Category: Intellectual Property

If Novartis’s “improved” version of Glivec is not more therapeutically efficacious, why is the Novartis decision such a big deal?

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By Adriana Benedict

Last week, Ryan Abbot blogged here about the Novartis case decided last Monday by the Supreme Court of India.  Since then, there have been a broad range of reactions to the case, but many of them appear to have left a lurking elephant in the room.

I’d like to attempt to provide some clarity to a question that seems to have created a lot of confusion surrounding the impact of the Novartis decision: If the older alpha crystalline form of imatinib mesylate (generic Glivec) is already available in India, and the newer beta crystalline form is not more therapeutically efficacious, then why does it matter whether or not Novartis can get a patent on the newer version of Glivec?  The simple answer is that for the most part, it doesn’t really, in terms of the availability of generic Glivec.  At most, it may make a difference for some Indian patients who will do better with the beta crystalline form.  And it will make some difference for Novartis, which will now forego a potential market of these Indian patients who would prefer to take (and can afford to pay for) the beta crystalline version.  But the alpha crystalline form of imatinib mesylate was already available in generic form in India, and it would have continued to be available in generic form in India regardless of the outcome of this case.  So why all the commotion?

First, the Novartis decision means that Indian generic manufacturers can now produce the beta crystalline form of imatinib mesylate with impunity.  This means that Novartis is likely to face competition in its production of the beta crystalline form, over which it would otherwise have held a global monopoly.  Indian generic manufacturers may now produce and export the beta crystalline form to other countries, which means that many more cancer patients in developing countries will have access to it.  Novartis’s markets in these countries may be disrupted through parallel importation of cheaper generics.

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Of Evergreening and Efficacy

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By Ryan Abbott

An important case was decided yesterday that may have a significant impact on access to medicines for patients in developing countries. India’s high court rejected an appeal by the pharmaceutical company Novartis to grant a patent for its cancer drug Glivec.

The case involved a challenge to Section 3(d) of the Indian Patents Act which was designed to prevent patent holders from extending the duration of their patents by making minor changes to existing formulations—a practice referred to as “evergreening.” Section 3(d) stipulates that “the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance” is not eligible for patent protection.

The drug Glivec was initially invented and patented as a compound in its free base form. Novartis subsequently obtained a patent in the U.S. and Europe on a beta crystal version of the compound, which was found to possess 30% greater bioavailability. In yesterday’s case, one of the central questions before the court was whether the “new” drug form qualified for a new patent under Section 3(d). The court ruled that it did not.

To arrive at this conclusion, one of the more interesting issues the court had to resolve was how to define efficacy. It elected to define efficacy as therapeutic efficacy, but even within that definition the court was presented with multiple visions.

On the one hand, efficacy could be thought of as the capacity of a drug to produce an effect. That is, the property of a drug that causes a stimulus at a receptor site, as distinct from characteristics such as affinity, potency, and bioavailability. A broader conception of efficacy would include considerations such as improved safety or reduced toxicity.

Theoretically, I suspect a more holistic approach is justified.

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Oral Arguments in FTC v. Actavis (SC pay for delay case)

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By Adriana Benedict

As Jonathan Darrow notes below, on Monday, the Supreme Court heard oral arguments in Federal Trade Commission (FTC) v. Actavis, the “pay for delay” case questioning whether or not reverse payment settlements in Hatch-Waxman litigation should be presumptively anticompetitive, a question on which the Circuit Courts are divided.  This particular case involves Solvay Chemicals Inc., whose patent on AndroGel cream, a synthetic testosterone formulation (set to expire in 2020) was challenged by three generic pharmaceutical companies that filed ANDA applications in 2003 for generic version of AndroGel (which is 1/6 the cost of the branded version).  Following a 30-month stay triggered by Solvay’s subsequent infringement lawsuit, the FDA approved the generic version of Androgel in 2006, at which point the generic companies’ motion for summary judgment on the validity of Solvay’s patent was ready for decision.  Instead of risking the judgment, the parties settled, with the generic companies agreeing to stay out of the market until 2015 in return for an estimated $186 – 252 million from Solvay over the course of six years.  The FTC, expressing concern that consumers would ultimately bear the costs of delayed generic entry, unsuccessfully challenged this settlement as presumptively unlawful restraints of trade.  The Eleventh Circuit affirmed the District Court’s decision in 2012, which rejected the FTC’s approach in favor of a “scope of the patent” test.  Several months later, though, the Third Circuit reached the opposite verdict in a similar case, accepting the FTC’s position that reverse payment settlements are presumptively unlawful agreements not to compete. The Supreme Court granted cert to resolve this conflict.

