WASHINGTON — There were signs Monday the pharmaceutical industry could end up losing a Supreme Court case with serious implications for medicine and drug prices.
The case focused on the Obama administration’s rules for a new process to review patents. Drug makers, supporting the plaintiffs, are urging the court to change that process, which currently makes it easier to invalidate patents crucial to their business.
But the plaintiffs seemed to be at a disadvantage before the court.
The four left-leaning justices, joined at times by Justice Anthony Kennedy, sounded skeptical. In the event of a 4-4 split, a possibility with the death of Justice Antonin Scalia, the lower court’s decision in favor of the government would be effectively upheld.
The question before the court was: What standard for interpreting patents should be used in new reviews created by Congress in 2011?
The left-leaning justices took turns challenging the attorney for the plaintiffs, Garrard Beeney. The lawyer argued the broad standard set by the Obama administration was inappropriate for these new reviews, called inter partes reviews, because patent holders cannot amend their patents during the review process. Justice Sonia Sotomayor noted Congress had allowed patent holders to propose a single amendment during inter partes review that would help them keep their patent.
“I’m not sure that that supports your proposition,” she said.
Justice Elena Kagan pressed Beeney on the ambiguity in the law that created the reviews process — Congress did not specify in writing what standard should be used by the US Patent and Trademark Office.
“It just doesn’t say one way or the other. So we’re reading the tea leaves a bit, aren’t we?” she said. The implication being: If the law is vague, the administration has the legal flexibility to set standards it considers reasonable.
Also concerning for the plaintiffs was skepticism from Kennedy, often a swing vote. One of the plaintiffs’ central arguments is that inter partes reviews were intended to be substitutes for court litigation, so they should therefore use the same narrower standard courts would.
But Kennedy questioned Beeney about some of the key differences between inter partes reviews and litigation. For example, in the courts, patents are presumed to be valid; they are not in the reviews.
“That shows a difference in these proceedings,” Kennedy said.
If there was any hope for the plaintiffs and pharmaceuticals, it was in Chief Justice John Roberts, who challenged government attorney Curtis Gannon on the problems created by different standards for inter partes reviews and court litigation.
Roberts asked Gannon if a district court would be free to disagree with the interpretation of a patent that had been used by the patent office in an inter partes review. Gannon affirmed that it could.
“It seems to me that’s a bizarre way to decide a legal question,” Roberts said. He called the dueling standards that could lead to different answers to the same question “an extraordinary animal in legal culture.”
The arguments bore out the two minds the current court has on patent matters, according to University of California Hastings law professor Robin Feldman.
On the one hand, the justices have often been hostile to patent holders. That would be good news for the generic drug companies and insurers, which are supporting the administration. On the other, they like uniformity in the standards used in different venues, which is what the brand-name drug companies are seeking.
The drug industry says it relies on patents to recoup investments, so the broader standard set by the administration imperils drug development.
But the administration, and generic companies and health insurance plans, think the current standards are appropriate and help fulfill Congress’s goal of stopping weak patents.