“It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913) which is primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other processes involving site specific genetic manipulation techniques) solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.“
35 U.S.C. § 271(e)(1)
The Hatch-Waxman (Drug Price Competition and Patent Term Restoration) Act of 1984 was created in the United States to shield activities including supplying active ingredients, using research tools, and stockpiling drug inventory done to secure regulatory approval. Its key purpose is to expedite FDA approval and market translation of drugs immediately following the expiration of blocking patents. Its significance to startups, and its implication to universities cannot be overstated. To explore both points I’ve broken this article into two posts:
- The significance of the Hatch-Waxman Act to startups
- The implication of the judicially created exemption (case law) to universities (future post)
For a more in-depth review see: Research Use Exemptions to Patent Infringement for Drug Discovery and Development in the United States
The significance of the Hatch-Waxman Act to startups
The Safe Harbor provision of the Hatch-Waxman Act exempts research and development activities using patented compounds or processes “reasonably related to the development and submission of information under Federal law” that extends broadly to small molecule-drug products, medical devices and biologics [Eli Lilly & Co. v. Medtronic, Inc. (496 U.S. 661) 1990]. In short, it allows biotech startups to use patented technology for the purposes of generating data for FDA approval without needing to take out costly licenses. Importantly, this extends to both in vitro and in vivo testing on pharmacology, toxicology, pharmacokinetics, and metabolism since this information is necessary to determine if a drug is sufficiently safe to put in humans. Since any information generated for the purposes of regulatory approval – whether or not successful or conducted using good laboratory practices – can be considered and reviewed by the FDA, “reasonably related” research has been broadly interpreted by the courts. “Uses reasonably related to the development and submission of information under a Federal law” extends to both pre-clinical and post-approval activities, although the latter have been inconsistently upheld.
For pre-clinical stage biotech startups with limited cash, a short runway, and long time-horizons to commercialization, licensing technology early on should be carefully considered. Unless the patents are core to your platform (necessary to establish commercial freedom to operate), or should be secured for specific strategic reasons (investor relations, disincentivizing or blocking commercial competitors), you may be better served redirecting your money and bandwidth to advancing the technology itself. This is especially true if the desired patents are set to expire before your startup’s product is commercially launched, since protections afforded by the Act were specifically enacted to facilitate market entry of generic drugs. Importantly, this act exists only in the United States, and should be considered carefully in light of your business and R&D strategy. I am not a lawyer, but a lot of us do business in the United States, and if you didn’t know these protections existed – now you do.