Patent Baristas

It seems that more and more generic drug companies are popping up and are developing more and more low-cost drugs, putting pressure on makers of name-brand drugs and raising fears of an FDA bottleneck. Generics already make up 54 percent of the prescription market, which should increase when Medicare offers more drug discounts on Jan. 1, 2006.

The Food and Drug Administration’s Office of Generic Drugs is expecting to receive 771 applications for generic drugs this year, a one-third jump from 563 the year before — and more applications are on their way. Teva Pharmaceuticals Industries alone has more than 200 applications being processed by the FDA.

This could mean that the FDA will become overburdened by the application process (although it has been trimming the process — getting the approval process for generic applications to 15.7 months from 17 months in 2004. A single new drug application comprises up to 200,000 pages bound into 400 volumes, although abbreviated new drug applications (ANDAs) for generic drugs are not nearly as large.

About $100 billion worth of name-brand drugs will lose patent exclusivity in the next five years, with $21 billion going off-patent in 2006, according to WR Hambrecht & Co., the biggest-selling drug losing exclusivity in 2006 is Zocor, the cholesterol-reducing drug from Merck & Co. that had $5.2 billion in 2004 sales.

Another closely watched patented drug is Pfizer’s Lipitor, which could become an unprecedented $14 billion blockbuster by 2007, or could take an $8 billion hit to sales, depending on the outcome of its multiple patent lawsuits with Indian generic drug maker Ranbaxy Laboratories over Pfizer’s two patents for Lipitor, which are scheduled to expire in 2010 and 2011.

Another worry for the name-brand companies is that Indian generic drug firms may be eclipsed by China if enters the market with its own cheap copies of drugs. China has already established itself as a source of raw materials, known as Active Pharmaceutical Ingredients (API). Taking the next step to create packaged drugs seems inevitable.

China is expected to seek US Food and Drug Administration approval for its first generic drug by 2006, introducing even cheaper generics into the market and adding further pricing pressure. This could be good news for consumers and insurance companies (not to mention the federal government) who will benefit from lower prices.

Taro Yaguchi, one of our associates and a Registered Patent Attorney in Japan at Omori & Yaguchi (But with an office in Philadelphia, PA. Read: they’re open during Eastern Standard Time), sent me a notice that his firm now offers an on-line fee calculator.

The calculator gives a comprehensive cost estimate for the PCT Japanese national phase entry and filing a Japanese trademark application. One of the new features is that you will find cost estimates for your case based on the three-step flow of the Japanese national phase entry system. Along with the calculation results, tips on how to reduce the costs at the time of the Japanese national phase entry are also available. It is particularly helpful for estimating the national entry of biotech applications with sequence listings. We recommend that you try it out.

To find a cost estimate for PCT Japanese national phase entry and Japanese trademark applications, go to the Calculator here.

I’m a fan of Feld Thoughts and recommend that you check it out if you don’t already read it. Although the content is sometimes over my head in financial lingo, I enjoy the insights I can glean from it. My favorite past post is where Feld describes mission statements as “vapid phrases that don’t inspire anything (except internal contempt)” and so adopted the motto “We Suck Less” where “Our goal in working with you is to suck less than the last guy that was here.” More places should strive for such clarity.

Recently, Feld posted about discovering work-life balance. I know what you’re thinking – “I’ve heard that a million times already!” Even so, it was nice to see how one person coped with the ever-elusive goal of having better balance. Most people tend to not understand that we all have a balance in our lives (whether we want one or not), it just might not be the balance that works right. Every day contains 100% of a day. No one ever gets a 110% day. Therefore, we all slice up that 100% into some mixture of work, home life, sleeping, eating, pooping, etc. We have no choice, it’s inevitable.

What I’ve learned recently is that we all have to pick what we spend our time on but, unfortunately, we don’t often choose wisely. I have spent too many years (decades!) putting everything else first: work, study, home, spouse, kids… Now, after too much stress and work, I realize I need to reapportion my time and effort. With that, I was able to connect to Feld’s thoughts on work/life balance because I feel the same pressures and needs he did (although he was only 34 at the time — I wish I had realized this earlier).

Feld writes that he discovered his own set of habits by which he realigned his work/life balance including:

1. Spend Time Away – he takes a regular vacation;
2. Life Dinner – they have a standing date on the first day of every month;
3. Segment Space – have separate and distinct spaces for work and home life;
4. Be Present in the moment to the other person; and
5. Meditate – that is, do whatever you want, but spend some of your time on yourself.

These habits won’t work for everyone — his Spend Time Away means that Feld and his spouse take a week long vacation each quarter. The average worker in the U.S. gets just 12 vacation days a year (compared with 27 for Germans and a whopping 39 for the French). A 2000 report showed that American workers spent the equivalent of almost a full month more per year on the job than they did in 1967. Also, in Segmenting Space, Feld splits his time between a home in Boulder and a home in Alaska. Clearly, Feld has more time and money than I do.

