By Pam Bertani
Approximately two months ago the United States Supreme Court decided the controversial case of Merck v. Integra Lifesciences I, Ltd., 125 S.Ct. 2372 (June 13, 2005).#160 The case surfaced concerns among patent owners, and all serious players in the multi-billion dollar pharmaceutical industry, specifically those using patented compounds to develop their own drugs.#160 As one commentator aptly framed the issue – the question before the Court was how much patent infringement does the safe harbor allow?
Recall that 35 U.S.C. �� 271(e)(1) is the so-called Food and Drug Administration (“FDA”) exemption to patent infringement and provides, in pertinent part, that making, using, offering to sell, selling or importing a patented invention is not an act of infringement if such activities are performed “solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.”#160 Under the Federal Food, Drug and Cosmetic Act (“FDCA”), a drug maker must submit research data to the FDA at two general stages of new drug development.#160 First, a drug maker must obtain authorization to conduct clinical trials (human tests) by submitting an investigational new drug application (“IND”).#160 The IND must describe “preclinical tests”, including animal tests, of the drug sufficient to justify the proposed clinical testing.#160 Second, in order to obtain authorization for new drug marketing, a drug maker must submit a new drug application (“NDA”), containing full investigational reports that demonstrate whether the drug is safe and efficacious.#160 Pursuant to FDA regulations, the NDA must include all clinical studies, as well as preclinical studies related to a drug’s efficacy, toxicity and pharmacological properties.#160 #160Generic drug makers may file an abbreviated new drug application (“ANDA”) by which the generic drug sponsor is not required to demonstrate safety and efficacy independently, either in pre-clinical or clinical studies. Rather, the ANDA requires only that generic drug makers show that the generic drug includes the same active ingredients as the original drug, and is biologically equivalent thereto.#160
The pivotal issue in Integra was that the pre-clinical experimental drug testing at issue was not performed to supply information for submission to the FDA, but instead was performed to identify the best drug candidate that Merck would subject to future clinical testing under FDA procedure.#160 The Federal Circuit affirmed the Southern District of California’s interpretation of the exemption to cover clinical trials – but, to exclude pre-clinical trial experiments that were performed to identify potentially new drugs.#160 The Federal Circuit held that the pre-clinical trial experiments at issue were not exempt from infringement under �� 271(e)(1) because the tests were not performed for the sole purpose of providing information to the FDA – but conversely for the commercial purpose of identifying potentially new drugs for Merck.
In a sweeping decision authored by Justice Scalia, the Supreme Court completely vacated and remanded the Federal Circuit’s decision, and thereby significantly broadened the Section 271(e)(1) safe harbor from infringement, which many believed to overbroad to begin with.#160 The Court read Section 271(e)(1) to provide a “wide berth for the use of patented drugs in activities related to the federal regulatory process”, and deemed apparent from the statutory text that Section 271’s exemption from infringement “extends to all uses of patented inventions that are reasonably related to the development and submission of any information under the FDCA.”#160 According to the Court:
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#160 There is simply no room in the statute for excluding certain information from the
exemption on the basis of the phase of research in which it is developed or the particular submission in which it could be included.#160
The Court refused to construe Section 271’s safe harbor provision so narrowly as to render illusory its protection for activities leading to FDA drug approval.#160 Properly construed, said the Court, Section 271(e)(1) “leaves adequate space for experimentation and failure on the road to regulatory approval”, at least where a drug maker has a reasonable basis for believing that a patented compound may work through a particular biological process to produce a particular physiological result, and uses the patented compound in research that – if successful – would be appropriate to include in an FDA submission.
The Federal Circuit’s safe harbor restriction, excluding preclinical trials from the scope of statutory protection, sent a chill through the pharmaceutical industry and beyond.#160 Fear centered on the prospect that the Federal Circuit’s decision was a major step back, and could potentially block drug makers from conducting pre-clinical research necessary to achieve FDA approval.#160 For instance, animal research is often a prerequisite for obtaining the green light to proceed to human clinical testing, and ultimate FDA approval.#160 Some reasonably feared that the Federal Circuit’s opinion could have been construed to leave drug makers liable for conducting such early stage research, which worried the industry in a major way.#160 The Supreme Court’s wholesale reversal of the Federal Circuit should allay a majority of such concerns.#160 But is society better off with broader safe harbor protections from infringement?#160 Obviously, industry says yes because theoretically now more drugs will move through the research, development and regulatory processes more quickly, which will facilitate bringing useful and effective pharmaceuticals to people who need them desperately.#160
On the flip-side however, major research institutions would likely disagree, and contend that with eroded patent rights comes an innovative erosion and diminished incentive to continue developing new technology.#160 The Regents of the University of California, The American Council of Education, Boston University, Research Corporation Technologies, The Salk Institute for Biological Studies, the University of Alberta and the University of Oklahoma filed an interesting Amicus Curiae brief in support of Integra, which raised several key issues to consider.#160 The Amici identified their interests in managing, developing, licensing and enforcing university-related intellectual property, which forms a substantial part of the new drug discovery pipeline.#160 They contended that these institutions, along with various biotechnology companies, perform the often risky experiments that can lead to cutting-edge research tools, which ultimately permit technological progress.#160 According to the Amici, the university sector’s ability to patent technology arising from its research efforts is the alleged basis for transferring such technology to the public for public use and benefit.#160 Thus, to expand the Section 271(e)(1) safe harbor beyond the limits set forth in the statute’s plain meaning, as interpreted by the Federal Circuit below, will adversely effect the research community as a whole, and the university research community in particular.#160 In this regard, the Amici expressly state that given the normal expectation that innovation follows invention, an erosion of patent rights corresponding to safe harbor expansion would bring with it a lag in innovation.#160 Without the protection afforded by viable patents, there would be a lessened interest within the private sector to support university-related research functions.
With such polarized and divergent views on how to achieve the highest public good with respect to technology and innovation, the most likely result is that each side of the issue will find a workable middle ground and continue to build on what has become a phenomenal knowledge base in America and abroad.#160 A textbook “win-win” situation is surely on the horizon.