WAS THE FDA EXEMPTION TO PATENT INFRINGEMENT, 35 U.S.C. § 271(e)(1), INTENDED TO EXEMPT A PHARMACEUTICAL MANUFACTURER’S ACTIVITIES IN THE DEVELOPMENT OF NEW DRUGS?
The general rule of patent infringement, 35 U.S.C. § 271(a), states: “whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.” Congress created the so-called FDA exemption with the Drug Price Competition and Patent Term Restoration Act of 1984 (“1984 Act”), later codified in 35 U.S.C. § 271(e)(1), which states: [i]t 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 … 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. 
Attached as Appendix A. The FDA exemption was created as a part of a legislative package intended to speed generic pharmaceuticals to the market in hopes of reducing the price of pharmaceuticals and increasing access.  Included in the legislation was a compromise between the interests of the brand and generic pharmaceutical industries. In order to speed generics to the market, the generic pharmaceutical companies were given the ability to file an ANDA, an abbreviated application for marketing approval, and the FDA exemption from patent infringement.  The ANDA allows a generic manufacturer to file for FDA approval prior to the expiration of the brand patent. The FDA exemption allows the generic manufacturer to do the studies necessary to prove bioequivalence, a requirement of the ANDA, while the brand medication’s patent is still in force. In exchange, the brand pharmaceutical industry received the ability to extend the terms of their patents to compensate for the long regulatory approval process.
The legislative history of the FDA exemption clearly shows that it was intended to apply only to generic pharmaceuticals. The legislation, in part, was meant to cure the unfair patent term extension that resulted when a generic manufacturer had to wait until the expiration of the brand patent before applying to the FDA for regulatory approval.  It was hoped that the legislation would get generic drugs to the market around two years earlier than under the prior system. 
Both the Supreme Court and the Federal Circuit have interpreted the text of the FDA exemption. In Eli Lilly and Company v. Medtronic, Inc., the Supreme Court interpreted the exemption to include medical devices.  In Intermedics, Inc. v. Ventritex Co., Inc., the Federal Circuit held that an intent to commercialize prior to the expiration of the patent did not violate the exemption. 
In the subsequent Merck v. Integra case, the Supreme Court and the Federal Circuit considered the meaning of the phrase “solely for uses reasonably related to the development and submission of information under a Federal law.”  At first instance, the Federal Circuit interpreted this language narrowly.  In the majority opinion, Judge Rader focused on the word “solely” in the statute and viewed it as limiting.  Applying the statute narrowly, the court found that the Scripps experiments, which were designed to identify a new drug candidate, did not fall within the exemption.  Judge Rader also held that if the FDA exemption were interpreted broadly so as to include the Scripps experiments then the exemption may unintentionally destroy the patent protection for all research tools. 
On appeal, the United States Supreme Court interpreted the exemption as including “all uses of patented compounds ‘reasonably related’ to the process of developing information for submission under any federal law regulating the manufacture, use, or distribution of drugs.”  This interpretation creates a vast exemption to patent infringement that goes well beyond the scope of Congress’s intent and well beyond reason.
The FDA exemption was not created to assist in the generation of new drug candidates, which are included in the broad interpretation of the “reasonably related” language by the Supreme Court in Merck. Applying the Supreme Court’s interpretation to the facts of Merck means that a pharmaceutical manufacturer may use the patented products and methods of another manufacturer to identify new drug candidates and not infringe. In fact there is almost no limit to what can be considered “reasonably related” to the development of information for submission to the FDA since a great deal of the research and development in the natural sciences is directed at identifying new drugs. Patented research tools are particularly vulnerable because they are often used in basic research that may now be considered “reasonably related” to submission to the FDA. Arguably, any use of the two research method patents at issue in Merck, the ’997 and ’237 patents, could be considered “reasonably related” under the Supreme Court’s broad interpretation.  Such development of new drugs using others’ patented technology was not meant to fall under Congress’s exemption to patent infringement….
Paul Wiegel, Esq.