JAMES-KELLEY-PatentTermMatters

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Patent Term Matters

Term and Scope

AIPLA

14 May 2009

Patent Term Matters

James J. Kelley

Ass’t General Patent Counsel

Eli Lilly and Company

Indianapolis, Indiana 46285

jim.kelley@lilly.com


Jeffrey P.
Kushan

Partner

Sidley Austin Brown & Wood

Washington, D.C. 20005

jkushan@sidley.com



Vicki G. Norton

Partner

Duane Morris LLP

San Diego, CA 92101
-
8285

vgnorton@duanemorris.com


Pamela
Politis

Patent Attorney

Endo Pharmaceuticals

Chadds

Ford,

PA 19317

politis.pamela@endo.com


14 May 2009

2

AIPLA Chemical and Biotechnology Sections

Motivation for This Session


Conference Speakers


“PTE = ½ day/day during testing phase + 1 day/day during
review phase (≤5, ≤14)”


Due diligence observations


premature filings


protracted, non
-
strategic prosecution


RCEs, CIPs, TDs, extensions, late submissions


final rejections, not ready for appeal


pursuit of “scope”


no apparent concern about term


How does pursuit of “scope” potentially jeopardize
>14
-
year effective patent term for drugs?

14 May 2009

3

AIPLA Chemical and Biotechnology Sections

How Much Does Term Matter?


One extra day of exclusivity for a $1B/year
drug is
$2.75 million
.


Decisions that may affect patent term must
be made carefully.


Example
:


direct non
-
provisional US filing vs.


PCT followed 18 months later by US national filing


NPV for $1B/year drug


up to ~$150 million
.
1


2
assuming 8% discount rate, 9
-
month difference in patent term (18 months
÷

2), and complete loss of market at

end of term

14 May 2009

4

AIPLA Chemical and Biotechnology Sections

Agenda

Discussion Starters


Jeff Kushan


PTA


Jim Kelley


PTE and PTA


Vicki Norton
-

Scope: Enemy of Term? The Impact of
Recent Decisions


Pam Politis


Strategy Questions

Panel and Audience Discussion

Questions May be Asked at Any Time


14 May 2009

AIPLA Chemical and Biotechnology Sections

5

35 U.S.C. PTE Provisions


PTE is applied after PTA
-

§

156 (a)


PTE accrues only after patent issues
-

§

156 (c)


Lack of diligence deduction; ½ day per day;
14
-
year limit
-

§

156 (c)


Regulatory review period = testing phase plus
review phase
-

§

156 (g)(1)(B)(i) and (ii), resp.


5
-
year limit
-

§

156 (g)(6)(A)






14 May 2009

6

AIPLA Chemical and Biotechnology Sections

PTE = PTR


Drug Price Competition and
P
atent
T
erm
R
estoration
Act


Must “lose” patent term before it can be “restored.”


PTE “credits”


Regulatory review period minus any time during which there
was lack of diligence;


½ day per day from when the patent has issued and an IND has
become effective until a complete NDA is submitted,



plus


1 day per day from when the patent has issued and the NDA is
complete until the NDA is approved,


Total patent term restored ≤ 5 yrs


Total period of Effective Patent Term (EPT) ≤ 14 yrs


14 May 2009

7

AIPLA Chemical and Biotechnology Sections

Effective Patent Term (EPT)

Patent
Term
Starts

IND

Effective

NDA

Complete

D

T

P

Patent

Issues

R

NDA
Approved

EPT (≤14 years)

Patent
Expires

Inputs
:

P = time from beginning of patent term to patent issue (“pending phase”)


D = time from beginning of patent term until IND effective date (“delay”)


T = time from IND effective date until NDA complete (“testing phase”)


R = time from NDA acceptance until NDA approval (“review phase”)

Output
:

EPT = time from NDA approval until patent expires

PTE “Credits”

½ day
per day

1 day per
day

Expiry of

17
-

or 20
-
year term

PTE (≤5 years)

14 May 2009

8

AIPLA Chemical and Biotechnology Sections

Effective Patent Term (EPT)

Patent
Term
Starts

IND

Effective

NDA

Complete

D

T

P

Patent

Issues

R

NDA
Approved

EPT (≤14 years)

Inputs
:

P = time from beginning of patent term to patent issue (“pending phase”)


D = time from beginning of patent term until IND effective date (“delay”)


T = time from IND effective date until NDA complete (“testing phase”)


R = time from NDA acceptance until NDA approval (“review phase”)

Output
:

EPT = time from NDA approval until patent expires

PTE “Credits”

½ day
per day

1 day per
day

14 May 2009

9

AIPLA Chemical and Biotechnology Sections

Patent
Expires

Expiry of

17
-

or 20
-
year term

PTE (≤5 years)

Effective Patent Term (EPT)

