do you know quickly how many have 30 days?

    Mr. DUDAS. I have to count it on my hand.

    Mr. MEEHAN. Right. But I am interested is that case. In other words, in other words, if you file an application with mistakes on time, can you make corrections?

    Mr. DUDAS. Yes, you can.

    Mr. MEEHAN. How does that work?

    Mr. DUDAS. Well, there is a variety of different instances.

    Mr. MEEHAN. So, in other words, so even if somebody files with mistakes, as long as they file within the 60 days, they will get a period of months to correct those mistakes?
 Page 61       PREV PAGE       TOP OF DOC

    Mr. DUDAS. There is an opportunity to correct mistakes in some cases with applications and also in other areas in the office, yes.

    Mr. MEEHAN. Do you, do you believe that PTO can waive the 60-day filing requirement on its own inherent authority? Or is it your belief that an extension must be legislated through a measure such as H.R. 5120?

    Mr. DUDAS. It is our belief that it would have to be legislated.

    Mr. MEEHAN. Do you agree with the discretionary authority in 5120? Do you agree that it is similar to other deadline-extending provisions presently in patent law? And if so, approximate—well, I think the question was asked. But you said maybe 30. But you agree that there is already discretionary authority with other deadlines?

    Mr. DUDAS. There is definitely discretionary authority with some other deadlines. And this is not in some way that we find to be fundamentally inconsistent with some of the other deadlines.

    Mr. MEEHAN. Okay. So there are other deadlines that it is okay, this discretion that you guys have? There are other mistakes that are filed that somebody has a period of months to correct. Would you agree with the description of H.R. 5120 that the bill simply gives the PTO the discretion to review a patent term restoration application filed a few days late to determine whether that filing was delayed intentionally? Would you agree?
 Page 62       PREV PAGE       TOP OF DOC

    Mr. DUDAS. I think that is correct, as I read it. It would depend on what—and I am not familiar with the legal standard of unintentional. And we have folks in our office that could determine, whether or not it would be automatic. But the bill on its face says discretion to determine whether it is unintentional.

    Mr. MEEHAN. Would you agree that the legislation doesn't by itself add any additional patent term restoration?

    Mr. DUDAS. The bill itself does not add any patent term restoration.

    Mr. MEEHAN. Finally, some people have characterized this bill as automatically extending—I heard some of the witnesses say that it automatically extends the 60-day filing deadline by 5 days. Do you agree with that?

    Mr. DUDAS. I think the only way that would be true is if the term unintentional—no, it can't be that, because if someone did it intentionally it wouldn't be automatic, either. So I think a lot depends on the standard of unintentional. But, no, there is at least that standard there.

    Mr. MEEHAN. And I read it, and I share Mr. Berman's feeling. I read the material from you, the letter from you. One thing I think we can be clear is the PTO doesn't have any reason to oppose this legislation. Is that correct?

 Page 63       PREV PAGE       TOP OF DOC
    Mr. DUDAS. From a PTO perspective, an administrative perspective and an ability to carry it out, no, we don't have a reason to oppose.

    Mr. MEEHAN. Thank you, Mr. Chairman.

    Mr. SMITH. Okay. Thank you, Mr. Meehan.

    I am going to ask, Mr. Dudas, you another question and in doing so, give other witnesses, if they so desire, an opportunity to answer the question as well. And what I am trying to do here in asking a question about precedent is to find out exactly what the facts are, and be a little bit more specific when we talk about those precedents.

    I have a list in front of me which may or may not be entirely comprehensive of all the instances where discretion has been allowed in the case of unintentional mistakes. And so far as I can see from this list in front of me, which, as I say, may not be completely extensive, is that in all the instances where discretion has been allowed in the case of unintentional mistakes that deal with the statute as opposed to PTO rules generally fall into two categories: discretion being allowed in the case of late fees and discretion being allowed in the case of failure to reference earlier applications.

