Sen. Kerry Introduces ANGIOMAX PTE Amendment to Tax Extenders Act of 2009

By Kurt R. Karst

Earlier this week, we reported on the latest in the ongoing saga over a Patent Term Extension (“PTE”) for U.S. Patent No. 5,196,404 (“the ‘404 patent”) covering The Medicines Company’s (“MDCO’s”) ANGIOMAX (bivalirudin) – an order from the U.S. District Court for the Eastern District of Virginia (Alexandria Division) to the U.S. Patent and Trademark Office (“PTO”) to issue a second interim PTE for the ‘404 patent. We also noted that outside of the current litigation, we understand that MDCO is continuing to push for passage of a bill that will legislatively extend the PTE for the ‘404 patent. And specifically, that the latest legislative push is to get the bill attached to the Tax Extenders Act of 2009 (H.R.4213). H.R.4213 is reportedly one of those “must pass” bills, and offers a perfect vehicle to slip in an amendment styled as an “excise tax on patent term extensions.”

Yesterday, Senator John Kerry (D-MA) introduced an amendment (SA4295)to H.R. 4213 that would grant MDCO a PTE for the ‘404 patent for the price of $65 million. The amendment is similar to other versions of what has been dubbed the “Dog Ate My Homework Act” introduced in previous Congresses (see our previous posts here, here, and here). The amendment would amend the PTE statute (35 U.S.C. § 156) to add new subsection (i), which states that the PTO Director:

shall accept an application under this section that was filed not later than 3 business days after the expiration of the 60-day period provided in subsection (d)(1) if the owner of record of the patent, or its agent, submits a request to the Director to proceed under this subsection not later than 5 business days after the expiration of that 60-day period. An application accepted by the Director under this subsection shall be treated as if it had been filed within the [60-day] period specified in subsection (d)(1).

The acceptance of a PTE application pursuant to proposed 35 U.S.C. § 156(i) would be subject to a tax, which for MDCO would be “$65,000,000 with respect to any application for a [PTE], filed with the [PTO] before the date of the enactment of this section, for a drug intended for use in humans that is in the anticoagulant class of drugs” (i.e., ANGIOMAX). Any other PTE application subject to proposed 35 U.S.C. § 156(i) would be subject to a tax equal to the sum of:

(A) 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),
(B) any net decrease in revenues arising from such patent term extension, and
(C) any indirect reduction in revenues associated with payment of the tax under this section.

The “effective date” section provides that Sen. Kerry’s amendment shall apply with respect to any PTE application made on or after the enactment of H.R.4213 or “that, on the date of the enactment of this Act, is pending, that is described in section 4491(b)(1)(A) of the Internal Revenue Code of 1986 as added by subsection (a) of this section, or as to which a decision denying the application is subject to judicial review on such date” (i.e., ANGIOMAX). Moreover, the Kerry amendment provides that the 5-business-day period in proposed 35 U.S.C. § 156(i) “shall be deemed to begin on the date of the enactment of this Act, and, if the original term of the patent to be extended has expired, any extension or interim extension of the term of the patent granted pursuant to a request under [35 U.S.C. § 156(i)] shall be effective from the original expiration date of the patent” (once again, describing the ANGIOMAX PTE situation).

According to Sen. Kerry’s statementmade upon the introduction of the amendment “[t]he purpose of this amendment is to fix a complete anomaly in the patent law that is vital to our State.” And according to former Surgeon General Dr. Louis Sullivan “[t]he fate of this corrective provision could be a matter of life and death for tens of thousands of patients. The reality is that stark. As drug innovators develop pioneering medicines, the benefits available to patients are increasing. These medical innovators’ ability to conduct lifesaving research should not be thwarted by a confusing filing deadline.” MDCO claims that if a PTE were applicable to the ‘404 patent, it would extend the patent expiration date until December 2014. Without a PTE on the ‘404, generic competition is expected later this year.