`
`No. 16-712
`
`
`IN THE
`Supreme Court of the United States
`____________________
`
`OIL STATES ENERGY SERVICES, LLC,
`
`Petitioner,
`
`v.
`
`GREENE’S ENERGY GROUP, LLC, et al.,
`
`Respondents.
`
`____________________
`
`On Writ of Certiorari
`to the United States Court of Appeals
`for the Federal Circuit
`____________________
`
`BRIEF OF
`AMERICA’S HEALTH INSURANCE PLANS
`AS AMICUS CURIAE
`IN SUPPORT OF RESPONDENTS
`____________________
`
`
`JULIE SIMON MILLER
`MICHAEL S. SPECTOR
`AMERICA’S HEALTH
` INSURANCE PLANS
`601 Pennsylvania Ave., NW
`Washington, DC 20004
`
`
`
`
`ANNA-ROSE MATHIESON
` Counsel of Record
`BEN FEUER
`CALIFORNIA APPELLATE
` LAW GROUP LLP
`96 Jessie Street
`San Francisco, CA 94105
`(415) 649-6700
`annarose@calapplaw.com
`
`
`
`i
`
`TABLE OF CONTENTS
`
`Page
`
`
`
`INTEREST OF AMICUS CURIAE........................... 1
`
`SUMMARY OF ARGUMENT ................................... 3
`
`ARGUMENT ............................................................. 6
`
`I. Congress Designed Inter Partes Review
`to Correct Inappropriate Patent
`Monopolies, Which (Among Other
`Harms) Drive up Drug Prices ....................... 6
`
`A. Patents on prescription drugs
`significantly and directly affect
`health plan premiums and
`consumer costs ..................................... 7
`
`B. Patent monopolies reflect a policy
`judgment that higher costs are
`worthwhile for a short time, after
`which consumers will benefit from
`less costly alternatives ....................... 10
`
`C. Congress designed inter partes
`review to reexamine
`inappropriately issued patents
`quickly and cost-effectively ................ 13
`
`II. Inter Partes Review Successfully Reex-
`amines Improper Patents ........................... 17
`
`A. Inter partes review yields
`reasonable, appropriate results ......... 17
`
`B. Results for biopharmaceutical inter
`partes review generally track
`district court results for patent
`cases ................................................... 20
`
`
`
`ii
`
`TABLE OF CONTENTS
`(continued)
`
`Page
`
`III. Eliminating Inter Partes Review Will
`Spur Patent Abuse and Harm
`Consumers ................................................... 22
`
`A. Inter partes review takes
`significantly less time and money
`than district court litigation .............. 22
`
`B. Eliminating inter partes review
`would reward patent abuse ............... 26
`
`C. Improper patents can stifle
`competition and deter innovation ...... 30
`
`CONCLUSION ........................................................ 32
`
`
`
`
`
`
`
`
`
`
`
`iii
`
`TABLE OF AUTHORITIES
`
`Page
`
`CASES
`
`Cuozzo Speed Techs., LLC v. Lee
`136 S. Ct. 2131 (2016) .................................. 14, 19
`
`Dynamic Drinkware, LLC v. Nat’l
`Graphics, Inc.
`800 F.3d 1375 (Fed. Cir. 2015) .......................... 16
`
`Precision Instrument Mfg. Co. v. Auto.
`Maint. Mach. Co.
`324 U.S. 806 (1945) ............................................ 14
`
`Scott Paper Co. v. Marcalus Mfg. Co.