Patent
Term
Starts

IND

Effective

NDA

Complete

D < 0

T

P

Patent

Issues

R

NDA
Approved

EPT (≤14 years)

Inputs
:

P = time from beginning of patent term to patent issue (“pending phase”)


D = time from beginning of patent term until IND effective date (“delay”)


T = time from IND effective date until NDA complete (“testing phase”)


R = time from NDA acceptance until NDA approval (“review phase”)

Output
:

EPT = time from NDA approval until patent expires

PTE “Credits”

½ day
per day

1 day per
day

14 May 2009

10

AIPLA Chemical and Biotechnology Sections

Patent
Expires

Expiry of

17
-

or 20
-
year term

PTE (≤5 years)

Attorney Influence Over EPT Variables


No control:
T
,
R


Some influence:
D



time between
start of
patent term

and start testing phase


Most influence:
P


time to issue patent

Patent
Term
Starts

IND

Effective

NDA

Complete

D

T

P

Patent

Issues

R

NDA
Approved

EPT

Patent
Expires

14 May 2009

11

AIPLA Chemical and Biotechnology Sections

Survey


48 human drugs that qualified for PTE (no
devices or animal products)


Sources


USPTO site


US patents


Federal Register



Approval

Year

Number in Survey

1996

1

2000

1

2001

3

2002

3

2003

6

2004

6

2005

5

2006

14

2007

9

14 May 2009

12

AIPLA Chemical and Biotechnology Sections

Survey Results


Averages

P

D

T

R

EPT

17
-
year (18)

5.9

5.9

5.5

0.9

12.8

20
-
year (30)

4.8

2.4

5.9

1.1

12.9

Biotech (18)

6.1

3.7

5.3

1.3

13.2

Small Mol. (30)

4.7

3.6

6.0

0.9

12.6

Total (48)

5.2

3.6

5.7

1.1

12.8

14 May 2009

13

AIPLA Chemical and Biotechnology Sections

P = time from beginning of patent term to patent issue (“pending phase”)

D = time from beginning of patent term until IND effective date (“delay”)

T = time from IND effective date until NDA complete (“testing phase”)

R = time from NDA acceptance until NDA approval (“review phase”)

EPT = effective patent term, i.e., time from NDA approval until patent expires

Survey Results


Ranges

P

D

T

R

EPT

Minimum

1.5

-
13.3

2.6

0.3

7.7

1
st

quartile

3.1

1.8

4.0

0.5

12.2

2
nd

quartile

4.6

3.0

5.5

0.8

14.0

3
rd

quartile

7.4

6.2

6.6

1.2

14.0

Maximum

12.4

10.4

20

3.0

14.0

14 May 2009

14

AIPLA Chemical and Biotechnology Sections

P = time from beginning of patent term to patent issue (“pending phase”)

D = time from beginning of patent term until IND effective date (“delay”)

T = time from IND effective date until NDA complete (“testing phase”)

R = time from NDA acceptance until NDA approval (“review phase”)

EPT = effective patent term, i.e., time from NDA approval until patent expires

An EPT “Mountain”


PTE Only


14 May 2009

AIPLA Chemical and Biotechnology Sections

15

Topographical View


14 May 2009

AIPLA Chemical and Biotechnology Sections

16

14 May 2009

AIPLA Chemical and Biotechnology Sections

17

EPT Observations


The longer the testing (
T
), the smaller the
“plateau.”


Longer prosecution (
P
) and greater delay (
D
)
lower likelihood for 14 years.


Length of prosecution (
P
) has least effect when
D
=0, that is, when patent term starts at the same
time that clinical testing starts.


Length of review (
R
) has little to no effect when
T

= 4
-
6 years, but longer review (
R)

lowers
likelihood for 14 years when
T

= 8
-
10 years.


14 May 2009

18

AIPLA Chemical and Biotechnology Sections

PTE Summary


Must have a patent before PTE “credits” accrue


therefore want to issue sooner than later.


Realizing this will affect drafting, filing, and
prosecuting strategies:


Longer prosecution => less EPT


Earlier patent filing => less EPT


Longer development time => less EPT


If short development times (<~4
-
5 years), then less
concern about prosecution time.

