Nos. 19-1434, 19-1452, and 19-1458
`
`IN THE
`
`_________
`UNITED STATES OF AMERICA,
`Petitioner,
`
`v.
`
`ARTHREX, INC., ET AL.,
`Respondent.
`
`________
`
`On Writs of Certiorari
`to the United States Court of Appeals
`for the Federal Circuit
`________
`
`BRIEF OF THE ASSOCIATION FOR ACCESSIBLE
`MEDICINES AS AMICUS CURIAE IN SUPPORT
`OF PETITIONERS IN NOS. 19-1434 AND 19-1452
`________
`
`Jeffrey K. Francer
`Karin Hessler
`ASSOCIATION FOR ACCESSIBLE
`MEDICINES
`601 New Jersey Ave., NW
`Suite 850
`Washington, DC 20001
`(202) 249-7100
`
`Matthew S. Hellman
`Counsel of Record
`Sarah J. Clark
`JENNER & BLOCK LLP
`1099 New York Ave., NW
`Suite 900
`Washington, DC 20001
`(202) 637-6327
`mhellman@jenner.com
`
`(For Continuation of Caption, See Inside Cover)
`
`
`
`IN THE
`
`_________
`UNITED STATES OF AMERICA,
`Petitioner,
`
`v.
`
`ARTHREX, INC., ET AL.,
`Respondent.
`
`________
`
`On Writs of Certiorari
`to the United States Court of Appeals
`for the Federal Circuit
`________
`
`BRIEF OF THE ASSOCIATION FOR ACCESSIBLE
`MEDICINES AS AMICUS CURIAE IN SUPPORT
`OF PETITIONERS IN NOS. 19-1434 AND 19-1452
`________
`
`Jeffrey K. Francer
`Karin Hessler
`ASSOCIATION FOR ACCESSIBLE
`MEDICINES
`601 New Jersey Ave., NW
`Suite 850
`Washington, DC 20001
`(202) 249-7100
`
`Matthew S. Hellman
`Counsel of Record
`Sarah J. Clark
`JENNER & BLOCK LLP
`1099 New York Ave., NW
`Suite 900
`Washington, DC 20001
`(202) 637-6327
`mhellman@jenner.com
`
`(For Continuation of Caption, See Inside Cover)
`
`
`
`IN THE
`
`_________
`19-1452
`
`SMITH & NEPHEW, INC. AND ARTHROCARE CORP.,
`
`Petitioner,
`
`v.
`
`ARTHREX, INC. AND UNITED STATES OF AMERICA,
`
`Respondent.
`
`Petitioner,
`
`_________
`19-1458
`
`ARTHREX, INC.,
`
`v.
`
`SMITH & NEPHEW, INC.; ARTHROCARE CORP.; AND
`UNITED STATES OF AMERICA,
`
`Respondent.
`
`
`
`i
`TABLE OF CONTENTS
`
`TABLE OF AUTHORITIES ......................................... iii
`
`INTERESTS OF AMICUS CURIAE ............................ 1
`
`OF
`SUMMARY
`INTRODUCTION AND
`ARGUMENT ................................................................. 2
`
`ARGUMENT ....................................................................... 4
`
`to
`I. Inter Partes Review Is Essential
`Eliminating Invalid Patents, Which In Turn
`Enables Patient Access to More Affordable
`Generic and Biosimilar Medicines ......................... 4
`A. Inter Partes Review Is Essential to
`Eliminating Invalid Patents ............................ 4
`1. The PTO Often Issues Invalid Patents .... 5
`2. Congress Established Inter Partes
`Review to Weed Out Invalid Patents
`Quickly and Efficiently ............................... 6
`B. Eliminating Invalid Patents Is Necessary
`to Permit Patient Access
`to More
`Affordable Generic
`and Biosimilar
`Medicines ............................................................ 7
`1. The Availability Of Generic and
`Biosimilar Medicines Saves Money and
`Provides Greater Patient Access to
`Critical Medicines ........................................ 8
`2. Invalid Patents Can Block More
`Affordable Generic and Biosimilar
`Medicines .................................................... 10
`
`
`
`ii
`II. Administrative Patent Judges Are Not
`Principal Officers, But to The Extent The
`Court Concludes Otherwise, It Should Reject
`Arthrex’s Request
`to Eliminate
`IPR
`Indefinitely ............................................................. 14
`
`CONCLUSION ................................................................. 17
`
`
`
`iii
`TABLE OF AUTHORITIES
`
` Page(s)
`
`Cases
`
`Ass’n for Molecular Pathology v. Myriad
`Genetics, Inc.,
`569 U.S. 576 (2013).................................................... 10
`
`In re Barr Laboratories, Inc.,
`930 F.2d 72 (D.C. Cir. 1991), cert. denied,
`502 U.S. 906 (1991)...................................................... 8
`
`BTG International Ltd. v. Amneal
`Pharmaceuticals LLC,
`923 F.3d 1063 (Fed. Cir. 2019) ............................ 3, 13
`
`Caraco Pharmaceuticals Laboratories, Ltd. v.
