Patent Docs

Federal Trade Commission v. Watson Pharmaceuticals, Inc. (11th Cir. 2012)

By Kevin E. Noonan --

The practice of "reverse payments" in ANDA litigation (where, typically, the branded drug manufacturer settles litigation brought under 35 U.S.C. § 271(e)(2) with a generic challenger) have been a thorn in the side of the Federal Trade Commission for several years.  Despite judicial, legislative, and administrative attempts to ban the practice, neither Congress nor the courts have been willing to do so, and while a ban on so-called "pay for delay" practices have been a part of the Obama administration's budgets for the past few years, nothing has come of it.

The FTC's reasoning and the basis for its crusade against such practices are as follows.  First, generic competition decreases the costs of drugs to consumers and, more importantly, to the Federal government, the largest drug purchaser in the country if not the world.  (The FTC is correct.)  Second, generic drug companies are motivated under the Hatch-Waxman Act to challenge patents, because the "first to file" an ANDA with a certification that the generic product that does not infringe or, more commonly, that the innovator's patents are invalid or unenforceable, will garner a 180-day exclusivity period as the only generic on the market.  (The FTC is also correct in this portion of its reasoning.)  Third, reverse payment arrangements upset the statutory arrangement, permitting "bad" patents to remain in effect and delaying generic entry.  (This is where the FTC's reasoning begins to go astray, because courts have found generally that reverse payment arrangements reduce the delay in generic entry.)  Finally, the FTC contends that branded drug companies enter into reverse payment arrangements because they know that their patents are invalid and/or unenforceable and the agreement permit them to undeservedly collect "monopoly" prices; it is here that the combination of economists and government bureaucrats come to the wrong conclusion, and why almost universally (Valley Drug Co. v. Geneva Pharmaceuticals, Inc., 344 F.3d 1294 (11th Cir. 2003); Schering-Plough Corp. v. Federal Trade Commission, 402 F.3d 1056 (11th Cir. 2005); In re Tamoxifen Citrate Antitrust Litigation, 466 F.3d 187 (2d Cir. 2006), Arkansas Carpenters Health & Welfare Fund v. Bayer AG, 604 F.3d 98, 105 (2d Cir. 2010); and In re Ciprofloxacin Hydrochloride Antitrust Litigation, 544 F.3d 1323 (Fed. Cir. 2008)) courts have rejected the FTC's premise that reverse payment arrangements are anticompetitive market behavior and violations of the antitrust laws.  (It will be noted that the lone appellate exception, In re Cardizem CD Antitrust Litigation, 332 F.3d 896 (6th Cir. 2003), involved different facts leading to the conclusion that there was anticompetitive behavior.)

The latest in this series of judicial rebukes came on April 25th, in Federal Trade Commission v. Watson Pharmaceuticals, Inc. et al. (the "et al." including the ANDA filer, Paddock Pharmaceuticals and its licensee, Par Pharmaceuticals).  The case involved  a reverse payment settlement between NDA holder Solvay Pharmaceuticals and ANDA filers Watson Pharmaceuticals and Paddock Pharmaceuticals over AndroGel, a prescription testosterone formulation prescribed for treating hypogonadism.  Unimed (acquired by Solvay and later acquired by Abbott) and Besins Healthcare S.A. held the NDA, as well as Orange Book-listed U.S. Patent No. 6,503,894 directed to the formulation; this patent will expire in August 2020.  Watson and Paddock filed separate ANDAs having Paragraph IV certifications that the '894 patent was invalid or unenforceable, and Unimed/Besins timely filed suit pursuant to 35 U.S.C. § 271(e)(2) in the U.S. District Court for the Northern District of Georgia.  The lawsuit was pending longer than the statutory 30-month stay, and the FDA approved Watson's ANDA, but neither Watson nor Paddock launched "at risk" (i.e., before the lawsuit had been decided).  As part of the suit, both Watson and Paddock did not contest that their products would infringe the '894 patent, but rather that the patent was invalid or unenforceable.  However, before the Court could rule on defendants' summary judgment motions after a Markman hearing the parties settled:  the District Court entered a Stipulation of Dismissal against Watson and a permanent injunction against Paddock.

In addition to these actions by the District Court, the parties agreed that the § 271(e)(2) defendants would "respect" the '894 patent, and that both were entitled to launch in August 2015, five years before the '894 patent was scheduled to expire.  In addition, Watson and Paddock agreed that their sales forces would promote Unimed's (later Solvay's) AndroGel product until the agreed time for their own product launch, and that Unimed (later Solvay) would pay the parties (~$20-30 million to Watson, ~$10 million to Par/Paddock) annually; in addition, Par/Paddock agreed to supply AndroGel to Unimed (later Solvay) in a "backup capacity" for an additional $2 million annually.

The case on appeal arose pursuant to an investigation by the FTC of these settlement agreements under 21 U.S.C. § 355 note (2003).  The FTC alleged violations of Section 5a of the Federal Trade Commission Act under 15 U.S.C. § 45(a)(1).  The suit was transferred from the Central District of California to the Northern District of Georgia, where the District Court granted defendants' motion to dismiss pursuant to Fed. R. Civ. Pro. 12(b)(6) (failure to state a claim).  In doing so, the District Court rejected the FTC's contentions in its complaint "(1) that the settlement agreement between Solvay and Watson is an unfair method of competition; (2) that the settlement agreement among Solvay, Paddock, and Par is an unfair method of competition; and (3) that Solvay engaged in unfair methods of competition by eliminating the threat of generic competition to AndroGel and thereby monopolizing the market."  The basis for the District Court's action was that, in the 11th Circuit, reverse payments did not constitute anticompetitive behavior "so long as the terms of the settlement remain within the scope of the exclusionary potential of the patent, i.e., do not provide for exclusion going beyond the patent's term or operate to exclude clearly noninfringing products, regardless of whether consideration flowed to the alleged infringer."

The 11th Circuit affirmed, in an opinion by Judge Carnes joined by Circuit Judge Kravitch and 9th Circuit Court Judge Farris (sitting by designation) and applying the 11th Circuit standard of de novo review of granted motions to dismiss.  The opinion from the outset showed little patience with the FTC's theories, saying that new drugs are produced in the U.S. under the maxims "no risk, no reward" and "more risk, more reward," and that "no rational actor" (the economists' archetype) "would take [the] risk" of investing more than "$1.3 billion" on a potential drug where "[o]nly one of every 5,000 medicines tested . . . is eventually approved for patient use" "without the prospect of a big reward."  Under this system, the Court recognizes that the successful drug maker who patents its drug will "usually[] recoup its investment and make a profit, sometimes a super-sized one."  The Court also notes that "more money, more problems" is the result, with the profits "frequently attract[ing] competitors in the form of generic drug manufacturers that challenge or try to circumvent the pioneer's monopoly in the market."  The Court recognizes as the "key allegation in the FTC's complaint" that "the patent holder [is] 'not likely to prevail' in the patent infringement action" that arises in the Hatch-Waxman context.  The Court also recognizes the FTC's position that reverse payments are per se anticompetitive as "unlawful restraints on trade" and hence violations of Section 1 of the Sherman Act, and cites (albeit in a footnote) the economic rationale advanced by the FTC in this and other contexts:

According to a study conducted by the FTC of the industry as a whole . . . , a branded manufacturer typically loses about 90 percent of its unit sales over the course of generic entry.  While generic entrants gain that unit volume, they do not gain all the revenues lost by the branded manufacturer because, as generic competition sets in, the price falls, on average, to about 15 percent of what the branded manufacturer was charging.  Thus, a branded manufacturer can expect that, if a drug is earning $1 billion a year before generic entry, the manufacturer will only earn about $100 million a year once generic competition has matured, and all the generic companies put together will only earn about $135 million a year (90% x 15% x $1 billion), thus leaving approximately $765 million a year for the public through the benefits of competition.  The parties have a strong economic incentive to avoid that result.

The Court set forth both the statutory basis of the Hatch-Waxman regime and the specific facts of this case (acknowledging that it does so "out of order" but asserting that this way "makes more sense"); in its explication of the law the Court states that "Federal law encourages generic drug manufacturers to file paragraph IV certifications."

The Court gets to the heart of the FTC's contentions; because the FTC's complaint was dismissed under Fed. R Civ Pro 12(b)(6), all factual allegations in the complaint were accepted as true.  The Court returned to its previously stated analysis of the FTC's position, stating that "[t]he lynchpin of the FTC's complaint is its allegation that Solvay probably would have lost the underlying patent infringement action" and that "Solvay was not likely to prevail" in the patent litigation because "Watson and Par/Paddock developed persuasive arguments and amassed substantial evidence that their generic products did not infringe the ['894] patent and that the patent was invalid and/or unenforceable" (emphasis in original).  "The difficulty," according to the Court, "is [in] deciding how to resolve the tension between the pro-exclusivity tenets of patent law and the pro-competition tenets of antitrust law," a difficulty that "is made less difficult [] by the law's proprecedent tenets" and "[o]ur earlier decisions" which "carry us much of the way to a resolution of [the] case."  In reviewing 11th Circuit precedent (all of which reject the FTC's position), the Court discussed the bases for these earlier decisions.