`326 U.S. 249 (1945) ...................................... 11, 30
`
`STATUTES, REGULATIONS &
`LEGISLATIVE MATERIALS
`
`157 Cong. Rec. 9778 (2011) ..................................... 14
`
`37 C.F.R. § 1.291 ..................................................... 16
`
`37 C.F.R. § 42.107 ................................................... 25
`
`35 U.S.C. §§ 100 et seq. ........................................... 14
`
`35 U.S.C. § 122 ........................................................ 16
`
`35 U.S.C. § 132 ........................................................ 16
`
`35 U.S.C. § 141 .................................................. 16, 19
`
`35 U.S.C. § 145 ........................................................ 16
`
`35 U.S.C. § 314 .................................................. 17, 25
`
`35 U.S.C. § 316 .................................................. 16, 25
`
`35 U.S.C. § 319 ........................................................ 19
`
`H.R. Rep. No. 112-98 (2011) .................................... 14
`
`S. Rep. No. 110-259 (2008) ...................................... 14
`
`
`
`
`
`
`
`
`
`iv
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page
`
`OTHER AUTHORITIES
`
`AHIP, Where Does Your Premium Dol-
`lar Go? (March 2, 2017), https://
`www.ahip.org/hhealth-care-dollar/ .................. 8, 9
`
`American Intellectual Property Law As-
`sociation, 2015 Report of the Eco-
`nomic Survey (June 2015) ........................... 23, 24
`
`American Intellectual Property Law As-
`sociation, 2017 Report of the Eco-
`nomic Survey (June 2017) ....................... 3, 23, 24
`
`Corinne E. Atton & April M. Breyer, Bi-
`ologics/HQ Fitzgerald, Drug Patents
`May Fare Better Than Other Tech-
`nologies In IPR Proceedings (June
`12, 2017), http://www.biolog-
`icshq.com/wp-content/uploads/
`2017/06/Drug-Patents-May-Fare-
`Better-Than-Other-Technologies-In-
`IPR-Proceedings.pdf .......................................... 21
`
`Courtenay C. Brinckerhoff, Coherus
`Challenges One AbbVie Humira Pa-
`tent In Four PTAB Proceedings,
`PharmaPatents (July 18, 2017),
`https://www.phar-
`mapatentsblog.com/2017/07/18/co-
`herus-challenges-abbvie-humira-pa-
`tent-in-four-ptab-proceedings/ ........................... 29
`
`Amy Brown, Evaluate Grp., EP Vantage
`2017 Preview (Dec. 2016), available
`at info.evaluategroup.com/rs/607-
`YGS-364/images/EPV2017Prev.pdf ................... 27
`
`
`
`
`
`
`
`v
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page
`
`Center for Sustainable Health Spend-
`ing, Insights from Monthly National
`Health Spending Data Through De-
`cember 2015 1 (Feb. 16, 2016), avail-
`able at https://altarum.org/sites/de-
`fault/files/uploaded-related-
`files/CSHS-Spending-Brief_Febru-
`ary_2016.pdf ........................................................ 7
`
`Centers for Medicare & Medicaid Ser-
`vices, Update to the Medicare Drug
`Spending Dashboard (Nov. 14,
`2016), https://www.cms.gov/News-
`room/MediaReleaseDatabase/Fact-
`sheets/2016-Fact-sheets-items/2016-
`11-14.html .................................................... 7, 8, 9
`
`Mildred K. Cho et al., Effects of Patents
`and Licenses on the Provision of
`Clinical Genetic Testing Services, 5
`J. MOLECULAR DIAGNOSTICS 3 (Feb.
`2003), available at https://
`www.ncbi.nlm.nih.gov/pmc/arti-
`cles/PMC1907368/#__ffn_sectitle ...................... 31
`
`Roger Collier, Drug Patents: The Ever-
`greening Problem, 185 CAN. MED.
`ASS’N J. E385 (June 11, 2013), avail-
`able at https://www.ncbi.nlm.
`nih.gov/pmc/articles/PMC3680578/ ................... 26
`
`Ryan Davis, Inter Partes Reviews Be-
`coming Friendlier to Patent Owners,
`Law 360 (March 1, 2017) https://
`www.law360.com/articles/894916/in-
`ter-partes-reviews-becoming-friend-
`lier-to-patent-owners ......................................... 17
`
`
`
`
`
`
`
`vi
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page
`
`Bianca DiJulio, Jamie Firth, and Molly-