    Clearly, discretion in those instances don't rise to the level of significance of discretion in the case of extending a patent. Do you know of any instance where there would be a precedent directly on point where discretion would be allowed in the case of an unintentional mistake dealing with the approval of a patent and dealing with discretion being allowed in the case of the statute as opposed to PTO rules?
 Page 64       PREV PAGE       TOP OF DOC

    Mr. DUDAS. I am not aware of that, but I would give the following caveat that we have in our deputy office of operations and policy within Patent and Trademark Office—I would like to follow-up——

    Mr. SMITH. Okay. It would probably be useful to the Committee to realize two things. One, most of the discretion that is being given is of relatively minor infractions or deadlines dealing with PTO rules, not the statute. And if you have any case in point, I think that would be helpful. But there is precedent perhaps on both sides. I just haven't seen the precedent yet on the side of extending a patent.

    Dr. Meanwell, do you have any examples you could give? And then we will ask Ms. Jaeger and Professor Thomas.

    Mr. MEANWELL. I would like to say that the hard and fast deadlines that we have reviewed—and I am no patent attorney, so I am——

    Mr. SMITH. Neither am I.

    Mr. MEANWELL. The ones that seek to expand the scope of a patent, the breadth of the intellectual property, are indeed often hard and fast. I know at least of three. In fact, they were mentioned earlier, I think, 102-B, 251 and 119-A are the things related to establishing a patent, either here or in foreign territories. But actually, that is establishing new grounds for a patent. That is establishing the breadth of a patent.

 Page 65       PREV PAGE       TOP OF DOC
    Here we are talking about the time life of a patent. We are not talking about the breadth of the patent in any way. The breadth of the Angiomax patent will remain exactly the same.

    And one of the things I should have said to Mr. Berman is that that means that we are not looking for a new patent to do what we are doing. We are hoping to use this one as long as we need. And we will need to invest $100 million to do so. So we obviously would like to recoup that with exclusivity thereafter. So just to clarify.

    But there are certainly situations where expanded the scope of a patent is hard and fast. But this is a procedural situation, in my opinion, not expanding the scope of the patent in any way. And by the way, the revision here would not in any way give us a single day more on our term than would be normally envisioned under Hatch-Waxman. And, you know, frankly for such a Draconian penalty to be hammered out for the sake of this dumb mistake, we feel would be, would be inequitable.

    Mr. SMITH. Okay. Thank you, Dr. Meanwell.

    Ms. Jaeger or Professor Thomas, any precedents to cite or examples to give?

    Mr. THOMAS. Mr. Chairman, I believe the most apt analogy would be with respect to maintenance fees, which may well be the first element on the chart you have referenced. As you know, the patent 20-year term is not automatic. You have to pay periodic annuities essentially to the patent office to retain the term and the 3 and-a-half, 7 and-a-half and 11 and-a-half years from the date of issuance. Some of those deadlines aren't met, so there are provisions for coming in late and asking for your patent to be maintained in a sense, sort of a term extension.
 Page 66       PREV PAGE       TOP OF DOC

    Mr. SMITH. You are right. Okay.

    Mr. THOMAS. However, and those applications are entertained by the U.S. PTO. However, if there is a late maintenance fee accepted, that gives some right with respect to third parties that are rather vaguely defined by the statute, for example, something that would be akin to the first inventor Defense Act, which you are considering modifying to encompass all sorts of inventions, not just——

    Mr. SMITH. Okay. Thank you, Professor Thomas.

    Mr. THOMAS. You are welcome.

    Mr. SMITH. Ms. Jaeger?

    Ms. JAEGER. I just want to reiterate for the record, I know we see three particular situations where patentees are seeking to expand the scope or lengthen the term that do not, do not have any discretion for PTO. And, of course, that is the——

    Mr. BERMAN. Expand the scope.

    Ms. JAEGER. Expand the scope of patent with a reissuance proceeding or a PTE, which is extending the length of the patent as well as, of course, you know, the foreign early filed foreign patent provision as well.

 Page 67       PREV PAGE       TOP OF DOC
    Mr. SMITH. Okay, okay. Thank you, Ms. Jaeger.

    Let me explain to the panelists that I have to leave for another engagement. I am going to ask the gentleman from Tennessee to chair the rest of the hearing. And thank you all again for being here.