14 May 2009

AIPLA Chemical and Biotechnology Sections

19

PTE and PTA


§

156 (c) The term … shall be extended by the time equal to the
regulatory review period for the approved product which period
occurs after the date the patent is issued, except that
-





(3) if the


period

remaining in the term of a patent after the date of the
approval of the approved product



when added to the


regulatory review period

as revised under paragraphs (1) and (2)


exceeds fourteen years,


the period of extension shall be reduced so that


the total of
both such periods

does not exceed fourteen years;

14 May 2009

AIPLA Chemical and Biotechnology Sections

20

156(c)(3), 154(b), 156(a)

Patent
Term
Starts

IND

Effective

NDA

Complete

Patent

Issues

NDA
Approved

Patent
Expires

Expiry of

17
-

or 20
-
year term

PTE (≤5 years)

14 May 2009

21

AIPLA Chemical and Biotechnology Sections

PTA

EPT (≤14 years)

156(c)(3) if the
period

remaining in the term of a patent after the
date of the approval of the approved product
… when added to the
regulatory review period
as revised under paragraphs (1) and (2)
exceeds fourteen years, the period of extension shall be reduced so
that
the total of
both such periods
does not exceed fourteen years

Incorrect Interpretation of 156(c)(3)

Patent
Term
Starts

IND

Effective

NDA

Complete

Patent

Issues

NDA
Approved

EPT (≤14 years)

Patent
Expires

Expiry of

17
-

or 20
-
year term

PTE (≤5 years)

14 May 2009

22

AIPLA Chemical and Biotechnology Sections

PTA

156(c)(3) if the
period

remaining in the term of a patent after the
date of the approval of the approved product
… when added to the
regulatory review period
as revised under paragraphs (1) and (2)
exceeds fourteen years, the period of extension shall be reduced so
that
the total of
both such periods
does not exceed fourteen years

PTE and PTA


Does the 14
-
year limit apply to both PTE and
PTA?


Statutory language seems clear


No.


But, will the USPTO take a different interpretation,
as in
Wyeth
?


No cases yet.


Some could be in process now.

14 May 2009

AIPLA Chemical and Biotechnology Sections

23

PTE and PTA


PTA vs.PTE


PTE


want to issue sooner, to start accruing “credit”
sooner


only ½ day per day during testing phase


PTE


want to issue later, but without incurring
deductions


1 day per day

14 May 2009

24

AIPLA Chemical and Biotechnology Sections

PTE and PTA


Poor correlation between pendency and PTA


see Patently
-
O blog, March 14, 2008


Average PTA = ~1.1 years over
-
all


Longer for
pharma

& biotech patents covering
products? Longer for such patents that receive PTE?


No data yet (
Wyeth

and other cases)


No patents that obtained PTE also obtained PTA,
yet


PTE data are very delayed (2
-
3 years from approval)


Only 2 patents in survey were filed after May 29, 2000
and neither qualified for any PTA.

14 May 2009

25

AIPLA Chemical and Biotechnology Sections

PTE and PTA Summary


PTA will extend PTE
-
extended patent term
beyond 14 years.


But, will USPTO take a different view?


Must be very careful not to lose PTA after
lengthy prosecution


e.g., lost appeal, RCE, TD


could jeopardize both PTE and PTA

14 May 2009

AIPLA Chemical and Biotechnology Sections

26

Back up Slides


14 May 2009

AIPLA Chemical and Biotechnology Sections

27

PTE and PTA


35 U.S.C.
§

156 (a
) The term of a patent …
shall be extended … from the original
expiration date of the patent,
which shall
include any patent term adjustment granted
under section 154(b)

if ….



14 May 2009

28

AIPLA Chemical and Biotechnology Sections

Requirement for Patent Issue


35 U.S.C.
§

156 (c)
The term of a patent
eligible for extension under subsection (a)
shall be extended by the time equal to the
regulatory review period for the approved
product
which period occurs after the date
the patent is issued
, except that
-

14 May 2009

AIPLA Chemical and Biotechnology Sections

29

Deductions, Partial Credit, 14
-
year
Limit


35 U.S.C.
§

156 (c) …


(1) each period of the regulatory review period shall
be reduced by any period [in which diligence was not
exercised];


(2) after any reduction required by paragraph (1), the
period of extension shall include only one
-
half of the
time [described in 35 U.S.C.
§

156 (g)(1)(B)(
i
)


i.e.,
from IND to NDA];


(3) if the period remaining in the term of a patent
after the date of the approval … exceeds fourteen
years, the period of extension shall be reduced so that
the total of both such periods does not exceed
fourteen years

14 May 2009

AIPLA Chemical and Biotechnology Sections

30

“Regulatory Review Period”


35 U.S.C
§

156 (g) For purposes of this section,
the term "regulatory review period" has the
following meanings: …


(1)(B) The regulatory review period for a new
drug, antibiotic drug, or human biological
product is the sum of



(
i
) the period beginning on the date [an IND] became
effective … and ending on the date an [NDA] was
initially submitted, and


(ii) the period beginning on the date the [NDA]was
initially submitted and ending on the date such [NDA]
was approved.



14 May 2009

AIPLA Chemical and Biotechnology Sections

31

5
-
year limit


35 U.S.C.
§

156 (g)(6)

A period determined
under any of the preceding paragraphs is
subject to the following limitations:


(A) …, the period of extension determined on
the basis of the regulatory review period …
may not exceed five years
.



14 May 2009

AIPLA Chemical and Biotechnology Sections

32