`ann Brodie, Kaiser Health Tracking
`Poll: October 2015 (Oct. 28, 2015),
`http://www.kff.org/health-costs/poll-
`finding/kaiser-health-tracking-poll-
`october-2015/ ........................................................ 6
`
`Electronic Frontier Foundation, Stupid
`Patent of the Month: Ford Patents a
`Windshield (May 31, 2017), https://
`www.eff.org/deeplinks/2017/05/stu-
`pid-patent-month-ford-patents-wind-
`shield .................................................................. 15
`
`Electronic Frontier Foundation, Stupid
`Patent of the Month: HP Patents Re-
`minder Messages (July 31, 2017),
`https://www.eff.org/deeplinks/
`2017/07/stupid-patent-month-hp-pa-
`tents-reminder-messages ................................. 15
`
`Alfred B. Engelberg, Aaron S. Kessel-
`heim, and Jerry Avorn, Balancing
`Innovation, Access, and Profits —
`Market Exclusivity for Biologics, 361
`NEW ENG. J. MED. 1917 (Nov. 12,
`2009), available at http://
`www.nejm.org/doi/full/
`10.1056/NEJMp0908496#t=article ............. 13, 26
`
`Federal Trade Commission, Emerging
`Health Care Issues: Follow-On Bio-
`logic Drug Competition (June 2009),
`available at https://www.ftc.gov/re-
`ports/emerging-health-care-issues-
`follow-biologic-drug-competition-fed-
`eral-trade-commission-report ............................ 11
`
`
`
`
`
`
`
`vii
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page
`
`Theo Francis, Can You Get A Patent On
`Being A Patent Troll?, NPR (Aug. 2,
`2012), http://www.npr.org/sections/
`money/2012/08/01/157743897/can-
`you-get-a-patent-on-being-a-patent-
`troll ..................................................................... 15
`
`Free Patents Online, Method of Swing-
`ing on a Swing, http://www.free-
`patentsonline.com/6368227.html
`(last visited Oct. 24, 2017) ................................. 15
`
`Monica Grewal, James Hill, and
`Kathryn Zalewski, Trends in Inter
`Partes Review of Life Sciences Pa-
`tents, 92 BNA’S PAT., TRADEMARK, &
`COPYRIGHT J. 4 (June 17, 2016),
`available at https://www.wil-
`merhale.com/uploaded-
`Files/Shared_Content/Editorial/Pub-
`lications/Documents/2016-06-07-
`Trends-in-Inter-Partes-Review-of-
`Life-Sciences-Patents.pdf ............................ 19, 20
`
`Divya Grover, Costly Drugs to Weigh on
`U.S. Employers’ Expenses in 2018:
`Survey, Reuters (Sept. 18, 2017),
`http://www.reuters.com/article/us-
`usa-healthcare-survey/costly-drugs-
`to-weigh-on-u-s-employers-expenses-
`in-2018-survey-idUSKCN1BT1FR .................... 10
`
`Halliburton, Patent Acquisition and As-
`sertion by a (Non-Inventor) First
`Party Against a Second Party (April
`27, 2007), available at https://
`www.google.com/patents/
`US20080270152 ................................................. 15
`
`
`
`
`
`
`
`viii
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page
`
`Ramy Hanna, Liane M. Peterson & Re-
`becca J. Pirozzolo-Mellowes, Com-
`paring the PTAB and District Court
`for Life Sciences Patents, Mondaq
`(July 20, 2017), http://www.mon-
`daq.com/article.asp?arti-
`cleid=611670&friend=1 ..................................... 22
`
`Michael A. Heller & Rebecca S. Eisen-
`berg, Can Patents Deter Innovation?
`The Anticommons in Biomedical Re-
`search, 280 SCIENCE 698 (May 1,
`1998), available at http://science.sci-
`encemag.org/content/280/
`5364/698.full ...................................................... 31
`
`Henry J. Kaiser Family Foundation,
`Public Opinion on Prescription
`Drugs and Their Prices,
`http://www.kff.org/slideshow/public-
`opinion-on-prescription-drugs-and-
`their-prices (last visited Oct. 24,
`2017) ................................................................... 12
`
`Bradford R. Hirsch, Suresh Balu &
`Kevin A. Schulman, The Impact of
`Specialty Pharmaceuticals as Driv-
`ers of Health Care Costs, 33:10
`HEALTH AFFAIRS 1714 (Oct. 2014) ....................... 8
`
`IMS Institute for Healthcare Informat-
`ics, Global Medicines Use in 2020:
`Outlook and Implications (Nov.