While noting that generally agreements between competitors that keep one competitor from the market to the benefit of the other (and that increase costs to the public) would be barred under the antitrust laws, reverse payment cases were "atypical cases because 'one of the parties [owns] a patent'," citing Valley Drug.  This "makes all the difference" because the patent holder "has a lawful right to exclude others" from the marketplace.  Said another way, "[t]he anticompetitive effect is already present" due to the existence of a patent," citing Schering Plough.  Further citing Valley Drug, the Court said that even subsequent invalidation of the patent would not render the agreement unlawful, since its lawfulness must be considered at the time of settlement, where the patentee "had the right to exclude others."  What counts is the "potential exclusionary power" of the patent at the time of the reverse payment settlement, not its "actual exclusionary power" unless a court had rendered a negative judgment of invalidity or unenforceability prior to the settlement (an unlikely but not impossible scenario).  But the Court noted that the mere existence of a patent did not give the parties to a reverse payment settlement carte blanche; the settlement cannot "exclude[] more competition that the patent has the potential to exclude."  Such agreements remain "vulnerable to antitrust attack" according to the opinion, and are subject to a "three-prong analysis" that requires an evaluation of "(1) the scope of the exclusionary potential of the patent; (2) the extent to which the agreements exceed that scope; and (3) the resulting anticompetitive effects," citing Valley Drug.

In another footnote, the Court also clarified the meaning of the term "strength of the patent" as used in the Schering Plough case:

The FTC's brief in this case places great weight on our statement in Schering-Plough that a proper antitrust analysis of reverse payment agreements needs to "evaluate the strength of the patent."  402 F.3d at 1076 (emphasis added).  The FTC argues that evaluating the "strength of the patent" means evaluating "the strength of the patent holder's claims of validity and infringement, as objectively viewed at the time of settlement."  We disagree.  When read in the context of the facts and the reasoning of Schering-Plough, the phrase "strength of the patent" refers to the potential exclusionary scope of the patent -- that is, the exclusionary rights appearing on the patent's face and not the underlying merits of the infringement claim.  Nowhere in the Schering-Plough opinion did we actually evaluate the merits of the infringement claim when defining how much competition the patent could potentially exclude from the market.

The Court also provided useful contrast between these earlier cases denying antitrust liability with one, Andrx Pharmaceuticals, Inc. v. Elan Corp., 421 F.3d 1227 (11th Cir. 2005), in which the Court reversed dismissal of an antitrust case brought by a private party.  In that case, the generic drug maker "had agreed 'to refrain from ever marketing a generic' version of the patented drug," and the generic drug maker was permitted to "retain its 180 day exclusivity period" despite having "no intention of marketing the drug."  This resulted in the generic drug maker's 180-day exclusivity period to "act[] like a cork in a bottle" preventing another generic drug maker from entering the market.  (This tactic was eliminated by later amendments to the statute wherein the first ANDA filer can forfeit its exclusivity rights if it fails to market a generic version of a patented drug "within certain time periods."  21 U.S.C. § 355(j)(5)(D)).

The Court then synthesized the rule from these cases:  "absent sham litigation or fraud in obtaining the patent, a reverse payment settlement is immune from antitrust attack so long as its anticompetitive effects fall within the scope of the exclusionary potential of the patent."  The Court assessed the FTC's allegations under this standard, noting those allegations to be:  (1) that Solvay was "unlikely to prevail" in the underlying patent infringement litigation; (2) that accordingly the patent has "no exclusionary potential" (emphasis in original); and (3) if a patent has no exclusionary potential, the reverse payment arrangement "necessarily" exceeds its "potential exclusionary scope" and thus is tantamount to "'buying off' a serious threat to competition."  The FTC urged the Court, according to the opinion, "to adopt 'a rule that an exclusion payment is unlawful if, viewing the situation objectively as of the time of the settlement, it is more likely than not that the patent would not have blocked generic entry earlier than the agreed-upon entry date.'"

The Court "decline[d] the FTC's invitation and reject[ed] its argument," saying that to adopt either would "equate[] a likely result (failure of an infringement claim) with an actual result."  In this context, according to the Court, if Solvay was "likely" to fail to survive litigation that meant its chances were 51% to 49%; under these circumstances "as many as 49 out of 100 times that an infringement claim is 'likely' to fail it actually will succeed and keep the competitor out of the market."  Under these circumstances the Court reasoned that "rational parties settle to cap the cost of litigation and to avoid the chance of losing," noting that "[o]ne side or the other almost always has a better chance of prevailing, but a chance is only a chance, not a certainty."  The rationality, rather than possible perfidity, of this behavior is illustrated colorfully as follows:

A party likely to win might not want to play the odds for the same reason that one likely to survive a game of Russian roulette might not want to take a turn.  With four chambers of a seven-chamber revolver unloaded, a party pulling the trigger is likely (57% to 43%) to survive, but the undertaking is still one that can lead to undertaking.

Patent litigation is analogous, according to the opinion, and "[w]hen both sides of a dispute have a substantial chance of winning and losing, especially when their chances may be 49% to 51%, it is reasonable for them to settle" without incurring antitrust liability for doing so.  The Court continues its theme of the rationality of this behavior, citing the opinion in In re Ciprofloxacin Hydrochloride Antitrust Litig., 261 F. Supp. 2d 188, 208 (E.D.N.Y. 2003):

No matter how valid a patent is -- no matter how often it has been upheld in other litigation or successfully reexamined -- it is still a gamble to place a technology case in the hands of a lay judge or jury.  Even the confident patent owner knows that the chances of prevailing in patent litigation rarely exceed seventy percent.  Thus, there are risks involved even in that rare case with great prospects.

In addition, the Court notes practical difficulties with the FTC's approach, including "an after-the-fact calculation of how 'likely' a patent holder was to succeed in a settled lawsuit if it had not been settled," calling it a "retrospective predict-the-likely-outcome-that-never-came approach" (and noting that "[p]redicting the future is precarious at best; retroactively predicting from a past perspective a future that never occurred is even more perilous.  And it is too perilous an enterprise to serve as a basis for antitrust liability and treble damages.")  The Court also emphasized the burden on the parties and the courts in this approach, noting that it would discourage settlements against the general consensus that settlements of litigation should be encouraged.  The Court also notes that the FTC itself had voiced concerns over the approach now espoused in appeal:

An after-the-fact inquiry by the Commission into the merits of the underlying litigation is not only unlikely to be particularly helpful, but also likely to be unreliable.  As a general matter, tribunals decide patent issues in the context of a true adversary proceeding, and their opinions are informed by the arguments of opposing counsel.  Once a case settles, however, the interests of the formerly contending parties are aligned.  A generic competitor that has agreed to delay its entry no longer has an incentive to attack vigorously the validity of the patent in issue or a claim of infringement.

In re Schering-Plough Corp., No. 9297, 2003 WL 22989651, at *22 (F.T.C. Dec. 8, 2003).  Finally, the Court suggests that the FTC's pattern of filing suit in the various regional circuit courts of appeal is inconsistent with the Congressional mandate that the Federal Circuit hear appeals of patent cases exclusively.  (The Federal Circuit has followed the 11th Circuit's reasoning in reverse payment cases.)  And the FTC's concerns are likely to be overstated, according to the Court, because of "the reality that there usually are many potential challengers to a patent, at least to drug patents" and other generic competitors will arise to challenge the patent.  If the FTC is correct that reverse payment arrangements indicate a "weak" or vulnerable patent, the "blood in the water" will likely provoke a "feeding frenzy" of other challenges.  "Although a patent holder may be able to escape the jaws of competition by sharing monopoly profits with the first one or two generic challengers, those profits will be eaten away as more and more generic companies enter the waters by filing their own paragraph IV certifications attacking the patent," also noting Herbert Hovenkamp, "Sensible Antitrust Rules for Pharmaceutical Competition," 39 U.S.F. L. Rev. 11, 25 (2004) ("In a world in which there are numerous firms willing and able to enter the market, an exit payment to one particular infringement defendant need not have significant anticompetitive effects.  If there is good reason for believing the patent [is] invalid others will try the same thing.").

Regardless of these realities, it is unlikely that the FTC's crusade against reverse payment settlements will diminish.

