top of page
  • gagandeep

Patent Term Extension (PTE): Driving Innovation Forward

35 U.S. Code § 156 - Extension of Patent Term
(a)The term of a patent which claims a product, a method of using a product, or a method of manufacturing a product shall be extended in accordance with this section from the original expiration date of the patent, which shall include any patent term adjustment granted under section 154(b), if—
(1) the term of the patent has not expired before an application is submitted under subsection (d)(1) for its extension;
(2) the term of the patent has never been extended under subsection (e)(1) of this section;
(3) an application for extension is submitted by the owner of record of the patent or its agent and in accordance with the requirements of paragraphs (1) through (4) of subsection (d);
(4) the product has been subject to a regulatory review period before its commercial marketing or use;

Introduction

Drug development is a labor-intensive procedure that takes a long time to complete. The testing of New Chemical Entities (NCEs) through pre-clinical and clinical trials to demonstrate their safety and efficacy in treating a disease is monitored and governed by a drug regulatory authority, such as the US Food and Drug Administration (FDA) or the Central Drugs Standard Control Organization (CDSCO) in India. Numerous NCEs fail at some point, making all the money and work useless. Each NCE has received investments in the billions of dollars range. The process of turning approved 'Drugs' from NCEs into commercially viable products normally takes 10 to 15 years.

Only 2% of candidates really make it to the pharmacist's desk after going through the entire process. Therefore, in this challenging circumstance, the 20 years of patent protection afforded to pharmaceutical items are insufficient to recoup the significant investment invested in the product's R&D. To maintain their monopoly over the drug product, pharmaceutical companies typically ask for an extension of legal protection.


Legal Provisions of Patent Term Extensions in the US

Under the 1984 Drug Price Competition and Patent Restoration Act, commonly referred to as the Hatch-Waxman Act (The Act), patent term extension (PTE) is permissible. The Act permits the extension of the life of a patent covering a good or service that needs to have regulatory permission before being sold, as well as a method of using or producing the good or service. Pharmaceuticals for humans and animals, food additives, color additives, and medical gadgets are some examples of these items. PTE seeks to reinstate the time lost by the patent holder while waiting for regulatory approval of the product.


The U.S. Patent and Trademark Office (USPTO), in cooperation with the regulatory body in charge of the product's approval, decides if PTE should be granted.


Reasons for Patent Term Extensions

Pharmaceutical businesses need more time to recuperate their R&D expenditures, which is the major goal of patent term extensions for these products. The prolonged patent term can help to ensure that businesses can realize a return on their investment because the process of creating a new treatment can be time-consuming, costly, and involve significant testing and clinical trials.


By enabling businesses to invest in the creation of new medications with the assurance that they would have more time to enjoy exclusive marketing rights, patent term extensions can also serve as a motivator for pharmaceutical innovation. This may encourage businesses to invest in research and development in potentially dangerous or undervalued fields, such as neglected or uncommon diseases that affect underdeveloped nations.


Additionally, by guaranteeing that innovative drugs are accessible for longer periods of time and possibly resulting in better health outcomes, patent term extensions can also help patients. Pharma companies may have more funds to spend on additional research and development if the patent duration is extended, which could result in the identification of novel medicines and cures.


Requirements for PTE

In order to be eligible for PTE, a pharmaceutical product must meet the following requirements:

  • The product must be subject to regulatory review by the Food and Drug Administration (FDA)

  • The product must have been approved for marketing by the FDA

  • The product must have been subject to a lengthy regulatory review process

Calculating PTE

The amount of patent term extension (PTE) that is awarded is based on the amount of time that the product was subject to regulatory review. The maximum amount of PTE that can be awarded is five years.

To calculate PTE, you will need to know the following information:

  • The date that the product was first submitted to the FDA for regulatory review

  • The date that the product was approved for marketing by the FDA

  • The number of days that the product was subject to regulatory review

The formula for Calculating PTE

PTE = (Number of days in regulatory review) / (240 days/year) * 5 years

For example, if a product was first submitted to the FDA for regulatory review on January 1, 2020, and was approved for marketing on December 31, 2023, the amount of PTE that would be awarded would be as follows:


PTE = (2,191 days) / (240 days/year) * 5 years = 4.4 years


It is important to note that the amount of PTE that is awarded can be reduced if the product was subject to a shortened regulatory review process. The USPTO has a number of factors that it considers when determining whether a product was subject to a shortened regulatory review process. These factors include the following:

  • The nature of the product

  • The complexity of the regulatory review process

  • The availability of information about the product

Procedure for Applying for PTE

A patent owner can apply for PTE by filing a petition with the United States Patent and Trademark Office (USPTO). The petition must include the following information:

  • The patent number for the product

  • The FDA approval date for the product

  • The date that the product was first submitted to the FDA for regulatory review

The USPTO will review the petition and make a decision on whether to grant PTE. The decision will be based on the information that is submitted in the petition and the requirements for PTE.


If PTE is granted, the patent term for the product will be extended by the amount of time that was awarded. This extension will allow the patent owner to market the product for an additional period of time before generic versions of the product can be marketed.


Factors Affecting New Medicine R&D Cost

The drivers of research and development (R&D) costs for new medicines in the United States can be complex and multifaceted. Some of the key drivers include:

  1. Clinical Trials: The price of carrying out clinical trials may contribute significantly to R&D expenses. Clinical trials can involve thousands of patients over the course of several years and involve intensive testing to make sure a new medicine is safe and effective.