`Novo Nordisk A/S,
`566 U.S. 399 (2012).................................................... 11
`
`Eli Lilly & Co. v. Medtronic, Inc.,
`496 U.S. 661 (1990)...................................................... 8
`
`Lear, Inc. v. Adkins,
`395 U.S. 653 (1969)...................................................... 5
`
`Novartis AG v. Noven Pharmaceuticals Inc.,
`853 F.3d 1289 (Fed. Cir. 2017) ............................... 2-3
`
`Precision Instrument Manufacturing Co. v.
`Automotive Maintenance Machinery Co.,
`324 U.S. 806 (1945)................................................... 4-5
`
`
`
`iv
`Sandoz Inc. v. Amgen Inc.,
`137 S. Ct. 1664 (2017) ........................................... 8, 12
`
`Statutes and Rules
`
`21 U.S.C. § 355(b)(1) ....................................................... 11
`
`21 U.S.C. § 355(j) ............................................................ 11
`
`21 U.S.C. § 355(j)(2)(A) .............................................. 8, 11
`
`21 U.S.C. § 355(j)(5)(B) .................................................. 11
`
`35 U.S.C. § 271(e)(2)(A) ................................................. 11
`
`35 U.S.C. § 271(e)(4)(C) ................................................. 12
`
`42 U.S.C. § 262(i)(2)(B) .................................................... 9
`
`42 U.S.C. § 262(k) ........................................................... 12
`
`42 U.S.C. § 262(k)(7) ....................................................... 12
`
`Sup. Ct. R. 37.3(a) ............................................................. 1
`
`Sup. Ct. R. 37.6.................................................................. 1
`
`Other Authorities
`
`John R. Allison et al., Understanding the
`Realities of Modern Patent Litigation, 92
`Tex. L. Rev. 1769 (2014) ............................................ 6
`
`Order, Amgen Inc. v. Iancu,
`No. 2019-2171 (Fed. Cir. Mar. 24, 2020),
`ECF No. 48 ................................................................ 15
`
`
`
`v
`Association for Accessible Medicines, Generic
`Drug Access & Savings in the U.S. (2017) .............. 9
`
`Association for Accessible Medicines, 2020
`Generic Drug & Biosimilars Access &
`Savings in the U.S. Report (2020) ............................ 9
`
`Biologics Price Competition and Innovation
`Act of 2009, Pub. L. No. 111-148, tit. VII,
`subtit. A, 124 Stat. 804 ............................................... 8
`
`Biosimilars Council, Failure to Launch:
`Patent Abuse Blocks Access to
`Biosimilars for America’s Patients (June
`2019) ............................................................................ 13
`
`21 C.F.R. § 314.107(b)(3)(viii) ....................................... 11
`
`Michael A. Carrier, Post-Grant Opposition: A
`Proposal and a Comparison to the
`America Invents Act, 45 U.C. Davis L.
`Rev. 103 (2011) ............................................................ 5
`
`157 Cong. Rec. 2844 (2011) (statement of Sen.
`Klobuchar) ................................................................... 7
`
`157 Cong. Rec. 3375 (2011) (statement of Sen.