Federal Trade Commission v. Watson Pharmaceuticals, Inc. (11th Cir. 2012)
Panel: Circuit Judges Carnes, Kravitch, and Farris
Opinion by Circuit Judge Carnes

Federal Circuit Sets Schedule for AMP v. USPTO

By Donald Zuhn --

In an order issued by the Federal Circuit this morning in Association for Molecular Pathology v. U.S. Patent and Trademark Office ("Myriad"), the Court has requested that the parties file simultaneous supplemental briefs of not more than 20 pages by June 15, 2012 to address the following issue:

What is the applicability of the Supreme Court's decision in Mayo to Myriad's isolated DNA claims and to method claim 20 of the '282 patent?

The Federal Circuit also indicated that it would accept amici curiae briefs of not more than 15 pages, to be submitted by June 15, 2012.  The Court expressly invited the United States to file an amicus brief.

Finally, the Federal Circuit noted that oral argument would be held at 10:00 am on July 20, 2012.

The Federal Circuit's order comes in response to the Supreme Court's decision on March 26, 2012 to grant the petition for writ of certiorari in Association for Molecular Pathology v. Myriad, vacate the judgment, and remand the case back to the Federal Circuit for further consideration in light of Mayo Collaborative Services v. Prometheus Laboratories (see "Supreme Court Remands Myriad Case").

USPTO Seeks Comments on Feasibility of Placing Economically Significant Patent Applications under Secrecy Order

By Donald Zuhn --

On April 20th, the U.S. Patent and Trademark Office published a notice in the Federal Register (77 Fed. Reg. 23662) requesting comments as to whether the U.S. should bar certain patent applications from publication and issuance as "detrimental to the nation's economic security."  The notice also seeks comments regarding changes to existing procedures for reviewing patent applications that might be detrimental to national security.

The Office's proposal to place economically significant applications under a secrecy order comes pursuant to a request from Congress.  The notice indicates that a report on the 2012 Appropriations Bill by the Subcommittee on Commerce, Justice, Science, and Related Agencies stated that:

By statute, patent applications are published no earlier than 18 months after the filing date, but it takes an average of about three years for a patent application to be processed.  This period of time between publication and patent award provides worldwide access to the information included in those applications.  In some circumstances, this information allows competitors to design around U.S. technologies and seize markets before the U.S. inventor is able to raise financing and secure a market.

H.R. Rpt. 112–169, at page 18 (July 20, 2011).

The notice also indicates that the Subcommittee instructed the Office to consult with the appropriate agencies and "develop updated criteria to evaluate the national security applications of patentable technologies [and] to evaluate and update its procedures with respect to its review of applications for foreign filing licenses that could potentially impact economic security."  According to the notice, the Subcommittee described "economic security" as "ensuring that the United States receives the first benefits of innovations conceived within this country, so as to promote domestic development, future innovation and continued economic expansion."

Pursuant to the Subcommittee's request, the Office now seeks comments as to whether an economic security screening procedure, which borrows from the current national security screening procedure, should be considered.  The Office also seeks comments on whether the national security screening procedures are adequate.  With regard to economically significant applications, the Office "seeks to obtain feedback on whether the United States Government should institute a new regulatory scheme, modeled from that applied to national security concerns," which "would institute a secrecy order that forbids applicants from disclosing subject matter deemed to be detrimental to national economic security for such period as the national interest requires."  The Office provides a list of questions for which it seeks comment on economic security-based secrecy orders at pages 23664-65 of the notice.  A number of questions for which the Office seeks on national security-based secrecy orders is provided at page 23665 of the notice.

Comments regarding new procedures for handling applications detrimental to the nation's economic security or current procedures for handling applications detrimental to national security must be submitted by June 19, 2012.  Comments can be sent by e-mail to SecrecyOrder.Comments@USPTO.gov, or by regular mail to:  Mail Stop Congressional Relations, Attention: Jim Moore, P.O. Box 1450, Alexandra, VA 22313–1450.

Conference & CLE Calendar

May 1, 2012 - Prometheus in the Post-Bilski Age: Patentable Subject Matter Under Continued Attack (Strafford) - 1:00 - 2:30 pm (EDT)

May 2, 2012 - Patent Prosecution under the AIA: Strategies for Before, During and After the Transition to First-Inventor-to-File (American Intellectual Property Law Association) - 12:30 - 2:00 pm (Eastern)

May 2, 2012 - Patent Reform Strategies in the Life Sciences: Assessing 'First-to-File' and Freedom to Operate under the New Rules (Elsevier Business Intelligence, CHI-California Healthcare Institute, and Merrill Datasite®) - 1:00 - 2:00 pm (EDT)

May 3, 2012 - In-Depth Analysis of Mayo v. Prometheus: What it Means for the Future of Medical Diagnostic Patents (Technology Transfer Tactics) - 1:00 - 2:00 pm (Eastern)

May 3, 2012 - Of "Use" and Labels: Recent Appellate Decisions in Hatch-Waxman Litigation (Intellectual Property Owners Association) - 2:00 - 3:00 pm (ET)

May 8, 2012 - GW Law Symposium on Intellectual Property (George Washington University Law School, Mayer Brown, and Cornerstone Research) - Washington, DC

May 10, 2012 - The America Invents Act and Beyond: International Grace Period and Post–Grant Review (Intellectual Property Owners Association) - Brussels, Belgium

May 16-18, 2012 - Fundamentals of Patent Prosecution 2012: A Boot Camp for Claim Drafting & Amendment Writing (Practising Law Institute) - Chicago, IL

May 22-23, 2012 - Biosimilars*** (American Conference Institute) - New York, NY

June 8-12, 2012 - 2012 MidYear Meeting (Association of American Law Schools) - Berkeley, CA

June 13-15, 2012 - Fundamentals of Patent Prosecution 2012: A Boot Camp for Claim Drafting & Amendment Writing (Practising Law Institute) - New York, NY

June 18-21, 2012 - BIO International Convention (Biotechnology Industry Organization) - Boston, MA

June 20-21, 2012 - International Forum on Pharma Patent Lifecycles*** (C5) - London, England

June 25-26, 2012 - Hatch-Waxman Boot Camp*** (American Conference Institute) - San Diego, CA

July 11-13, 2012 - Fundamentals of Patent Prosecution 2012: A Boot Camp for Claim Drafting & Amendment Writing (Practising Law Institute) - San Francisco, CA

***Patent Docs is a media partner of this conference or CLE

Webinar on Recent Hatch-Waxman Decisions

The Intellectual Property Owners Association (IPO) will offer a one-hour webinar entitled "Of 'Use' and Labels: Recent Appellate Decisions in Hatch-Waxman Litigation" on May 3, 2012 beginning at 2:00 pm (ET).  A panel consisting of James Hurst of Winston & Strawn, LLP; Andrea Kamage of Johnson & Johnson; and Christina Markus of King & Spalding will review the Supreme Court's decision in Caraco v. Novo Nordisk and the Federal Circuit's decisions in AstraZeneca v. Apotex and Bayer v. Lupin, and discuss how these decisions will influence the future of patent prosecution and litigation.

The registration fee for the webinar is $120 (government and academic rates are available upon request).  Those interested in registering for the webinar can do so here.

AALS 2012 MidYear Meeting

The Association of American Law Schools (AALS) will be holding its 2012 MidYear Meeting on June 8-12, 2012 Berkeley, CA.  The MidYear Meeting will consist of two workshops, the latter entitled: "Workshop on When Technology Disrupts Law: How Do IP, Internet and Bio Law Adapt?"  The latter workshop will take place from June 10-12.  According to the meeting brochure, the workshop is directed to law teachers interested in intellectual property, internet, and bio law, and will offer presentations on the following topics:

• Keynote: User Innovation as a Challenge to Intellectual Property Paradigms
• Open Innovation Panel
• Commercializing Open Innovations
• Open Biology
• Updating the Regulatory Infrastructure: Domestic Regulatory
• Teaching Biotech
• Gene Patenting Debate -- featuring Patent Docs author Dr. Kevin Noonan of McDonnell, Boehnen, Hulbert & Berghoff LLP and Daniel Ravicher of the Benjamin N. Cardozo School of Law, Yeshiva University.
• Biotech Patents: A Perspective from a Biotech Executive Who Has Been a Venture Capitalist
• Big Data / Evolutionary / Genomics

A schedule for the latter workshop can be found here and a brochure for the workshop, including a program and list of speakers, can be found here.

The registration fee for the workshop is $545 (faculty of member and fee-paid schools) or $645 (faculty of non fee-paid law schools) (discounts are available for those registering by May 3).  Those interested in registering for the workshop can do so here.