    Mr. JENKINS. [Presiding.] Mr. Berman, were you finished?

    I am sorry. Go ahead.

    Mr. BERMAN. I was just interrupting somebody else.

    Actually, now I understand, Dr. Meanwell, you are not seeking a new patent. You will need to get FDA approval for the new uses. You won't need to get a new patent. And it makes a heck of a difference whether it expires in 2010 or 2014 whether you have some exclusive period for marketing this drug that FDA would have approved for additional uses. Okay. I have got it. It is not about a new patent.

    Professor Thomas, you made a point in your initial testimony. I forget exactly how you put it, but a policy reason perhaps to not provide discretion in this provision is because it implicates not just the patent office, but the Secretary of HHS and the head of FDA and the Secretary of Agriculture. And I don't know what other agencies you mentioned.

    But realistically, what is the difference if under the limited nature of this extension in terms—I am trying to understand why is that a policy argument against doing it when in the limited nature of the relief proposed in this legislation.
 Page 68       PREV PAGE       TOP OF DOC

    Mr. THOMAS. It is a good point. It is only 5 days. But it does create a lot of reliance interest upon other actors. And that is something that is not as commonly the case with other missed PTO deadlines. So in short, there are a host of actors out there that have to engage in a fair amount of steps.

    Another distinction that may be salient to you—and again, let me first once more acknowledge you are right about the 5 days. It is only 5 days from that perspective. But there are any number of other deadlines that if missed are irremediable under the Patent Act. And again, they often impact small entities that are not sophisticated players in the patent system. They have long been a part of our law. That really——

    Mr. BERMAN. That are not, that are not——

    Mr. THOMAS. That cannot be correctable. And that is really not the case here. Right? We are really talking about very sophisticated actors that are well-advised. And that may be why this is not a situation that has recurred.

    One of my colleagues at Georgetown often uses the phrase ''big boys'' that I don't like because of its gender implications. But nonetheless, do we need in a sense really a protection statute for sophisticated actors who have just been gifted with a watershed event for their firm, FDA marketing approval?

    Mr. BERMAN. Well, no, look, one cannot help but avoid the notion that in life there are a lot of deadlines that every day because some little person or company or whatever missed them and opportunity was lost or harm was done and, I mean, you can't, you can't but avoid thinking at this. And at the same time, it is hard to avoid thinking about the enormity of, you know—I mean, there is a disproportional aspect of what has happened here, too, on the other side in terms of just nature of mistake versus money lost. So I guess that is part of the consideration.
 Page 69       PREV PAGE       TOP OF DOC

    Ms. Jaeger, my last question—in the context of, somewhere companies in your association, unknown to you because of the proprietary interests may have spent money, and in some cases considerable money, thinking that notwithstanding all the hullabaloo in 2010 this thing is coming out there and we want to be ready to fill that void with a lower cost consumer benefit therefore protection.

    Are there situations—somebody mentioned in the context of some other statute the maintenance fees. In the context of things, are compensation for money spent in reliance on something that Congress subsequently changed—is there any precedent for those kinds of arrangements?

    Ms. JAEGER. Well, I think when we are looking at this retroactively—we are looking at this retroactive bill. And in so doing, the job, I think, of everyone here is to sort of do the analysis of weighing the benefits and the risks.

    And here, yes, absolutely, the benefit would inure to The Medicines Company and would provide them with 5 additional years of market exclusivity in the United States. It is adding to their patent that they have today, which expires in 2010. It is not taking away their patent. It is just going to extend the terms of that particular patent and give them this extraordinary benefit.

    At the same time, the burden that would be placed on our industry would be that we relied upon the 2010 patent expiration date. We went through and did some performance research and development, which costs money from our industry side.
 Page 70       PREV PAGE       TOP OF DOC

    At the same time, we also have a downstream effect of the others in the health care distribution channel, which are the insurers and the PBMs and the consumers, that have relied upon that date as well for forecasting and in trying to figure out what health insurance premiums will be in 2010 and the like. So this does have a negative implication downstream in the health care distribution channels.

