By Kevin E. Noonan --
In rendering its decision in eBay Inc. v. MercExchange, L.L.C. that the Federal Circuit's rubric that a patentee victory in a patent infringement lawsuit rendered the grant of a permanent injunction against the defendant almost "automatic," it is likely that the Supreme Court intended merely to adhere more closely to the distinction in statutory language between 35 U.S.C. §§ 283 and 284. Specifically, Congress mandated that a prevailing patentee would be entitled to money damages for infringement ("the court shall award the claimant damages adequate to compensate for the infringement"), but left injunctive relief to the court's discretion ("[t]he several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity"). The Supreme Court's directive appeared merely to require the Federal Circuit to employ the conventional equitable considerations in granting injunctions under the patent statutes. However, as related in a recent post, in its application the eBay decision appears to have other, likely unintended, consequences (see "Court Still Cannot Decide on Amgen's Permanent Injunction").
Hoffmann-LaRoche was the losing party last October in a jury verdict of infringement brought by Amgen, asserting four patents in its erythropoietin arsenal. That verdict found Roche's Mircera® drug product (a form of recombinant EPO that has been covalently linked to polyethylene glycol) infringed claims 3, 7, and 8 of Amgen's U.S. Patent No. 5,547,933 (claim 12 was found not to be literally infringed but infringed under the Doctrine of Equivalents); claims 1 and 2 of U.S. Patent No. 5,441,868; and claims 6 through 9 of U.S. Patent No. 5,618,698 (see "Amgen Survives Another EPO Challenge"). Pursuant to that verdict, Amgen pursued a permanent injunction to prevent Roche from launching Mircera®, because the U.S. Food and Drug Administration granted approval for Roche to market Mircera® last November.
Instead of granting a permanent injunction, Judge Young of the District of Massachusetts granted a preliminary injunction on February 28, 2008, based on his application of the rubrics set forth by the Supreme Court in eBay for granting injunctions in patent cases. In Amgen, Judge Young held that Amgen had clearly fulfilled three of the four factors mandated for consideration by the Supreme Court in eBay: Amgen's asserted claims were infringed and not invalid; Amgen's injury would not be adequately compensated merely with money damages; and the balance of the hardships weighed in favor of granting the injunction. However, the District Court did not decide in Amgen's favor as to the fourth prong, the public interest, particularly in view of Roche's representations of the advantages of its Mircera® product over Amgen's version of EPO (including inter alia less frequent dosing; see "Long-Acting Drug for Dialysis Anemia Equivalent to Weekly Agent").
On March 20, Roche complied with the requirements the District Court imposed in order for the Court to consider lifting the injunction (see "Court Still Cannot Decide on Amgen's Permanent Injunction"). These included that Roche would pay Amgen a royalty of 22.5%; Roche's sales to Medicare patients would be at a cost no more than the average sales price of Amgen's EPO products (a requirement that would prevent Roche from passing its royalty obligations onto patients, but would not prevent Roche from selling Mircera® at a bargain price relative); Roche would have to provide clinical evidence to permit the Court to determine a "dosage conversion factor" between Mircera® and Amgen's Epogen® product; Roche would pay for an independent agency to monitor sales and determine royalty payments owed to Amgen; and Roche would agree to supply Mircera® to any patient needing it, at or below the authorized price. However, in the face of the District Court's continuing inability to resolve the fourth eBay injunction factor (as evidenced by the District Court's order that the parties submit a list of agreed candidates to be a "special master" to consider the scope of any injunction), Roche filed its notice of appeal to the Federal Circuit (see "Hoffmann-LaRoche Can't Wait, Files Notice of Appeal to the Federal Circuit"). The status of the injunction is thus in some doubt. Amgen has informed the District Court that it would move to amend its complaint to seek damages, including enhanced damages for willful infringement, should Roche launch Mircera® before the case has been resolved.
As part of its brief indicating that it would comply with the conditions the District Court set for lifting the injunction, Roche advanced an argument that may resonate with other "generic" drug defendants. Roche particularly argued that Mircera® had dosing and cost advantages that should be considered to be in the public interest, including a better dosing schedule (according to Roche, the difference between 12 (for Mircera®) and 156 (for Epogen®) injections per year for dialysis patients), concomitant reduced Medicare and Medicaid costs, and fewer adverse effects as well as meeting unmet medical needs (relating to Amgen's failure to secure FDA approval for monthly dosing for certain indications).
It will almost always be the case that a true generic drug manufacturer will be able to argue that the public has an interest in cheaper and more plentiful sources of drugs. Even small decreases in drug prices can have a major impact, particularly in the public sector: every cent saved on the cost of a patented drug disbursed through Medicare is a public savings, and with millions of Medicare recipients this rapidly becomes "real money." The economics of this situation will only increase as more and more of the "baby boom" generation becomes eligible for (and begins to receive) Medicare benefits. Thus, by mandating that courts apply conventional equitable principles in considering injunctions to prevailing patentees, the Supreme Court may have provided generic companies an avenue to convince a court that the public interest in cheaper drugs outweighs the patentee's (and the public's) interest in upholding patent rights.
At present, the statutory scheme grants a 30-month regulatory approval ban against a generic ANDA filer. The ban is triggered by a patentee filing suit in response to receiving the generic drug company's Paragraph IV certification after filing an ANDA. Since many pharmaceutical patent lawsuits take more than 30 months to be resolve, the FDA can grant approval to the generic before the Orange Book-listed patent has expired (35 U.S.C. § 271(e)(4)) or the outcome of the lawsuit has been determined. However, particularly before resolution of an ANDA patent infringement lawsuit (which carries no entitlement to damages before a generic enters the market, and is triggered by the mere filing of an ANDA), generic drug companies are typically loathe to launch "at risk" of being liable not only for damages but enhanced damages for willful infringement (35 U.S.C. § 285). Congress has amended the Hatch-Waxman Act before, however (most recently Medicare Modernization and Improvement Act of 2003). The (favorable) economic consequences of permitting early generic entry (for the public, not the patentee) might be the occasion for additional modifications, including permitting an infringing generic drug maker to enter the market under the same type of "compulsory license" that Judge Young was considering in the Amgen case. The fact that such a result would upset the balance of interests that motivated the Hatch-Waxman scheme may not be enough to forestall this result, particularly in view of the complete disregard for this balance evinced by the Supreme Court in Merck KGaA v. Integra Life Sciences (see "Merck v. Integra: The Supreme Court Misses a Golden Opportunity").
For additional information regarding this topic, please see:
• "Glasses Half-full or Half-empty: Hoffman-LaRoche's Different Interpretation of Pfizer v. Teva," April 15, 2008
• "Hoffmann-LaRoche Can't Wait, Files Notice of Appeal to the Federal Circuit," April 11, 2008
• "Will the Federal Circuit's Pfizer v. Teva Decision Spell the End of Amgen's Patent Rights to Recombinant Human Erythropoietin?" March 31, 2008
• "Court Still Cannot Decide on Amgen's Permanent Injunction," March 26, 2008
• "Amgen Inc. v. International Trade Commission (Fed. Cir. 2008)," March 20, 2008
• "Roche Agrees to Court's Conditions for Modifying Preliminary Injunction," March 20, 2008
• "Roche's Mircera® Remains Off the Market (For Now)," March 2, 2008
• "Amgen Survives Another EPO Challenge," October 28, 2007
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