(Once Again) It Ain't Necessarily So

By Kevin E. Noonan --

A large part of the debate on patenting genetic diagnostic method and isolated genes has revolved around the effects of such patents on what is loosely termed "personalized medicine."  Personalized medicine can be summarized as a dream/holy grail/GATTACA future of universal genetic information -- every infant having her genomic DNA sequence determined at birth and contained on a medical identity card, to determine what diseases she may get, what drugs she should not and even who she should or should not marry (or at least mate with).  It is the most recent of the promises of the biotechnology or genetic revolution, made possible (in theory) by the fruits of the Human Genome Project; advances in genomic sequencing technology (as described in The $1,000 Genome and elsewhere) have quickened the expectations surrounding the technology.  But many have begun to wonder why this genetic fruit is taking so long to ripen (see, for example, "How Bright Promise of Genetic Testing Fell Apart"), and a recent study published in Science Translational Medicine may provide some clues.

The article, entitled "The Predictive Capacity of Personal Genomic Sequencing," was published on April 2, 2012 by Nicholas Roberts, Kenneth Kinzler, Bert Vogelstein, and Victor Velculescu from the Howard Hughes Medical Institute at Johns Hopkins University Kimmel Cancer Center; Joshua Vogelstein from the Department of Neuroscience, Johns Hopkins University; and Giovanni Parmigiani from the Department of Biostatistics and Computational Biology, Dana Farber Cancer Center and the Department of Biostatistics, Harvard School of Public Health.  The paper presents the results of a bioinformatics study on monozygotic twin pairs, using whole genome sequencing (WGS) that was interrogated for 24 different diseases.  For 23 of the 24 diseases tested, the results were negative, i.e., uninformative results for 19 of the 24, with risk of 50-80% for disease as compared with the general population.  However, 90% of the tested individuals were alerted to "a clinically significant predisposition" to at least one disease thus reflecting a silver lining if not a rainbow from the data.

The paper notes that there is an estimate of three million sequence variants per person (K. A. Frazer et al.,  2009, "Human genetic variation and its contribution to complex traits," Nat. Rev. Genet. 10: 241-51); of these, thousands of genetic variants have been associated with human disease, including Mendelian traits (e.g., sickle cell anemia), SNPs (e.g., Huntington's s disease), or by genome-wide association studies (GWAS) (examples include familial pancreatic cancer and Miller syndrome).

The paper addresses the question of what the benefit of such information would be, defining "benefit" as "receiving information indicating that the risk of disease is increased or decreased to a degree that would alter an individual's lifestyle or medical management."  The authors recognize that it is impossible to assess these benefits generally, but monozygotic twins present the possibility to make this assessment:  as they have in many other instances, the identity of genetic information make it possible that diseases and other traits with a large genetic component should be experienced in common between twins:  "If one twin of the pair has a disease, then the probability of the other twin developing that disease is dependent on the genome whenever that disease has some genetic component."  However, the paper also notes that "[t]he general public does not appear to be aware that, despite their very similar height and appearance, monozygotic twins in general do not always develop or die from the same
maladies," citing Wong et al., 2005, "Phenotypic differences in genetically identical organisms: The epigenetic perspective," Hum. Mol. Genet. 14 Spec No 1, R11-R18, and "Identical Twins Not As Identical As Believed," ScienceDaily, reflecting a limitation in the predictive power of genetic disease assessment even between individuals having almost identical genetic complements.  (Interestingly, even monozygotic twins are not necessarily identical genetic copies of one another, there being copy number variants between them; Bruder et al., 2008, "Phenotypically concordant and discordant monozygotic twins display different DNA copy-number variation profiles," Am. J. Hum. Genet. 82: 763-71.)  The twin populations were selected from "the Swedish Twin Registry, Danish Twin Registry, Finnish Twin Cohort, Norwegian National Birth Registry and the National Academy of Science – National Research World War II Veteran Twins Registry."

The authors also define "heritability" as the difference between the incidence of disease in monozygotic twins compared with dizygotic twins, "reflect[ing] the average genetic contribution to disease" in the population of twins studied.  Averages not as informative as distributions in this regard, since a given average incidence of disease could reflect either "a small fraction of twin-pairs with genometypes [(i.e., a complete genomic DNA sequence from an individual)] conferring high genetic risk or a larger fraction of twin-pairs with genometypes conferring a moderate genetic risk."  This challenge is illustrated by an example:

Suppose a woman receives a whole-genome test result indicating that she has a 90% lifetime risk (the total risk over her entire life) of developing breast cancer.  She may decide to have a prophylactic double mastectomy to prevent this outcome.  Similarly, if the test indicated an 80% or even a 50% lifetime risk of developing breast cancer, she may consider mastectomy.  On the other hand, if the test indicated only a 14% risk of developing breast cancer, then mastectomies would be considered by very few women, given that most women today do not opt for prophylactic mastectomies even though the lifetime risk of developing breast cancer in the general population is 12%.

The authors adopt the threshold of a "positive predictive value" of 10%, meaning that 10% of patients with a "positive" test result are expected to develop a disease, according to Clarke-Pearson, 2009, "Clinical practice. Screening for ovarian cancer," N. Engl. J. Med. 361: 170-77.  However, for several diseases, including chronic fatigue syndrome, gastro-esophageal reflux disorder, coronary heart disease-related death and general dystocia, this threshold is inappropriate due in part to the prevalence of these diseases in the population; for these diseases the threshold is a two-fold higher risk of disease compared with the general population.  In addition to these diseases, the study assessed the risk for coronary artery disease, stroke, cancer (bladder, breast, colorectal, lung, leukemia, ovarian, pancreatic, prostate and stomach), thyroid autoimmunity, diabetes (types 1 and 2), Alzheimer's disease, dementia, Parkinson's disease, irritable bowel syndrome, pelvic organ prolapse, and stress urinary incontinence.

The bulk of paper set forth a mathematical treatment of these biostatistics that is beyond the scope of the discussion here; the results, on the other hand, are informative.  These include:

•  "The fraction of patients that would receive a positive test varies widely from disease to disease."
•  "The majority of patients (>50%) who would ultimately develop 13 of the 27 disease categories would not test positive, even in the best-case scenario."
•  "There were four disease categories -- thyroid autoimmunity, type I diabetes, Alzheimer's disease, and coronary heart disease-related deaths in males -- for which genetic tests might identify more than 75% of the patients who ultimately develop the disease."
•  "The fraction of individuals in the population who would receive positive test results for each disease is small."
•  For 22 of the 27 disease categories studied, "a negative test would not indicate a risk that is less than half that in the general population, even in the best-case scenario" (which is probably not sufficient to warrant changes in behavior, lifestyle, or preventative medical practices).
•  An exception is Alzheimer's disease, where a negative test "could indicate as little as a ~12% relative risk of disease compared to the entire twin cohort . . . .  Knowledge of such a reduced risk might be comforting and relieve anxiety, particularly to those with a family history of Alzheimer's disease."
•  ">95% of men and >90% of women could receive at least one positive test result."
•  Many of these results represent the best-case scenarios and thus the true benefits of genetic disease testing may be overestimated.

The authors' conclusions are a dose of cold water on the hopes and expectations of many in the field (and even more laypersons outside the field, including policymakers, judges, and even Supreme Court justices):

[O]ur results suggest that genetic testing, at its best, will not be the dominant determinant of patient care and will not be a substitute for preventative medicine strategies incorporating routine checkups and risk management based on the history, physical status and life style of the patient.

The authors best state the significance of an accurate assessment of the likelihood of predictive genetic testing:  "Recognition of these merits and limits [for genetic diagnostic testing] can be useful to consumers, researchers, and industry, as they can minimize unrealistic expectations and foster fruitful investigations."  These are words policymakers should no doubt heed when considering changes to established patent and other policies based on perhaps unrealistic prospects for a brighter genetic future.

Court Report - Part III

By Sherri Oslick --

 In an effort to catch up with recently filed biotech and pharma cases, Patent Docs presents this additional installment of Court Report. 

Depomed Inc. et al. v. Watson Laboratories Inc. Florida et al.
1:12-cv-00492; filed April 18, 2012 in the District Court of Delaware

• Plaintiffs:  Depomed Inc.; Valeant International (Barbados) SRL
• Defendants:  Watson Laboratories Inc. Florida; Watson Pharmaceuticals Inc.; Watson Pharma Inc.

Infringement of U.S. Patent Nos. 6,488,962 ("Tablet Shapes to Enhance Gastric Retention of Swellable Controlled-Release Oral Dosage Forms, issued December 3, 2002) and 7,780,987 ("Controlled Release Dosage Forms," issued August 24, 2010) following a Paragraph IV certification as part of Watson's filing of an ANDA to manufacture a generic version of Depomed's Glumetza® (metformin hydrochloride extended release tablets, used to improve glycemic control in adults with type 2 diabetes mellitus).  View the complaint here.