`2015), available at https://s3.amazo-
`naws.com/assets.fiercemarkets.net/
`public/005-LifeSciences/imsglobalre-
`port.pdf ............................................................. 4, 8
`
`
`
`
`
`
`
`ix
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page
`
`Judith A. Johnson, FDA Regulation of
`Follow-On Biologics (Cong. Research
`Serv., Apr. 26, 2010), https://prima-
`ryimmune.org/wp-content/uploads/
`2014/05/Biosimilars_Congres-
`sional_Research_Service_Report.pdf........... 12, 27
`
`Aaron S. Kesselheim, Jerry Avorn, and
`Ameet Sarpatwari, The High Cost of
`Prescription Drugs in the United
`States: Origins and Prospects for Re-
`form, 316:8 JAMA 858 (Aug. 2016) ........... passim
`
`Josh Landau, IPR Statistics—Success Is
`Sector Specific, Patent Progress
`(June 23, 2017), https://www.pa-
`tentprogress.org/2017/06/23/ipr-sta-
`tistics-success-sector-specific/ ............................ 22
`
`Anne Layne-Farrar, The Other Thirty-
`Percent: An Economic Assessment of
`Duplication in PTAB Proceedings
`and Patent Infringement Litigation
`(June 28, 2017), available at
`https://ssrn.com/abstract=2994858 ............... 3, 25
`
`Anne B. Martin et al., National Health
`Spending: Faster Growth in 2015 as
`Coverage Expands and Utilization
`Increases, 36:1 HEALTH AFFAIRS 166
`(Jan. 2017) ......................................................... 10
`
`Medicaid and CHIP Payment and Ac-
`cess Commission, Report to Congress
`on Medicaid and CHIP (June 2016),
`available at https://www.mac-
`pac.gov/wp-content/uploads/
`2016/06/June-2016-Report-to-Con-
`gress-on-Medicaid-and-CHIP.pdf .................... 7, 9
`
`
`
`
`
`
`
`x
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page
`
`Mercer, Mercer Survey Finds Employers
`Hold Health Benefit Cost Increases
`to 4.3%, Maintaining Stable Growth
`(Sept. 18, 2017), https://www.mer-
`cer.us/our-thinking/healthcare/mer-
`cer-survey-finds-employers-hold-
`health-benefit-cost-increases-to-43-
`maintaining-stable-growth.html ....................... 10
`
`Jon F. Merz, Disease Gene Patents:
`Overcoming Unethical Constraints
`on Clinical Laboratory Medicine, 45
`CLINICAL CHEMISTRY 324 (March
`1999), available at http://clinchem.
`aaccjnls.org/content/45/3/324.full ...................... 31
`
`Malathi Nayak, Cost of Patent Infringe-
`ment Litigation Falling Sharply,
`Bloomberg BNA (Aug. 10, 2017),
`https://www.bna.com/cost-patent-in-
`fringement-n73014463011/ ................................ 24
`
`Office of the Assistant Secretary for
`Planning and Evaluation, Depart-
`ment of Health & Human Services,
`Observations on Trends in Prescrip-
`tion Drug Spending (Mar. 8, 2016),
`https://aspe.hhs.gov/pdf-report/ob-
`servations-trends-prescription-drug-
`spending ......................................................... 7, 12
`
`Andrew Pollack, New Patents Aim to
`Delay Generics of Biologics, N.Y.
`Times, July 15, 2016, available at
`https://www.nytimes.com/2016/07/
`16/business/makers-of-humira-and-
`enbrel-using-new-drug-patents-to-
`delay-generic-versions.
`html?mcubz=1 .................................................... 27
`
`
`
`
`
`
`
`xi
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page
`
`S&P Dow Jones Indices, Healthcare Ex-
`penditures for Commercial Plans up
`3.2% in the Year to February 2014:
`S&P Healthcare Claims Indices
`(June 30, 2014), available at http://
`press.spglobal.com/2014-06-30-
`Healthcare-Expenditures-for-Com-
`mercial-Plans-up-3-2-in-the-Year-to-
`February-2014-S-P-Healthcare-
`Claims-Indices?asPDF=1................................... 10
`
`Kristen Schorsch, How AbbVie Has
`Won the Humira Fight—So Far,
`Crain’s Chicago Business (Nov. 5,
`2016), http://www.chicagobusi-
`ness.com/article/20161105/IS-
`SUE01/311059994/how-abbvie-has-
`won-the-humira-fight-so-far .............................. 28
`
`Mari Serebrov, Amgen-Abbvie Agree-
`ment Erases Uncertainty for Humira
`Biosimilar, BioWorld, http://
`www.bioworld.com/content/amgen-
`abbvie-agreement-erases-uncer-
`tainty-humira-biosimilar-0 (last vis-
`ited Oct. 25, 2017) ........................................ 28, 29
`
`Michael T. Siekman & Oona M. John-
`stone, Impact of Post-Grant Proceed-
`ings on Biologics and Biosimilars,
`BioProcess International (Jan. 19,
`2017), http://www.biopro-
`cessintl.com/business/intellectual-
`property/impact-of-post-grant-pro-
`ceedings-biologics-biosimilars/ .......................... 32
`
`
`
`
`
`
`
`xii
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page
`
`Dan Stanton, AbbVie: Humira’s Patent
`Maze Will Keep US Biosimilars
`Away Until at Least 2022, Bio-
`Pharma Reporter (Nov. 3, 2015),
`http://www.biopharma-reporter.com/
`Markets-Regulations/AbbVie-
`Humira-s-patent-maze-to-keep-US-
`biosimilars-at-bay-until-2022 ...................... 27, 28
`
`The Street, AbbVie (ABBV) Earnings
`Report: Q3 2015 Conference Call
`Transcript (Oct. 30, 2015), available
`at https://s.t.st/media/xtranscript/
`2015/Q4/13346337.pdf ................................. 28, 29
`
`Christopher A. Suarez, American Bar
`Association: Section of Intellectual
`Property Law, Navigating Inter
`Partes Review Appeals in the Federal
`Circuit: A Statistical Review, 9
`LANDSLIDE MAGAZINE No. 3 (2017) .............. 19, 20
`
`Philip Swain, The Cost-Effectiveness of
`PTAB Proceedings, PTAB Blog (Nov.
