Cross-border

Life Sciences 2007/08

Patents and life cycle management Nigel Jones, Linklaters LLP

www.practicallaw.com/0-379-0607

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Non-patent legal issues, including regulation and anti-trust.

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Patent issues, including: ‰

use of patents;

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obtaining patents and SPCs;

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enforcement;

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preliminary injunctions.

regulatory and patent departments is now required than before SPCs were introduced in the early 1990’s. Further, the whole area of data exclusivity and Europe’s new “bolar-type” exception to patent infringement has become at least as important in life cycle management discussions, if not more so, than the duration of patents/SPCs. These, along with patenting issues, need to be considered up front and not left until the last minute. Decisions on matters such as which authorisation or patent to use as the basis for an SPC, and which form of a product to use as the basis for the first European marketing authorisation, will often be critical in determining the duration (and possibly scope) of an originator’s monopoly. That is the position in Europe. However, as with other aspects of life cycle management, the position in other jurisdictions also needs to be considered, as those countries implement or modify their data exclusivity and other regulatory regimes.

Anti-trust

Broader context - India.

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NON-PATENT LEGAL ISSUES Patent laws are not the only legal issues that affect life cycle management. Among the most important non-patent laws are those relating to pharmaceutical regulation (in particular data and market exclusivity) and anti-trust. Both need to be taken into account in deciding the inevitable disputes between originator and generic manufacturers, to make medicines available to patients at the most cost-effective price. They are the subject of separate chapters in this Handbook, and will therefore be addressed here only in outline.

The legal development of anti-trust issues in the pharmaceutical industry has been lead by the US. US competition authorities have looked carefully at the potential anti-trust impact of a number of agreements in which originator and generic companies have settled patent disputes, a key issue for life cycle management, particularly those involving reverse payments (when pharmaceutical companies agree to pay generic producers a certain sum to keep their products off the market longer). They have also written detailed judgments to guide companies on these issues. In contrast, as yet there have not been any similar judgments by European competition authorities. However, the need to take account of local competition laws when considering settlement is clear. The European Commission and national competition authorities seem likely, before too long, to find a test case in which to explain their views on these issues. Few in the industry will want to be chosen as the test case.

Pharmaceutical regulation

PATENT ISSUES

There has been a dramatic increase in pharmaceutical patent litigation in the US as a result of the Hatch-Waxman legislation (including the recent amendments), and, as many predicted, there has been a similar (though less dramatic) increase in equivalent litigation elsewhere, including in Europe, as local laws in this area have been implemented or amended. It is no longer possible to advise on life cycle management issues solely on the basis of patent law. For example, in Europe, an understanding of both patent law and pharmaceutical regulation is necessary to advise on, and make the most effective use of supplementary protection certificates (SPCs). A much closer degree of interaction between

Use of patents

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Successful life cycle management requires an understanding not only of the complex issues considered above, but also an ability to keep track of the constantly changing international patent law landscape. The aim of life cycle management is clear: to obtain and maintain a legitimate monopoly position for as long as possible in the most cost-effective manner, within the parameters of international and national patent law and practice.

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Effective life cycle management is crucial for pharmaceutical companies. Filing the right patents and enforcing them effectively is an essential part of this. However in practice, such implementation can be difficult. The challenge is to find ways of achieving the right balance between adequate protection of the interests of those who invest substantial sums of money in research, and the need to make medicines available to patients at a fair price. A discussion of how best to meet this challenge involves consideration of pharmaco-economic, social, political and ethical issues. They are beyond the scope of this article. It focuses instead on the legal considerations, and examines the following:

Cross-border

Life Sciences 2007/08

The concept of a “legitimate monopoly” is difficult to define objectively. Supporters of the patent system in the context of global healthcare need to avoid inadvertently providing support to the “evergreening” arguments of those on the other side of the debate. (Evergreening is when the originator extends patent protection by obtaining separate patents on multiple attributes of a single product). Crossing the “legitimacy” line, by pushing the boundaries of patentability too far, risks jeopardising the support the research-based industry has among most stakeholders. The cost of that, both for industry and patients, would be high.