I found a couple features of yesterday’s oral arguments particularly striking.  First was Justice Breyer’s statement that he thought one of the four briefed scenarios in which a reverse payment settlement may rebut an anticompetitive presumption was “neutral”:

JUSTIC BREYER: [B]the person’s already in the market thinks that the next year or two or three years is worth $100 million a year, and the person who’s suing thinks it’s worth 30 million a year. And so he says, hey, I have a great idea, I’ll give him the 30 million and keep the 70. And — and that, I don’t see why that’s anticompetitive if that’s what’s going on.

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Branded Drugs and Generics: Reverse Payment Settlement Agreements

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By Jonathan J. Darrow

Earlier this week the Supreme Court heard oral arguments in FTC v. Actavis, in which the Federal Trade Commission is asserting that it is impermissible for a brand name drug company to pay a generic drug company to stay out of the market. Normally, such collusive behavior would constitute a clear violation of antitrust laws, because it reduces competition and thereby has the potential to raise prices to the detriment of consumers. But a complication arises in the case of branded and generic drugs because a patent is involved, giving the patent holder the lawful right to exclude competitors from the marketplace.

In a typical “reverse payment” case, the scenario unfolds as follows: First, the branded company enters the market with a new drug product that is covered by a patent. Some time later, but before the expiration of the patent, a generic drug company seeks to market a generic version of a drug, asserting that the patent is either invalid or not infringed (the assertion takes the form of a Paragraph IV certification, named for the section of the U.S. statute under which the certification arises, see 21 U.S.C. 355(j)(2)(A)(vii)(IV)).  Rather than litigate the case to completion, however, the two firms settle, with the patent holder agreeing to pay the generic company to stay off the market until some future date, such as the date that the patent is set to expire. The “monopoly” profits are thus shared between the two companies, to the detriment of consumers.

Defenders of reverse payment settlements argue that such agreements should be legal so long as they are “within the scope of the patent,” that is, so long as the restrictive agreement does not extend beyond the patent expiration date (see, e.g., Edward Stewart, Skepticism from the Court in Drug Case, N.Y. Times, Mar. 25, 2013).  The fundamental weakness of this argument—and what the N.Y. Times article does not mention—is that many drug patents (73% according to a 2002 government report (see page vi)) turn out to be invalid, not infringed, or otherwise insufficient when litigated in court. If many drug patents would be invalid or not infringed if litigated to conclusion, then the actual “scope of the patent” would be less than its nominal term would suggest, and the high cost borne by consumers would be greater than the patent law contemplates. Read More

REMINDER – Issues and Case Studies in Clinical Trial Data Sharing: Lessons and Solutions

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A reminder about our upcoming conference on Friday, May 17, co-sponsored by the Petrie-Flom Center and the Multi-Regional Clinical Trials Center at Harvard:

Issues and Case Studies in Clinical Trial Data Sharing: Lessons and Solutions

May 17, 2013, 8:00AM-5:00PM

Harvard Law School, Wasserstein Hall, Milstein West A (2nd Floor)

1585 Massachusetts Ave., Cambridge, MA

Our current agenda/objectives are below the fold, and will be updated with additional detail shortly.  Please make sure to register as space is limited! 