Eli Lilly and Company v. Apotex Inc. et al.
1:12-cv-00499; filed April 17, 2012 in the Southern District of Indiana

• Plaintiff:  Eli Lilly and Company
• Defendants:  Apotex Inc.; Apotex Corp.

Infringement of U.S. Patent No. 7,772,209 ("Novel Antifolate Combination Therapies," issued August 10, 2010) following a Paragraph IV certification as part of Apotex's filing of an ANDA to manufacture a generic version of Lilly's Alimta® (pemetrexed for injection, used to treat malignant pleural mesothelioma and locally advanced or metastatic non-small cell lung cancer).  View the complaint here.

OSI Pharmaceuticals LLC et al. v. Roxane Laboratories Inc.
1:12-cv-00465; filed April 13, 2012 in the District Court of Delaware

• Plaintiffs:  OSI Pharmaceuticals LLC; Pfizer Inc.; Genentech Inc.
• Defendant:  Roxane Laboratories Inc.

Infringement of U.S. Patent Nos. RE41,065 ("Alkynyl and Azido-Substituted 4-Anilinoquinazoline," issued May 5, 1998), 6,900,221 ("Stable Polymorph on N-(3-Ethynylpheny1)-6, 7-Bis(2MethoxyEthoxy)-4-Quinazolinamine Hydrochloride, Methods of Production, and Pharmaceutical Uses Thereof," issued May 31, 2005), and 7,087,613 ("Treating Abnormal Cell Growth With A Stable Polymorph on N-(3-Ethynylpheny1)-6,7-Bis(2MethoxyEthoxy)-4-Quinazolinamine Hydrochloride," issued August 8, 2006) following a Paragraph IV certification as part of Roxane's filing of an ANDA to manufacture a generic version of OSI's Tarceva® (erlotinib, used to treat non-small cell lung cancer and advanced pancreatic cancer).  View the complaint here.

Pfizer Inc. et al. v. Dr. Reddy's Laboratories Ltd. et al.
1:12-cv-00467; filed April 13, 2012 in the District Court of Delaware

• Plaintiffs:  Pfizer Inc.; Pfizer Pharmaceuticals LLC; Pfizer Ireland Pharmaceuticals; Pfizer Ltd.; CP Pharmaceuticals International CV
• Defendants:  Dr. Reddy's Laboratories Ltd.; Dr. Reddy's Laboratories Inc.

Infringement of U.S. Patent No. 6,455,574 ("Therapeutic Combination," issued September 24, 2002) following a Paragraph IV certification as part of Dr. Reddy's filing of an ANDA to manufacture a generic version of Pfizer's Caduet® (atorvastatin calcium -- the active ingredient in Lipitor® -- and amlodipine besylate -- the active ingredient in Norvasc® -- used to treat high cholesterol in combination with treating hypertension, angina, and/or coronary artery disease).  View the complaint here.

Purdue Pharma L.P. et al. v. Mylan Pharmaceuticals Inc. et al.
1:12-cv-02959; filed April 13, 2012 in the Southern District of New York

• Plaintiffs:  Purdue Pharma L.P.; The P.F. Laboratories, Inc.; Purdue Pharmaceuticals L.P.; Rhodes Technologies
• Defendants:  Mylan Pharmaceuticals Inc.; Mylan Inc.

Infringement of U.S. Patent Nos. 7,674,799 ("Oxycodone Hydrochloride Having Less Than 25 PPM 14-Hydroxycodeinone," issued March 9, 2010), 7,674,800 (same title, issued March 9, 2010), and 7,683,072 (same title, issued March 23, 2010) following a Paragraph IV certification as part of Mylan's filing of an ANDA to manufacture a generic version of Purdue Pharma's OxyContin® (controlled release oxycodone hydrochloride, used to treat pain).  View the complaint here.

Allergan, Inc. v. Sandoz, Inc. et al.
2:12-cv-00207; filed April 13, 2012 in the Eastern District of Texas

• Plaintiff:  Allergan, Inc.
• Defendants:  Sandoz, Inc.; Alcon Laboratories, Inc.; Alcon Research, Ltd.; Falcon Pharmaceuticals, Ltd.; Apotex, Inc.; Apotex Corp.; Watson Laboratories, Inc.

Infringement of U.S. Patent No. 8,133,890 ("Combination of Brimonidine and Timolol for Topical Ophthalmic Use," issued March 13, 2012) in conjunction with defendants' filing of an ANDA to manufacture a generic version of Allergan's Combigan® (brimonidine tartrate/timolol maleate ophthalmic solution, used to treat glaucoma).  View the complaint here.

BIO Comments on FDA Biosimilars Guidance: Demand More Testing, Permit Fewer Differences

By James DeGiulio --

In February, the U.S. Food and Drug Administration published three draft guidance documents on biosimilars and the abbreviated biosimilar approval pathway created by the Biologics Price Competition and Innovation Act of 2009 ("ABLA pathway") (see "FDA Publishes Draft Guidelines for Biosimilar Product Development").  The FDA provided a 60 day period for stakeholders to provide comments on the guidances, opening a docket for the each of the three draft guidance documents, FDA-2011-D-0602 (Quality Considerations), FDA-2011-D-0605 (Scientific Considerations), and FDA-2011-D-0611 (Questions and Answers).  The FDA received a submissions from a wide array of stakeholders, including the Biotechnology Industry Organization (BIO), which published its comments on BIO's website on April 16.  BIO filed a separate comments document for each of the three guidance documents, first introducing the organization and thanking the FDA for the opportunity to comment on the guidances before launching into the group's positions.  Both the Scientific Consideration and Quality Considerations comments contain an index that proposes line-by-line changes to the FDA guidance language, which will not be discussed here.

As an organization representing many innovators with currently available reference products (RP), BIO advocates that the FDA expand the requirements to prove biosimilarity significantly beyond the minimum tests required in the statute, and generally recommends policies that make it more difficult to obtain ABLA approval.  Business motives aside, BIO presents a persuasive and scientifically sound justification for each of its positions on how the ABLA pathway should be administered moving forwad.  Biosimilar applicants would be hard-pressed to argue that the minimum study requirements listed in the statute provide all the data needed to establish a safe and efficacious biosimilar product in most situations.  Overall, BIO commends the FDA for its first effort -- but makes it clear that the U.S. biotech industry still needs substantially more guidance before the ABLA pathway can be endorsed as clear and safe.  There can be no disagreement that the FDA is tasked with challenging policy decisions:  ensuring patient safety with sufficient biosimilarity testing, yet somehow keeping the costs of biosimilar approval low enough to encourage applicants to choose to file an ABLA over a BLA, which currently represents an infinitely more predictable approval route.

Scientific Considerations Guidance

The first and most lengthy of BIO's comments covers the Scientific Considerations guidance, and was authored by Kelly Lai, the Director of Science and Regulatory Affairs at BIO.  To open the comment, BIO notes its extensive experience with biosimilar products, referencing the group's benchmark document BIO Principles on Follow-On Biologics, which was sent to key legislators in 2007 and emphasizes the required balance between patient safety and incentives to innovate that is required of a biosimilar approval pathway.  Of note, BIO also requests that FDA publish future biologic product-specific guidances that include specific statistics and/or ranges acceptable for a determination of biosimilarity.  This is currently the model followed under the European Medicines Agency (EMA) biosimilar framework, which has published several product guidances, including most recently on monoclonal antibodies.

BIO recognizes the need for distinguishing biologics and biosimilars from traditional small molecule generic drugs, both in terms of complexity and the quantity of clinical data required for approval.  Of course, noting particularly that they are merely similar, not identical, like generic small molecule drugs.  The FDA has introduced a number of distinguishing factors proposed by BIO in previous agency submissions, but BIO lists additional key issues that must be evaluated during biosimilar approval.

The group voices several concerns with the FDA guidance as written.  Of particular concern to BIO is the use of the word "should" throughout the document.  Especially in the context of demonstrating biosimilarity using analytical or animal/human clinical studies, the FDA generally uses the word "should" to indicate that something is suggested or recommended, but not required.  BIO takes issue with the use of this word where certain studies are fundamental and/or necessary for a determination of biosimilarity, as it falls short of conveying that these studies are required -- BIO prefers "is expected to" or "will need to," such as the key phrase:  "It is expected that the expression construct for a proposed biosimilar product will encode the same primary amino acid sequence as its reference product."

BIO asserts that the language of the guidance is inconsistent with the statute, in that it implies that clinical trials are only a "residual requirement" that is triggered if there are gaps in the analytical, PK/PD, and safety results.  Instead, BIO advocates for a more extensive clinical trial requirement for biosimilarity, requesting that the FDA necessarily require several additional studies beyond the statutory minimum, including animal toxicity studies and human clinical trials evaluating safety and efficacy.  BIO further advocates that the minimum clinical trials required by the statute, human PK/PD and immunogenicity human trials, be enhanced.  Due to the multitude of factors affecting immunogenicity, the trial must be of sufficient duration to assess the effects of immunogenicity on PK, biodistribution, safety, and efficacy, and a significantly laborious pharmacovigilence for all biosimilars, that must extend into the post-marketing period for at least one year (more for certain products).