That being said, each of us can come up with our own set of habits and learn to better appropriate time between work and self. And it isn’t about finding time but about making time, which is worth doing because regularly spending some of your time on yourself makes you a better person during all the remaining hours of the day. It can make your work and your life much more rewarding. By making time to just enjoy yourself, you get more done overall. If you take time for yourself, even though it makes you ‘busier,’ it’s fulfilling. It gives you energy, brainpower, a sense of self-fulfillment that helps you perform in every other area of your life. You get more done in less time the rest of the week.

Below are some tips I picked up from Bicycling Magazine for making time for yourself:

1. Get a buddy to do things together.
2. Get a babysitter when you need time – you’re worth it.
3. Make an appointment to take time for yourself at least once a week – put it in your Outlook or PDA.
4. Eliminate a TV show out of your life.
5. Pounce on an opportunity to take time for yourself when a window unexpectedly opens.

Now get to it.

The U.S. District Court for the District of New Jersey has issued a summary judgment ruling that GlaxoSmithKline’s U.S. Patent Nos. 5,578,628 (the ‘628 patent) and 4,753,789 (the ‘789 patent) for Zofran ODT(R) (ondansetron) Orally Disintegrating Tablets are valid, enforceable and infringed by Kali Laboratories, Inc., a wholly-owned subsidiary of Par Pharmaceutical Companies, Inc. There are “method of use” patents covering the way that the active ingredient in Zofran works. These are often difficult to protect.

Zofran ODT(R) is used for the prevention of nausea and vomiting associated with emetogenic cancer chemotherapy, certain radiotherapies, and the prevention of postoperative nausea and/or vomiting. Annual U.S. sales of Zofran ODT(R) are approximately $225 million.

Kali filed an Abbreviated New Drug Application (ANDA) containing a paragraph IV certification with the U.S. Food and Drug Administration (FDA) in September 2002 seeking marketing clearance for its generic version of Zofran ODT(R). In October 2002, Kali’s ANDA was accepted for filing by the FDA. GlaxoSmithKline did not file suit against Kali on U.S. Patent Nos. 5,955,488 and 6,063,802, which expire in May 2016. The ‘628 method of use patent expires August 16, 2005 and the ‘789 method of use patent expires December 24, 2006, following expiration of pediatric exclusivity.

More here.

I have been overwhelmed with comment and trackback spam of late to the point that I stopped posting for a while as I tried to deal with this problem. I noticed that Overlawyered had the same problem. It looks like Movable Type may do something about this in a future version but I had to deal with the problem now.

Basically, I had to take the brute force method of opening up every single past message and individually turning off comments and trackback and re-saving in order to get the rotten %$#@%$@%$! off my site.

I’m going to try to leave a few new posts open for a short time but it seems that the spam jerks can track down any post and flood my system with their crap.

Sorry for the inconvenience.

President Bush has appointed Chris Israel as the new Coordinator of International Intellectual Property Enforcement, a position Congress created last year to coordinate law-enforcement efforts aimed at stopping international copyright infringement and to oversee a federal umbrella agency responsible for administering intellectual property law. Intellectual property law enforcement is divided among a range of agencies, including the Library of Congress, the Justice and State departments and the U.S. Trade Representative.

As the Coordinator for International Intellectual Property Enforcement, Israel will head the international work of the National Intellectual Property Law Enforcement Coordination Council (NIPLECC) and coordinate and supervise international intellectual property protection plans among other agencies. This is a part of the implementation of the Bush administration’s “Strategy Targeting Organized Piracy (STOP)” initiative. The initiative protects American businesses and their products from counterfeiters and pirates.

Although NIPLECC has been around since the early 1990s, it has never actually done anything, and the hope is that giving the organization some money and a new charter will finally give the office some backbone.

Obviously, a large goal is to reduce counterfeits in China since the piracy levels there approach 90%. The Commerce Department estimates that nearly 7% of the products in the global market are counterfeit, costing U.S. companies up to $200 billion a year in lost sales.

More here.

Today’s post comes from Guest Barista C. Lee Thomason, a registered patent attorney and senior litigator at Frost Brown Todd LLC, writing on whether or not inequitable conduct claims in a patent suit should be heard in open court, or confined to a “special office” as proposed in the draft Patent Act of 2005 (H.R. 2795):

On the topic of proposed “patent reform” legislation, many comments fix upon doctrinal or policy arguments, or they predict improvement to the ‘system.’ The area of interest to me (but, to few others) are the proposals to eliminate the inequitable conduct defense, or to remand it from the courts to the USPTO. Those who do comment on that topic of reform, slot it as an issue of reducing litigation costs or as a question of whether district courts are up to the task of deciding “state of mind” issues. I have added my comments to those. See, e.g., pgs. 102-105.

