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A Late Addition Worth $214 Million

Amendment to the Patent Reform Bill Last Week Would Benefit Powerful Law Firm, Drug Company

The House might have sworn off earmarks, but that didn’t stop the chamber from essentially passing one last week that would allow a single drug company to avoid generic competition while saving a powerful law firm from paying out $214 million in a malpractice suit.

The amendment, authored by Rep. John Conyers (D-Mich.) and added to the patent reform bill Thursday, would have a direct benefit for the Medicines Co. by essentially ensuring it retains control of the patent for Angiomax, a blood-thinning medication and MDCO’s flagship product.

The provision would also be a financial boon to WilmerHale, which since February has had a malpractice settlement with MDCO hanging over its head that would require the firm to pay $214 million to the drug company — $115 million out of its own pocket and $99 million from malpractice insurance — if a generic drug is introduced before June 15, 2015.

Although the amendment does not obligate taxpayer funds be spent on a specific project, by virtue of its narrow scope it falls within the broad definition of an earmark and is a classic example of Congress taking pains to assist powerful interests, Taxpayers for Common Sense Vice President Steve Ellis said.

The language “really has no business in this bill,” said Ellis, who called the amendment “almost a private law that helps one or two companies.”

But it almost didn’t happen. The House on Thursday had originally voted against the amendment to the patent bill, only to have the vote reopened after Rep. Jesse Jackson Jr. (D-Ill.) protested that Members were still voting when it was gaveled down.

After much debate, Republicans ultimately reopened the vote, and the tide turned. Several Members switched their votes, while others were able to cast their votes in favor of the amendment after originally missing the vote.

“What’s the point of gaveling down a vote if you can just reopen it?” Ellis asked, arguing that “it’s not Congress’ job to bail out bad decisions or indecisions … by WilmerHale or the Medicines Co.”

A spokesman for Majority Leader Eric Cantor (Va.) said the vote was opened as a courtesy to Members who were still attempting to vote.

“There were Members of both parties still voting from the well,” the spokesman said, adding that Cantor ultimately backed the amendment because it “established a consistent standard for the U.S. Patent Office by bringing their deadlines into conformity.”

At issue is MDCO’s 2000 application to maintain its patent over Angiomax. Following approval of the sale of the drug by the Food and Drug Administration in December 2000, the company had 60 days to file for a patent extension, which under the law would have precluded the sale of generic versions of the drug until 2014.

WilmerHale attorneys handling the application for MDCO technically filed the extension 61 days after the approval, and because the Patent and Trademark Office does not have authority to give applicants wiggle room in filing, the application was denied, meaning generics would hit shelves in 2010, costing MDCO an estimated $500 million to $1 billion in profits.

PTO officials have said problems with how the office interprets the deadline have rarely been an issue, noting that only a handful of extensions have been rejected in the past two and half decades because they missed the deadline.

To regain control of the patent, MDCO opened up a three-pronged offensive. It filed suit against the PTO, arguing that because the FDA used a different interpretation to calculate the 60-day permit trigger, its 61-day filing time actually fell within the PTO’s definition.

MDCO also began malpractice proceedings against WilmerHale over its handling of the patent extension, while both MDCO and WilmerHale launched an aggressive effort to pass legislation overturning the extension rejection.

Over the next several years, MDCO and WilmerHale spent millions of dollars lobbying Congress, and several ultimately unsuccessful efforts to pass the legislation were attempted.

MDCO got a major break last summer when the U.S. District Court for the Eastern District of Virginia ruled in the company’s favor, arguing that the PTO should have used the FDA’s calculation of the request period. If not appealed, the decision would have all but assured the company would be granted its extension.

But while the PTO did not appeal the decision, a generic drug manufacturer did and the case remains in limbo.

With time ticking down on the patent, MDCO and WilmerHale entered into settlement negotiations.

On Feb. 14, MDCO CEO Clive Meanwell announced a deal between the company and WilmerHale, under which the law firm was required to pay $18 million up front to cover MDCO’s past expenses. The settlement also commits WilmerHale to paying MDCO $214 million in total damages if a generic version of Angiomax is released before June 15, 2015.

In a statement announcing the deal, Meanwell made it clear that the settlement was being struck “to establish a fair and equitable resolution of this matter if the district court’s decision ultimately is not sustained.”

Significantly, MDCO and WilmerHale have maintained their relationship, and sources said they have continued to actively lobby Congress to permanently codify the district court ruling.

A spokesman for MDCO did not return a request for comment, and a spokesman for WilmerHale declined to comment. But defenders of the legislation dismissed complaints that the language is an earmark helping only two powerful businesses.

In a floor statement before Thursday’s vote, Conyers, the Judiciary Committee’s top Democrat, called the language a “bipartisan amendment” that would make a “technical — but important — revision” to federal patent law.

“It addresses confusion regarding the calculation of the filing period for patent term extension applications,” Conyers said, adding that, “By eliminating confusion regarding the deadline for patent term extension applications, this amendment provides the certainty necessary to encourage costly investments in lifesaving medical research.”

A supporter of the amendment agreed and argued that rather than meddling in the legal system, as maintained by Ellis and other critics, “it’s the opposite. It’s actually Congress leaving the world the way they found it,” this source said.

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