Pharmaceutical litigation was once dominated by conflicts between originator and generics companies – and, for the most part, it still is.
But alongside these ‘traditional’ pharmaceutical cases, there seems to be an increasing trend towards originator v originator conflicts between different pharmaceutical businesses.
One reason these companies are taking each other on now is because the complexity of biological medicines, compared to small molecule medicines, has led to increased collaboration between them.
In relatively new areas of biological medicines such as cell and gene therapies, it’s often difficult or even impossible for one company to bring a medicine to market on its own.
Collaboration is thus required between different originators or academic institutions, sometimes of different sizes, with expertise in particular aspects of certain technologies or that have developed platform technologies or starting materials.
Intellectual property is a great enabler of these collaborations because it allows originators to come together in complex cross-licensing deals or other variable arrangements.
To date, most of these arrangements to innovate through complexity have been successful – because science is better together. The vast majority remain collaborative and do not reach litigation.
But as with any kind of collaboration, parties occasionally fail to agree on aspects of their collaborations and disputes can arise, sometimes relating to the validity or infringement of patents themselves, and other times relating purely to contractual matters.
New challenges
Very often, both originators in a dispute will have relevant patent portfolios. That’s often a good thing, because it may mean these disputes are more likely to settle because both sides have something the other values.
Occasionally, originators have to work through situations where they potentially fall within the scope of broad patents held by their collaborators, and where those collaborators may similarly fall within the scope of the originators’ own broad-ranging patents.
What’s more, a company could be developing a biological product that could fall within the scope of a broad patent belonging to a third party, and yet that company could similarly own a patent with broad scope that might cover another third party’s product.
I would like to stress that there is nothing inherently wrong with broad patents, which may reflect a ground-breaking innovation that opens the door to new areas of R&D.
But this breadth may add complexity to the innovation landscape and may even generate some risk around an originator’s launch, which could lead to licensing opportunities for monetisation, as well as possible disputes. Overall, I believe that these situations mostly encourage settlements.
However, when they occur, these originators’ disputes can turn into high-stakes litigation, and frequently do.
Generally, in the biological space, the increased complexity and investment that goes into developing a new innovative medicine makes the financial stakes higher for originators, leading to companies wanting to defend and monetise their innovations as much as possible.
Originators may also be willing to devote plenty of resources to defending their patents and seeking freedom to operate, because as innovators themselves (unlike generic competitors), they may be bringing substantially different medicines to market, even though those medicines may share certain qualities covered by another’s patent.
This means that when disputes arise, the cases are hard fought, with many complex arguments raised.
Additionally, it is worth noting that the fast-developing nature of some fields of biological medicines, such as cell and gene therapies, will have a bearing on originators’ disputes because the treatments available today may not be the same as those that are used in 10 or 15 years’ time.
Originators are therefore becoming increasingly active in the search for alternative ways of realising the value of their IP, such as through royalty streams, as well as to protect their own sales.
This may drive an increase in litigation relating to patents that competitors seek to invalidate, or which competitors argue they have found a way to design around.
Interestingly, as these types of lawsuits typically involve different innovative medicines, the goal of originator v originator litigation will often be different than in originator v generic cases.
In particular, where different medicines treat different patients (even if covered by the same patent), patent owners may seek to receive fair compensation for the value that their patents contribute to the other infringing innovative medicine, rather than an injunction.
Regulation, regulation
These disputes commonly arise in the context of orphan drug exclusivity, which is an important incentive to enable the development of new medicines for patients suffering from rare diseases.
The incentive is designed to reward sponsors that are first to develop such therapies by restricting the circumstances in which others may apply or get approval for competing therapies for a period of time.
In Europe, for example, if two originator companies find themselves developing medicinal products for the same orphan indication that are deemed to be similar, then whichever manages to obtain marketing authorisation first may have the exclusive right to provide the therapy for the authorised indication(s) for the duration of the orphan market exclusivity.
These races may create significant uncertainty for originators which often lasts years and continues until the last moment when one of the products is approved.
Disputes as well as collaborations between originators arising from conflicts around regulatory exclusivities are on the rise in view of the more complicated products developed nowadays.
It is thus advisable that originators carefully consider the publicly available information about products that are being developed in parallel by other originators for the same orphan indication.
On a few occasions, it may still not be clear (even with monitoring) which originator will win the race, and therefore strategic decisions need to be made, for example through acquisitions.
Remedies
Quite separately, it is interesting to note that at the same time, the parallel system of regulatory exclusivities sometimes results in injunction-like effects.
We therefore must not be blinkered just by patents, but also consider the competitive landscape from a regulatory perspective, including orphan exclusivity.
While this discussion is taking place, it is important to remember why we have patent and regulatory exclusivities in the first place and to give full weight to these policy tools when considering the issues.
All in all, it is an exciting time to be working in the pharmaceutical industry and one where private practice lawyers and company counsel need to work together creatively and collaboratively to support the great work of the scientists around us for the benefit of patients and society at large.