Nonetheless, my further inquiry sought to draw a fair comparison between the old way that courts resolved the defense of inequitable conduct, and the proposed new way of handling that first in the USPTO, and then in the courts. To do that, I looked at several pharmaceutical cases and their online dockets, to gauge how long the time frame was from inequitable conduct being pleaded to it being decided. That set a baseline for the old way of handling the issue. From there, I wanted to compare that time frame with, or how that may change if, the new way proposed in the draft Patent Act of 2005 became law.

Consider some recent district court decisions, which arise from the filing of an ANDA for approval of a generic drug, and which decide the issue of inequitable conduct. By way of background, the filing of an ANDA is deemed an act of infringement under 35 U.S.C. §271(e)(2). Coincidentally, two of the decisions involve Aventis Pharmaceutical.

In August, 2003, the infringement complaint was filed in Aventis Pharma S.A. v. Amphastar Pharms., Inc., 2005 U.S. Dist. LEXIS 12510 (C.D. Cal. June 15, 2005). After the complaint was amended, an amended answer pleaded inequitable conduct in May or June, 2004 (see, dkt # 274 in 5:05cv887). A opinion and order granted summary judgment on the inequitable conduct defense on June 15, 2005. Thus, in a one-year span, the defense was pleaded, discovery was taken, motions were made, and the issue was decided.

The suit commenced June, 2002 in Impax Labs., Inc. v. Aventis Pharms., Inc., 333 F. Supp. 2d 265, 2004 U.S. Dist. LEXIS 17321 (D. Del. 2004), as a declaratory judgment action, alleged invalidity and inequitable conduct. Id., at 268. By stipulation in April, 2003, Impax agreed that if valid and enforceable, the patent would be infringed by the drug described in the ANDA (see, dkt. # 93, in 02cv581). In June, 2003, the briefing of a summary judgment motion on the unenforceability defense was completed. The case was tried in late October 2003 (Id., at 268), and after post-trial submissions, the issues were decided August, 2004. The inequitable conduct defense apparently was present from the outset of the case (although an amended complaint was presented in April, 2003), even so, the time from pleading to resolution was about 26 months.

Consider further the recently decided Oxy-Contin case, in Purdue Pharma L.P. v. Endo Pharms., Inc., 410 F.3d 690, 2005 U.S. App. LEXIS 10416 (Fed. Cir. 2005). As the docket in 01cv8177 indicates, the infringement suit was filed in August, 2001, followed by Endo’s counterclaim in late September, 2001 which presumably alleged inequitable conduct. The antitrust case was severed in December, 2002, and as the Federal Circuit’s opinion notes, a trial on the patent issues occurred “in June 2003.” The District Court ruled in January, 2004. Thus, the time from the pleading to the disposition of the inequitable conduct defense (and all patent issues) was about 40 months. Those three results (13, 26 & 40 months) compare too with the 24 months from pleading to decision, in Ferring B.V. v. Barr Labs., Inc., 2005 U.S. Dist. LEXIS 3597 (S.D.N.Y. Feb. 7, 2005), which again, arose from filing of an ANDA for a generic drug.

Presumably, the defense of inequitable conduct in a pharmaceutical case is as complicated as it would be in most any patent case. Also, the stakes and costs of these cases is as high, or higher, than with other litigation over patents in other fields of invention. Yet, the time from pleading to decision, in these recent cases, is not excessive. The average time of around 2 years, over which the defense was pleaded, answered, discovered, tried and decided, is not unreasonable. Many, in my experience most, complex civil cases last at least two years.

Can the proponents of proposals to remove inequitable conduct from the courts, and to create an administrative tribunal to investigate that conduct, can they fairly show that this new procedure will resolve the issue in the same or a shorter time frame that is demonstrated in these recent ANDA cases? I genuinely doubt that the USPTO “special office” can investigate and decide these issues any faster or more efficiently than the U.S. District Courts.

In §136 of the draft Patent Act of 2005, some minimum time frames are set out. After the Court refers the matter §136(c)(4), and notice is provided §136(e)(2)(B), then discovery can commence §136(e)(2)(C). The office is to conclude the investigation and make a preliminary determination “at the earliest practicable time” §136(e)(2)(D). If the preliminary determination is that misconduct may have occurred, then the office has “1 month” to notify the parties, then they get to “respond to the preliminary determination” and they are allowed some “period of time” to “reach a settlement” §136(e)(3)(B). If not settled, and a request is made “within 2 months,” then a “hearing” occurs §136(e)(4)(A) & (B). Next, “1 year after” the request for a hearing was made, the special office will issue a “final” determination. §136(e)(4)(C). A further time period “for settlement” may follow that §136(e)(5), and then an appeal can follow §136(e)(8).