    At the same time, among the broader issue, we are just very concerned about the many, many deadlines in Hatch-Waxman. And, you know, we say, we all hope to move the deadline to, 65 days. When we get to another situation when someone comes in at 67, 68, are we going to move it again? And then do we move the 45-day window? And does that move——

    Mr. BERMAN. We are very good at saying it is this time only, never again until——

    Ms. JAEGER. And we think it is a Pandora's Box that doesn't need to be opened, sir.

    Mr. BERMAN. Just in closing, Mr. Chairman, as I heard Dr. Meanwell describe the drug, I realized that this fit perfectly with what happened to my father, who died from an allergic reaction to heparin during a heart surgery where he had to have a blood thinner at that time. This is 16 years ago or something. Not from the heart surgery, not from the heart attack, but from not having—so I could personally testify there is something valuable about what you have produced here.

 Page 71       PREV PAGE       TOP OF DOC
    And I yield back.

    Mr. JENKINS. Professor Thomas, let me go back to the flexibility that you spoke about with respect to the payment of fees for continuation. If that flexibility was not in the law, then this patent continuation would be just as dead as any of the other instances that could kill its continued life. Isn't that true? If we had the same rigidity in the law with respect to the payment of those fees that we have, let us say, in this instance, then that would put an end to that patent and its continuation just as surely.

    Mr. THOMAS. Sir, I don't know all the facts of the case. I am not aware of how long the patent has been extant and whether they have paid maintenance fees or not. So in good faith I can't answer that, sir.

    Mr. JENKINS. Well, let me ask it not on a comparative basis, but just on the basis of if the law was different and said you had to pay these fees on time, you couldn't pay them a day late, then your continuation would be just as dead, would it not? It would be dead.

    Mr. THOMAS. That is right, if the maintenance fees were paid late, right.

    Mr. JENKINS. Okay.

    Mr. Meehan, do you have any questions, sir?

 Page 72       PREV PAGE       TOP OF DOC
    Mr. MEEHAN. Mr. Chairman, I just want to point out on this issue of unintentional error in standards that are, that are used by the PTO, there is a letter in the record from Lawrence Goffney that specifically says that the agency is extremely familiar with the unintentional error standard that is being proposed in H.R. 2150. Indeed, this is a standard most commonly used by the PTO in determining whether to accept late filings under the statutory provisions. And I would refer that to Members of the Committee.

    Just one more thing that I want to ask Ms. Jaeger. So you can't provide us with a company that is ready to develop this drug or has had an investment or anything of that nature?

    Ms. JAEGER. No, sir, not at this time I cannot because, again, our companies' pipelines are proprietary. As you can imagine, they are fierce competitors. And so, it is not something they are about to disclose, what products they are or are not going to bring to the market in a few years.

    Mr. MEEHAN. Right. And that is basically for some of us—the question is, you know, what is the future going to be of this particular drug and the advances that have been made?

    It is my understanding that clinical data demonstrates that up to 23,000 transfusions could be saved if these results move forward, more than 1 million of these performed each year, these procedures. So from my perspective, that is why we are balancing interests here.

    We are balancing a lawyer at a firm who messed up with what the public health effect would be in the end. And for me, that is a significant thing that we should weigh.
 Page 73       PREV PAGE       TOP OF DOC

    So I thank the Chairman. I just want to point out those unintentional error standards into the record.

    Mr. JENKINS. Thank you, Mr. Meehan.

    Does any other Member of the Committee have any additional questions?

    Mr. Berman?

    Mr. BERMAN. No.

    Mr. JENKINS. Any?

    Well, the Chairman has already complimented this panel of witnesses. And let me add to that and say that your remarks were very informative. Your answers were very direct and cogent, and we certainly appreciate that.

    I think that this Committee has learned quite a bit today. I hope that we can use it to the benefit of the people across the United States of America. It is a difficult situation.

    And, Ms. Jaeger, let me say I have the utmost respect for you and what your association members are doing. We shouldn't let it pass without saying that your members provide a really valuable service to millions and millions of Americans.
 Page 74       PREV PAGE       TOP OF DOC

    As I understand it, Dr. Meanwell is also on the board of directors of a generic company. Was that brought out? Is that true?