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Rethinking Biotechnology and Software Patents: A Myriad of Jurisdictional Issues Related to Subject-Matter Eligibility

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by Adriana Benedict

Today, Professor Glenn Cohen announced on this blog that he, in conjunction with two others, filed an amicus brief in AMP v. USPTO (Myriad), a case concerning Myriad’s patents on isolated DNA and cDNA. In a paper I have been writing on the natural phenomenon doctrine as applied to biotechnology patents, I arrived at this conclusion about the doctrine’s implications for Myriad:

According to Mayo v. Prometheus, the preemption rationale for the natural phenomenon doctrine suggests that any patent on a diagnostic biotechnology product or process should be limited to the inventive use of that product or process as defined by its associated process or product, respectively.  As applied to Myriad, this qualified interpretation of the natural phenomenon doctrine would suggest that ideally these patents ought to be limited to Myriad’s one remaining valid method claim, namely claim 20 of the ‘282 patent, “a method for screening potential cancer therapeutics.”  The unavoidable and unsettling problem with such a conclusion, of course, is that at this stage in litigation, it is not possible for the Court to limit Myriad’s gene patents in this way.  This procedural limitation sheds some light on the elephant in the natural phenomenon doctrine: If the doctrine was meant to exclude certain categories of discoveries from patentability before Congress had the opportunity to refine more specific patent validity rules, then perhaps it should be limited to carrying out that function at the outset of a patent prosecution.  The natural phenomenon doctrine serves the important purpose of ensuring that patents do not contravene their Constitutional objective by too broadly preempting the use of “basic tools of science.”  It does so by balancing the scope of preemption against the scope of invention, and ensuring that the scope of preemption does not exceed that which is justified by the inventor’s handiwork in applying natural phenomena.  At the patent prosecution stage, the natural phenomenon doctrine is a useful “catch-all” analytical tool that allows flexibility in promoting the spirit of patent law when the letter of patent law has not kept pace with the progress of science. But at the litigation stage, its Achilles heel is that it may prove too much: In the absence of a procedural option to limit a patent at this stage, the natural phenomenon doctrine is forced to err on either the side of all or nothing.  While the doctrine may be useful at the patent prosecution stage, it was not (as other statutory patentability requirements were) appropriately designed to assess the validity of patents once they’ve been issued in a way that is compatible with today’s patent litigation procedures.  As a doctrine of limitation, it must in this context either fall, and prove nothing at the expense of unwarranted preemption, or rise, and prove too much at the expense of patent holders who have been reasonably relying on guidance from the USPTO regarding gene patents for many years.  

I am unable to find any commentary exactly on this point, but some issues concerning the jurisdictional authority of §101 have been raised in response to both Mayo and CLS Bank v. Alice.  While these cases concern biotechnology processes and software, respectively, they are extremely relevant to Myriad if we consider isolated genes / cDNA to be the equivalent of biological software. Indeed, Professor Ronald Mann observed that “Though most of the attention to …[Mayo]  has focused on its immediate implications for medical providers, the broader effect of the case probably will be on the software industry.”

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New Amicus Brief Filed on Behalf of Dr. Eric Lander in the Supreme Court in the Myriad (Gene Patent) Case

I. Glenn Cohen 3 Comments

I am pleased to announce that Gideon Schor, Vern Noviel, and I filed an amicus brief on behalf of Dr. Eric S. Lander in a pending Supreme Court case that will address whether human genes are patentable.  The case is Association for Molecular Pathology v. Myriad Genetics, No. 12-398 and will be argued April 15, 2013.  Lander is a leading genomics researcher and is President and Founding Director of the Broad Institute of Harvard and MIT. We think the brief will play a key role in helping the Supreme Court chart a path through this legal thicket.  The full brief can be downloaded here https://www.americanbar.org/content/dam/aba/publications/supreme_court_preview/briefs-v2/12-398_neither_amcu_lander.pdf. Here is an excerpt from the brief, the Summary of the Argument:

This case hinges on a scientific question: whether DNA fragments from a human chromosome are (1) products of Nature or (2) at least similar enough to products of Nature that they should not be considered “markedly different.” Diamond v. Chakrabarty, 447 U.S. 303, 310 (1980).

The members of the Federal Circuit panel below agreed that the DNA of a whole human chromosome was a product of Nature. But the majority held that isolated DNA fragments of a human chromosome were not products of Nature.

Because the majority made (without citing scientific support) a foundational assumption that isolated DNA fragments of the human genome do not themselves routinely occur in Nature, it considered whether they are similar enough to products of Nature. Employing analogies, the panel members debated whether isolated DNA cleaved from a chromosome was akin to a leaf plucked from a tree, or a kidney surgically removed from a human body.