Taken together, the minimum time frame is “1 month” plus “2 months” and “1 year after” all of which totals 15 months. Added to that is the time for the actual investigation, and the settlement period/s. At the end of these “special office” procedures (and perhaps an appeal to the CAFC), the inequitable conduct finding matter can go back to the district court for an unenforceability determination. §136(d).

This approach cannot be faster, based on my experience in district courts and the CAFC, and nothing about it suggests it will be cheaper for the adversaries.

Unstated in the proposed law is the amount of time for the “special office” to investigate and then to make a preliminary determination, and I am unqualified to predict that. However, ask what number of months typically pass to complete the administrative process, that runs from issuance of a final rejection, through an appeal to the BPAI, to decision on that appeal. That action by the BPAI is only a review of the record, and no “investigation” time is required. Does that take less than 24 months? Also, ask how long an interference proceeding takes, especially, when the subject invention is a pharmaceutical method and composition. Is it more or less than 30 months?

My comparison of time frames in ANDA suits that allege inequitable conduct to the estimated time that a USPTO “special office” could handle the same matter is, wholly unscientific. It does raise my genuine concern that the good intentions of those advocating these reforms will not be furthered by the solutions that they advocate. It will not be faster, or less expensive. More broadly, the concern is not about good or ‘bad’ patents, and the solution may not cure the “plague” of inequitable conduct charges. The true inquiry asks, as between a U. S. District Court and the proposed “special office” which one is the forum non conveniens for adjudication of the defense of unenforceability. Having spent my career in those courts, I believe they have more resources and case management skills than an as-yet-unassembled administrative panel.

According to the Center for Public Integrity, Big Pharma has certainly benefited from the more than $800 million spent since 1998 on lobbyists and political campaigns. Not exactly chump-change.

While industry trade group, Pharmaceutical Research and Manufacturers of America (PhRMA) claims the money helped patients, they hired a former U.S. ambassador to Canada and his top aide to lobby the Canadian government organizing a campaign against legalizing importation of drugs from Canada. The industry’s pressure must be paying off. Canada has announced they will ban the bulk export of prescription drugs and crack down on Internet pharmacies that sell drugs to Americans — which could lower profit margins. Meanwhile, Pfizer made a profit of $11.3 billion last year, out of sales of $51 billion.

In the past year, the industry hired nearly 1,300 lobbyists, including dozens of former lawmakers and hundreds of people who worked for congressional committees or regulatory agencies. Last year, according to the center, the industry spent $128 million on such efforts, including lobbying for $5.6 billion in spending for biodefense and for a bill that allows easier access to patents for inventions researched jointly by public institutions and private entrepreneurs. The campaign has also led to a more industry-friendly regulatory policy at the Food and Drug Administration.

Lobbying efforts have led to the Medicare Modernization Act of 2003, which created a taxpayer-funded prescription drug benefit for senior citizens. By adding the benefit to Medicare, the industry found a reliable purchaser for its products. Thanks to a provision in the law for which the industry lobbied, government programs like Medicare are barred from negotiating with companies for lower prices! According to one study, 61 percent of Medicare money spent on prescription drugs will become profit for drug companies. Drug-makers will receive $139 billion in increased profits over eight years, the study predicts. The Medicare prescription drug benefit starts in 2006.

This, for an industry that spends up to $60 billion/year on drug marketing—nearly twice what it spends on research and development. In 2004, Pfizer spent almost $120 million for media ads for Lipitor, while companies promoting erectile dysfunction treatments Viagra, Levitra and Cialis spent $425 million.

[NOTE: I’m not picking on anyone here — I’d love to have their profits — it’s just hard to feel sorry for an industry that just about prints money.]

More than 3,000 people over the past seven years have done lobbying work for a pharmaceutical company. The list includes at least 48 former members of the U.S. House of Representatives and 15 ex-senators to lobby. That includes Sens. Bob Dole (R-Kan.), Birch Bayh (D-Ind.), Lloyd Bentsen (D-Texas), Dennis Deconcini (D-Ariz.), Steve Symms (R-Idaho), Tim Hutchinson (R-Ark.) and Howard Baker (R-Tenn.) and Reps. Bob Livingston (R-La.), Bill Paxon (R-N.Y.) and James Blanchard (D-Mich.).

In addition to hiring former members and their staffs, the industry has also helped keep lawmakers in office by making political contributions. Since the 1998 election cycle, employees of the pharmaceutical and health product industry, their family members and industry political action committees have given $133 million in campaign contributions to federal and state candidates. Since 2000, the top drug corporations and their employees and PhRMA gave more than $10 million to 527 organizations, tax-exempt political committees.

The real scandal doesn’t rest with the Pharma industry, though. I think everyone should be allowed to spend money on whatever they want to spend it on. The nauseating truth is that our politicians can be so easily bought. I don’t know what happened to “…of the people, by the people, for the people…”

See the report here.