    Mr. MEANWELL. Yes, I am, sir. I am on the board of a company that sells generics. I absolutely agree with your remarks.

    Mr. JENKINS. All right. Well, thank you very much for coming.

    And the Committee will be adjourned.

    [Whereupon, at 12:35 p.m., the Subcommittee was adjourned.]

A P P E N D I X

Material Submitted for the Hearing Record

STATEMENT OF THE HONORABLE HOWARD BERMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND RANKING MEMBER, SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

    Mr. Chairman,

    Thank you for scheduling this hearing on a bill giving the USPTO additional discretion to extend certain patent deadlines. While similar measures (bills that have specifically extended the Angiomax patent) have been attached to legislative vehicles in the past, I am glad that this issue is finally being reviewed by the committee with jurisdiction over patent matters. It is important that this Subcommittee be able to analyze the impact of any changes this bill may make on the patent system.
 Page 75       PREV PAGE       TOP OF DOC

    Patents are the cornerstone of innovation. The Constitution provides for a limited period of time of protection in order to promote innovation. Therefore, the patent process provides the exclusive right for an invention (for 17 to 20 years) generating incentives for an inventor to continue to create after which the invention becomes available for public use. There is a delicate balance of - on the one hand- providing enough of an incentive to the inventor to spend the time, energy and money to create new inventions - and on the other- the value of allowing the invention to be used by the public enabling others to develop new products or provide similar products for lower cost.

    Therefore, when considering the effect of allowing the PTO discretion to extend certain patent deadlines, there is a natural tension between providing the flexibility to extend a deadline and maintaining a hard date for specific types of filings. While providing greater elasticity may prevent seemingly draconian results does it come at the expense of stability in the market? There appear to be other instances where the PTO has discretion to extend deadlines but the situation this bill is designed to address is not among them. WHY? Is there something different about this type of filing that the PTO should NOT have discretion in this case?

    Unfortunately, the PTO has not provided much guidance in its response to the (letter from the Chairman and myself about the) policy questions posed by this bill. I look forward to hearing from the other witnesses to discuss the policy implications of this bill on the patent system and possibly Hatch-Waxman.

    Originally this legislation began as an effort to address one particular late filing, of one patent - there has been no demonstrated need nor request from any other patent owners to provide discretion to the PTO for these type of filings. Moreover, from the way the bill has been written it is clear that this bill would effect the late filing of a particular company which occurred over 4 years ago. Some have even suggested that the better alternative to this bill is a private bill. However, this bill and this particular circumstance does raise some questions about why there are inconsistencies in the discretion afforded to the PTO to determine when filings are timely. As such I look forward to further exploring the issues.
 Page 76       PREV PAGE       TOP OF DOC

     

STATEMENT OF THE HONORABLE ELTON GALLEGLY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND MEMBER, SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

    Mr. Chairman, I would like to begin by thanking you for holding this hearing on H.R. 5120. I appreciate your interest in this important issue. I would also like to commend Congressman Jenkins for the introduction of this legislation.

    H.R. 5120, which I strongly support, deals with what seems to be a narrow issue in our nation's patent law, namely the question of patent term restoration applications submitted to the Patent and Trademark Office. However, although the change to the law is relatively minor, the passage of this legislation would both provide greater fairness to patent holders and encourage innovation by companies in the medical research field and in other industries.

    H.R. 5120 would amend the Hatch-Waxman Act to provide the U.S. Patent and Trademark Office with modest discretion to accept late-filed patent term restoration applications. In a recent letter to the Subcommittee, the Director of the Patent and Trademark office confirmed that under current law the PTO already enjoys discretion in numerous instances to accept late-filed applications. However, Congress has not given the PTO similar discretion to accept late-filed patent restoration applications.

    This strikes me, and other cosponsors of H.R. 5120, as an unfortunate and undeserved inconsistency in our patent law.
 Page 77       PREV PAGE       TOP OF DOC

    Mr. Chairman, failure to allow an innovator that has earned patent term restoration to qualify merely because of a clerical or other unintentional error discourages innovation and ultimately harms patients who rely on research into new medicines. We must keep in mind that for a company to qualify for patent term restoration, it must already have successfully completed an incredibly rigorous drug testing and development regime, ultimately obtaining FDA approval of its drug. The Hatch-Waxman Act offers patent term restoration as an incentive for innovators to invest their time, effort, and resources in this arduous drug development and approval process.

