Testimony to the House Committee on the Judiciary, Subcommittee on Courts, the Internet, and Intellectual Property
September 14, 2006
by: Tom Schatz

Testimony

Mr. Chairman, members of the subcommittee, thank you for having this hearing to discuss H.R. 5120 and allowing me to submit testimony on behalf of the more than 1.2 million members and supporters of Citizens Against Government Waste (CAGW).  We hope that this hearing will shed light on what we believe is an irresponsible attempt to change U.S. patent law and throw a cog into the wheel of the landmark Drug Price Competition and Patent Term Restoration Act of 1984, also known as the Hatch-Waxman Act, that governs the approval process for generic drugs.  Hatch-Waxman seeks to balance two important but highly competitive goals: provide quick market access for generic manufacturers and encourage brand-name drug manufacturers to incur the high cost of drug research by providing patent term restoration to compensate for the Food and Drug Administration (FDA) regulatory review time.

 CAGW was created in 1984 By J. Peter Grace and Jack Anderson after Mr. Grace presented to President Ronald Reagan the 2,478 findings and recommendations of the Grace Commission (formally known as the President’s Private Sector Survey on Cost Control).  If all of the Grace Commission’s recommendations had been implemented, it would have saved $424.4 billion over three years.  In fact, savings from Grace Commission and other CAGW-proposed recommendations have saved $825 billion over 22 years.

 CAGW is classified as a Section 501(c)(3) organization under the Internal Revenue Code of 1954, has not received any federal money, and does not plan to receive any federal funds in the future.

H.R. 5120 has no specific title, but should be called, “The Dog Ate My Homework Act.”  Simply put, this legislation will allow the Director of the U.S. Patent and Trademark Office (PTO) to accept an application for an extension of the term of a patent if an application is filed no more than 5 days late and if the applicant files a petition showing that the delay in filing the application was unintentional.  If no attention had been paid to this legislation, it might have been added to an appropriations bill in the dead of night.  There would have been no hearing or analysis of how it would drastically change current drug approval law.  We therefore appreciate the effort being made to address this matter in an open hearing.

As you know, The Medicines Company acquired the anti-coagulant drug Angiomax from Biogen in 1997, received their New Drug Application (NDA) from the FDA on December 15, 2000, and began to sell the drug in January 2001.  The company filed for a patent extension until December 15, 2014.  Current patent law states that a company has 60 days from the day of NDA approval to file a patent term extension.  That day came and went on February 13, 2001.  Unfortunately for The Medicines Company, their representative waited until they thought was the last minute to file this simple application.  By filing the extension on February 14, 2001, The Medicines Company missed the statutory deadline.  The PTO said precisely this in a letter to the company, dated March 4, 2002:  “The NDA was approved on December 15, 2000, which makes the submission of the patent term extension application on February 14, 2001, untimely within the meaning of 35 U.S.C. 156(d)(1)…”

CAGW is concerned that the PTO has left this matter pending for several years in order to provide The Medicines Company with the opportunity to explore avenues to extend the term of its patent.  According to patent lawyers with whom we have spoken, this is unusual.  CAGW is also concerned that the PTO is under pressure to keep this application open, possibly anticipating that H.R. 5120 will be enacted.

H.R. 5120 is special interest legislation at its worst.  It would allow the Director of the PTO to accept an application for an extension of the term of a patent if an application is filed no more than 5 days late, if the applicant files a petition showing that the delay in filing the application was unintentional.  Why?  Because one company missed a statutory deadline that has existed since 1984.  As it states in H.R. 5120, it would apply to any application that, “is pending on the date of enactment, is the subject of a request for reconsideration of a denial of a patent extension, or has been denied a patent term extension in a case in which the period for seeking reconsideration of such denial has not yet expired.”  The PTO admits as much when it states in its letter to the Subcommittee on Courts, the Internet, and Intellectual Property that, “We are aware of one current application for patent term extension that would immediately benefit from enactment of the bill.”

Of further concern is the legislative language that states, “if the applicant files a petition showing, to the satisfaction of the Director, that the delay in filing the application was unintentional.”  How does one prove that a delay was “unintentional?”  Talk about opening up a can of worms and prompting numerous lawsuits!  At best, the phrase exposes PTO to all sorts of political shenanigans and lobbying pressure.  At worse, it is an automatic 5-day extension on patent term extension applications.  It is far better to have certainty on patent extension applications.  The current statute provides that certainty without burdening the public with additional patent extensions – extensions that delay generic competition.

As CAGW stated in a June 19 letter to the Judiciary Committee, timelines written into laws have meaning.  Furthermore, how likely is it that a company that has its product regulated under the Food, Drug, and Cosmetic Act will miss this kind of important deadline?  Again, the PTO provides insight.  Of the 700 applications for patent term extensions filed since 1984, when Hatch-Waxman was enacted, only three other applications were not granted due, at least in part, to timeliness issues.  That is 0.4 percent of total applications.  Surely this doesn’t warrant legislation that will provide a window to cover delays in patent extension filings.  In other words, making a law to cover an exception benefits the one to the detriment of the many who have complied with the regulatory deadlines.

CAGW understands and appreciates the importance of patents, property rights and the role research pharmaceutical companies play in our nation’s health and economy.  We have long fought against legislation that jeopardizes the vital work pharmaceutical companies do, such as price controls and the re-importation of prescription drugs.

But CAGW also appreciates the vital role that the generic industry plays in health care.  Generics encourage competition and lower the price of pharmaceuticals for all Americans.

The bottom line is H.R. 5120 gives an unfair advantage to one company and dramatically changes patent law.   It is in fact private relief legislation disguised as public law.

CAGW believes any changes to Hatch-Waxman and patent exclusivity deserve close examination.  We appreciate this hearing, but other committees need to review this legislation before it goes forward, such as the House Energy and Commerce Committee, and it deserves a full review in the appropriate Senate committees.

Neither Congress, nor taxpayers and consumers, should be used to cover-up and correct any company’s errors.  H.R. 5120 sets a dangerous precedent and it should not become law.