The organization is extremely wary of the FDA's allowance of extrapolation of data to other indications and patient populations by the biosimilar applicant.  BIO suggests a "cautious approach," where the FDA accepts this type of data only if:  (1) the mechanisms and sites of action for both indications are very well understood; (2) there are no significant differences between PK and bio-distribution in patient populations; and (3) the clinical study in the original indication is highly sensitive to differences that may emerge from the new indication, including immunogenicity.  Even if these criteria are met, BIO suggests that a confirmatory clinical study be conducted on PK/PD and immunogenicity for all indications.  Further, the FDA's requirement that only "most sensitive" population be tested is insufficient, for defining such a population will often be impossible, especially if indications affect different organ systems in the human body.  Further, at times, one population may display the most immunogenicity, while another population shows the most efficacy.  Therefore, a single population study fails to address these two important safety issues.

A related issue is the FDA's explicit allowance of biosimilar approval for subsets of route of administration, presentations, and conditions of use.  BIO's main point here is prominent and efficient labeling of the biosimilar product, with an emphasis on the differences between the biosimilar and the RP.  Of course, an emphasis on the differences in the product will have the effect of discouraging patient switching.  However, the point is well taken with regard to a lack of identity of these various product properties, and the FDA may avoid a finding of interchangeability of product property identity is lacking.  As a good example of the multitude of scenarios the FDA has yet to identify, BIO asks for clarification as to what level of supplementation will be required to add new indications to the ABLA applications.  In particular, the scenario where the BLA holder secures approval for a new indication for the RP, and the biosimilar applicant wishes to add that new indication to its label.

Quality Considerations Guidance

The second comments document on Quality Considerations guidance was authored by Andrew J. Emmett, Managing Director of Science and Regulatory Affairs at BIO.  BIO points out that all biosimilars must be evaluated in the context of all that is in the public domain regarding aspects of the manufacturing process.  However, BIO asks for additional clarification regarding the FDA's scientific and technical expectations, including clarity regarding the term "fingerprint-like analysis."  Indeed, this term is repeated throughout the guidance, referencing mysterious "additional product attributes" and their correlation to clinical safety and efficacy, consistency in manufacture, or some other meaningful feature for establishing biosimilarity.  The "fingerprint-like analysis" approach is discussed by the FDA in (slightly) greater detail in Kozlowski et al. in the New England Journal of Medicine, but the term remains vague at best (see "FDA Looks to Multiple Sources, Including EMA Guidelines, in Developing Biosimilar Approval Standards").  The origin of this approach appears to be the EMA monoclonal antibody guidelines, although how it translates to overall biosimilarity evaluation remains to be seen.

An interesting (albeit not unexpected) position from BIO is that any intentional differences in host cell type, primary structure, formulation, or immediate package and those of the RP should disqualify the applicant for ABLA filing.  BIO advocates that any applicants introducing avoidable differences between the two products must seek approval using a BLA, otherwise the biosimilar applicant is unethically introducing the risk of undetected and clinically significant adverse events.  If differences between the biosimilar and the RP can be avoided, this is the best approach to control the proposed biosimilar's safety, effectiveness, and immunogenicity profiles.  With these unavoidable differences, BIO recommends placing the burden on the ABLA filer to affirmatively show that any design differences do not to result in a clinically meaningful difference between the biosimilar and reference product, which should require at least one clinical study.  This seems reasonable; biosimilar applicants certainly will expect that more differences between their product and the RP will lead to additional testing and cost.  Indeed, changes in formulation excipients, equipment, raw materials used in the manufacturing process for the active ingredient, the container closure system and the cold chain distribution system could potentially have an impact on safety and/or efficacy of the biologic.  BIO cited patient safety for this rigorous standard, which is valid, but an unmentioned benefit is the closer to identical the biosimilar product is to the RP, the likelihood improves that the biosimilar product is covered by one or more BLA holder patents.

Questions and Answers Regarding Implementation

The third comments document on the Q&A Guidance was authored by Sandra J.P. Dennis, BIO Deputy General Counsel, and is the shareholder's chance to respond to the policy changes implemented by the FDA following the first round of public hearings.  The comments on the Q&A Guidance is organized by individual questions.  While many of the issues have been discussed under the Scientific and/or Quality Considerations, there are several key points raised in the third comments set.

BIO disputes the FDA's definition of "protein," which was added to the PHSA in order to consolidate approval of all "proteins" via BLAs; inclusion of this term also forecloses the filing of New Drug Applications (NDAs) for polypeptide products that are longer than 40 amino acids.  BIO criticizes this 40 amino acid cutoff as arbitrary, and instead advocates a more flexible standard, including more consideration of the presence of higher order structure.  BIO advances the same critique of the 100 amino acid cutoff for defining a "chemically synthesized polypeptide," which is excepted from BPCIA coverage.

A major topic of interest at the 2011 BIO International Convention seminar on biosimilars was the access of confidential information by the ABLA applicant and the BLA holders (see "Docs at BIO: Session on Patent Litigation Tactics and Strategies for Biosimilars").  In its comments, BIO requested explicit recognition from the FDA that certain information contained within the BLA, including manufacturing facilities, must be treated as confidential.  BIO generally disfavors the comparison of a prospective biosimilar to a non-U.S. licensed product, but in particular, it raises significant concerns over the confidentiality of RP manufacturing sites, in that this (non-public) information will be critical in determining whether it is appropriate to rely on studies involving a foreign comparator product.  BIO points out that several key points must be remedied with regard to confidentiality/trade secret protection during all ABLA reviews.  A non-exhaustive list includes:  (1) FDA's regulations on disclosure of BLA information must be updated for consistency with the BPCIA, for several provisions of a BLA become public immediately; (2) confidential commercial and trade secret information in a BLA must be protected from intentional or inadvertent use or disclosure; (3) an ABLA application must stand on its own, in that FDA approval of ABLA must be based upon ABLA data and "publicly-available information" (redacted BLA "action packages" published by FDA) regarding the RP; and (4) procedures must be adopted to assure proper review of ABLA and avoid potential disclosure or reliance upon the reference BLA.  BIO adamantly notes that the BPCIA does not authorize or permit reliance on non-public information regarding the reference BLA, and the FDA must ensure the ABLA is absent any reliance on non-public BLA information (such as from IND or biosimilar development meetings).

Finally, BIO suggests that the FDA should require biosimilar applicants to certify compliance with section 351(l)(2) of the PHSA, which requires the biosimilar applicant to timely provide the reference product sponsor with the ABLA and such other information that describes the process or processes used to manufacture the biosimilar product.  Should a biosimilar applicant seek to opt out of the certification notice provisions by failing to provide the required information, the FDA should adopt a policy that it will refuse to file the biosimilar application.

As discussed, BIO's comments have the effect of rendering ABLA approval more difficult, both for the safety of U.S. patients, and for the competitive advantage of its BLA holder innovator members.  Regardless of these business interests, and enhanced level of proof of safety and/or efficacy for ABLAs adds credibility to the FDA's determination of biosimilarity for these complex and potentially under-characterized therapeutics.  To support these comments, BIO intends to provide testimony at the FDA public hearing on the draft guidances scheduled for May 11, 2012.

For both sides of the story, Patent Docs will present an analysis of the comments and positions suggested by biosimilar developers in a future post.

Court Report - Part II

By Sherri Oslick --

 In an effort to catch up with recently filed biotech and pharma cases, Patent Docs presents this additional installment of Court Report. 

Purdue Pharma, L.P. et al. v. Varam, Inc. et al.
2:12-cv-01898; filed April 12, 2012 in the Eastern District of Pennsylvania

• Plaintiffs:  Purdue Pharma, L.P.; The P.F. Laboratories, Inc.; Purdue Pharmaceuticals L.P.; Rhodes Technologies
• Defendants:  Varam, Inc.; KVK-Tech, Inc.

Purdue Pharma L.P. et al. v. Varam, Inc. et al.
1:12-cv-02814; filed April 10, 2012 in the Southern District of New York

• Plaintiffs:  Purdue Pharma L.P.; The P.F. Laboratories, Inc.; Purdue Pharmaceuticals L.P.; Rhodes Technologies
• Defendants:  Varam, Inc.; KVK-Tech, Inc.