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Time Magazine on Solving Health Care’s #1 Problem: “All the Prices Are Too Damn High”

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By Patrick O’Leary

The cover story of the March 4, 2013 issue of Time Magazine is a piece by Steven Brill titled Bitter Pill: Why Medical Bills Are Killing Us. The article has apparently made a pretty big splash: in an interview (Part 2, Part 3) with Brill last week, Jon Stewart of Comedy Central’s The Daily Show told his audience that the article was so good that it “should be required reading for . . . not only every individual in this country, but lawmaker in this country.”

What most seems to fascinate Stewart, and what Brill emphasizes, is an insight that is old hat to health law types: the market for health care is just plain screwy. Brill explains that health care consumers “have no choice in what you’re buying, you have no idea what you’re buying, you have no idea what the price is, even when you get the bill you have no idea what it says.” The starting point for the article was Brill’s observation that in all the debate over the last few years about health care, “we seem to jump right to the issue of who should pay the bills, blowing right past what should be the first question: Why exactly are the bills so high?” Read More

The High Cost of Health Care: Why Some Pay $240 for a $9 Bottle of Pills

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By Jonathan J. Darrow

An earlier post discussed the equivocal efficacy of Propecia (finasteride) as a baldness remedy, ending with the provocative assertion that, efficacy aside, “there is little reason for anyone ever to buy or consume Propecia (finasteride), or any doctor ever to prescribe it, since a much cheaper and identical chemical sold under the trade name Proscar (finasteride), is available.” This post continues the discussion, addressing one small component of the rising cost of healthcare—the cost of finasteride.  It explores why consumers pay as much as $240 for a bottle of Propecia (finasteride) when a $9 bottle of an equivalent, FDA-approved supply of the identical chemical is readily and legally available at nearby stores.

In the exorbitantly priced landscape of prescription drugs, there is at least one low-cost oasis: Wal*Mart.  Though some find reason to criticize the discount store, few would disapprove of the dozens of prescription medications Wal*Mart offers for an unbeatable $4 for a 30-day supply.  Cost-sensitive consumers can purchase everything from blood thinners to antidepressants to antibiotics at this price, while a 90-day supply is only $10 (and this price includes shipping to your doorstep).  A handful of drugs that cannot be sold at $4 per month sell for a still-modest $9.  For the 300 or so drugs on Wal*Mart’s list, this means there is no longer a need for $10 co-pays or snowy treks to the pharmacy in 15 degree weather.  That’s right: the Wal*Mart total price is less than most insurance company co-pays.  Finally, a major industry player seems to have put effective downward pressure on prescription drug prices.  Read More

Reverse Settlements, Part 4: What Is the Baseline?

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In my final post on reverse settlements I want to offer three thoughts that are more directly related to the legal question of how to treat reverse settlements under antitrust law.

First, it strikes me as odd that we scrutinize reverse settlements of Paragraph IV challenges differently than settlements of patent suits of non-drug, even non-health products.  As Einer acknowledges in his Texas Law Review piece, nearly all patent litigation affects market structure and thus both the level of competition and the amount of consumer welfare (Elhauge and Krueger 2012).  In each of those cases, because the public is not party to the litigation, settlements between patent holders and alleged infringers will – in theory and perhaps in practice – tend to hurt consumers.  (The monopoly-duopoly wedge that gives rise to the problem of reverse settlements is by no means unique to the drug market.)  Yet my patent law colleagues tell me there is no systematic review of non-drug patent settlements as is being urged of drug settlements in the FTC v. Watson case.  It seems that under the FTC view, drug patents would be treated more harshly than other patents. I am not sure why that should be the case under antitrust law.

Second, the critical question in the antitrust litigation is the baseline against which reverse settlements are judged.  Reverse settlements are only problematic under antitrust law if they extend patent duration or scope beyond some baseline.  Should that baseline be expected duration with full litigation and no settlement – as critics of reverse settlements urge – or something else?  For expected litigation to be the baseline, one has to assume that Hatch-Waxman modifies patent law and that patent duration after litigation is what is now required.  I am not sure these assumptions are appropriate.

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