Patent Baristas

The U.S. Court of Appeals for the District of Columbia Circuit ruled that Pfizer and other drug companies have the right to sell unbranded versions of their own drugs even if they undercut sales of generic competitors in a suit by Teva Pharmaceutical, which sought to stop Pfizer from selling its own generic version of the epilepsy drug Neurontin. (see

In Teva Pharmaceutical Industries Ltd. v.Lester M. Crawford, Jr., Acting Commissioner of Food And Drugs, et al. (No. 05-5004 , Decided June 3, 2005), Teva Pharmaceutical Industries sued to overturn the Food and Drug Administration’s denial of its “citizen petition” requesting that the agency prohibit Pfizer, Inc., the holder of the approved New Drug Application (NDA) for gabapentin, from marketing that drug in “generic” form during the 180-day exclusivity period provided by the Drug Price Competition and Patent Term Restoration Act, also known as the “Hatch-Waxman Amendments” to the Food, Drug, & Cosmetic Act. Because the exclusivity provision does not apply to the holder of an approved NDA, the district court entered a summary judgment for the FDA.

Section 355(j) of 21 U.S.C. provides that a drug manufacturer may submit an “Abbreviated New Drug Application” (ANDA) for approval to market a so-called “generic” drug, which is the bioequivalent to a “branded” drug previously approved pursuant to a NDA filed under 21 U.S.C. § 355(b). Unlike a NDA, an ANDA need not contain clinical evidence of the safety or efficacy of the drug.

The ANDA must certify either that the approved product is not protected by a patent or “that such patent is invalid or will not be infringed by the manufacture, use, or sale of the new drug for which the application is submitted.” 21 U.S.C. § 355(j)(2)(A)(vii)(para. IV). The statute rewards the first generic applicant successfully to challenge the patent on an approved drug with a 180-day exclusivity period during which no other ANDA for the same drug may be approved.

The Federal Trade Commission, at the urging of three U.S. senators, is looking into whether authorized generics are anti-competitive. Under federal law, the first generic-drug maker to challenge patents on a drug wins six months of exclusive marketing rights. Teva argued that Pfizer, the world’s largest drug company, sought to thwart competition by undermining that incentive.

In the appellate case, Teva’s argument stemmed from the following premises: (1) the purpose of the 180-day exclusivity period was “to encourage generic companies to file Paragraph IV challenges to brand-drug patents”; (2) the marketing of a brand-generic competitor during that period will reduce the revenues going to the first to file an ANDA; and (3) such “brand-generic intrusion [into the exclusivity period] developed only recently as a routine brand-company business strategy.”

The Appeals Court held that:

..when Teva goes on to argue that because the Congress could not have anticipated brand-generic competition during the exclusivity period, adhering to the “literal” terms of the statute would lead to an absurd result, namely, that § 355(j)(5)(B)(iv) grants only a “meaningless” exclusivity against subsequent ANDA filers rather than a “commercially effective” exclusivity that runs against the NDA holder as well.

It does not follow, however, from the Congress having intended to create an incentive to challenge brand-drug patents –as it clearly did –that the incentive it created is without limitation. Rather, as even the formal name of the Hatch-Waxman Amendments (the Drug Price Competition and Patent Term Restoration Act) reflects, the Congress sought to strike a balance between incentives, on the one hand, for innovation, and on the other, for quickly getting lower-cost generic drugs to market. Because the balance struck between these competing goals is quintessentially a matter for legislative judgment, the court must attend closely to the terms in which the Congress expressed that judgment.

The DC Circuit affirmed stating that § 355(j)(5)(B)(iv) of the Act clearly does not prohibit the holder of an approved NDA from marketing, during the 180-day exclusivity period, its own “brand-generic” version of its drug.

Get the entire opinion here.

It appears that the Commonwealth of Kentucky has it out for blogs. As detailed by Ben Cowgill on his Legal Ethics Blog, the Kentucky Attorney’s Advertising Commission has taken the position that a weblog is an advertisement.