  2. Regulations: The approval process for new pharmaceuticals can be time-consuming and expensive. In order to comply with regulatory standards, pharmaceutical companies may be required to conduct additional studies or trials or to submit detailed data to regulatory organizations like the FDA.

  3. Discovery and Development: Finding novel drugs and developing them can be a time-consuming and expensive process. Finding a new medication candidate can take many years of study and testing and developing it into a marketable product can take even longer.

  4. Protection of Intellectual Property: For pharmaceutical businesses, obtaining and maintaining intellectual property rights, such as patents, can be expensive. With the help of these rights, businesses may be given an exclusive window of time to recuperate their R&D expenditures.

  5. Manufacturing and Distribution: Costs associated with production and distribution might be high after a new treatment has been given the go-ahead. Depending on the manufacturing process' complexity and the size of the patient base, a new drug's production and distribution costs can change.

Alternatives to Patent Term Extensions

There are several alternative approaches that can be used to help recover research and development (R&D) costs of drugs without extending patent terms, such as:

  1. Government Funding: Governments can provide funding to support the development of new drugs. This funding can come in the form of grants, loans, tax credits, or other incentives. By providing funding to support R&D, governments can help to reduce the financial risk and uncertainty associated with drug development.

  2. Price Negotiation: Governments or insurance companies can negotiate prices directly with pharmaceutical companies to reduce the cost of drugs. By leveraging their bargaining power, governments can secure lower prices for drugs, making them more affordable for patients and reducing the burden on healthcare systems.

  3. Cost-Sharing: Pharmaceutical companies can share the cost of drug development with other stakeholders, such as academic institutions or non-profit organizations. This can help to reduce the financial burden on the company, while still allowing them to benefit from the commercialization of the drug.

  4. Open Innovation: Pharmaceutical companies can collaborate with other companies or academic institutions to share the cost of drug development. By pooling their resources and expertise, companies can reduce the cost of drug development and bring new drugs to market more quickly.

  5. Market Exclusivity: In some cases, market exclusivity or other forms of regulatory protection can be used to incentivize drug development without extending patent terms. For example, the Orphan Drug Act provides incentives for companies to develop drugs for rare diseases, including market exclusivity for a limited period of time.

Non-Patent Exclusivities

In the United States, there are several types of non-patent exclusivities that can provide pharmaceutical companies with market exclusivity for their products. These exclusivities are designed to provide incentives for pharmaceutical innovation, particularly in areas where there may be limited commercial potential.


Types of Non-Patent Exclusivities in the US

  1. New Chemical Entity Exclusivity: This provides a period of exclusivity for drugs that contain a new chemical entity (NCE). The exclusivity period is five years, during which time the FDA cannot approve any other drug that contains the same active ingredient.

  2. Orphan Drug Exclusivity: This provides a period of exclusivity for drugs that are developed to treat rare diseases or conditions. The exclusivity period is seven years, during which time the FDA cannot approve any other drug for the same indication.

  3. Pediatric Exclusivity: This provides a period of exclusivity for drugs that are studied and approved for use in pediatric populations. The exclusivity period is six months and is added to the end of any existing patent or exclusivity period.

  4. Biosimilar Exclusivity: This provides a period of exclusivity for biosimilar drugs that are approved under the Biologics Price Competition and Innovation Act (BPCIA). The exclusivity period is 12 years, during which time the FDA cannot approve any other biosimilar drug for the same reference product.

  5. Abbreviated New Drug Application: This provides a period of exclusivity of 180 days to the generic competitor who first submits and maintains an ANDA (Abbreviated New Drug Application) with Paragraph IV certification, which calls for the applicant to demonstrate either that he won't be violating the innovator's patent or that the innovator's patent is invalid or unenforceable.

  6. New Clinical Study Exclusivity: Three years of exclusivity for new clinical study submissions for "reports of new clinical investigations (other than bioavailability studies) essential to the approval of the application [or the supplemental application] and conducted or sponsored by the applicant" are granted. For instance, while preparing a drug that has already received approval, changes to the drug's administration method, drug delivery system, dosing schedule, or modification with an ester or salt won't have an impact on the drug's pharmacological effects. The period of exclusivity would begin on the day the same drug's NDA was approved. This application for the active ingredient has already received approval.

For products that have been designated as Qualified Infectious Disease Products (QIDP) under the Generating Antibiotics Incentives Now (GAIN) Act, an additional five years are allowed if the antibiotics are used to treat a serious ailment.


Conclusion

The question of whether patent term extensions are necessary to ensure that pharmaceutical companies have sufficient time to recoup their research and development (R&D) costs is a matter of debate.


On one hand, patent term extensions can provide additional time for pharmaceutical companies to earn revenue from their products, which can help to offset the high R&D costs associated with drug development. This revenue can also be used to fund future R&D efforts, enabling companies to continue to develop new and innovative drugs.


On the other hand, critics of patent term extensions argue that they can lead to higher drug prices and reduced competition, as companies are able to maintain a monopoly on the market for a longer period of time. This can limit patient access to affordable medications and reduce the incentives for innovation in the pharmaceutical industry.


There are also alternative approaches that can be used to help recover the R&D costs of drugs without extending patent terms, such as government funding, price negotiation, cost-sharing, open innovation, and market exclusivity.


Overall, the question of whether patent term extensions are necessary to ensure that pharmaceutical companies have sufficient time to recoup their R&D costs is complex and depends on a variety of factors, including the specific drug and disease area, the cost of development, and the level of competition in the market.


References

Comments


Recent Insights
bottom of page