`13, 2015), http://www.ptab-blog.com/
`2015/11/13/the-cost-effectiveness-of-
`ptab-proceedings/ ........................................... 3, 25
`
`U.S. Court of Appeals for the Federal
`Circuit, Appeals Filed, Terminated,
`and Pending, available at http://
`www.cafc.uscourts.gov/sites/default/
`files/the-court/statistics/FY16_Ap-
`peals_Filed_Terminated_and_Pend-
`ing_2.pdf............................................................ 20
`
`U.S. Court of Appeals for the Ninth Cir-
`cuit, 2015 Ninth Circuit Annual Re-
`port (2015), available at http://
`www.ce9.uscourts.gov/publications/
`AnnualReport2015.pdf ..................................... 20
`
`
`
`
`
`
`
`xiii
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page
`
`U.S. Food & Drug Administration, FDA
`Approves Amjevita, a Biosimilar to
`Humira (Sept. 23, 2016), https://
`www.fda.gov/newsevents/newsroom/
`pressannouncements/
`ucm522243.htm ................................................. 27
`
`U.S. Food & Drug Administration, Fre-
`quently Asked Questions About Ther-
`apeutic Biological Products, https://
`www.fda.gov/drugs/developmentap-
`provalprocess/howdrugsaredevel-
`opedandapproved/approvalapplica-
`tions/therapeuticbiologicapplica-
`tions/ucm113522.htm (last visited
`Oct. 25, 2017) ....................................................... 5
`
`U.S. Patent & Trademark Office, Per-
`formance and Accountability Report
`Fiscal Year 2016 (Nov. 14, 2016),
`https://www.uspto.gov/sites/de-
`fault/files/documents/
`USPTOFY16PAR.pdf ......................................... 14
`
`United States Patent No. 9,715,680,
`available at https://www.eff.org/doc-
`ument/united-states-patent-no-
`9715680 .............................................................. 15
`
`USPTO, Patent Technology Centers
`Management (Aug. 16, 2017),
`https://www.uspto.gov/patent/con-
`tact-patents/patent-technology-cen-
`ters-management ......................................... 20, 21
`
`USPTO, Patent Trial and Appeal Board
`Statistics (Mar. 31, 2017), available
`at https://www.uspto.gov/sites/de-
`fault/files/documents/AIA%20Statis-
`tics_March2017.pdf............................................ 21
`
`
`
`
`
`
`
`xiv
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page
`
`USPTO, Trial Statistics: IPR, PGR,
`CBM 11 (Sept. 2017), available at
`https://www.uspto.gov/sites/de-
`fault/files/documents/
`Trial_Stats_2017-09-30.pdf ....................... passim
`
`Arlene Weintraub, Key Humira Patent
`Gets Struck Down for the Second
`Time in as Many Months,
`FiercePharma (July 7, 2017),
`http://www.fiercepharma.com/legal/
`key-humira-patent-gets-struck-
`down-for-second-time-as-many-
`months ............................................................... 30
`
`
`
`
`
`
`
`
`
`BRIEF OF AMERICA’S HEALTH
`INSURANCE PLANS AS AMICUS CURIAE
`IN SUPPORT OF RESPONDENTS
`
`The undersigned respectfully submits this amicus
`curiae brief in support of respondents.1
`
`INTEREST OF AMICUS CURIAE
`
`America’s Health Insurance Plans (AHIP) is a na-
`tional association whose members provide coverage
`for health care and related services to millions of
`Americans every day. These offerings improve and
`protect the health and financial security of consum-
`ers, families, businesses, communities, and the na-
`tion. AHIP is committed to market-based solutions
`and public-private partnerships that improve afford-
`ability, value, access, and well-being for consumers.
