© 2008 Innovate Legal Services Limited The European Commission's Pharma Sector Inquiry: A Generic...

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© 2008 Innovate Legal Services Limited The European Commission's Pharma Sector Inquiry: A Generic Industry Perspective on The Way Forward Dr Duncan Curley Director, Innovate Legal www.innovatelegal.co.uk ERA’s Biennial Conference on European Pharmaceutical Law Brussels, 15 April 2010

Transcript of © 2008 Innovate Legal Services Limited The European Commission's Pharma Sector Inquiry: A Generic...

Page 1: © 2008 Innovate Legal Services Limited The European Commission's Pharma Sector Inquiry: A Generic Industry Perspective on The Way Forward Dr Duncan Curley.

© 2008 Innovate Legal Services Limited

The European Commission's Pharma Sector Inquiry:A Generic Industry Perspective on The Way Forward

Dr Duncan Curley

Director, Innovate Legal

www.innovatelegal.co.uk

ERA’s Biennial Conference on European Pharmaceutical Law

Brussels, 15 April 2010

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© 2008 Innovate Legal Services Limited

Overview of presentation

Part 1

Introduction

Part 2

Patent Clusters and Patent Filing Strategies

Part 3

Patent-Related Exchanges, Litigation and Settlements

Part 4

Conclusions

Page 3: © 2008 Innovate Legal Services Limited The European Commission's Pharma Sector Inquiry: A Generic Industry Perspective on The Way Forward Dr Duncan Curley.

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Introduction

In its Inquiry, the Commission analysed the speed with which generic entry took place after loss of exclusivity.

It took more than 7 months [on a weighted average basis] for generic entry to occur once originator medicines lost exclusivity.

The time varies by Member State.

The Commission equates this to €3 Billion in lost savings to the payers of EU healthcare provision for the period 2000 – 2007.

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Introduction

A look at some of the best selling products – EU turnover for the year 2007

Lipitor® (Pfizer) – €1.917 Billion

Clopidogrel (Plavix® - Sanofi-Aventis) – €1.62 Billion

Herceptin® (Roche) – €1.345 Billion

Pantoprazole (Nycomed) – €1.289 Billion

Zyprexa® (olanzapine – Lilly) – €1.059 Billion

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Introduction

Life cycle management

In anticipation of the declining turnover following patent expiry, originator companies….[employ] strategies with broadly two aims: (1) extending the time of their market exclusivity without generic competition; (2) maintaining or expanding the market that the product covers during its exclusivity period. These strategies are generally developed by life cycle management plans for specific products and markets….Life cycle strategies can be considered as a tool-box for originator companies to use in order to maximise the return from their products.

Sector Inquiry Final Report, paragraph (166)

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Introduction

Main life cycle management strategies[inter alia]

• Creation of patent clusters/thickets - in particular through secondary patents• Litigation against generic companies• Settlements with generic companies• Reformulation and second-generation launch• Interventions with marketing authorities

Sector Inquiry Final Report, paragraph (167)

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Patent Clusters and Patent Filing Strategies

The Commission studied the patent portfolios of the originator companies.

Patents covering new active ingredients are referred to by the Commission as primary, basic or compound patents.

Patents covering products containing active ingredients already covered by a primary patent, or covering new production processes for the production of active ingredients already covered by a primary patent, are referred to by the Commission as secondary patents.

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Patent Clusters and Patent Filing Strategies

Facts and figures - subject matter of secondary patents

Subject-matter claimed

Products 81%of which

formulations 57%combinations 7%polymorphic forms 5%salts 4%

Processes 38%Second/further medical uses 24%

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Patent Clusters and Patent Filing Strategies

Information and data gathered in the course of this inquiry, in particular from companies’ strategy documents, indicate that the ultimate aim of protecting the market share of a product is pursued by some major originator companies by obtaining the most efficient, broadest and longest possible patent protection

Sector Inquiry Final Report , paragraph (473)

The Commission’s conclusion

Patent strategies can form part of a company’s tool-box which are used in order to protect continuous revenue streams from pharmaceutical products by preventing or delaying generic entry.