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That does not mean that patent applications should only be filed for breakthrough inventions such as new chemical entities. The patent system provides protection for other forms of invention in this and other fields, provided the basic patentability criteria are met. Examples in the healthcare area include inventions relating to: „

Different salts or esters or other derivatives of known drugs.

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Different dosage forms or means of administration.

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Combinations of known products (including fixed dose combinations).

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New uses of known compounds. (These are sometimes referred to as “incremental” or “me too” inventions.)

Patent applications should, for life cycle management purposes, be considered for inventions in all of these areas. If they are new and inventive, patent offices around the world should grant patents for them, and courts should uphold and enforce them. Such patents should form part of the life cycle manager’s toolkit, as should SPCs or other forms of patent term extension legitimately obtained to extend the effective period of patent protection to compensate for the time taken to obtain regulatory approval. Developments in the legislation and case law affecting the extent to which patents are available in various parts of the world for biotech patents are important here (for two European examples, see below, Obtaining patents and SPCs). Once patent rights have been obtained, the life cycle manager needs to determine how best to use them. Procedures for enforcing, defining or challenging patents vary considerably around the world. So do costs and timing. Other factors to be taken into account in formulating an international patent enforcement/defence strategy include the:

Obtaining patents and SPCs The two cases summarised below relate to one type of incremental innovation, namely new uses of known compounds. Patents protecting this type of invention are normally referred to as “second medical use” or “Swiss-type” patents. This results from the prohibition in European law on obtaining a patent for a method of medical treatment, and the practice (originally developed in Switzerland) of granting protection in Europe by claims in the following form: “Use of [known] product X in the manufacture of a medicament for the treatment of [new] condition Y”. The first decision was one in which the UK Patents Court revoked a second medical use patent, taking a position which is clearly inconsistent with the approach of the European Patent Office (EPO). The second is a decision of the European Court of Justice (ECJ) refusing to maintain an SPC granted on the basis of a different second medical use patent. UK Court: Actavis v Merck & Co. Merck & Co., Inc. (Merck) is the proprietor of a number of patents related to a drug called finasteride. Finasteride is the active pharmaceutical ingredient in a product called PROPECIA, a one milligram per day tablet of finasteride for the treatment of male pattern balding. Male pattern balding is believed to be caused by dihydrotestosterone, which is produced from testosterone by the activity of the enzyme 5-reductase. Finasteride blocks the activity of this enzyme. Actavis UK Limited (Actavis) sought to revoke the patent under which PROPECIA is sold (Actavis UK Limited v Merck & Co., Inc. [2007] EWHC 1311 Ch). The disputed patent claimed, in the “Swiss-type” form, the use of low dose (0.05 to one milligram per day) finasteride for the preparation of a medicament for oral administration useful for the treatment of androgenic alopecia (a condition including both male and female pattern baldness). At the priority date of the disputed patent, October 1993, Merck was already marketing a product called PROSCAR, a five milligram per day tablet of finasteride for the treatment of a condition known as benign prostatic hyperplasia (prostate enlargement) under an earlier patent. The specification of the earlier patent disclosed the treatment of androgenic alopecia with finasteride, but at a much higher dosage than claimed in the disputed patent. Actavis’ grounds of invalidity were that the claims in the patent in suit were: „

A method of treatment. Obvious in light of the prior art and common general knowledge.

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Likelihood of success, both on the merits and on an application for a preliminary injunction.

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Size of local markets.

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Place of manufacture by the alleged/potential infringer.

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Likely influence of a decision in one forum on the outcome of disputes elsewhere.

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Best method of resolving the dispute in the particular circumstances, for example litigation, arbitration, mediation, or other forms of alternative dispute resolution.

In relation to the first ground, Actavis argued that for a second medical use claim to be valid, it needed to be directed to the use of a substance for the manufacture of a medicament for a specified new and inventive therapeutic application. In particular, following Bristol Myers Squibb v Baker Norton ((2000) ENPR 230), a new dosing regimen for the treatment of a previously disclosed disorder would not confer novelty.

