Extent of Drug Patents With Terminal Disclaimers and Obviousness-Type Double Patenting Rejections

Abstract

This study evaluates the frequency of terminal disclaimers filed by drug patent holders to obviate obviousness-type double patenting rejections associated with drug patent thickets.

Brand-name drug manufacturers charge high prices for their products during market exclusivity defined by their patents, which normally lasts 20 years. Apart from patents on underlying active ingredients, most drug patents are “secondary” patents that protect formulations, manufacturing processes, methods of use, or delivery devices.

Large portfolios of secondary patents (so-called patent thickets) can complicate and delay generic or biosimilar competition because such manufacturers must make sure the product does not infringe on any patent. Evaluating more patents increases the time and expense, and, if any patents are infringed, patent litigation is costly and time-consuming.¹ The US Patent and Trademark Office (USPTO) can reject secondary patents as being too similar to an earlier patent, which is called an obviousness-type double patenting rejection. Patent holders can respond to such a rejection by filing terminal disclaimers that give up time remaining on the secondary patent beyond the expiration of the other patent.² The secondary patent then is issued, making the drug’s patent portfolio thicker, although not longer.

To encourage timely generic or biosimilar competition, the USPTO and US Congress are pursuing reforms targeting secondary patents with terminal disclaimers filed to obviate obviousness-type double patenting rejections. A recent USPTO proposed rule would establish that if any claim in a patent is found invalid, all patents linked to it via terminal disclaimers would become unenforceable.³ A bipartisan bill in Congress would permit patent holders to enforce only 1 patent per group connected by terminal disclaimers in litigation with generic and biosimilar manufacturers.⁴ We analyzed the potential effect of these reforms by evaluating the frequency of terminal disclaimers filed to obviate obviousness-type double patenting rejections associated with drug patent thickets.

Methods

We identified every patent with a terminal disclaimer filed and an obviousness-type double patenting rejection from 2002 to 2023 using the USPTO’s PatentsView and Patent Examination Research Dataset (PatEx).^5,6 We extracted patents listed on these drugs in the US Food and Drug Administration’s Orange Book (small molecules) and Purple Book (biologic drugs). We used PatentAdvisor, a commercial database, to determine if terminal disclaimers were used to obviate an obviousness-type double patenting rejection, and Lex Machina, a legal analytics platform, to determine if any of these patents were litigated and invalidated.

Results

Among 7072 small-molecule drug patents associated with 1357 drugs listed during the study period, 3151 (45%) had obviousness-type double patenting rejections and terminal disclaimers. Among the 2890 small-molecule drug patents subject to litigation, 1365 (47%) had obviousness-type double patenting rejections and terminal disclaimers. Among 241 invalidated small-molecule drug patents, 100 (41%) had obviousness-type double patenting rejections and terminal disclaimers (Table).

Table. Small-Molecule and Biologic Drug Patents With Terminal Disclaimers to Obviate Obviousness-Type Double Patenting Rejections and Litigation Outcomes.

Patent type	Total patents, No. (%)	Frequency of obviousness-type double patenting rejections and terminal disclaimers, No./total (%)
All small-molecule drug patentsa	7072	3151/7072 (45)
Litigated small-molecule drug patents	2890 (41)	1365/2890 (47)
Invalidated small-molecule drug patents	241 (3)	100/241 (41)
All biologic drug patentsb	240	78/240 (33)
Litigated biologic drug patents	221 (92)	67/221 (30)
Invalidated biologic drug patents	14 (6)	3/14 (21)

^a Small-molecule drug patents were identified using the US Food and Drug Administration (FDA) Approved Drug Products With Therapeutic Equivalence Evaluations (Orange Book).

^b Biologic drug patents were identified using the FDA Lists of Licensed Biological Products With Reference Product Exclusivity and Biosimilarity (Purple Book).

Among 240 biologic drug patents associated with 14 drugs, 78 (33%) had obviousness-type double patenting rejections and terminal disclaimers. Among the 221 litigated biologic drug patents, 67 (30%) had obviousness-type double patenting rejections and terminal disclaimers. Among the 14 invalidated patents, 3 (21%) patents had obviousness-type double patenting rejections and terminal disclaimers (Table).

Discussion

Almost half of small-molecule and biologic drug patents in the last 2 decades had obviousness-type double patenting threats and terminal disclaimers; more than one-third of invalidated small-molecule patents and one-fifth of invalidated biologic patents had obviousness-type double patenting and terminal disclaimers. Thus, the proposed USPTO rule could substantially reduce drug patent portfolios by discouraging firms from filing patents on obvious variations of prior inventions. The congressional bill could also force branded drug firms to concentrate litigation on their most important patents.

Limitations include that for biologics, this study examined only patents listed in the Purple Book, which does not include most currently marketed biologic drugs. The analysis is also constrained by the fact that most firms choose to settle patent disputes rather than litigate to final judgment.

Terminal disclaimers have helped catalyze the current large drug patent portfolios built of secondary patents. Reducing the size of patent thickets should facilitate market entry of generic and biosimilar drugs closer to the expiration of the patent on the underlying active ingredient or other meaningful innovation, thereby improving competition and patient access to affordable drugs.

Section Editors: Kristin Walter, MD, and Jody W. Zylke, MD, Deputy Editors; Karen Lasser, MD, MPH, Senior Editor.

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