    I can think of no area in the patent law where permitting discretion on the part of the PTO too accept late-filed applications is more important that in the case of patent restoration applications. Yet, this is one area where Congress has not granted the PTO such discretion. It is imperative that we correct this situation by the passage of H.R. 5120.

    I understand that some oppose H.R. 5120, arguing that giving the PTO any discretion will somehow disadvantage generic manufacturers.

    In my view, the Hatch-Waxman Act provides generic manufacturers with clear, enumerated benefits. However, Congress never intended one of those benefits to be the ability to take advantage of unintentional clerical errors, thereby gaining years of marketing time at the expense of innovative companies that have satisfied all of the many processes required by Hatch-Waxman.

    Mr. Chairman, I want to thank you again for holding this hearing today.
 Page 78       PREV PAGE       TOP OF DOC

A LETTER TO THE HONORABLE JONATHAN W. DUDAS, UNDER SECRETARY FOR INTELLECTUAL PROPERTY AND DIRECTOR, U.S. PATENT AND TRADEMARK OFFICE (USPTO) FROM THE HONORABLE LAMAR SMITH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS AND CHAIRMAN, SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY, AND THE HONORABLE HOWARD BERMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND RANKING MEMBER, SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

[Note: Image(s) not available in this format. See PDF version of this file for complete hearing record.]

A LETTER TO THE HONORABLE LAMAR SMITH, A REPRESETATIVE IN CONGRESS FROM THE STATE OF TEXAS, AND CHAIRMAN, SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY, IN RESPONSE TO A LETTER REQUESTING THE UNITED STATES PATENT AND TRADEMARK OFFICE (USPTO) ANALYSIS AND ASSESSMENT OF H.R. 5120

[Note: Image(s) not available in this format. See PDF version of this file for complete hearing record.]

A LETTER TO THE HONORABLE JON W. DUDAS, UNDER SECRETARY FOR INTELLECTUAL PROPERTY AND DIRECTOR, U.S. PATENT AND TRADEMARK OFFICE (USPTO) FROM JANE A. AXELRAD, ASSOCIATE DIRECTOR FOR POLICY, CENTER FROM DRUG EVALUATION AND RESEARCH, DEPARTMENT OF HEALTH & HUMAN SERVICES IN REGARD TO THE MARCH 24, 2003 LETTER FROM KARIN FERRITER REQUESTING FDA'S ASSISTANCE IN PREPARING A RESPONSE TO A REQUEST FOR RECONSIDERATION IN THE APPLICATION FOR PATENT TERM EXTENSION FOR U.S. PATENT NO. 5, 196, 404 FILED BY THE MEDICINES COMPANY
 Page 79       PREV PAGE       TOP OF DOC

[Note: Image(s) not available in this format. See PDF version of this file for complete hearing record.]

A PAPER ON CRITICAL ACTIONS THAT RELATE TO THE MEDICINES COMPANY APPLICATION FOR PATENT TERM EXTENSION FOR U.S. PATENT 5, 196, 404

[Note: Image(s) not available in this format. See PDF version of this file for complete hearing record.]

REQUESTED SUBMISSION FROM THE HONORABLE WILLIAM JENKINS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE; LETTERS FROM LEADING MEDICAL PRACTITIONERS AND CONSUMER GROUPS

[Note: Image(s) not available in this format. See PDF version of this file for complete hearing record.]

LETTER FROM LAWRENCE GOFFNEY

[Note: Image(s) not available in this format. See PDF version of this file for complete hearing record.]

TESTIMONY FROM THOMAS SCHATZ, PRESIDENT, CITIZENS AGAINST GOVERNMENT WASTE

[Note: Image(s) not available in this format. See PDF version of this file for complete hearing record.]
 Page 80       PREV PAGE       TOP OF DOC