`Sessions)....................................................................... 7
`
`157 Cong. Rec. 12992 (2011) (statement of
`Sen. Leahy) .................................................................. 7
`
`Drug Price Competition and Patent Term
`Restoration Act of 1984, Pub. L. No. 98-
`417, 98 Stat. 1585 ........................................................ 8
`
`
`
`vi
`Michael D. Frakes & Melissa F. Wasserman,
`Does the U.S. Patent and Trademark
`Office Grant Too Many Bad Patents?:
`Evidence from a Quasi-Experiment, 67
`Stan. L. Rev. 613 (2015) ............................................. 6
`
`H.R. Rep. No. 107-120 (2001) .......................................... 6
`
`H.R. Rep. No. 112-98, pt. 1 (2011), as
`reprinted in 2011 U.S.C.C.A.N. 67........................... 7
`
`Aaron S. Kesselheim et al., Extensions of
`Intellectual Property Rights and Delayed
`Adoption of Generic Drugs: Effects on
`Medicaid Spending, 25 Health Affairs
`1637 (2006) ................................................................. 12
`
`Cynthia Koons, Guarding Big Pharma’s
`Crown Jewel, Bloomberg Businessweek
`(Sept. 11, 2017) .......................................................... 13
`
`U.S. Food & Drug Administration, Generic
`Competition and Drug Prices
`(Dec. 13, 2019), https://www.fda.gov/about-
`fda/center-drug-evaluation-and-research-
`cder/generic-competition-and-drug-prices ........... 10
`
`U.S. Patent and Trademark Office,
`Performance and Accountability Report,
`Fiscal Year 2020 (2020) ............................................. 5
`
`
`
`INTERESTS OF AMICUS CURIAE1
`The Association for Accessible Medicines (AAM) is a
`nonprofit,
`voluntary
`association
`representing
`manufacturers and distributors of generic and biosimilar
`medicines and bulk active pharmaceutical chemicals, as
`well as suppliers of other goods and services to the
`generic pharmaceutical industry. AAM’s members
`provide patients with access to safe and effective generic
`and biosimilar medicines at affordable prices. AAM’s
`core mission is to improve the lives of patients by
`providing timely access to safe, effective, and affordable
`prescription medicines. Generic drugs constitute 90% of
`all prescriptions dispensed in the United States, yet
`generics account for only 20% of total drug spending.
`AAM regularly participates in litigation as amicus
`curiae.
`
`AAM and its members have a significant interest in
`the questions presented, and in the existence and
`smooth functioning of the inter partes review process.
`AAM’s members depend on fair and prompt adjudication
`of patent claims that seek to block their efforts to bring
`lower-cost drug options to patients. The inter partes
`review process is thus essential to the work of AAM’s
`
`1 Pursuant to Supreme Court Rule 37.3(a), counsel for all parties
`consented to the filing of this brief. Pursuant to Supreme Court
`Rule 37.6, no party authored this brief in whole or in part, no fee has
`been paid or will be paid for preparing this brief, and no person or
`entity other than amicus curiae and its counsel made any monetary
`contribution to the preparation or submission of this brief.
`
`
`
`2
`
`members and to the patients who depend on generic and
`biosimilar medicines.
`
`INTRODUCTION AND SUMMARY OF
`ARGUMENT
`Inter partes review (IPR) is a critical tool for quickly
`and efficiently eliminating invalid patents. When it
`adopted the current IPR system in 2011, Congress
`recognized that patent examiners—laboring under an
`intense workload—frequently issue patents that are
`invalid. IPR allows the Patent and Trademark Office
`(PTO) to fix those mistakes without forcing competitors
`to undertake lengthy, expensive litigation to defeat
`patents that never should have been granted in the first
`place.
`
`Perhaps no segment of the public benefits more from
`IPR than the patients who depend upon generic and
`biosimilar medications. Branded drug manufacturers
`often seek to extend their monopolies unlawfully by
`filing multiple patents intended to keep more affordable
`generic and biosimilar medicines off the market. AAM’s
`members rely on IPR to efficiently root out those invalid
`drug patents. The ultimate winners from those IPR
`proceedings are the patients (and taxpayers) who are
`able to obtain less expensive, safe generic and biosimilar
`medicines without undue delay. It is because of
`successful IPR proceedings that cheaper generic and
`biosimilar alternatives to fight diseases like Alzheimer’s,
`Parkinson’s, and prostate cancer, have reached the
`market far more quickly than they otherwise would
`have. See, e.g., Novartis AG v. Noven Pharms. Inc., 853
`
`
`
`3
`
`F.3d 1289 (Fed. Cir. 2017); see also BTG Int’l Ltd. v.
`Amneal Pharms. LLC, 923 F.3d 1063 (Fed. Cir. 2019).
