On January 13, 2015, the Patent Trial and Appeal Board ("PTAB" or "Board") denied institution of four covered business method ("CBM") patent review petitions filed by Par Pharmaceutical, Inc. ("Par"), Roxane Laboratories, Inc. ("Roxane"), and Amneal Pharmaceutical, LLC ("Amneal") (together, "petitioners") against patents owned by Jazz Pharmaceutical, Inc.  All of these patents are listed in the Orange Book as covering XYREM^® (sodium oxybate, or the sodium salt of gamma hydroxyl butyrate ("GHB")), indicated for the treatment of excessive daytime sleepiness and cataplexy in patients with narcolepsy.  Before jumping to the conclusion that this author has confused CBMs with inter partes reviews ("IPRs"), petitioner did indeed file CBM petitions against these patents, alleging that they contain a method for the use "in the practice, administration, or management of a financial product or service."  These four patents contain "Risk Evaluation and Mitigation Strategies" ("REMS")-style claims.  REMS was a program initiated by the FDA in 2007 to "ensure that the benefits of a drug or biological product outweigh its risks."  Nevertheless, even though these patents do not contain typical composition-of-matter or method-of-use claims (which certainly would not be subject to CBM review), the PTAB disagreed with petitioner, determining that these patents do not claim a financial product or service.

The four patents at issue in this case were U.S. Patent Nos. 7,668,730 ("the '730 patent") (CBM2014-00151), 7,895,059 (CBM2014-00149), 8,457,988 (CBM2014-00150), and 8,589,182 (CBM2014-00153).  The Board focused on the '730 patent as illustrative.  This patent explains that "[c]ertain agents, such a gamma hydroxyl buterate (GHB) are also abused, yet also are effective for therapeutic purposes," and therefore, a need exists "for a distribution system and method that directly addressed these abuses."  '730 patent, col. 1, ll. 21-31.  Claim 1 is an example of the method developed to address this problem:

1.  A computerized method of distributing a prescription drug under exclusive control of an exclusive central pharmacy, the method comprising:
    receiving in a computer processor all prescription requests, for any and all patients being prescribed the prescription drug, only at the exclusive central pharmacy from any and all medical doctors allowed to prescribe the prescription drug, the prescription requests containing information identifying patients, the prescription drug, and various credentials of the any and all medical doctors;
    requiring entering of the information into an exclusive computer database associated with the exclusive central pharmacy for analysis of potential abuse situations, such that all prescriptions for the prescription drug are processed only by the exclusive central pharmacy using only the exclusive computer database;
    checking with the computer processor the credentials of the any and all doctors to determine the eligibility of the doctors to prescribe the prescription drug;
    confirming with a patient that educational material has been read prior to shipping the prescription drug;
    checking the exclusive computer database for potential abuse of the prescription drug;
    mailing the prescription drug to the patient only if no potential abuse is found by the patient to whom the prescription drug is prescribed and the doctor prescribing the prescription drug;
    confirming receipt by the patient of the prescription drug; and
    generating with the computer processor periodic reports via the exclusive computer database to evaluate potential diversion patterns.

Put simply, the claimed method requires using an exclusive computer database associated with an exclusive central pharmacy to ensure that use of the prescription drug is not abused through the withholding of the drug if potential abuse is found.  The patent also contains claims drawn specifically to the prevention of abuse of gamma hydroxyl buterate.

As background on CBM patent review, the America Invents Act ("AIA") provided for this transitional program, but limited the program to patents claiming "a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions."  AIA § 18(d)(1).  How could petitioners have thought that such a definition would apply to the above-reproduced claim?  The answer lies in the PTAB's expansive view of the definition for "financial product or service."  In its responses to comments when promulgating the final CBM rules, the Board explained that the legislative history provides for review of "patents 'claiming activities that are financial in nature, incidental to a financial activity or complementary to a financial activity.'"   77 Fed. Reg. 48,734, 48,735 (Aug. 14, 2012).  And, in practice, the Board has taken an expansive view of the patents that fall within the scope of this definition when instituting these procedures.

Interestingly, in denying institution in this case, the PTAB did not state that REMS-style patents could never be subject to CBM patent review.  In fact, the Board suggested that claims "recit[ing] or require[ing] (i) the sale of a prescription drug, (ii) processing of payments, benefits, or insurance claims related to the sale of a prescription drug, (iii) a method of insuring a patient or determining the cost of insurance, (iv) a method of determining the cost of prescription benefits, (v) a method of facilitating payment of health care benefits, or (vi) the extension of credit for the purchase of a prescription drug" might be susceptible to such review.  In this case, however, the Board concluded that petitioners had not met their burden of demonstrating Jazz's patents were "covered business method patents" under the AIA.

Petitioners had argued that claim 1 of the'730 patent was CBM-eligible because the method would be used in commerce.  They emphasized the steps for verifying either insurance coverage or a patient's ability to pay.  Moreover, they noted that the method is directed to the very business of running a mail-order pharmacy.  The Board disagreed, however, finding the petitioners' arguments to be conclusory.  According to the Board, none of the claim limitations identified ("distributing a prescription drug," "receiving all prescription requests," "checking the credentials of any and all doctors," "mailing," or "providing" the drug to a patient) "recite or require an activity involving the movement of money or extension of credit in connection with the sale of a prescription drug."  Moreover, the Board found that "[t]he claims also do not recite a product or service particular to or characteristic of financial institutions such as banks, insurance companies, and investment houses."  As such, it was unpersuaded that claim 1 of the'730 patent (and correspondingly all other claims at issue) was directed to "the practice, administration, or management of a financial product or service."

Perhaps in anticipation of this impending institution denial, Par (either alone or together with Amneal) filed separate IPR petitions against all four of these patents on January 8, 2015.  We will monitor these petitions and provide any updates as warranted.