SCOTUS Ruling Deals a Blow to Pharma, Win for Generics

The Supreme Court ruled to uphold a new process for challenging patents that the pharmaceutical industry was hoping would be struck down. Generic drug companies and health insurance plans supported the new rule, which could help lower prices.

The Supreme Court ruled to uphold a new process for challenging patents that the pharmaceutical industry was hoping would be struck down. Drug makers argued that the rule would stifle innovation and endanger investments in drug research and development.

The Supreme Court delivered a unanimous opinion. Justice Clarence Thomas wrote a concurring opinion and Samuel Alito filed an opinion that concurred in part and dissented in part, with Justice Sonia Sotomayor joining him.

“The regulation is a reasonable exercise of the Patent Office’s rulemaking authority,” Justice Stephen Breyer wrote in the Court’s opinion. “The broadest reasonable construction standard helps ensure precision in drafting claims and prevents a patent from tying up too much knowledge, which, in turn, helps members of the public draw useful information from the disclosed invention and understand the lawful limits of the claim.”

The inter partes review allows patent challenges to be heard by an appeals board in the US Patent and Trademark Office. The new reviews interpreted patents more broadly, which would make them more likely to be overturned. Traditionally, patents are presumed to be valid.

“Having concluded that the Patent Office’s regu­lation, selecting the broadest reasonable construction standard, is reasonable … we do not decide whether there is a better alterna­tive as a policy matter,” Breyer wrote.

Brand-name pharmaceutical companies were backing the plaintiff in the case, while generic drug companies and health insurance plans supported the new rule and argued that the patent system was being exploited by the drug industry in order to keep prices high. The new rule could help lower drug prices.

America’s Health Insurance Plans (AHIP) and the Generic Pharmaceutical Association (GPhA) released a joint statement applauding the Supreme Court’s decision. The 2 organizations had filed a joint amicus brief in the case recognizing that the inter partes review was a critical consumer protection against abusive patent activity.

"Today's decision from the Supreme Court is a significant win for consumers,” Marilyn Tavenner, AHIP president and CEO, and Chip Davis, GPhA president and CEO, said in the statement. “By protecting and reaffirming the importance of the inter partes review, the Court recognizes the vital need for an efficient patent review process—one that promotes a competitive, affordable prescription drug market for consumers."