`
`In the decision below, the Federal Circuit held that
`the administrative judges who preside over IPR
`proceedings are principal officers who hold their position
`in violation of the Appointments Clause. AAM urges the
`Court to reverse that ruling for the reasons the
`government and Smith & Nephew have set out, and
`writes separately to emphasize that the Federal
`Circuit’s merits ruling has already caused delay by
`mandating rehearing of potentially hundreds of IPR
`decisions. Branded drug patent-holders have jumped at
`the opportunity to re-litigate the validity of patents
`already found invalid through the IPR process. And
`members of the public must now wait even longer to
`benefit from generic and biosimilar alternatives that do
`not infringe any lawful patent. Reversing the Federal
`Circuit’s incorrect merits determination would correct
`this problem.
`
`If the Court nonetheless concludes that the IPR
`judges are principal officers, it should reject Arthrex’s
`contention that a more sweeping remedy is needed.
`Arthrex asks this Court to invalidate the entire IPR
`system subject to Congress’s decision to reauthorize the
`system if Congress so chooses. Arthrex leaves no doubt
`that it would be happy to see the IPR system never
`return from its trip to the Capitol, but eliminating IPR,
`even temporarily, would have deleterious consequences
`for the patients who seek cost-effective medications and
`the generic and biosimilar manufacturers who must
`
`
`
`4
`
`make investment decisions about what products to bring
`to market.
`
`There is no legal justification for treating any
`Appointments Clause violation as a basis for dismantling
`the entire IPR system, and doing so would re-impose the
`very hurdles to addressing
`invalid patents that
`Congress sought to eliminate. Those patents would
`continue to serve as an illegitimate barrier to cheaper
`generic and biosimilar alternatives. This Court should
`allow the IPR system to continue to serve the goals that
`Congress intended and to work on behalf of all
`Americans, including the millions who benefit from cost-
`effective generic and biosimilar medicines.
`
`I.
`
`ARGUMENT
`Inter Partes Review Is Essential to Eliminating
`Invalid Patents, Which In Turn Enables Patient
`Access to More Affordable Generic and Biosimilar
`Medicines.
`Is Essential
`A. Inter Partes Review
`Eliminating Invalid Patents.
`IPR allows competitors to quickly and cheaply
`eliminate
`improvidently granted patents that are
`blocking valuable technology from reaching the market.
`This Court has recognized that “possession and
`assertion of patent rights are ‘issues of great moment to
`the public,’” and that “[t]he far-reaching social and
`economic consequences of a patent . . . give the public a
`paramount interest in seeing that patent monopolies . . .
`are kept within their legitimate scope.” Precision
`
`to
`
`
`
`5
`
`Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S.
`806, 815-16 (1945) (quoting Hazel-Atlas Glass Co. v.
`Hartford-Empire Co., 322 U.S. 238, 246 (1944)). The
`PTO frequently issues invalid patents, and Congress
`established the inter partes review process to remedy
`those mistakes. Inter partes review simplifies and
`accelerates the process of weeding out invalid patents,
`while retaining significant protections for valid patents.
`
`1. The PTO Often Issues Invalid Patents.
`A patent “represents a legal conclusion reached by
`the Patent Office,” “predicated on factors as to which
`reasonable men can differ widely” and reached “in an ex
`parte proceeding, without the aid of the arguments
`which could be advanced by parties interested in
`proving patent invalidity.” Lear, Inc. v. Adkins, 395 U.S.
`653, 670
`(1969).
` Unfortunately, the examiners
`conducting those ex parte proceedings have heavy
`caseloads: In the 2020 fiscal year, fewer than 8,500
`patent examiners were tasked with reviewing more than
`650,000 patent applications. U.S. Patent and Trademark
`Office, Performance and Accountability Report, Fiscal
`Year 2020, at 189, 231 (2020) (PTO Report). On average,
`patent examiners have only about 20 hours to evaluate a
`patent application, which requires reading
`the
`application, searching for prior art, communicating with
`the applicant, evaluating patentability, and writing up
`their conclusions. Michael A. Carrier, Post-Grant
`Opposition: A Proposal and a Comparison to the
`America Invents Act, 45 U.C. Davis L. Rev. 103, 107
`(2011).
`
`
`
`6
`
`It is no surprise, therefore, that the PTO frequently
`issues patents later found to be invalid. See Michael D.