`
`As AHIP and its members are uniquely aware, in-
`creases in prescription drug costs are a leading driver
`of rising health care costs that burden consumers. Be-
`cause of AHIP’s commitment to practical solutions
`that reduce consumer costs and increase patient ac-
`cess to needed medication, AHIP has a strong interest
`in preventing drug manufacturers from securing im-
`proper patents or engaging in conduct that artificially
`prolongs monopoly power over critical medications
`past the time intended by Congress.
`
`
`1 No counsel for any party authored this brief in whole or in
`part, and no person other than amicus or its counsel have made
`any monetary contribution intended to fund the preparation or
`submission of this brief. Letters of consent from all parties to
`the filing of amicus curiae briefs are on file with the Clerk’s Of-
`fice.
`
`
`
`
`
`2
`
`Because the merits briefs filed by the Solicitor
`General and Respondent Greene’s Energy Group
`thoroughly address the constitutional issues in this
`case, this amicus brief seeks to provide the Court with
`studies and data showing that inter partes review can
`be quicker, less costly, and better at facilitating the
`aims of the patent system than district court litiga-
`tion alone. As explained below, inter partes review
`promotes a strong competitive market for prescription
`drugs, which in turn expedites access to affordable,
`lifesaving medicines for millions of American citizens.
`
`
`
`
`
`
`
`3
`
`SUMMARY OF ARGUMENT
`
`Congress designed inter partes review as a quick
`and cost-effective way for the Patent Office to revoke
`patents that should never have issued. Congress suc-
`ceeded. Inter partes review takes significantly less
`time than district court patent litigation, generally re-
`solving disputes at least a year earlier.2 The costs are
`dramatically lower. Inter partes review averages
`$451k through appeal, while the average federal court
`patent case costs between $627k to nearly $4 million.3
`
`While some of petitioner’s amici claim that inter
`partes review strikes down too many patents, the pro-
`cess is also impartial and accurate. Out of the 5,914
`inter partes review proceedings resolved as of Sep-
`tember 2017, in only 24% did the Patent Trial and Ap-
`peal Board (“PTAB”) rule some or all of the claims
`were unpatentable.4 The PTAB denied institution in
`30% of cases (outright wins for the patent owner), 28%
`
`
`2 Anne Layne-Farrar, The Other Thirty-Percent: An Eco-
`nomic Assessment of Duplication in PTAB Proceedings and Pa-
`tent Infringement Litigation (June 28, 2017), available at
`https://ssrn.com/abstract=2994858; Philip Swain, The Cost-Ef-
`fectiveness of PTAB Proceedings, PTAB Blog (Nov. 13, 2015),
`http://www.ptab-blog.com/2015/11/13/the-cost-effectiveness-of-
`ptab-proceedings/ (citing Lex Machina statistics).
`
`3 American Intellectual Property Law Association, 2017 Re-
`port of the Economic Survey I-112-116, I-162-163 (June 2017).
`
`4 USPTO, Trial Statistics: IPR, PGR, CBM 11 (Sept. 2017),
`available
`at
`https://www.uspto.gov/sites/default/files/docu-
`ments/Trial_Stats_2017-09-30.pdf.
`
`
`
`
`
`4
`
`settled, 12% were joined, dismissed, or otherwise re-
`solved, and in 6% the PTAB upheld all challenged
`claims of the patent.5
`
`While most petitions are resolved in favor of the
`patent owner, inter partes review still provides a
`speedy, cost-effective, and reliable way to weed out
`improper and costly patent monopolies. The United
`States Patent and Trademark Office (“USPTO”) re-
`ceives more than half a million patent applications
`every year. The system is structurally biased in favor
`of granting patents, and some improper patents slip
`through the examination process. The monopolies
`created by those patents harm consumers who have
`to pay higher prices for patented products, potential
`competitors unable to enter the market, and society
`as a whole.
`
`The ills of improper patents are particularly acute
`for health care. Prescription drug prices spiral up at
`ever-increasing rates. Drugs protected by patent mo-
`nopolies cause the bulk of this price growth.6 While
`brand-name drugs comprise only 10% of all dispensed
`prescriptions in the United States, they account for
`72% of drug spending.7
`
`
`5 Id.
`
`6 IMS Institute for Healthcare Informatics, Global Medicines
`Use in 2020: Outlook and Implications (Nov. 2015), available at
`https://s3.amazonaws.com/assets.fiercemarkets.net/public/005-
`LifeSciences/imsglobalreport.pdf.
