BioRationality: Withdrawal of Proposed Terminal Disclaimer Rule Spells Major Setback for Biosimilars

On May 10, 2024, the United States Patent and Trademark Office (USPTO) proposed a rule to add a new requirement for an acceptable terminal disclaimer filed to obviate (that is, overcome) non-statutory double patenting.

On 4 December 2024, the USPTO withdrew this proposed rule to overcome obviousness-type double patenting rejections.

The proposed rule would likely have had wide implications for how patent owners choose to prosecute continuation applications. It would have included an agreement that the patent in which the disclaimer is filed would “be enforceable only if the patent is not tied and has never been tied directly or indirectly to a patent by 1 or more terminal disclaimers filed to obviate non-statutory double patenting in which: any claim has been finally held unpatentable or invalid as anticipated or obvious by a Federal Court in a civil action or by the USPTO, and all appeal rights have been exhausted; or a statutory disclaimer of a claim is filed after any challenge based on anticipation or obviousness to that claim has been made.”

In other words, patents tied together via a terminal disclaimer would fall together, i.e., if 1 patent is found invalid or unenforceable, other patents tied to it via a terminal disclaimer would also be unenforceable. In proposing the new rule, the USPTO desired to promote competition and innovation by reducing the high cost of separately challenging the validity of multiple patents having claims with potentially obvious variants under obviousness-type double patenting. Under the proposed rule, a challenger could have rendered multiple patents unenforceable by successfully challenging a single claim in a single patent.

While the rule could have decreased competitors’ costs in seeking to challenge multiple patents on the same invention, such as biosimilar developers, the patent applicants or originators would likely have seen increased patent prosecution costs associated with choosing to argue against obviousness-type double patenting rejections, amending claims, or filing a terminal disclaimer. In other words, the decision of the USPTO to withdraw the rule change brings benefits to reference product companies and makes the development of biosimilars more costly.

The USPTO states that the decision was made after receiving more than 349 comments during the 60-day comment period. It concluded that it would bring higher cost constraints to originator companies, favoring big pharma. The comments submitted by the big pharma way outnumbered the comments favoring the change.

An analysis of the 349 comments filed shows that there were 29 who expressed their opinion about how it would affect biosimilars; surprisingly, only 7 who opposed were prominent identities:

1. Emily Michiko Morris
2. Mitchell Berger
3. Biotechnology Innovation Organization
4. Amgen
5. Intellectual Property Owners Association
6. Initiative for Medicines, Access & Knowledge
7. Pharmaceutical Research and Manufacturers of America

The 22 entities who favored the proposed rule included:

• Sandoz
• Association for Accessible Medicines
• Public Citizen
• Legal and Medical Academics
• Fresenius Kabi
• The ERISA Industry Committee
• Representative Debbie Dingell
• Pharmaceutical Care Management Association
• US Public Interest Research Group
• Campaign for Sustainable Rx Pricing
• Alliance of Community Health Plans
• Kaiser Permanente
• Federal Trade Commission
• Patients For Affordable Drugs
• Biocom California
• Generation Patient (mentioned twice)
• Niskanen Center
• Patrea Pabst
• Anonymous
• Mark Lemley
• West Virginia Citizen Action Group

Despite this clear majority favoring the amendment to the double-patenting, the USPTO agreed with big pharma; this shows their influence. I recommend that powerful entities in the biosimilar space, like the Biosimilars Council, take immediate action, potentially with a lawsuit against the USPTO for issuing such an unfavorable decision.