`Frakes & Melissa F. Wasserman, Does the U.S. Patent
`and Trademark Office Grant Too Many Bad Patents?:
`Evidence from a Quasi-Experiment, 67 Stan. L. Rev.
`613, 615, 676 (2015) (describing consensus that the PTO
`“is issuing too many invalid patents” and concluding that
`“the Agency is in fact biased toward granting patents”).
`Indeed, one recent study found that federal courts hold
`challenged patents to be invalid 43% of the time. John R.
`Allison et al., Understanding the Realities of Modern
`Patent Litigation, 92 Tex. L. Rev. 1769, 1801 (2014).
`
`2. Congress Established Inter Partes
`Review to Weed Out Invalid Patents
`Quickly and Efficiently.
`Because the PTO will inevitably issue some patents
`that it should not, a speedy and inexpensive process for
`challenging patents of dubious validity is critical to the
`health of the entire patent regime. Congress has long
`recognized the need for an administrative mechanism to
`review improvidently granted patents. See H.R. Rep.
`No. 107-120, at 3 (2001) (noting that the 1980 creation of
`a reexamination process was intended to “(i) settle
`validity disputes more quickly and less expensively than
`litigation; (ii) allow courts to refer patent validity
`questions to an agency with expertise in both the patent
`law and technology; and
`(iii) reinforce
`investor
`confidence in the certainty of patent rights by affording
`an opportunity to review patents of doubtful validity”).
`
`
`
`7
`
`By 2011, when the America Invents Act was passed,
`Congress had concluded that the existing ex parte and
`inter partes reexamination procedures were “too
`lengthy and unwieldy to actually serve as an alternative
`to litigation when users are confronted with patents of
`dubious validity.” 157 Cong. Rec. 12992
`(2011)
`(statement of Sen. Leahy). And it noted “a growing
`sense that questionable patents are too easily obtained
`and are too difficult to challenge.” H.R. Rep. No. 112-98,
`pt. 1, at 39 (2011), as reprinted in 2011 U.S.C.C.A.N. 67,
`69. As then-Senator Sessions explained, the goal of the
`America Invents Act was to “allow invalid patents that
`were mistakenly issued by the PTO to be fixed early in
`their life, before they disrupt an entire industry or result
`in expensive litigation.” 157 Cong. Rec. at 3375
`(statement of Sen. Sessions); accord id. at 2844
`(statement of Sen. Klobuchar) (“The legislation also
`provides a modernized, streamlined mechanism for third
`parties who want to challenge recently issued, low-
`quality patents that should never have been issued in the
`first place.”).
`
`B. Eliminating Invalid Patents Is Necessary
`to Permit Patient Access
`to More
`Affordable Generic
`and Biosimilar
`Medicines.
`Pharmaceutical patents provide a compelling
`illustration of the need for an efficient mechanism for the
`PTO to retract improvidently issued patents. Inter
`partes review is essential to ensure patient access to
`low-cost generic and biosimilar medicines that would
`otherwise be blocked by invalid patents.
`
`
`
`8
`
`1. The Availability Of Generic and
`Biosimilar Medicines Saves Money and
`Provides Greater Patient Access to
`Critical Medicines.
`Congress has recognized the benefits offered by
`generic medicines, and it sought to encourage their
`introduction by enacting the Drug Price Competition
`and Patent Term Restoration Act of 1984, Pub. L. No.
`98-417, 98 Stat. 1585, commonly known as the Hatch-
`Waxman Amendments.
` See Eli Lilly & Co. v.
`Medtronic, Inc., 496 U.S. 661, 676 (1990) (Congress
`sought “to enable new drugs to be marketed more
`cheaply and quickly”); In re Barr Labs., Inc., 930 F.2d
`72, 76 (D.C. Cir. 1991) (purpose of Hatch-Waxman was
`“to get generic drugs into the hands of patients at
`reasonable prices—fast”), cert. denied, 502 U.S. 906
`(1991). More recently, Congress sought to speed up the
`introduction of biosimilar medicines by enacting the
`Biologics Price Competition and Innovation Act of 2009,
`Pub. L. No. 111-148, tit. VII, subtit. A, 124 Stat. 804. See
`generally Sandoz Inc. v. Amgen Inc., 137 S. Ct. 1664
`(2017). Patient access to low-cost, high-quality generic
`and biosimilar medicines remains critically important
`today given the high cost of healthcare in the United
`States.