`
`7 Aaron S. Kesselheim, Jerry Avorn, and Ameet Sarpatwari,
`The High Cost of Prescription Drugs in the United States: Origins
`and Prospects for Reform, 316:8 JAMA 858, 860 (Aug. 2016).
`
`
`
`
`
`5
`
`As a recent article from the Journal of the Ameri-
`can Medical Association explains, “the only form of
`competition that consistently and substantially de-
`creases prescription drug prices occurs with the avail-
`ability of generic drugs, which emerge after the mo-
`nopoly period ends.”8 Yet drug makers have signifi-
`cant incentives to maximize their market exclusivity
`period by seeking additional patents on other aspects
`of their brand-name drugs (such as slightly different
`formulations or methods of administration) in order
`to block generic entry for as long as possible.9 Many
`of these follow-on patents are improper, but the long
`time frame of district court litigation itself extends
`the patent monopoly and prevents consumers from ac-
`cessing generic alternatives.
`
`Inter partes review allows the swift correction of
`inappropriately-issued pharmaceutical patents that
`block lower-cost generic drugs.10 Without inter partes
`
`
`8 Kesselheim et al., High Cost of Prescription Drugs, supra
`note 7, at 861.
`
`9 References to “prescription drugs” or “drugs” in this brief
`include biologics, complex medications that “are generally de-
`rived from living material—human, animal, or microorganism.”
`U.S. Food & Drug Administration, Frequently Asked Questions
`About Therapeutic Biological Products, https://www.fda.gov/
`drugs/developmentapprovalprocess/howdrugsaredevelopedand
`approved/approvalapplications/therapeuticbiologicapplications/
`ucm113522.htm (last visited Oct. 25, 2017). References to “ge-
`nerics” include biosimilars.
`
`10 Because the Court’s grant of certiorari focuses on inter
`partes review, this brief does as well, but most of the discussion
`applies to post-grant review and covered business method pro-
`ceedings. USPTO, Trial Statistics, supra note 4, at 3.
`
`
`
`
`
`6
`
`review, companies will funnel funds towards obtain-
`ing spurious patents instead of investing in develop-
`ment of new medications. Many challenges to im-
`proper patents will never occur. And even if a chal-
`lenger has the funds to proceed with district court lit-
`igation, consumers will bear the higher costs created
`by these extended patent monopolies.
`
`These costs and delays cause very real harms to
`American citizens. They mean that consumers must
`pay higher prices, both through direct payments for
`prescription medications and through increased in-
`surance premiums. For those who cannot afford ex-
`pensive branded medications, these delays may mean
`no access at all to needed treatments.
`
`ARGUMENT
`
`I.
`
`Congress Designed Inter Partes Review to
`Correct Inappropriate Patent Monopo-
`lies, Which (Among Other Harms) Drive
`Up Drug Prices
`
`A recent national poll found “that the affordability
`of prescription drugs continues to be at the top of the
`public’s priority list for the President and Congress.”11
`From patients who cannot afford life-saving medica-
`tions, to consumers who pay higher and higher premi-
`ums because of rising drug prices, to hardworking
`taxpayers who fund public programs like Medicaid
`
`
`11 Bianca DiJulio, Jamie Firth, and Mollyann Brodie, Kaiser
`Health Tracking Poll: October 2015
`(Oct. 28, 2015),
`http://www.kff.org/health-costs/poll-finding/kaiser-health-track-
`ing-poll-october-2015/. Priorities include “‘making sure that
`high-cost drugs are affordable to those who need them’ and ‘gov-
`ernment action to lower prescription drug prices.’” Id.
`
`
`
`
`
`7
`
`and Medicare, rising prescription drug costs impose a
`heavy burden on Americans. As explained in this sec-
`tion, Congress designed the inter partes review sys-
`tem to address these harms and prevent improper pa-
`tent monopolies that drive up drug prices.
`
`A.
`
`Patents on prescription drugs sig-
`nificantly and directly affect health
`plan premiums and consumer costs
`
`The United States spends 18% of our gross domes-
`tic product on health care, up from just 7% in 1970.12
`A significant portion of that spending—and the fast-
`est growing portion—goes towards prescription
`drugs. Our nation spent more than $324 billion on
`prescription drugs in 2015.13 That represents a 9%
`
`
`12 Center for Sustainable Health Spending, Insights from
`Monthly National Health Spending Data Through December
`2015 1 (Feb. 16, 2016), available at https://altarum.org/sites/de-
`fault/files/uploaded-related-files/CSHS-Spending-Brief_Febru-
`ary_2016.pdf; Medicaid and CHIP Payment and Access Commis-
`sion, Report to Congress on Medicaid and CHIP 3 (June 2016),
`available at https://www.macpac.gov/wp-content/uploads/2016/
`06/June-2016-Report-to-Congress-on-Medicaid-and-CHIP.pdf.
