Five Solutions to the REMS Patent Problem

Abstract

Two principles collide in the pharmaceutical industry. On the one hand, the U.S. Food and Drug Administration (“FDA”) approves potentially dangerous drugs under Risk Evaluation and Mitigation Strategies (“REMS”) programs when a drug’s benefits outweigh its risks. But on the other hand, brand firms can prevent generic competition by patenting these programs.

REMS patents, which claim compliance with FDA-imposed REMS programs, pose two problems — one procedural, the other substantive. First, current practice is to list REMS patents in the Orange Book even though such listings may be invalid, with this conduct allowing the brand to obtain an automatic 30-month stay of generic approval. Second, because a REMS program appears on a product’s label and generics must copy that label, REMS patents threaten generics with claims of induced infringement.

We offer five solutions to these problems. First, we target brands’ listings of REMS patents in the Orange Book, proposing that generic firms sued for infringement file counterclaims to delist REMS patents and that the FDA issue guidance making clear that REMS patents cannot be listed. Second, we suggest more rigorous scrutiny of REMS patents in the courts and at the U.S. Patent and Trademark Office (“PTO”). Third, we apply the Supreme Court’s four-factor eBay test to conclude that courts should award damages rather than injunctions in cases of infringement. Fourth, we suggest that Congress amend the Food and Drug Administration Amendments Act of 2007 (“FDAAA”) to mitigate the effects of REMS patents. And fifth, we recommend, similar to the treatment of tax-strategy patents in the America Invents Act, that Congress deem REMS patents to fall within the “prior art.”

Keywords: Patent, Drugs, Pharmaceuticals, REMS, FDA

JEL Classification: I18, K21, L40, L41, L43, L65, O34, O38