This is the result of Rule 7.02 of the Kentucky Code, which states:

7.02 “advertise or “advertisement” means to furnish any written, printed or broadcast information or any other communication containing an attorney’s name or other identifying information…

Like we’ve posted before, does this mean I can’t leave my real name at a restaurant for reservations for fear of it being deemed an advertisement?

The regulations also require the lawyer to submit a copy of the advertisement to the Commission, along with a filing fee of $50.00. In the past, the Commission has interpreted those requirements to mean that the lawyer must pay a filing fee of $50.00 each and every time the content of the advertisement is modified. Ouch!

Needless to say, this would make blogging impossible as it is not static but constantly changing. Let’s hope that the Commission does the right thing in this case.

You can send your comments directly to:

Linda Gosnell
Chief Bar Counsel
Kentucky Bar Association
514 W. Main Street
Frankfort, KY 40601
E-Mail: lgosnell–at–kybar.org

Bill Heinze of I/P Updates recently posted a note about “A Step-By-Step Guide To Getting a Patent,” which ran in the Wall Street Journal’s Startup Journal.

The article quotes a U.S. Patent Office spokeswoman as saying that 63% to 65% of applications are eventually allowed as patents, but then displays the following “reality check:”

I used to be in-house counsel at a major university handling a large patent portfolio and these numbers are no surprise to me. Very, very few inventions ever return a great ROI. What did shock me out of my chair was the quote in the Journal article that “This stage is also where the real money starts to pile up. A patent agent or attorney will usually charge around $2,000 to prepare a patent application.” Sure, maybe twenty-five years ago!

Granted, the article did give the caveat “but the price can go as high as $10,000 or even $50,000, depending on the attorney’s fees and the complexity of the invention.” But this does not erase the disservice of printing such a low estimate for “usually charge” — it makes it sound like any higher cost is only due to paying higher fees to some greedy attorney.

The AIPLA Report of the Economic Survey 2003, states that the typical charge for an “Original non-provisional application on invention of minimal complexity” was $5,504 in 2002 — more than 2-1/2 times the Journal’s estimate and this was three years ago. These kinds of articles get me fired up because they create such unrealistic expectations in the public. In complex, high-technology applications for chemical and biotech arts, patent applications run well over $10,000 to draft. There is just no way around it and it’s better to be blunt upfront than sorry afterwards.

You just know some inventor is going to go to a patent attorney and say “Hey, it should only be $2000 so you’re ripping me off.” I have clients who are really quite sophisticated who still think that a complicated invention should only cost $4-5000 because that’s the number they remember from a decade or two ago. It’s like saying a car should only cost $10,000 because that’s what you paid in the 1980’s. This doesn’t even get into all of the post-filing costs of prosecution, formal drawings, continuations, appeals, foreign filings, translations, and so on. I’ve had many inventions where the total cost ran far into the hundreds of thousands of dollars due to the complexity and the counties involved.

It doesn’t help anyone to create false hope in an unviable number. I think we should be able to expect better from the Wall Street Journal than this kind of (misleading) journalism.

We’ve gotten behind in some (OK, a lot) of to-do items on the site so we’ll try to get caught up on some housecleaning. One item of note is that the Patent Baristas received a nice mention by Monica Bay in the Common Scold. Besides being editor-in-chief of Law Technology News, editorial director of Law Firm Inc. and Small Firm Business, and a rabid Yankees fan, she includes singing with Luciano Pavarotti in her spare time.

The Common Scold, named after the Puritan act of dunking opinionated women in the local pond, is a tough, opinionated law blog but hard to describe in a nutshell. Law news? Check. Law practice management? Check. Legal technology? Double check. Lawyer jokes? Of, course! Wine recommendations? Got that, too. Line up of all the best baseball movies? It’s in there.

If you’re not already a regular reader, we recommend you check out the Common Scold (whether or not you happen to be a Yankees fan).

There has been a flurry of news reports this year showing the heightened awareness of the biotech industry and the concomitant growth.