`
`To be approved by the FDA, a generic medicine must
`have the same active ingredients as the brand-name
`drug and must meet the same rigorous standards of
`strength, quality, purity, and potency. See 21 U.S.C.
`§ 355(j)(2)(A)(ii)-(iv). Likewise, a biosimilar medicine
`has “no clinically meaningful differences” in “safety,
`
`
`
`9
`
`purity, and potency” from the brand-name biologic
`product. 42 U.S.C. § 262(i)(2)(B).
`
`The principal difference between generic or
`biosimilar medicines and brand-name prescription drugs
`or biologic products is cost. Association for Accessible
`Medicines, Generic Drug Access & Savings in the U.S.
`24 (2017). Generics account for 90% of prescriptions
`dispensed in the United States, but only 20% of total
`drug costs. Association for Accessible Medicines, 2020
`Generic Drug & Biosimilars Access & Savings in the
`U.S. Report 16 (2020). In total, generic medicines
`generated $313 billion in savings for the American
`healthcare system in 2019, and $2.2 trillion in savings
`over the last decade. Id. at 16, 18. In 2019 alone, generic
`medicines saved the Medicaid system $48.5 billion and
`the Medicare system $96 billion. Id. at 17.
`
`The benefits of more affordable generic and
`biosimilar medicines extend beyond mere cost savings.
`Lack of adherence to treatments is responsible for
`approximately 125,000 deaths annually. Association for
`Accessible Medicines, Generic Drug Access & Savings
`in the U.S. 26 (2017). Generic drugs reduce the problem
`of lack of adherence because new patients are three
`times less likely to stop taking generic medicines than
`brand-name drugs. Id.
`
`All of these benefits flow directly from the
`competition that generic and biosimilar medications
`provide to brand-name drugs that would otherwise
`enjoy monopoly status. The more competitors there are,
`the greater the savings: The entry of a second generic
`
`
`
`10
`
`manufacturer into the market reduces the average
`generic price to roughly half the brand-name price, and
`for medicines that attract a large number of generic
`manufacturers, the average generic price falls to less
`than 10% of the brand-name price. U.S. Food & Drug
`Admin., Generic Competition and Drug Prices (Dec. 13,
`2019),
`https://www.fda.gov/about-fda/center-drug-
`evaluation-and-research-cder/generic-competition-and-
`drug-prices.
`
`2. Invalid Patents Can Block More
`Affordable Generic and Biosimilar
`Medicines.
`Patent law “strikes a delicate balance between
`creating ‘incentives that lead to creation, invention, and
`discovery’ and ‘imped[ing] the flow of information that
`might permit, indeed spur, invention.’” Ass’n for
`Molecular Pathology v. Myriad Genetics, Inc., 569 U.S.
`576, 590 (2013) (quoting Mayo Collaborative Servs. v.
`Prometheus Labs., Inc., 566 U.S. 66, 92 (2012) (alteration
`in original)). Especially in the pharmaceutical context,
`that balance is frequently upset by the assertion of
`invalid patents, which inevitably leads to lengthy and
`expensive litigation. Delay in removing improperly
`awarded patents can lead to substantially higher drug
`costs for patients, insurers, and taxpayers.
`
`a. When a brand-name drug manufacturer submits
`an application to the FDA for approval of a new drug, it
`must include a list of every patent related to that drug
`that the patentee could reasonably assert would be
`infringed by the manufacture, use, or sale of a generic
`
`
`
`11
`
`version of the drug. 21 U.S.C. § 355(b)(1). Those patents
`are then listed in the FDA’s “Orange Book,” See Caraco
`Pharm. Labs., Ltd. v. Novo Nordisk A/S, 566 U.S. 399,
`405-06 (2012).
`
`A generic competitor hoping to enter the market
`must file an Abbreviated New Drug Application
`(ANDA). See 21 U.S.C. § 355(j). As part of that
`application, the generic manufacturer must identify any
`patents claiming the brand-name drug in the Orange
`Book and either wait for their expiration or show that
`they are not a barrier—for example, by certifying that
`they are “invalid or will not be infringed by the
`manufacture, use, or sale” of the proposed generic. Id.
`§ 355(j)(2)(A)(vii).
