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Generics discuss fallout from major pharma patent cases

In-house counsel at global generic pharmaceutical companies point to Supernus, Novartis v Ezra and Helsinn as practically-important rulings for generics

Generic companies’ entire business relies on brands’ patents expiring, so anything that could delay pharmaceutical patents’ expiration is of acute interest to generics.

In its January 23 Supernus v Iancudecision, the Federal Circuit found that the USPTO’s patent term adjustment calculator would incorrectly subtract time from the extension period due to “applicant delay” in cases where applicants could not have reasonably acted sooner. The court’s correction to the calculation resulted in a term extension of 546 days for the patent owner. Managing IP details the case here.

It was a valuable win for Supernus and other patent owners because each day of pharmaceutical patent exclusivity can be extremely lucrative. But which drugs are still worth pursuing for generics?

“A major factor of that calculation is when we can get on the market, and the answer may shift from yes to no as a result of Supernus,” according to an IP director of a global generic drug manufacturer who wishes to remain anonymous. Drugs with smaller profit margins will be less of a safe bet, and generics are likely to invest in the development of more obviously valuable, blockbuster drugs.

Novartis v Ezra Venturesis another recent Federal Circuit decision that did not support the generics industry. Ezra challenged the patent term extension (PTE) of a Novartis patent with an obviousness-type double patenting (OTDP) argument. It could have armed generics with a new tool to cut down brands’ patent terms.

However, in December 2018, the court held that a PTE is valid as long as the patent is valid without the extension. The court described OTDP as a “judge-made doctrine” intended to prevent the extension of patents beyond a “statutory time limit”. The decision states: “Here, agreeing with Ezra would mean that a judge-made doctrine would cut off a statutorily-authorised time extension. We decline to do so.”

The anonymous IP director says: “Had it come out the other way it would have been a very useful attack for generic companies in particular. But since it was the first time the OTDP attack on PTE was tried, taking away something people rarely use is not going to be particularly detrimental to the generic industry.”

The final recent decision that in-house counsel identified as impactful is good news for generics. The January 22 Supreme Court ruling in Helsinn v Teva established that the sale of an invention to a third party who must keep the invention confidential triggers the on-sale bar, which prevents that invention from being patented if it has been on sale for more than one year. Managing IP covered the case in January.

This is an important change for the pharmaceutical industry, where confidential sales have been common in agreements such as co-development, manufacturing, or marketing deals. Brands have to be more careful with their proprietary information, and erring on the side of caution means filing an application earlier in the development process, effectively shortening the patent term. Shorter patent terms allow generics to enter the market sooner.

Additionally, the Helsinn decision opens up a new point of attack to challenge patents. “The on-sale challenge will absolutely become more common from generics following Helsinn,” New York-based IP consultant Matt Golden explains. “That's something to watch going forward.”

Smaller pharmaceutical companies that lack the ability to manufacture everything in-house will be particularly vulnerable to on-sale challenges, so they should delay such contracts until the latest date possible. Another thing to keep in mind is that the US is unique in granting a one-year grace period in the first place. “Since most companies are looking for worldwide protection,” Golden says, “keep an eye on these things so that you're ideally filing before anything happens commercially, and you're not impeding foreign rights.”

STRONGER Patents Act

Gleaned from statements made by the new Trump-appointed heads of the FDA and the USPTO, “right now, drug prices are a big deal”, says Lars Taavola, senior patent counsel at Amneal Pharmaceuticals in New York.

On whether he thinks the STRONGER Patents Act will come into force in 2019, Taavola says: “With the new focus on drug prices, people are paying more attention to this bill.”

The latest version of the bill was introduced in the House in March 2018.

“Being a generic pharmaceutical company,” Taavola says, “it's nice to have certainty. And after seven years with inter partes reviews (IPRs), we've figured out how they work and how they relate to litigation. The thing about the STRONGER Patents Act is that it's going to change the rules of the game”. That uncertainty is unsettling.

After all, Taavola says, “We thought there were going to be a lot of good changes with IPRs [after the America Invents Act in 2011], but it turns out everyone thought it would be significantly cheaper and faster than it actually is.” He approaches the bill’s proposed changes to IPRs with scepticism: “IPRs for generics have been a mixed bag. It's a tool, but it's not a solution to drug prices or getting generics to market. Contrary to popular belief, no one has been able to point me to one drug that has gone to market sooner because of an IPR.”

Specifically, Taavola points to the provision that limits patent validity challenges to either the Patent Trial and Appeal Board or Hatch-Waxman litigation in district courts. He says he thinks that it would be limiting for generics because many pharmaceutical drugs involve multiple patents. To be able to efficiently handles these cases, he says, “sometimes it's more efficient for the parties to deal with a couple of patents in IPRs, rather than bringing them all into district court litigation and later having to narrow them because the court doesn't want to have to deal with them all”.

As for the provision that would prevent subsequent parties from filing IPRs, Taavola says this could have serious practical implications for generics. “It happens a lot in pharma cases where subsequent filers join or file a slightly different one after the institution decision has been denied, so it’s going to change the game significantly. That’s where you get the heartburn from.”

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