Business Week recently published an article touting that Biotechnology has finally come of age after 30 years of biological research. Now, recent developments in gene and exotic chemical manipulation have brought a wave of biological drugs, many of them reengineered human proteins. These drugs represent real progress for a range of diseases all but untreatable just five years ago.

The article points out that a decade ago there were fewer than 10 oncology drugs in clinical trials, most of them highly toxic chemotherapies. Today, there are 230 medicines and related products created from biotech techniques with over 400 cancer drugs being tested in humans, and almost all are targeted biotech drugs.

Last year alone, the Food & Drug Administration approved 20 biotech drugs and there are at least 50 of 250 biotech drugs currently in late-stage clinical trials that should gain FDA approval. This represents a success rate of almost three times that of Big Pharma.

This all means that biotech investors are starting to be optimistic even though few of the 1,500 companies in this sector are profitable (see BW Online, 6/2/05, “Why Biotech Stocks Are Sedated“). A new report from Ernst & Young shows a 17 percent increase last year in global revenues at publicly traded biotech companies, to $54.6 billion. In the United States, equity financing rose 17 percent, to $16.9 billion from $14.4 billion in 2003. In Europe, the percentage increase was even higher, with equity financing increasing 31 percent, to $3.4 billion last year from $2.6 billion in 2003.

It’s not all rosy, though. The biotechnology industry lost a combined $6.4 bln in 2004, according to Ernst & Young, leaving biotech a money-losing, niche industry of 1,400 companies that employ about 183,000 workers nationwide.

But the drugs are selling. Ernst & Young International estimates that nine new biotech drugs approved in 2004 will bring in total revenues of $3 billion this year. By 2007, sales of just those products should grow to $8 billion. These numbers have spurred efforts by Big Pharma to mimic biotechs or merge with them.

Interestingly, the article points out that this blooming of biotech really owes a debt of gratitude to academic researchers who, since 1973, have been the real forefront to gene manipulation and gene targeting.

Many now see stem cells as the next great advance of bio-medical research, which may enable many different kinds of tissue regeneration in patients to repair or replace diseased organs.

Let’s hope politics don’t get in the way of real advances in medicine.

Food and Drug Administration regulators turned down a request from Johnson & Johnson to expand the approved uses for Risperdal, a treatment for bipolar disorder. J&J received a not approvable letter from the FDA to use Risperdal in Alzheimer’s-related psychoses.

This is after last weeks announcement that the FDA rejected J&J’s application to market Risperdal for patients with autism after it petitioned for an additional use of the drug.

It seems the FDA is taking a slow and cautious route on new approvals, especially after the Vioxx withdrawal, as we noted before. In April, the FDA ordered new warnings on all antipsychotic drugs, including Risperdal, to alert physicians to a higher death rate when the medicines are prescribed for the atypical use of treating dementia in elderly patients.

Things are not all bad for J&J, though. It announced that it plans to file and receive marketing approval for 10 to 13 new drug compounds by 2007. J&J said that it expects to grow even though it will likely lose patent protection on some of its top-selling drugs. Obviously, this is geared to rev up confidence in the company. J&J, like lots of big pharmas these days, is staring down the barrel of a growing number of patent expirations.

The company expects new growth would come from therapies to treat cancer; viruses such as HIV; urology treatments, including a drug for premature ejaculation; and antibacterials to treat serious infections. J&J said it could have as many as 70 product filings between 2005 and 2011, including 23 new drug compounds and 47 line extensions.

Interestingly, the company said it is rapidly expanding its research into drugs based on biotechnology, or live organisms. While this brings great potential, this will certainly not be without risks. Earlier, when two patients taking Tysabri, a new drug for multiple sclerosis, developed a rare brain disease, the $3 billion a year in potential profits suddenly vaporized. Shares of Biogen Idec fell by nearly half, and Elan, trading at $30, took a sickening swan dive to $4.

It’s an exciting time but biotechnology’s risks will make for some stomach-churning thrills.

The TechnoLawyer Blog, an amalgam of pithy commentary, industry news, and other helpful information compiled by Neil Squillante and Sara Skiff, is sponsoring the Eighth Annual TechnoLawyer @ Awards where TechnoLawyer members vote for their favorite products, services, and Web sites in a variety of categories.

