Uncharted Territories of the Patent-Restoration Due-Diligence Challenge

March 2011

The innovation and development incentives offered by the patent system are mitigated if a substantial portion of the patent term is lost while obtaining product approval through the Food and Drug Administration (FDA). The Drug Price Competition and Patent Restoration Act was enacted to return some of the lost patent term to the patentee. However, any person can petition the FDA, contending that the patentee did not act with due diligence in seeking FDA approval of the product during the regulatory review period. A successful challenge will reduce the restored term, such that the patentee is not compensated for time lost due to his own non-diligent actions. While the current due-diligence regulations provide a vague and flexible standard, earlier drafts of the regulations and FDA responses to comments provide insight as to the types of factors the FDA is likely to consider when assessing an applicant's diligence. A due-diligence petition has only been filed three times, and in none of these cases did the FDA issue a decision based on substantive diligence matters. Still, detailed examination of these petitions is also instructive in predicting the success of due-diligence challenges. Statute-imposed maximums and applicants' own incentives to act diligently may minimize the utility of the due-diligence challenges in some contexts. However, in other contexts, I propose that these petitions offer a feasible approach towards limiting pharmaceutical monopolies. 


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