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Life Sciences 2007/08

The Court agreed with Actavis’ submission that Merck’s earlier patent had disclosed the therapeutic application, treatment of androgenic alopecia, and that there had been no novelty in the use of finasteride as treatment for androgenic alopecia, only in its reduced dosing regimen. It held that although it may be novel to use finasteride in the small dosage which it was apparent could result in successful treatment (rather than the much larger doses mentioned in Merck’s previous patent), that was simply a different dosing regime and therefore precisely the same as the situation as in Bristol-Myers. The Court considered itself to be bound by Bristol-Myers and revoked the patent on that basis. Actavis, however, failed in its case on inventive step: the judge found that the invention was not obvious.

be significant, those involved in managing the life cycles of any products covered by such SPCs should monitor the way in which this ruling is applied by the UK court and/or by other patent offices and courts in other cases.

Enforcement European Patent Litigation Agreement (EPLA). For patent enforcement purposes, the US is a single jurisdiction. A decision on the validity or infringement of a patent by a court in, say, Texas is binding in all other states. Although patent litigation in the US is not cheap, at least the parties do not have to pay to litigate in more than one place. That is not the case in Europe. We do not have a single “Community” patent (as we do for trade marks), and it seems unlikely that we will have one in the foreseeable future, despite the clear demands of users for political and other barriers to be removed, and the significant effort put into the Community Patent project over the last 40 years. Progress is, however, being made to develop a more streamlined and cost-effective system for enforcing bundles of national patents. Under the proposed EPLA, the USstyle approach (with significant adaptations) would apply, enabling the parties to enforce the outcome of a decision in, say, the UK in all other member states. That would reduce costs and simplify the procedure, both important considerations in patent litigation planning.

Since both Merck and Actavis have leave to appeal, it will be interesting to see whether the English courts will now address the question of what is patentable second medical use. The outcome will be important for those wishing to use this type of patent in managing the life cycle of products in this category.

In the meantime, those involved in life cycle management continue to need to understand the advantages, disadvantages and general quirks of the local court procedures around Europe in relation to cost, timing, availability of preliminary injunctions and so on. These issues need to be considered not only in relation to patents but also, as explained above, in relation to the procedures of courts or other competent bodies (such as competition authorities) in the regulatory and anti-trust fields. For example, consideration should be given to whether the relevant entity is more likely to achieve its commercial objectives through a challenge to a decision of a national regulatory authority (such as through an application for judicial review in the UK) or by enforcing or challenging the relevant patent(s).

ECJ: Yissum. SPCs can be granted in Europe by a member state to extend the life of that part of a patent which concerns a medicinal product that has been approved for marketing in the European Community. The primary legislation is Regulation (EEC) No. 1768/92 concerning the creation of a supplementary protection certificate for medicinal products (Regulation). In Yissum Research and Development Company of the Hebrew University of Jerusalem v Comptroller-General of Patents (Case C-202/05) the ECJ was asked about the interpretation of Article 1(b) of the Regulation, which defines the meaning of “product” in relation to (among other things) an SPC granted on the basis of a different second medical use patent. In answer, the ECJ held that: “Article 1(b) of [the Regulation]… concerning the creation of [an SPC] for medicinal products…is to be interpreted as meaning that in a case where a basic patent protects a second medical use of an active ingredient that use does not form an integral part of the definition of the product” (Order of the Court (Eighth Chamber) of 17 April 2007 (reference for a preliminary ruling from the High Court of Justice of England and Wales, Chancery Division - United Kingdom)). It is unclear what the implications of this ruling will be: the procedure used in this reference (the so-called Article 104(3) expedited procedure) was unusual. It is questionable whether it was appropriate to use it here and, even if it was, whether the ECJ applied it correctly; and because the ruling has not yet (to the author’s knowledge), been applied by the UK court which referred the matter to the ECJ. However, as the implications may

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Preliminary injunctions In the UK, the courts are now more willing than they were a few years ago to grant preliminary injunctions to originators, to prevent the launch of a generic competitor’s product. The onus is now on the generic to “clear the path” by proactively applying to revoke the relevant national patent rather than waiting to be sued. In the light of a decision of the UK’s Court of Appeal in Les Laboratoires Servier v Apotex ([2007] EWCA Civ 783), they may now need to start that process even earlier - as much as two years before their intended launch. In that case, Servier asked the court to maintain an injunction (originally granted on a preliminary basis) pending its appeal of a decision on the merits that its patent was invalid. The court refused, but its reasoning suggests that a generic may be deemed to have done enough to “clear the way” (to avoid an injunction) only if it has won on validity and/or infringement at both first instance and on appeal to the Court of Appeal. The implications for life cycle management, both in terms of timing and cost, are clear. (For a fuller discussion of this case, see the article by Cohen and Royle in CIPA September 2007 at page 494.)