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Patent Clusters and Patent Filing Strategies

…in some cases both patent clusters and divisional [patent applications] seemingly serve to prevent or delay generic entry. While this, during the period of exclusivity, is generally in line with the objectives of patent systems, it may in certain cases only be aimed at excluding competition and not at safeguarding a viable commercial development of own innovation covered by the clusters

Sector Inquiry Final Report, paragraph (523)

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Patent Clusters and Patent Filing Strategies

Navigating the patent landscape to achieve a generic product launch– some practicalities, from a generic company perspective

Step 1: define the patent landscape

• what patents are actually out there?

• request a patent search [from a professional patent searcher]what is the cost? – maybe €5000 - €10,000 for a well-protected molecule

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Patent Clusters and Patent Filing Strategies

Step 2: analyse the search results

• the search results may reveal anything from 1 to over 500 potentially relevant patents and patent applications

• they must each be reviewed by an appropriately qualified patent attorneywhat is the cost? – maybe €10,000 – €50,000 for a well-protected molecule

• BUT – many of the patents turned up by the search can often be quickly discarded as irrelevant

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Patent Clusters and Patent Filing Strategies

Step 3: determine the ‘freedom to operate’

• it should be possible to narrow down the large number of patents and patent applications uncovered by the search to perhaps 10-12 key patents

• the 10-12 key patents must then be evaluated in careful detail, to determine whether they are ‘blocking’ patents [i.e. a complete bar to generic entry] or whether they can be avoided by a suitable generic development strategy

• sometimes, it may be necessary to develop a litigation strategy to remove a ‘blocking’ patent (often involves lawyers…so can be very costly!)

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Patent Clusters and Patent Filing Strategies

Can the process of addressing patent clusters be improved?

Prevent ‘weaker’ secondary patents from being granted?-‘Patent quality’ issues- the role of the European Patent Office- Divisional patent applications – the rules have now been tightened up

Penalise originator companies whose ‘underlying intent’ is to exclude generic competitors?- impact of competition law

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Patent Clusters and Patent Filing Strategies

Can the process of addressing patent clusters be improved?

A practical suggestion

An ‘Orange Book’ public listing [perhaps a website?] for EU patents

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Patent-Related Exchanges and Litigation

Enforcement of Patent Rights

The use of patent clusters and divisionals by some companies may deter or delay generic entry merely by their existence. In other cases, companies may proceed with the development of generic versions with a view to enter the market at risk. In such cases, patent clusters and also divisionals are an indispensable asset for originator companies’ implementation of their procedural enforcement strategies. These strategies will typically lead to patent litigations….

Sector Inquiry Final Report, paragraph (538).

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Patent-Related Exchanges and Litigation

Patent-related exchanges – out of Court

Contacts and disputes between an originator and a generic company may have an impact on the decisions of the generic company regarding the launch of a competing product. Although not (always) leading to court proceedings, such patent-related exchanges can have a dissuasive effect and thus affect planned generic entry, in particular as a result of the threat of costly litigation and the risk of the grant of interim [preliminary] injunctions and eventually damages.

Sector Inquiry Final Report, paragraph (553).

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Patent-Related Exchanges and Litigation

Litigation - facts and figures

The Commission found that there had been an overall increase in the number of patent litigation cases in the pharma sector, with an approximate 4-fold rise in the number of patent-related disputes between 2000 and 2007.

Overall, the generic companies won 62% of all patent litigations in which a final judgment was delivered. These figures may reflect the fact that generic companies are good at litigating, or simply that for the originators, it may be worthwhile pursuing litigation with only a slim chance of success.

Only 8% of disputes ended in a settlement.

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Patent-Related Exchanges and Litigation

Patent-related exchanges – litigation

The Commission acknowledges that enforcing patent rights in court is legitimate and constitutes a fundamental right guaranteed by the European Convention on Human Rights. But the Commission says that its findings in the Sector Inquiry show that, like in any other industry, litigation can also be an efficient means of creating obstacles, in particular for smaller companies.

In certain instances originator companies may consider litigation not so much on its merits, but rather as a signal to deter generic entrants-“objectively baseless” litigation?

