Case 2:15-cv-01455-WCB Document 517-6 Filed 10/13/17 Page 1 of 5 PageID #: 25858
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`Exhibit 5
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`Case 2:15-cv-01455-WCB Document 517-6 Filed 10/13/17 Page 2 of 5 PageID #: 25859
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`October 12, 2017
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`Honorable Charles E. Grassley
`Chairman
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`Committee on Judiciary
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`SD-224 Dirksen Building
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`Washington, DC 20510
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`Dear Chairman Grassley and Ranking Member Feinstein:
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`Honorable Dianne Feinstein
`Ranking Member
`Committee on Judiciary
`SD-224 Dirksen Building
`Washington, DC 20510
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`I am writing on behalf of the Biotechnology Innovation Organization (“BIO”) with
`respect to a recent request by several Judiciary Committee members that the Committee
`investigate the recent patent licensing agreement between Allergan and the Saint Regis
`Mohawk Tribe. While BIO does not comment on specific business transactions of its
`members, BIO believes that any inquiry by the Judiciary Committee in this area must include
`a serious review of the numerous deficiencies of the U.S. Patent & Trademark Office (PTO)
`inter partes review system (“IPR”), and the extent to which its use by certain generic
`pharmaceutical manufacturers undermines longstanding and carefully-balanced procedures
`governing market entry and patent dispute resolution under the highly successful Hatch-
`Waxman Act.
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`BIO is the world’s largest biotechnology trade association. It represents over 1,100
`companies, research institutions, technology incubators, and similar entities in the medical,
`agricultural, environmental and industrial biotechnology sectors, the vast majority of which
`are small, start-up companies that are engaged in the most cutting-edge and risky R&D and
`are heavily reliant on massive amounts of private investment. As such, BIO is focused on the
`critical and positive role that patents play in incentivizing biotechnology and pharmaceutical
`innovation and in generating millions of high-skill jobs in the United States. Given this focus,
`BIO is extremely concerned with the way in which the IPR system has failed to live up to
`Congress’s hopes for a limited, but faster and cheaper, alternative to certain types of patent
`litigation. Instead, IPR as it exists today, is undercutting the patent system’s intended
`incentives for innovation by serving as an open-ended and duplicative forum for a new class
`of “patent trolls” that is introducing significant business uncertainty and cost.1
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`1 BIO also recently submitted an amicus curiae brief in the Oil States Energy Services, LLC v.
`Greene’s Energy Group, LLC, No. 16-1712, which is currently before the United States
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`Case 2:15-cv-01455-WCB Document 517-6 Filed 10/13/17 Page 3 of 5 PageID #: 25860
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`As you know, IPR has become highly controversial. There are persistent complaints
`that these proceedings lack finality and due process, use legal standards that are
`systematically unfavorable to patentees, and that the PTO has emphasized speed and
`efficiency over procedural fairness. IPR is too often used not as a substitute for, but together
`with, district court litigation for multi-pronged attacks on the same patents in different fora.
`There are instances of valuable patents being upheld after years of litigation by a federal
`court, only to be struck down on the same record through an IPR using a weaker legal
`standard. For patent challengers, IPR can be an effective form of answer-shopping. For
`patentees, they are a form of double – indeed seemingly endless – jeopardy.
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`Importantly, Congress never discussed or contemplated the potential impact on
`pharmaceutical patent litigation under the Hatch Waxman Act (HWA) when it created the
`IPR system.2 And such use of IPR has introduced unexpected and unintended complications
`into the Hatch-Waxman system. The HWA, enacted in 1984, is the principal law governing
`approval and market entry of generic drugs. For 30 years, the HWA has successfully
`balanced its goals of drug innovation and cheaper access: more innovative new drugs have
`been developed in the United States than in the rest of the world combined, while at the same
`time, more than 90% of drug prescriptions in America today are for generic drugs – one of
`the highest generic market penetration rates in the industrialized world. In addition, U.S.
`consumers enjoy generic drug prices that are among the lowest among industrialized
`countries.
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`Generic drug companies already receive benefits under the HWA that exist in no
`other industry, including a safe harbor from infringement liability during drug development,
`the ability to issue patent challenges in FDA certifications, a lucrative 180-day generic
`exclusivity, and the ability to fully and fairly challenge patents in federal district court
`without risk of financial liability. Under this system, generic drug companies also get the
`benefit of the innovator company’s prior demonstration of safety and efficacy for a given
`medicine, resulting in enormous reductions in both drug development costs and business risk.
