Executive Summaries » Legal Issues Affecting Generic Drugs

Legal Issues Affecting Generic Drugs

April 20, 2015

Today more than 86 percent of U.S. prescriptions are being dispensed as generic medicines. They have saved consumers more than $1 trillion in the past decade, fulfilling the promise of 1984 legislation sponsored by Senator Orrin Hatch and Representative Henry Waxman. At that time few generic pharmaceutical companies existed, primarily because of the absence of any efficient procedure for gaining FDA approval to market these products. This article highlights some issues of current interest to the generics industry and its corporate counsel.

Inter partes review (IPR) by the Patent Office, a procedure to challenge the validity of a patent, has emerged as a useful tool for generic pharmaceutical companies to supplement litigation. To invalidate a patent in district court, the accused infringer must show by clear and convincing evidence that the claims are invalid, in contrast to the standard for invalidating claims before the Patent Trial and Appeal Board, where it’s a preponderance of evidence.

An accused infringer in district court faces the presumption that a patent issued by the USPTO is valid, whereas there is no presumption of validity for a patent challenged in an IPR. However there is a potential downside. The PTAB decides not only whether an IPR will proceed, but also whether it will end. If the parties decide to settle the IPR (and possibly related district court litigation), the PTAB may still decide to proceed. Such a determination could have a catastrophic effect on settlements.

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