The complaints in these cases are substantially identical.  Infringement of U.S. Patent Nos. 5,508,042 ("Controlled Release Oxycodone Compositions," issued April 16, 1996), 7,674,799 ("Oxycodone Hydrochloride Having Less Than 25 PPM 14-Hydroxycodeinone," issued March 9, 2010), 7,674,800 (same title, issued March 9, 2010), and 7,683,072 (same title, issued March 23, 2010) following a Paragraph IV certification as part of Varam's filing of an ANDA to manufacture a generic version of Purdue Pharma's OxyContin® (controlled release oxycodone hydrochloride, used to treat pain).  View the SDNY complaint here.

UCB Inc. et al. v. Mallinckrodt Inc.
1:12-cv-00463; filed April 12, 2012 in the District Court of Delaware

• Plaintiffs:  UCB Inc.; UCB Manufacturing Inc.
• Defendant:  Mallinckrodt Inc.

Infringement of U.S. Patent No. 6,344,215 ("Methylphenidate Modified Release Formulations," issued February 5, 2005) following a paragraph IV certification as part of Mallinckrodt's filing of an ANDA to manufacture a generic version of UCB's Metadate CD® (methylphenidate hydrochloride, used to treat attention deficit hyperactivity disorder).  View the complaint here.

Astrazeneca Pharmaceuticals LP et al. v. Intellipharmaceuticals Corp. et al.
1:12-cv-02855; filed April 11, 2012 in the Southern District of New York

• Plaintiffs:  Astrazeneca Pharmaceuticals LP; Astrazeneca UK Ltd.
• Defendants:  Intellipharmaceuticals Corp.; Intellipharmaceuticals International Inc.

Infringement of U.S. Patent No. 5,948,437 ("Pharmaceutical Compositions Using Thiazepine," issued September 7, 1999) following a Paragraph IV certification as part of Intellipharmaceuticals' filing of an ANDA to manufacture a generic version of AstraZeneca's Seroquel® XR (quetiapine fumarate, used to treat schizophrenia and bipolar disorder).  View the complaint here.

Abbott Laboratories v. Roxane Laboratories Inc.
1:12-cv-00457; filed April 10, 2012 in the District Court of Delaware

Infringement of U.S. Patent Nos. 7,148,359 ("Polymorph of a Pharmaceutical," issued December 12, 2006), 7,364,752 ("Solid Dispersion Pharamaceutical Formulations," issued April 29, 2008), and 5,648,497 ("Retroviral Protease Inhibiting Compounds," issued July 15, 1997) following a Paragraph IV certification as part of Roxane's filing of an ANDA to manufacture a generic version of Abbott's Norvir® (ritonavir, used to treat human immunodeficiency virus (HIV) infection).  View the complaint here.

Depomed, Inc. v. Impax Laboratories, Inc. et al.
3:12-cv-02154; filed April 10, 2012 in the District Court of New Jersey

• Plaintiff:  Depomed, Inc.
• Defendants:  Impax Laboratories, Inc.; Par Pharmaceutical Companies, Inc.; Par Pharmaceutical, Inc.

Infringement of U.S. Patent Nos. 6,340,475 ("Extending the Duration of Drug Release Within the Stomach During the Fed Mode," issued January 22, 2002), 6,488,962 ("Tablet Shapes To Enhance Gastric Retention of Swellable Controlled-Release Oral Dosage Forms," issued December 3, 2002), 6,635,280 ("Extending the Duration of Drug Release Within the Stomach During the Fed Mode," issued October 21, 2003), 6,723,340 ("Optimal Polymer Mixtures for Gastric Retentive Tablets," issued April 20, 2004), 7,438,927 ("Methods of Treatment Using a Gastric Retained Gabapentin Dosage," issued October 21, 2008) and 7,731,989 ("Gastric Retained Gabapentin Dosage Form," issued June 8, 2010) following a Paragraph IV certification as part of defendants' filing of an ANDA to manufacture a generic version of Depomed's Gralise® (gabapentin, used for the management of postherpetic neuralgia).  View the complaint here.

Roxane Laboratories, Inc. v. Abbott Laboratories
2:12-cv-00312; filed April 10, 2012 in the Southern District of Ohio

Declaratory judgment of invalidity and noninfringement of U.S. Patent Nos. 7,148,359 ("Polymorph of a Pharmaceutical," issued December 12, 2006) and 7,364,752 ("Solid Dispersion Pharamaceutical Formulations," issued April 29, 2008) in conjunction with Roxane's filing of an ANDA to manufacture a generic version of Abbott's Norvir® (ritonavir, used to treat human immunodeficiency virus (HIV) infection).  View the complaint here.

Opportunity to Reform Existing PTO Regulations and Ease Patent Application Paperwork Burden

    By David Boundy --

The Patent Office recently requested comment on the paperwork that applicants submit during post-filing, pre-allowance patent prosecution (Patent Processing (Updating), 77 Fed. Reg. 16813, Mar. 22, 2012).  This is a highly significant opportunity to seek reform of problematic PTO regulations, one that only comes once every three years.  This comment period gives the public access to an oversight officer outside the PTO whose job is to help reduce costs and unnecessary paperwork burden associated with PTO regulations or MPEP guidance.  The PTO has invited the public to challenge long-standing rules, and to seek reform.

The Paperwork Reduction Act is one of the key administrative law statutes that governs PTO rule making, along with the Administrative Procedure Act and several others.  A quick tutorial on the Act is at the bottom of this article -- but before we get there, let's look at the subject matter of this comment period.

This comment period asks for comments on regulations or MPEP provisions relating to post-filing prosecutions that increase paperwork burden unnecessarily:

• regulations or MPEP guidance that compel you to expend more time than required by statute, or for no observable reason
• regulations or MPEP guidance that increase burden because of ambiguity
• regulations or MPEP guidance that increase burden because they appear to be inconsistent with the patent statute or Administrative Procedure Act

Congress gave you this opportunity to challenge such regulations and guidance, if your concern slots into one of the kinds of avoidable paperwork that the Act covers.

The Notice itself asks the public to comment on several questions.  To elaborate the questions, here are the kinds of issues that have resulted in significant changes to PTO regulations in the past:

1.  Do the PTO's regulations and guidance minimize paperwork burden?  How can they be modified to do so?  Under the Paperwork Reduction Act, agencies are "required to minimize the burden on the public to the extent practicable."¹  Are the current rules structured to minimize the burden of the paperwork it requires from you?  How could the regulations be improved to reduce burden, or to improve clarity or utility?  For example:

• Are there MPEP requirements that go above fair interpretation of the statute or 37 C.F.R.?  For example, both 35 U.S.C. § 121 and 37 C.F.R. § 1.141 authorize the PTO to restrict "independent and distinct" inventions, but MPEP Chapter 800 encourages examiners to restrict inventions that are "independent or distinct."  The PTO can't override the statute via the MPEP.  When the PTO does so to impose more paperwork burden than authorized by statute, the PTO violates the Paperwork Reduction Act.  (See below for the "public protection" provision, and unenforceability of regulatory content of the MPEP.)
• Are there "unwritten rules" that were never validly promulgated, but that the PTO enforces anyway?  Examples include memoranda of April 2007 and January 2010 on restriction and election of species that were never promulgated through valid rule making procedure, and that have been obsoleted by subsequent revisions of the MPEP, but that the PTO continues to enforce.
• Is there a 37 C.F.R. regulation that either has no statutory authorization, or requires more from you than the statute does?  For example, 35 U.S.C. § 113 only authorizes the PTO to require drawings "where necessary for the understanding of the subject matter."  However, 37 C.F.R. § 1.83(a) states "The drawing in a nonprovisional application must show every feature of the invention specified in the claims."  The PTO can't ask more from you than the statute does.
• Are there regulations that are gratuitously burdensome?  37 C.F.R. § 1.111(b), until 2004, permitted you to file a supplementary amendment up until the time it would "unduly interfere with an Office action being prepared."²  In 2004, the Office amended § 111 to cap your right to amend at the six month statutory deadline,³ no matter whether it affected PTO efficiency or not.  The PTO's stated reasons violate the Paperwork Reduction Act -- agencies cannot regulate in their self-interest.

2.  Burden estimates:  Are the PTO's burden estimates for various tasks reasonably correct?  The estimate must account for all time spent on a task, including reviewing instructions, gathering information, thinking and planning, and filling out a paper, and filing it.  If you are skeptical of either the PTO's numbers or estimation methodology, you are invited to comment.  Among the PTO's current estimates are the following:

• For a statutory disclaimer or terminal disclaimer, all legal research, investigating facts, evaluating options, consulting with the client, making the decision, filling out the form, and filing it takes (on average) 12 minutes.
• Evaluating a final Office Action to decide whether to appeal or RCE, starting down one path and changing your mind, preparing the form, and filing it, takes (on average) 12 minutes.
• Preparing an IDS, on average, takes 10 hours
• The PTO is not permitted to rely on speculation, guesswork, or hope for its estimates.  The PTO is required to have "objective support" for its estimates, including a duty to "consult with the public" before publishing these estimates.⁴  "The USPTO estimates . . ." is not a legally-sufficient basis for estimation of burden.