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The Bristol-Myers case purports to follow EISAI v Second Medical Indication ([1985] OJEPO 64), in which it was held by the Enlarged Board of Appeal of EPO that European patents could be granted containing claims in the Swiss style and that such claims would not fall foul of Article 52(4) of the European Patent Convention. However, in the more recent EPO case of T1020/03 Method of administration of IGF-1/Genetech Inc. (29 October 2004), the Technical Board decided that cases purporting to follow EISAI, but which placed limits on the circumstances in which Swiss style claims could be obtained, and in particular which held that Swiss style claims to dosing regimens were contrary to Article 52(4), wrongly interpreted EISAI. At least six EPO cases have since cited T1020/03, none with disapproval.

Cross-border

Life Sciences 2007/08

BROADER CONTEXT - INDIA India is a good example of how patent issues affect life cycle management in the broader global context. A discussion of the position there illustrates some of the complexities in this area in relation to access to medicines in the developing world.

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India’s pharmaceutical industry had until recently focused mainly on generics; using its highly skilled scientists to produce cheap copies of drugs invented elsewhere but not capable of product patent protection locally. This enabled it to provide cheap medicines for India’s poor, and significant export opportunities both to other developing countries and to developed world markets. India joined the World Trade Organisation (WTO) in 1995 and, ten years later, a new patent law was introduced, extending patent protection to pharmaceutical products as well as processes. This dramatically changed the pharmaceutical landscape. Whether this was positive for the Indian people remains the subject of considerable debate. Some thought the change would, if properly implemented, be positive: encouraging inward investment by multinational pharmaceutical companies and greater focus on the R&D model by many Indian pharmaceutical companies who had traditionally focused mainly on the generic side of the business. This has, at least in part, proved to be the case. Supporters of the change believe the law has not gone far enough. They are particularly concerned about restrictions on the patentability in India of the sorts of “incremen-

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tal” innovations discussed above (Novartis’ appeal of the decision not to grant a patent for its Glivac product is the most public example. At the time of writing, the final outcome of that challenge had not yet been determined. A number of multinationals have, however, already indicated that, if the final decision goes against Novartis, they will reduce their investment in India, showing the significant economic impact the issue may have.) The change to Indian patent law has also been viewed in a less positive light. Some argue that the introduction of patents, particularly for the sorts of incremental innovations widely used in the life cycle management process, would threaten India’s ability to provide drugs at prices which the world’s poor can afford. It is critical for this issue to be addressed, though it would be simplistic and misleading to suggest that retaining the status quo in the patent system would have sufficiently addressed this issue anyway.

REVIEW Life cycle management is a complex and multi-faceted process. Pharmaceutical companies need to get it right, in the interests of their shareholders. In doing so, they must also consider the importance of achieving the right balance between providing incentives for research and development of new medicines and the need to provide the public with products at the best possible price. An awareness of the ever-changing patent law landscape should help in undertaking that difficult task.

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© This chapter was first published in the PLC Cross-border Life Sciences Handbook 2007/08 and is reproduced with the permission of the publisher, Practical Law Company. For further information or to obtain copies please contact [email protected], or visit www.practicallaw.com/lifescienceshandbook.

On call.

Linklaters has a leading practice covering the healthcare, pharmaceutical and biotechnology fields. A dedicated team of lawyers across our worldwide offices is able to provide technical expertise within the industry sector. Combining this expertise along with our corporate finance, mergers and acquisitions, intellectual property, antitrust, regulatory, product liability, projects and tax experience means that our healthcare capability is second to none. For more information on how we can apply our expertise to help you, please contact: Stephen Blackshaw Co-head of Healthcare Sector Telephone: (44-20) 7456 2000 email: [email protected] or Nigel Jones Co-head of Healthcare Sector Telephone: (44-20) 7456 2000 email: [email protected]

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