`
`13 Centers for Medicare & Medicaid Services, National
`Health Expenditures 2015 Highlights 2 (2015), available at
`https://www.cms.gov/Research-Statistics-Data-and-Systems/
`Statistics-Trends-and-Reports/NationalHealthExpendData/
`downloads/highlights.pdf; see also Office of the Assistant Secre-
`tary for Planning and Evaluation, Department of Health & Hu-
`man Services, Observations on Trends in Prescription Drug
`Spending (Mar. 8, 2016), https://aspe.hhs.gov/pdf-report/obser-
`vations-trends-prescription-drug-spending
`(estimating
`the
`United States spent $457 billion on prescription drugs in 2015).
`
`
`
`
`
`8
`
`increase over 2014, and outpaced the growth rate for
`all other areas of health care spending.14
`
`And it continues to increase. Global spending on
`medicine is projected to reach $1.4 trillion by 2020.15
`Our nation’s spending on prescription drugs will
`likely reach between $560 billion and $590 billion in
`2020, a 34% increase over 2015.16
`
`These trends have significant impacts on both pri-
`vate citizens and the public sector. For individuals
`paying for prescriptions out of their own pockets, ris-
`ing drug prices take a direct and obvious toll. For
`those with insurance the costs are just as substantial,
`although less obvious, because health insurance pre-
`miums have a direct relationship with costs of inputs
`such as pharmaceuticals.17 Nearly a quarter of every
`dollar spent on health insurance premiums goes to
`pay for prescription drugs.18 This is more than the
`
`
`14 Centers for Medicare & Medicaid Services, National
`Health Expenditures, supra note 13, at 2.
`
`15 IMS Institute for Healthcare Informatics, Global Medi-
`cines Use in 2020, supra note 6, at 9.
`
`16 Id., at 16. These figures are on an invoice price basis.
`
`17 See, e.g., Bradford R. Hirsch, Suresh Balu & Kevin A.
`Schulman, The Impact of Specialty Pharmaceuticals as Drivers
`of Health Care Costs, 33:10 HEALTH AFFAIRS 1714 (Oct. 2014).
`
`18 AHIP, Where Does Your Premium Dollar Go? (March 2,
`2017), https://www.ahip.org/health-care-dollar/. The figures in
`this study actually understate the impact of prescription drugs
`on insurance premiums, because drugs administered in hospital
`inpatient settings were excluded.
`
`
`
`
`
`9
`
`amount spent on physician services, inpatient hospi-
`tal services, or outpatient hospital services.19
`
`On the public side, about a quarter of the entire
`federal budget goes to Medicare and Medicaid.20
`Spending for drugs in the Medicare Part D prescrip-
`tion drug program rose to $137 billion in 2015, a 13%
`increase from 2014.21 Similarly, spending for drugs
`covered under the Medicare Part B program (which
`include outpatient prescription drugs that are admin-
`istered by physicians rather than by patients them-
`selves) totaled $24.6 billion, a 14% increase from
`2014.22
`
`The bulk of this spiraling price growth is caused
`by drugs protected by patent monopolies. Although
`brand-name drugs comprise only 10% of all dispensed
`prescriptions in the United States, they account for
`72% of drug spending.23 Prices for existing brand-
`name drugs reached a double-digit growth rate in
`2015 for the fourth consecutive year, while prices for
`
`
`19 Id., at 4.
`
`20 This represents a dramatic increase since those programs
`were enacted in 1965. See Medicaid and CHIP Payment and Ac-
`cess Commission, Report to Congress on Medicaid and CHIP, su-
`pra note 12, at 3-5.
`
`21 Centers for Medicare & Medicaid Services, Update to the
`Medicare Drug Spending Dashboard (Nov. 14, 2016), https://
`www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/
`2016-Fact-sheets-items/2016-11-14.html.
`
`22 Id.
`
`23 Kesselheim et al., High Cost of Prescription Drugs, supra
`note 7, at 860.
`
`
`
`
`
`10
`
`generic drugs increased less than 1%.24 And this
`trend is expected to c
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