A court case over an obscure fracking patent could put an end to one of the pharmaceutical industry's biggest irritants.
The Supreme Court heard arguments Monday in two patent cases that could determine the future of inter partes review (IPR) -- an expedited patent-challenge process that has knocked out thousands of patents and has been turned against several blockbuster drugs. It was thrust into the headlines after Allergan PLC tried to avoid it by taking advantage of a Native American tribe's sovereign immunity.
Comments made during Monday's arguments suggest conservative justices such as Neil Gorsuch have issues with IPR and that it's possible the Supreme Court could do away with it -- which would benefit big pharma handsomely.
IPR is faster, cheaper, and friendlier to patent plaintiffs than going to court. That makes it particularly worrisome to pharma companies, which want market exclusivity for their drugs to last as long as possible. Since IPR became available in 2012, 550 biopharma patent petitions have been filed with the U.S. Patent and Trademark Office, 337 of which have been accepted by the Patent Trial and Appeal Board (PTAB) for review. Other industries have bigger numbers, but that's still a lot of drugs at risk.
Billions of dollars of drug sales are at stake. A district court ultimately invalidated the patents Allergan tried to protect with its deal with the St. Regis Mohawk tribe. But the fact that the company even tried such an ill-advised and broadly criticized deal shows how seriously drugmakers take IPR. And there are even bigger drugs in danger. AbbVie Inc.'s Humira, the world's best-selling medicine, is a favorite IPR target.
The death of IPR is not good for everyone. Generic drugmakers that file patent challenges in the hopes of getting competing products to market would suffer. Consumers would likely lose out on cheaper drugs. Some innovative companies, such as Biogen Inc. and Amgen Inc., are also trying to develop copies of blockbuster medicines, and IPR offers them a faster path to market. And drugmakers have occasionally used the process to target potential legal threats to their own products.
But branded drugmakers would trade that limited IPR use for increased safety for their own medicines in a heartbeat.
The outcome of the Supreme Court case is far from certain; tech firms love the IPR process and its ability to banish patent trolls as much as pharma loathes it.
But Monday's arguments give pharma a spark of hope that the good old days of lengthier and more expensive patent fights may return.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
To contact the editor responsible for this story:
Mark Gongloff at email@example.com