By Juan Luis Serrano* --
In the first and second installments of this series, we've explained the general purpose and the patents and marketing authorizations sections of the study published on August 9, 2017 by the Federal Commission for Economic Competition. In this third installment we take a look at the sections on strategic behaviour and the analysis on litigation cases.
For the purposes of this entry, we'll refer to Mexican authorities by their acronyms; COFECE for the antitrust body, COFEPRIS for the regulatory authority, and IMPI for the patent office.
The section on Strategic Behavior of the study by COFECE (3.4), is heavy with criticism to the innovative pharmaceutical industry; it starts with references to evegreening practices, and patent clustering as a way to block generic entrances.
Whereas the study does mention the main argument in favor of allowing several patents related to a single drug product (inventive merit on new formulations or uses), it quotes the policy decisions taken in countries such as Argentina and India which have limited this possibility, mentioning that such policies have required countries to strike a balance between national interests and TRIPS. There is also a reference to the practice in Brazil requiring the regulatory authority to provide a green light before a patent is issued.
The angle of the study in favor of the generic side of industry is clear in the section related to product switching (explained as a marketing strategy leading physicians to a new formulation of an existing product to take advantage of a more recent patent); there is a direct reference to the position of ANAFAM (a major association of generic drug manufacturers) on the issue without a counter-argument from the innovator's association.
This section concludes with a reference to pay for delay agreements which have been subject of antitrust analysis and litigation in the U.S. and Europe, but does not indicate whether any such agreement has taken place in Mexico or not. The Mexican legal system does not force companies to automatically report such an agreement, but if one takes place it could be subject of review by COFECE.
Overall, this section leads the reader to think that the current environment in Mexico is slanted in favor of innovator companies, with an underlying message that the authority will start to look at actions that have been found as anticompetitive in other markets to study them here.
Special relevance comes from the fact that the message is issued by a Government office; whereas other factors would certainly be in play before any major policy decision is taken (the position by Congress and the Patent Office, and current NAFTA renegotiations which will include IP related discussions), it seems clear that we should expect additional activity from COFECE on the review of practices which have been sanctioned abroad.
In the section "litigation related to patents and marketing authorizations" (3.5), the study lists some of the major judicial and policy decisions that have shaped the current regulatory environment for generic drug entry in the past 20 years, as follows:
a) The enactment of linkage regulations in 2003, which were initially interpreted by authorities as limited to patents covering active pharmaceutical ingredients;
b) The creation of a specialized IP Court in 2008;
c) The Supreme Court decision of 2010 establishing that linkage should be broadly interpreted to include formulation patents;
d) The addition of an opposition system to patent applications in the IP Law, also in 2010 (which does not extend to granted patents); and
e) The reform to the IP Law ordering the patent office to publish all decisions which modify a granted patent or trademark.
The study then explains that litigation has taken place in the form of patent infringement actions, challenges to applications or authorizations granted to generic drug manufacturers, and judicial petitions of recognition of Regulatory Data Exclusivity.
Two additional shots are fired at patent holders: on page 52, first paragraph, the study states:
"Upon making this study, we had knowledge that some holders of patents related to an active ingredient which are already in the public domain, have intended to cause confusion in authorities in charge of the purchase of drugs for the public sector and Courts, even trying to persuade their competitors by informally warning them of the initiation of and infringement proceed if (said competitor) does not refrain from manufacturing any product with the relevant active ingredient."
This statement refers to acts which could be subject to antitrust or even criminal investigations. Again, this becomes quite relevant when the source is not an independent writer, but a Government office.
The last paragraph of page 52 is also relevant:
"In summary, innovative laboratories can extend product market exclusivity through the abuse of judicial proceedings established in our laws and thus place obstacles to generic drug entry to the market. This calls for a review of the linkage system in order to have a transparent tool between marketing authorizations and industrial property rights and with this reduce possible spaces of litigation which seek to delay generic entry."
Whereas as mentioned in the first entry of this series, I agree with the need for transparency, the blanket reference to judicial proceedings as abusive does seem over the top. I would argue that those judicial proceedings are not necessarily abusive per se but are on many occasions the only resource available to prevent or correct the actual invasion of a granted right.
The section closes with a summary of litigation cases, by active ingredient, indicating the parties and patents involved, and those cases where regulatory data exclusivity has been requested by judicial means.
In part IV of the series on the COFECE study, we'll look at the first eight recommendations of policy changes.
* Mr. Serrano is Of Counsel with ROMO DE VIVAR V.IP SERVICES, S.C.