WASHINGTON — At the Supreme Court on Monday, there were signs that the pharmaceutical industry could end up on the losing side of a case with serious implications for medicine and drug prices.
The case in question 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 right now makes it easier to invalidate the patents that are crucial to their business.
But the plaintiffs seemed to be at a disadvantage before the court.
The four liberal justices, joined at times by Justice Anthony Kennedy, sounded skeptical toward their arguments. And in the event of a 4-4 split, made possible by the death of Justice Antonin Scalia earlier this year, the lower court’s decision — which, in this case, was 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 liberal justices took turns challenging the attorney for the plaintiffs, Garrard Beeney.
Beeney started by arguing that 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 quickly cut in, noting that Congress actually 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 the skepticism they saw from Kennedy, who is often a swing vote at the court. One of the plaintiffs’ central arguments is that the inter partes reviews were intended to be substitutes for court litigation, so they should therefore use the same narrower standard that 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 pharma, it was in Chief Justice John Roberts, who spent much of the administration’s argument challenging government attorney Curtis Gannon on the problems created by having inter partes reviews and court litigation use different standards.
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, a point he returned to again and again during the government’s time before the bench. At one point, 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 that, according to University of California, Hastings, law professor Robin Feldman, the current court has when it comes to patents.
On the one hand, the justices have often been hostile to patent holders. That would be good news for the generic drug companies and health insurance plans, which are supporting the administration. But on the other hand, they like uniformity in the standards used in different venues, which is what the brand-name drug companies are arguing for.
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.
The drug industry says it relies on patents to recoup its investments into research and development, so the broader standard set by the administration imperils future drug development.
The generic companies and insurers allege that the industry exploits the patent system to preserve monopolies on drugs, preventing generics from entering the market and keeping prices high. The new reviews will help bring drug costs down, they say.
The case being heard on Monday was Cuozzo Speed Technologies, LLC v. Lee.