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ECO 404 GDB No 2 Starting Date Monday, February 09, 2015 Closing Date Friday, February 13, 2015

The Case: Patent helps the inventor to have exclusive right on his invention to get benefits for a limited period of time. Thus a patent can be used to create monopoly. If there is no patent system then individuals and firms will not be willing to invest in research and development (R & D) and any new invention will be copied by competitors. The life of a patent is different in different countries, as in United States it is 17 years. While in Pakistan due to significant development under the TRIPS agreement, also reflected in the Patent Ordinance 2000, is the extension of the term of patent from 10 to 20 years from the date of application. During the life of a patent, inventor enjoys monopoly and after the patent expires everyone is free to use the invented technology.

Requirement: Being a student of managerial Economics analyze the situation of the extension of time period of patent from 10 to 20 years under the patent ordinance 2000 and comment regarding its effect on research and development(R & D) and to the society.

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Small Business Assistance: Frequently Asked Questions on the Patent Term Restoration Program

1. What is Patent Term Restoration?

Patents issued by the Patent Trademark Office (PTO) grant patent holders the right to exclude others from making, using, or selling an invention. The granting of this exclusive right is designed to encourage innovation. The patent holder is likely to reap greater profits if protected from direct competition. These profits are intended to serve as incentives for creating innovative products that benefit the public.

The Uruguay Rounds Agreements Act (Public Law 103-465), which became effective on June 8, 1995, changed the patent term in the United States. Before June 8, 1995, patents typically had 17 years of patent lifefrom the date the patent was issued. Patents granted after the June 8, 1995 date now have a 20-year patent life from the date of the first filing of the patent application. However, the effective patent term is frequently less than 20 years because patents are often obtained before products are actually marketed. Many factors influence the length of the effective patent term, including the requirements in the Federal Food, Drug, and Cosmetic Act and the Public Health Service Act that certain products receive FDA approval before marketing. New human drug products generally must undergo extensive testing in animals and humans to show that the drugs are both safe and effective before FDA will approve the product for marketing. Consequently, in order to stimulate product development and innovation, Congress in 1984 enacted Title II of the Drug Price Competition and Patent Term Restoration Act (Public Law 98-417) to extend patent life to compensate patent holders for marketing time lost while developing the product and awaiting government approval. Title II of the Act created a program whereby patent holders whose patents claim a human drug product, medical device, food additive or color additive could recoup some of the lost patent time. In 1988, Congress enacted the Generic Animal Drug and Patent Term Restoration Act (Public Law 100-670) which contained provisions for patent restoration to animal drug products. The regulations governing the Patent Term Restoration program are located in the Code of Federal Regulations, 21 CFR Part 60.

2. What products are included?

As stated above human drug products, medical devices, food additives, or color additives, and animal drug products are eligible for patent extension. This Q&A pertains only to human drug products. Human drug product means the active ingredient of a new drug or human biologic product (as those terms are used in the Food, Drug and Cosmetic Act and the Public Health Service Act).

3. What is the maximum amount of time that the patent can be extended?

A maximum of 5 years can be restored to the patent. In all cases, the total patent life for the product with the patent extension cannot exceed 14 years from the product’s approval date, or in other words, 14 years of potential marketing time. If the patent life of the product after approval has 14 or more years, the product would not be eligible for patent extension.

4.What is FDA’s role in the Patent Term Restoration Program?

FDA’s primary responsibility is to assist the Patent Trademark Office (PTO) in determining a product’s eligibility for patent term restoration and to provide information to PTO regarding a product’s regulatory review period. As described below, FDA also has the responsibility for due diligence petitions and due diligence hearings. PTO is responsible for determining the period of patent extension. FDA defers to PTO on all matters involving the construction and validity of patent claims.

5. When is a patent extension application submitted and where is it submitted?

Application for patent extension must be filed within 60 days of FDA approval of the drug product even if the product cannot be commercially marketed at that time. For example, if a drug product is a controlled substance and cannot be commercially marketed at the time of its approval due to domestic drug scheduling activities, approval occurs on the date FDA notifies the marketing applicant that the NDA for the drug product is approved and the patent extension must be filed with 60 days of the date of approval. The patent extension application is filed with the PTO.

6. What are the criteria for determining whether a patent for a human drug product is eligible for patent extension?

The term of a patent which claims a human drug product, a method of using the product or a method of manufacturing the product will be extended from the original expiration date if it satisfies six conditions.

First, the applicant must show that the patent has not expired.

Second, the applicant must establish that the patent has not previously been extended.

Third, the patent owner or its agent must submit an application for patent term restoration that includes details about the patent and the activities undertaken to secure FDA approval.

Fourth, the applicant must establish the product was subject to a regulatory review period before its commercial marketing or use.