Yes, the Patent Baristas are simply far too modest to ask for your votes but we’ll understand if you feel compelled to vote for us as best practice area blog, especially for Best Coffee-Themed, Bio-Pharma Blog.

Voting began May 16, 2005 and ends on Friday, June 10, 2005 at midnight eastern time. If you’re not yet a TechnoLawyer member, you have until June 10th at midnight eastern time to join and cast your votes. You can find out more about this year’s awards and voting opportunities on the Official Awards Page.

Also on TechnoLawyer, don’t miss one of the (many) side-projects of blogger Stephen Nipper: IP Memes, a biweekly newsletter that explores emerging technology-related intellectual property issues.

The IPKat posted a nice summary of the Tercica Inc v Avecia Ltd et al. case involving summary judgment motions on the validity of a patent having Swiss-type claims. The action concerned two applications for summary judgment in linked proceedings. In the first, Tercica, a licensee under a Genentech patent for a growth hormone, sued Avecia and Insmed for infringement; in the second, Avecia and Insmed sought revocation of that patent. The patent had a Swiss claim, its essential inventive content being a new use for a known drug.

Tercica’s suit in the UK alleged that by making, using, and selling the SomatoKine(R) product in the United Kingdom for the treatment of Growth Hormone Insensitivity Syndrome (GHIS), Avecia and Insmed infringe a European (UK) patent under which Tercica holds an exclusive license from Genentech. SomatoKine(R) is a complex of insulin-like growth factor-1 (IGF-1) and insulin-like growth factor binding protein-3 (IGFBP-3). Tercica licensed world-wide rights to develop, manufacture and commercialize rhIGF-1 and IGF-1/IGFBP-3 from Genentech.

The High Court of Justice (Chancery Division Patent Court) in London dismissed both sides’ applications for summary judgments. The Court also ordered Insmed and Avecia to pay Tercica’s and Genentech’s legal fees saying:

“What I was asked to consider (among other things) was a concept which Jacob J has called the “artificial construct of a Swiss form claim” (see Merck & Co Inc’s Patents [2003] FSR 498 at para 80), and in particular what is meant by “new use” where part of that new use involves a particular method of administration, and the interface with the method of treatment point. One of the questions which might arise is: just how far can the artificiality be pushed before reality forces its way in? These are not subjects which are particularly happily determined on applications for summary judgment, even when those applications are argued as well and as fully as the one before me was.”

Basically, if a chemical composition or a method of manufacture or use, is already known, then it is not patentable. The therapeutic use of that substance cannot be patented either. This is because that use is a method of treatment of a human or animal body by surgery, therapy or diagnosis which is practiced on that human or animal body and methods of treatment are regarded in Europe as not being capable of industrial application and are consequently not patentable.

However, if an invention relates to a substance or composition which is to be used in a method of treatment of a human or animal body by surgery, therapy or diagnosis practiced on that human or animal body then, even if that substance is known, that knowledge does not prevent the compound from being regarded as new, if the use of that substance or composition in any such method does not form part of the state of the art. In other words, it is possible to patent a known chemical compound as a pharmaceutical provided that it has not been previously known to have any pharmaceutical activity.

This is what is known as the Swiss Claim, adopted by the EPO and the Swiss Patent Office, which has a basic format along the lines of:

“Use of compound X in the manufacture of a medicament for the treatment of disorder Y”.

In the UK, the view is that merely indicating that something is “for” or “suitable for” a new purpose will not give novelty to subject matter which is already known but allowed the Swiss form of claim to be granted in order to achieve conformity with EPO practice.

The Swiss claim is a claim to a manufacturing process and not merely to the taking of the active ingredient and converting it into a special medicament. However, the distinguishing feature of the claim is the use to which that medicament is then put. That new medical use must be entirely new and cannot just be a modification of an existing treatment or a better method for treating the disease, for which the drug is already known to have an effect.

It will be interesting to see how the case law on Swiss claims evolves in both the UK and the EPO.