`
`“provoke[es]
`naturally
`certification
`a
`Such
`litigation,” see Caraco, 566 U.S. at 407, and the brand-
`name manufacturer may file suit immediately, 35 U.S.C.
`§ 271(e)(2)(A). When the brand-name manufacturer
`does sue, the FDA is automatically precluded from
`approving the proposed generic for 30 months, unless
`the case is dismissed or the court declares that the
`patent is invalid or not infringed before that time. 21
`U.S.C. § 355(j)(5)(B)(iii); 21 C.F.R. § 314.107(b)(3)(viii).
`
`In other words, whether or not the patent is
`eventually ruled invalid, litigation is “likely to keep the
`generic drug off the market for a lengthy period.”
`Caraco, 566 U.S. at 408. Even after the 30-month stay
`has elapsed, a generic manufacturer that enters the
`market before the litigation is fully resolved risks being
`held liable for substantial damages if the court later
`
`
`
`12
`
`rules against it. 35 U.S.C. § 271(e)(4)(C). And when it
`comes to generic drugs, even modest delays have high
`costs. One study, for example, concluded that delays
`ranging from 21 to 33 months in the introduction of
`generic substitutes cost the Medicaid program alone
`more than $1.5 billion. Aaron S. Kesselheim et al.,
`Extensions of Intellectual Property Rights and Delayed
`Adoption of Generic Drugs: Effects on Medicaid
`Spending, 25 Health Affairs 1637, 1643 (2006).
`
`Because the automatic 30-month stay does not
`depend
`on
`the
`strength
`of
`the brand-name
`manufacturer’s patents or infringement claims, even
`invalid patents may block generic substitutes for
`lengthy periods of time. A speedy and efficient
`mechanism to challenge improvidently granted patents
`is therefore essential to the timely provision of generic
`medicines.
`
`Much the same is true of biosimilar medicines. By
`statute, the FDA may approve such products as
`“interchangeable” with a brand-name biologic product.
`42 U.S.C. § 262(k). Such approval is permitted only after
`a 12-year period of exclusivity for the brand-name
`product. Id. § 262(k)(7); see Sandoz, 137 S. Ct. at 1670.
`But by using multiple patents, even patents of doubtful
`validity, brand-name biologic manufacturers can delay
`the introduction of biosimilar products until well after
`the expiration of that 12-year period.
`
`b. Recent experience with efforts to introduce
`generic medicines shows that the costs of invalid patents
`are not merely theoretical. For example, when generic
`
`
`
`13
`
`manufacturers sought to introduce their versions of
`Zytiga, a brand-name prostate cancer drug, the brand-
`name manufacturer filed suit in district court. The
`generic manufacturers then sought inter partes review,
`where they defeated the patent claims on obviousness
`grounds. See BTG Int’l Ltd., 923 F.3d at 1066-67. The
`Federal Circuit affirmed the Patent Trial and Appeal
`Board’s decisions. Id. at 1066. While the generic
`manufacturers were successful in the end, the time spent
`litigating the patent claims was time in which the
`affordable, life-saving generics were not available to
`prostate cancer patients.
`
`Brand-name drug companies can also use dubious
`patents to delay the entry of more affordable biologic
`medicines. See, e.g., Cynthia Koons, Guarding Big
`Pharma’s Crown Jewel, Bloomberg Businessweek 17
`(Sept. 11, 2017) (noting that AbbVie Inc. has secured
`more than 75 ancillary patents on its best-selling
`rheumatoid arthritis drug, Humira, most within several
`years of the expiration of the original patent); accord
`Biosimilars Council, Failure to Launch: Patent Abuse
`Blocks Access to Biosimilars for America’s Patients 8
`(June 2019) (highlighting that, absent settlements, late-
`stage patents would have extended AbbVie’s patent
`protection for Humira until 2034, over thirty years after
`its approval).
`
`By allowing speedier resolution of patent validity—
`and prompt correction by the PTO of its own mistakes—
`inter partes review avoids unnecessary delays and
`furthers the congressional goal of ensuring that the
`patent monopoly on brand-name medicines be of limited
`
`
`
`14
`
`duration, thus bringing more affordable treatment
`options to patients sooner.
`
`II. Administrative Patent Judges Are Not Principal
`Officers, But to The Extent The Court Concludes
`Otherwise, It Should Reject Arthrex’s Request to
`Eliminate IPR Indefinitely.