Sector Inquiry Final Report, paragraph (549)

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Patent-Related Exchanges and Litigation

Patent-related exchanges – litigation

Some examples of ‘abuse’ of patent litigation procedures (in particular preliminary injunction procedures) were put forward by the European Generic Medicines Association (EGA) in a report in May 2008:

• gemcitabine (preliminary injunction obtained in the Czech Republic)• alendronate (preliminary injunctions sought in Italy)• venlafaxine (preliminary injunctions obtained in Spain)

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Patent-Related Exchanges and Litigation

Preliminary injunctions

The Commission noted in its Final Report that there were 255 requests for preliminary injunctions by originator companies in the period 2000 – 2007, of which 44% were granted.

The Commission also observed that the subset of cases in which a preliminary injunction was sought had a high ratio of subsequent settlements (44 out of 60 cases, or 73%). The Commission concluded that in almost half of the closed cases, the grant of interim [preliminary] injunctions might not have been justified, whilst in another 25% of the cases that were settled the situation is unclear.

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Patent-Related Exchanges and Litigation

Three identifiable problems:

(1)Fragmented nature of the EU, insofar as patent litigation is concerned

• no single, unified EU patent;• no central EU patents court;• necessary to litigate separately in the national courts in all countries, which

is time consuming, costly and duplicative;

(2) Objectively baseless litigation

(3) Abuse of procedures (especially preliminary injunctions)

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Patent-Related Exchanges and Litigation

Problem (1) – Fragmentation

Addressed by the Commission in its Final Report:

- urgent need for the establishment of a Community Patent

- urgent need for a unified, specialised patent litigation system

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Patent-Related Exchanges and Litigation

Problem (2) – Objectively baseless litigation

Competition law?

But unilateral conduct – therefore only an issue for dominant companies?

And only one relevant case [ITT Promedia: Case T-111/96]

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Patent-Related Exchanges and Litigation

Problem (3) – Abuse of procedures

Competition law?

But unilateral conduct – therefore only an issue for dominant companies?

And only one relevant Commission Decision – presently on appeal [AstraZeneca: Case T-321/05]

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Patent-Related Exchanges and Litigation

Litigation settlement agreements

The Commission announced on 12 January 2010 that it had asked certain pharmaceutical companies to submit copies of their recently concluded patent settlement agreements (i.e. settlement deals done in the period since that covered by the Sector Inquiry).

The Sector Inquiry highlighted the risk that certain types of patent settlements may have negative effects on European consumers by depriving them of a broader choice of medicines at lower pricesCommission Press Release IP/10/12

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Patent-Related Exchanges and Litigation

Litigation settlement agreements

The Sector Inquiry (and the ongoing monitoring activity by the Commission) has left many companies in a state of uncertainty and some types of patent settlement agreement are now perceived to be in a grey area.

There are many kinds of clauses that can be found in patent settlement agreements, but the Commission seems to be taking a dim view of arrangements which involve an originator company paying a generic company a sum of money (or effecting some other form of ‘value transfer’ to the generic company) for the generic company to withdraw a patent challenge and to remain off the market for a defined period of time.“Pay for delay” settlement agreements – more on this later...

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Conclusions

The Sector Inquiry has brought into sharp focus the patent granting system and the fragmented nature of patent litigation in the EU.

However, many of the ‘issues’ uncovered by the Commission in the Pharma Sector Inquiry are common to other innovative industriese.g. patent quality; patent thickets; the expense of patent litigation; abuse of court procedures…

Competition law is only likely to brought to bear on certain ‘extreme’ types of bad behaviour by dominant companies (in relatively rare circumstances).

More radical solutions are needed to ensure rapid access of EU citizens to generic medicines.

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Conclusions

In the USA, the Hatch-Waxman legislation of the early 1980s revolutionised the generic medicines industry, by providing a substantial financial incentive for the first generic to reach the market: 180 days of exclusivity[i.e. approx. 6 months as the sole generic on the market in competition with the originator].

A similar 180 day exclusivity for the first generic to reach the market would represent a strong economic incentive, if such a regime was introduced in the EU.

Likely to be far more effective at stimulating generic competition than tinkering with the patent system or bringing cases at the margins of competition law!

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© 2008 Innovate Legal Services Limited

Thank you for listening

Dr Duncan [email protected]

107 Fleet Street

London

EC4A 2AB

Tel: +44(0)20 7936 9056

Fax: +44(0)20 7936 9111

www.innovatelegal.co.uk