This week, the Senate Judiciary Committee will consider the Promoting and Respecting Economically Vital American Innovation Leadership Act – also called the PREVAIL Act. I am deeply concerned that this bill will hobble a critical process that was established in the Leahy-Smith America Invents Act (AIA) to challenge patents that have been filed as a tactic to extend exclusivity of an existing patent. Before AIA became law it was a common business practice, often used by pharmaceutical companies, to file frivolous patents to de facto extend the life of a patent well beyond its term of exclusivity because the process to dismiss these patents was cumbersome and took far too long. This resulted in increased health care costs. As a result, Americans were paying higher prices for many medications than the rest of the world.
The Leahy-Smith America Invents Act (AIA) created the Patent Trial and Appeal Board (PTAB) to address the patent quality issues that were widely recognized as problematic for consumers and the American economy. Its establishment was a key component of the Leahy-Smith AIA that received bi-partisan support in the House and Senate. The PTAB provides a faster, less expensive, and expert assessment of patent validity by the same agency that granted the right in the first place.
The PTAB has lived up to its expectations. The number of low-quality patents being regularly abused in litigation against productive businesses has declined. Patent challenges are heard in one year compared to the many years it takes in district court, and parties spend about a tenth of the cost that they otherwise would. And when you look at the affirmance rates, PTAB decisions are upheld more often than those issued by Article III judges.
The PTAB benefits to consumers has been immediate. There is now a path to proactively address invalid drug patents, allowing lower-cost alternatives from generic drug providers to reach the market sooner. Hundreds of patents for FDA-approved drugs have been reviewed as a result, and, unsurprisingly, the cancellation of invalid drug patents by the PTAB has often been followed by a sharp decrease in prescription prices.
None of this is to say that there is no room for improvement at the PTAB. In fact, Senators Thom Tillis, John Cornyn and I introduced the PTAB Reform Act last Congress. That bill was the product of extensive stakeholder consultation and bi-partisan negotiations that worked to improve PTAB, not make it toothless as proposed by the PREVAIL Act. The PTAB Reform Act also acknowledges that any patent challenge is costly for small patent holders and established a subsidy program to ensure that our smallest innovators are on a level playing field when presenting before the PTAB.
The PREVAIL Act being considered by the Judiciary Committee this week would gut the PTAB instead of improving it. The opposition to the bill is broad and includes not just generic drug manufacturers and patient rights advocates, but also retailers, restaurants, the automotive industry, financial services, technology businesses, and startups. I hope members on both sides of the aisle on the committee will take a hard look at the consequences of advancing the PREVAIL act this week.