`In the case below, the Federal Circuit held that
`Administrative Patent Judges (APJs) of the Patent Trial
`and Appeal Board are principal officers who held their
`position in violation of the Appointments Clause. AAM
`urges the Court to reverse that merits determination for
`the reasons stated by the government and by Smith &
`Nephew in their opening briefs. AAM will not repeat
`those legal arguments here but emphasizes that the
`Federal Circuit’s merits determination has required a
`large number of IPR decisions currently pending on
`appeal to be sent back to the IPR for re-adjudication by
`a new panel. See Pet. App. 223a-228a, No. 19-1434
`(Patent Trial and Appeal Board, General Order in Cases
`Remanded Under Arthrex, Inc. v. Smith & Nephew,
`Inc., 941 F.3d 1320 (Fed. Cir. 2019) (May 1, 2020)) (noting
`that the Federal Circuit had already vacated more than
`a hundred decisions by the Board in light of Arthrex,
`with more expected in the future). As the government
`has explained, there are now at least 139 cases in which
`an IPR determination has been vacated—not including
`cases currently pending in the Federal Circuit or cases
`to which the government is not a party. See Petition for
`a Writ of Certiorari 24-25, 25 n.2, United States v. Image
`Processing Techs. LLC, No. 20-74.
`
`
`
`15
`
`One casualty of that ruling is the recent IPR
`decisions invalidating unlawful branded drug patents.
`Armed with the Federal Circuit’s principal officer
`determination, brand-name manufacturers have jumped
`at the opportunity to relitigate—and delay—IPR
`(re)determinations on the validity of their patents. See,
`e.g., Order 1-2, Amgen Inc. v. Iancu, No. 2019-2171 (Fed.
`Cir. Mar. 24, 2020), ECF No. 48 (remanding to the Board
`in light of the Federal Circuit’s decision below). The
`result is that patients and taxpayers must wait even
`longer to gain access to affordable generic and biosimilar
`alternatives that have already been adjudicated through
`the IPR process not to infringe on any valid patent.
`Indeed, so many Board decisions have been vacated in
`light of Arthrex that the Board has placed the cases in
`abeyance until the APJs’ status is settled by the
`Supreme Court, further exacerbating the delay. Pet.
`App. 223a-228a, No. 19-1434 (Patent Trial and Appeal
`Board, General Order in Cases Remanded Under
`Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320
`(Fed. Cir. 2019) (May 1, 2020)).
`
`But if this Court concludes that the APJs are in fact
`principal officers, AAM urges the Court to reject
`Arthrex’s invitation to undermine the IPR process
`further by going beyond the Federal Circuit’s remedial
`decision and disbanding the IPR system indefinitely
`unless and until Congress acts to reauthorize it. As
`Arthrex has set out both in its Federal Circuit briefing
`and its petition to this Court, Arthrex contends that the
`proper remedy for an Appointments Clause violation is
`to invalidate the entire IPR system, and permit
`
`
`
`16
`
`Congress to reauthorize it if Congress so chooses. Brief
`for Petitioner at 33-34, Arthrex, Inc. v. Smith & Nephew,
`Inc., No. 19-1458 (June 30, 2020).
`
`It would be legally groundless as well as harmful to
`the American public and the cost-effective generic and
`biosimilar medications the public relies upon to eliminate
`IPR, even temporarily. As Smith & Nephew has
`explained, the Federal Circuit’s remedy lifting certain
`tenure protections is well in keeping with this Court’s
`prior Appointments Clause jurisprudence. See Brief for
`Respondents Smith & Nephew, Inc. and ArthroCare
`Corp. at 10-18, Nos. 19-1434 and 19-1458 (July 23, 2020).
`And as explained above, the IPR system is crucial to
`ensuring that necessary and affordable generic and
`biosimilar medicines can quickly and efficiently be
`brought to market free of restraints from invalid
`patents. See supra Section I.
`
`If IPR were unavailable, even just temporarily, it
`would deprive patients and drug manufacturers of all
`the efficiencies and benefits of IPR going forward. At-
`risk launches—where a generic company launches its
`product prior to resolution of patent issues at the risk of
`incurring damages
`should
`infringement
`liability
`ultimately be found—are already a perilous, time-
`sensitive proposition. Eliminating IPR would create
`further uncertainty and risk for generic and biosimilar
`drug manufacturers in determining what cost-effective
`alt
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