The Pharmaceutical Industry- Another Unintended Consequence of Patent Reform

February 23, 2016

By: Maureen Veterano

The pharmaceutical industry is one of many groups (and individuals) that does not like the current patent laws. However, they have come up with a unique approach to getting around the provisions that negatively affect their business. Instead of spending money lobbying for patent reform, they are asking Congress to exempt drug patents from being challenged under the patent law. According to a recent article in the Wall Street Journal, the Congressional Budget Office concluded that, if this passes, the cost to federal health care programs could exceed one billion dollars over a ten-year period due to the delay of the generic drugs entering the marketplace.

At issue is an administrative procedure known as an Inter Partes Review, or IPR for short. The pharmaceutical industry wants legislation that exempts their products from IPR challenges. The drug companies complain that this unfairly allows the generic drug makers to get around a 1984 law that requires the FDA to wait 30 months before approving generic versions of medicines whose patents are being challenged in court. The IPR is an administrative procedure (instead of a civil procedure filed in state or federal court) and typically moves much faster than a civil lawsuit over patent invalidity. This allows for the generic drugs to get to market faster if the IPR is successful.

This is yet another example of the unintended (and possibly unforeseeable) consequences of the recent patent legislation. One thing is certain- whether it is new laws or recent Supreme Court rulings, business owners continue to complain that the rules are always changing in the patent litigation game. Preparing for the cost of an IP lawsuit is critical. The reality is, if companies cannot afford the cost of an IP lawsuit, they risk going out of business or being forced into an unattractive licensing agreement. Prudent executives understand this and mitigate their business risk by putting the appropriate insurance policies in place to protect their company. IPISC’s IP insurance policies help pay legal costs if companies get sued for IP infringement or if their intellectual property rights are infringed. The policies offer the confidence that businesses cannot just be spent out of business and allow them to stay in the fight and to prevent forced settlements.

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