By Kevin E. Noonan —

In 2001, The Medicines Company failed to file a patent term extension application for its anticoagulant drug Angiomax® (bivalirudin) within the 60-day time limit set forth under 35 U.S.C. § 156(d)(1); the application was filed one day late.  Since that time, there have been efforts to remedy this deficiency by legislation (including H.R. 5120; S. 1785; and provisions of S. 1145, the patent "reform" act; as well as an earlier "stand alone" version of the bill introduced as H.R. 1778 earlier in this Congress).  Last Monday, the House finally passed a bill containing the necessary provisions.

The bill, H.R. 6344, sets forth the changes in patent term extension law in Section 4:

SEC. 4. AUTHORITY OF DIRECTOR OF PTO TO ACCEPT LATE FILINGS.

(a) Authority — Section 156 of title 35, United States Code, is amended by adding at the end the following new subsection:
(i) Discretion to Accept Late Filings in Certain Cases of Unintentional Delay —

(1) IN GENERAL — The Director may accept an application under this section that is filed not later than three business days after the expiration of the 60-day period provided in subsection (d)(1) if the applicant files a petition, not later than five business days after the expiration of that 60-day period, showing, to the satisfaction of the Director, that the delay in filing the application was unintentional.
(2) TREATMENT OF DIRECTOR'S ACTIONS ON PETITION — If the Director has not made a determination on a petition filed under paragraph (1) within 60 days after the date on which the petition is filed, the petition shall be deemed to be denied.  A decision by the Director to exercise or not to exercise, or a failure to exercise, the discretion provided by this subsection shall not be subject to judicial review.

(b) Fee for Late Filings —

(1) IN GENERAL — In order to effect a patent term extension under section 156(i) of title 35, United States Code, the patent holder shall pay a fee to the United States Treasury in the amount prescribed under paragraph (2).
(2) FEE AMOUNT —

(A) FEE AMOUNT — The patent holder shall pay a fee equal to —
(i) $65,000,000 with respect to any original application for a patent term extension, filed with the United States Patent and Trademark Office before the date of the enactment of this Act, for a drug intended for use in humans that is in the anticoagulant class of drugs; or
(ii) the amount estimated under subparagraph (B) with respect to any other original application for a patent term extension.
(B) CALCULATION OF ALTERNATE AMOUNT — The Director shall estimate the amount referred to in subparagraph (A)(ii) as the amount equal to the sum of —
(i) any net increase in direct spending arising from the extension of the patent term (including direct spending of the United States Patent and Trademark Office and any other department or agency of the Federal Government);
(ii) any net decrease in revenues arising from such patent term extension; and
(iii) any indirect reduction in revenues associated with payment of the fee under this subsection.
The Director, in estimating the amount under this subparagraph, shall consult with the Director of the Office of Management and Budget, the Secretary of the Treasury, and either the Secretary of Health and Human Services or (in the case of a drug product subject to the Act commonly referred to as the 'Virus-Serum-Toxin Act'; 21 U.S.C. 151-158) the Secretary of Agriculture.

(3) NOTICE OF FEE — The Director shall inform the patent holder of the fee determined under paragraph (2) at the time the Director provides notice to the patent holder of the period of extension of the patent term that the patent holder may effect under this subsection.
(4) ACCEPTANCE REQUIRED — Unless, within 15 days after the Director provides notice to the patent holder under paragraph (3), the patent holder accepts the patent term extension in writing to the Director, the patent term extension is rescinded and no fees shall be due under this subsection by reason of the petition under section 156(i)(1) of title 35, United States Code, pursuant to which the Director provided the notice.
(5) PAYMENT OF FEE — The extension of a patent term of which notice is provided under paragraph (3) shall not become effective unless the patent holder pays the fee required under paragraph (2) not later than 60 days after the date on which the notice is provided.
(6) FEE PAYMENT NOT AVAILABLE FOR OBLIGATION — Fees received under this subsection are not available for obligation.
(7) DIRECTOR DEFINED — Except as otherwise provided, in this subsection, the term 'Director' means the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.

(c) Applicability —

(1) IN GENERAL — This section and the amendments made by this section shall apply to any application —

(A) that is made on or after the date of the enactment of this Act; or
(B) that, on such date of enactment, is pending before the Director or as to which a decision of the Director is eligible for judicial review.

(2) TREATMENT OF CERTAIN APPLICATIONS — In the case of any application described in paragraph (1)(B), the 5-day period prescribed in section 156(i)(1) of title 35, United States Code, as added by subsection (a) of this section, shall be deemed to begin on the date of the enactment of this Act.

These terms are reminiscent of so-called "private bills" that have long been introduced in Congress to address specific changes in the law targeted at particular constituents.  An early use of such bills occurred in the aftermath of the Civil War, where patent terms were extended for patents that had been suppressed by the Northern government as part of the war effort.  This tactic was famously employed by G.D. Searle & Co. in the early 1980's to extend the term of its patent for aspartame (NutraSweet®) at a time prior to the existence of the Hatch-Waxman regime for pharmaceutical patents.  (The bill was introduced by Congressman Donald Rumsfeld, who represented Searle’s home district.)  H.R. 6344 was introduced by Rep. William Delahunt (10th District, MA), but also includes seven co-sponsors, including John Conyers of Michigan (who moved to suspend the rules and permit the bill to be passed without amendment by voice vote, thereby avoiding the need for the position of each of the members of Congress to be on the record).

Here, The Medicines Company will pay a hefty price ($65 million) for its extension, but the amount of the extended term (1,773 days, or until December 15, 2014) and the expected market for Angiomax ($500 million by 2010) clearly justify the cost.  It remains to be seen, however, if the Senate will acquiesce to a solution to one company's problem that will impose additional costs on the American health care system.  On the one hand, Senator Kennedy reportedly introduced a version of the PTE "savings" provisions into S. 1145 (and Senator Leahy reportedly incorporated Senator Session's gift to the banking industry as part of the patent "reform" bill with little debate).  On the other hand, Senator Leahy evinced great concern over the cost to Medicare occasioned by Genentech's intention to prevent pharmaceutical formularies from reformulating its Avastin® VEGF monoclonal antibody as a lower-cost alternative to its AMD drug Lucentis®; his veiled threat to "look into" the matter may have been instrumental in resolving the pricing crisis over these drugs (see "Finally, Some Good News for Genentech on Avastin®").  Lobbying against the bill is sure to ensue, by generic drug companies, consumer advocates, and "watchdog" groups.  Already, Elizabeth Wright, Vice President of Government Relations for Citizens against Government Waste was quoted by CBS News as saying "[w]e call this the dog-that-ate-my-homework act.  It's outrageous and very sneaky.  This could develop into a game that many companies end up playing."  (Ms. Wright opines more extensively on the bill on the group's blog, The Swine Line.)  Expect similar rhetoric from other stakeholders, with uncertain results in this election year.