`While continuing to reap these benefits, generic companies now use IPR to game the system
`in pursuit of further advantages – for example, by litigating the innovator company’s patents
`for about a year in federal district court, and then using what they have learned to open a
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`Supreme Court. It is BIO’s position that the current IPR process is constitutionally infirm
`and requires significant reforms.
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` See, e.g., Statement of Chairman Charles Grassley (R-IA), Executive Business Meeting,
`Senate Judiciary Committee, June 4, 2015 (“When the America Invents Act was considered,
`it’s my understanding that there was no debate over whether or how IPR would impact these
`important processes.”).
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`Case 2:15-cv-01455-WCB Document 517-6 Filed 10/13/17 Page 4 of 5 PageID #: 25861
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`parallel challenge to the same patents in an IPR proceeding. If timed strategically, this
`parallel IPR proceeding can be used as a hedge against the results of the district court
`litigation. If the federal court determines the innovator’s patent to be valid, the IPR may still
`produce the opposite result. And even if the court and the PTO both agree that the patent is
`valid, the generic company has not one but two chances to overturn the result on appeal. It is
`the quintessential double bite at the apple.
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`Through such gamesmanship, generic drug companies seek to secure for themselves
`the benefits of the Hatch-Waxman system without being bound by that system’s results. In
`the process, they are undermining the carefully constructed policy balance of the HWA, by
`creating uncertainty, delay, and increased costs in the system for drug innovators and other
`generic competitors, without producing any offsetting benefits for patients or consumers.
`After five years of using IPRs in this way, generic companies cannot point to a single generic
`drug that entered the market sooner because the PTO ruled in their favor. Indeed, such
`gamesmanship by generic drug companies will serve only to harm patients in the long run by
`dampening investment in already risky biomedical innovation.
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`As you will recall, BIO has been raising concerns with the Senate Judiciary
`Committee about the impact of IPR on the HWA system for several years. And more than
`two years ago, members of this Committee began expressing their concern with these
`developments.3 Since then, the problem has only become worse. It is time for this Committee
`to reassess whether IPR remains, in Senator Hatch’s words, the “legitimate and cost-effective
`alternative to litigation” it was intended to be, while at the same time preventing misuse of
`“this administrative process to interfere with a litigation system that encourages the
`development of cheaper life-saving medicines.”
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`Finally, let me emphasize that BIO takes no particular position with respect to
`Allergan’s transaction with the Saint Regis Mohawk Tribe. We note, however, that sovereign
`immunity is nothing new in the patent system. State-owned patents have been part of the
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`3 See, e.g., Transcript of Executive Business Meeting, Senate Judiciary Committee, June 4,
`2015 (Statement of Senator Charles Schumer (D-NY): “When we passed the AIA and set up
`the IPR process, no one anticipated it would be used as an end run around Hatch -
`Waxman.…That pattern is troubling to me and many other sponsors and I see a strong
`justification for work to preserve the incentive structure as it existed for decades.”; Statement
`of Senator John Cornyn (R-TX): “When we passed the America Invents Act, no one
`anticipated that IPR would impact [Hatch Waxman] in the way that it has and it is important
`we preserve incentives both for generics to come to market and to encourage future
`investments in developing new treatments for patients.”).
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`Case 2:15-cv-01455-WCB Document 517-6 Filed 10/13/17 Page 5 of 5 PageID #: 25862
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`Hatch-Waxman system for decades, and we are aware of no instance where sovereign
`immunity has ever interfered with or delayed resolution of innovator-generic patent disputes
`in federal court. It is the misuse of IPR, not the assertion of sovereign immunity, that has
`introduced imbalance into the HWA framework. We remain committed to restoring that
`balance through reasonable, but urgently-needed reforms of the IPR system.4
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`With Sincerest Regards,
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`James C. Greenwood
`President and CEO
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`4 For a description of BIO’s proposed reforms, see generally: testimony of Hans Sauer on
`behalf of BIO, United States Senate Committee on the Judiciary Hearing on “The Impact of
`Abusive Patent Litigation Practices on the American Economy” March 18, 2015. BIO also
`supports the PTAB reform concepts embedded in S. 1390, introduced 6/21/2017 by Senators
`Coons, Cotton, Durbin and Hirono.
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