Fifth, the applicant must show that the product either represents the first permitted commercial marketing or use of the product after such regulatory review period or, in the case of a product manufactured under a process patent that primarily uses recombinant deoxribonucleic acid (DNA) technology, represents the first permitted commercial marketing or use of a product manufactured under the process claimed in the patent.

Finally, the applicant must submit the application for patent term restoration to PTO within 60 days of FDA approval of the commercial marketing application.

7. How is active ingredient defined with regard to the first permitted commercial marketing or use of the product?

Permission for commercial marketing or use must be the first permitted commercial marketing or use of the product under the provision of law under which such regulatory review period occurred. A product is the active ingredients contained therein for patent term extension purposes. Active ingredient does not equal active moiety (generally the molecule or ion responsible for the physiological or pharmacological action). A new ester or salt of a previously approved acid is eligible for patent extension; a new acid of a previously approved salt or ester is ineligible.

8. What is a regulatory review period determination?

The regulatory review period is the basis for patent extension. Basically, a regulatory review period is composed of two parts: a testing phase, and an approval phase. The testing phase for a human drug product is the period between the effective date of an investigational product exemption (Investigational New Drug Application) and the initial submission of the marketing application (New Drug Application). The approval phase is the period between the submission and approval of the marketing application.

9. What are the procedures employed by the FDA for regulatory review period determinations?

FDA consults its records and experts to verify the dates contained in the application of the testing phase and the approval phase. Once the regulatory period has been determined, FDA will notify both PTO and the applicant of the determination, file a copy of the determination in a docket for the application located in FDA’s Dockets Management Branch, and publish the determination in the Federal RegisterThe Federal Registernotice will state the applicant’s name, the product’s trade name and generic name, the product’s approved uses and patent number, an explanation of any discrepancies between the dates in the application and FDA records, and the regulatory review period determination, including a statement of the length of the testing and approval phases and the dates used in calculating each phase.

10. When does FDA consider a regulatory review period determination to be final?

FDA will consider its regulatory review period to be final after either of the following events: (1) Expiration of the 180 day period for filing a due diligence petition, or, (2) upon resolution of a timely-filed request for revision, due diligence petition, or request for a hearing.

11. How is the length of the patent extension calculated?

As stated above, all regulatory periods are divided into a testing phase and an agency approval phase. The regulatory review period that occurs after the patent to be extended was issued is eligible to be counted towards the following calculation:

First, each phase of the regulatory review period is reduced by any time that the applicant did act not act with due diligence during that phase. The reduction in time would only occur after an FDA finding that the company did not act with due diligence.

Second, after any such reduction, one-half of the time remaining in the testing phase would be added to the time remaining in the approval phase to comprise the total period eligible for extension.

Third, all of the eligible period can be counted unless to do so would result in a total remaining patent term from the date of approval of a marketing application of more than fourteen years. An additional limitation on the period of extension is that the extension cannot exceed five years. For example, if an approved drug product which is eligible for the maximum of five years of extension had ten years of original patent term left at the end of its regulatory review period, then only four of the five years could be counted towards extension. The Patent Trademark Office is responsible for determining the period of extension.

12. Where there are multiple INDs in effect, when does the testing phase begin?

For drugs for which more than one exemption is in effect, the provisions of the patent extension statue specifically state that the testing phase for human drug products begins on the date an exemption became effective for the approved product. Thus, while the drug’s dosage form and strength during the IND phase need not be identical to that of the approved drug product, the information from the IND studies must have been material to the approval of the drug product. Where multiple INDs are in effect, the agency will consider the testing phase to have begun when the first IND for the approved drug product became effective.

13. What combination products are eligible for patent extension?

In combination products, at least one of the active ingredients (including any salt or ester of that active ingredient) of the product must have not been previously approved by the FDA to be eligible for patent extension, based on the approval of the combination product, and then only the patent covering the newly approved component or the combination of components may be extended.

14. What is a due diligence petition?

Any person may file a due diligence petition with FDA, no later than 180 days after the publication of a regulatory review period determination. Such a petition challenges FDA’s determination by alleging that applicant for patent term restoration did not act with due diligence in seeking FDA approval of the product during the regulatory review period. Information regarding the filing, format, and content of petitions; applicants response to petition; and standard of due diligence is available in the Patent Term Restoration regulations 21 CFR PART 60, Subpart D---Due Diligence Petitions. At the present time no due diligence petition has been submitted to...

15. What is a Due Diligence Hearing?

Any person may request not later than 60 days after the publication of FDA’s due diligence determination that FDA conduct an informal hearing on the due diligence determination. Information regarding the request for a hearing, notice of hearing, hearing procedures, and administrative decision is available in the Patent Term Restoration Regulations 21 CFR PART 60, Subpart E---Due...

16. Who are the contacts for information about the Patent Restoration Program at the Food and Drug Administration and Patent Trademark Office?

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