Scope of the request for comment

This comment period covers essentially everything that you file in a patent prosecution after the initial filing of an application and recording of an assignment, and before appeal or allowance:

• replies to restriction requirements and election of species requirements
• replies to Office Actions on the merits
• most petitions (a few exceptions are noted below)
• notices of appeal and pre-appeals
• Information Disclosure Statements and prior art search

This comment period does not cover the following phases of prosecution, which are broken out in separate Paperwork categories:

• initial filings of applications, declarations, and the like⁵
• sequence listings⁶ and biological deposits⁷
• Power of Attorney⁸
• PCT international stage⁹
• reexamination filings¹⁰

The Paperwork Reduction Act, in overview

The Paperwork Reduction Act (44 U.S.C. § 3501 to 3519, especially §§ 3506, 3507, and 3512), and regulations issued by the Executive Office of the President for "controlling paperwork burdens on the public" (5 C.F.R. Part 1320), bar the PTO from requiring applicants to submit information that:

• is unnecessary for the proper performance of the functions of the agency;¹¹
• is "unnecessarily duplicative" of "information otherwise reasonably accessible to the agency";¹²
• has poor or no "practical utility" -- that is, an agency may only collect information that has "actual, not merely the theoretical or potential, usefulness . . . to or for an agency, taking into account its accuracy, validity, adequacy, and reliability, and the agency's ability to process the information it collects . . . in a useful and timely fashion";¹³
• is of poor quality¹⁴ or clarity;
• is more burdensome than necessary on those who are to respond -- the PTO must "[take] every reasonable step to ensure that the proposed collection of information . . . is the least burdensome necessary."¹⁵
• regulations must be "written using plain, coherent, and unambiguous terminology."¹⁶

The Paperwork Reduction Act is administered by the Office of Management and Budget within the Executive Office of the President.  Each agency must seek OMB clearance of any regulation that imposes paperwork burden; if OMB denies clearance, the agency cannot enforce the regulation.^17,18

Note that the Paperwork Reduction Act does not control statutes -- if Congress says you have to submit information to the PTO, or the Federal Circuit's inequitable conduct law requires submission of information of limited relevance, then the Paperwork Reduction Act provides no relief from those requirements.  However, if the PTO imposes regulations for form of the information to be submitted, and those regulations violate any of the bullet points above, then the Paperwork Reduction Act gives you a right to request amendment to the regulation.

The PTO has to obtain re-approval for these items every three years.  Thus, this review gives the public an opportunity to propose ways to reduce the burden and to bring to the PTO's attention any violations of the Paperwork Reduction Act, and to request amendment to the regulations that would bring the PTO into compliance with the Act.  Indeed, the PTO's Federal Register Notice specifically asks you to comment on "ways to minimize the burden of the collection of information," either by revising the regulation or by revising procedures for submission (e.g., electronic filing), and you should take the PTO up on its invitation.

How and where you should send your comments

There is no set form for a comment to the PTO; an email or letter works just fine.  You can find examples on OMB's web page for the 2008 Appeal Rules.¹⁹  Comments should be submitted to the PTO by May 21, 2012 (though a couple days delay is usually tolerated, especially if you send an email by May 21 to indicate that your comments will follow in a few days), to:

• By email to InformationCollection@uspto.gov with "0651–0031 comment" in the subject line of the message
• By fax to 571–273–0112, marked to the attention of Susan K. Fawcett
• By mail to Susan K. Fawcett, Records Officer, Office of the Chief Information Officer, U.S. Patent and Trademark Office, P.O. Box 1450, Alexandria, VA 22313–1450

If you have any questions, please phone me at 212-294-7848 or email me at DBoundy [at] Cantor [dotcom].

David Boundy (at left) is Vice President and Assistant General Counsel for Intellectual Property at a New York brokerage and investment banking firm.  In 2008, David led the teams that made presentations to the Office of Management and Budget showing Paperwork Reduction Act violations for the Continuations, 5/25 Claims, IDS, Markush, and Appeal rules.  OMB either directed PTO to withdraw its request for clearance, or withheld approval, for each of these regulations.

_________________________________________

¹  Dole v. United Steelworkers of America, 494 U.S. 26, 32 (U.S. Sup. Ct. 1990).
²  See http://web.archive.org/web/20041101225636/http://www.uspto.gov/web/offices/pac/mpep/documents/appxr_1_111.htm.
³  U.S. Patent & Trademark Office, Changes To Support Implementation of the United States Patent and Trademark Office 21st Century Strategic Plan; Final Rule, 69 Fed. Reg. 56481, 56516-17, http://www.gpo.gov/fdsys/pkg/FR-2004-09-21/pdf/04-20936.pdf (Sept. 21, 2004).
⁴  44 U.S.C. § 3506(c)(2)(A) and § 3506(c)(1)(A)(iv); 5 C.F.R. § 1320.8(a)(4) and (d)(1).
⁵  http://www.reginfo.gov/public/do/PRAOMBHistory?ombControlNumber=0651-0031
⁶  http://www.reginfo.gov/public/do/PRAOMBHistory?ombControlNumber=0651-0024
⁷  http://www.reginfo.gov/public/do/PRAOMBHistory?ombControlNumber=0651-0022
⁸  http://www.reginfo.gov/public/do/PRAOMBHistory?ombControlNumber=0651-0035
⁹  http://www.reginfo.gov/public/do/PRAOMBHistory?ombControlNumber=0651-0021
¹⁰  http://www.reginfo.gov/public/do/PRAOMBHistory?ombControlNumber=0651-0064
¹¹  44 U.S.C. § 3506(c)(3)(A) and 5 C.F.R. § 1320.5(d)(1)(i) ("To obtain OMB approval of a collection of information, an agency shall demonstrate that it has taken every reasonable step to ensure that the proposed collection of information: (i) Is the least burdensome necessary for the proper performance of the agency's functions. . .").
¹²  44 U.S.C. § 3506(c)(3)(B) and 5 C.F.R. § 1320.5(d)(1)(ii).
¹³  44 U.S.C. § 3502(11) and 5 C.F.R. § 1320.3(l)
¹⁴  Information "quality" is defined in OMB's information quality guidelines, 67 Fed.Reg. 8451-60, http://www.whitehouse.gov/omb/fedreg_final_information_quality_guidelines (Feb. 22, 2002), and PTO's information quality guidelines, 67 Fed.Reg. 22052, http://www.uspto.gov/products/cis/infoqualityguide.jsp (May 2, 2002).
¹⁵  44 U.S.C. § 3506(c)(2)(A)(iv) and 5 C.F.R. § 1320.5(d)(1)(i).
¹⁶  44 U.S.C. § 3506(c)(3)(D) and 5 C.F.R. § 1320.9(d).
¹⁷  44 U.S.C. § 3512 and 5 C.F.R. § 1320.6.
¹⁸  http://www.reginfo.gov/public/do/DownloadDocument?documentID=44055&version=2 (In January 2008, "At the direction of OMB" the PTO removed the Continuations, Claims, and IDS rules from its requests for clearance at OMB.  At the time, the Tafas case was in briefing for summary judgment.  The PTO allowed Tafas to grind on for another 18 months before this information was made public.
¹⁹  The 2008 appeal rules were stayed on the day they were to go into effect in December 2008, because those letters convinced OMB to withhold approval under the Paperwork Reduction Act.

Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S (2012)

By Kevin E. Noonan --

On April 17th, the Supreme Court overturned a Federal Circuit decision construing statutory language involving the 2003 Medicare Prescription Drug Improvement and Modernization Act, which amended the 1984 Drug Price Competition and Patent Term Restoration Act (colloquially known as the Hatch-Waxman Act).  The decision was certainly not a surprise, to put it mildly; indeed, the surprise is when the Court affirms a Federal Circuit decision.  But that doesn't mean the Court is wrong, it just reflects the differences in the way the two appellate courts view the world and their respective places in it.

The statutory provisions at issue involve the requirements for listing patents claiming drug products or their uses in the Orange Book.  The statute requires an innovator and approved New Drug Application (NDA) holder to identify these patents by patent number and expiration date.  For patents claiming uses (more properly, methods of use) of a regulated drug, the FDA proscribes "use codes" which are published in the Orange Book as well.

For a use not covered by an Orange Book listed patent, a generic drug manufacturer who files an Abbreviated New Drug Application (ANDA) must submit a proposed label for the unpatented use as well as a statement under 21 U.S.C. § 355(j)(2)(A)(viii) (a "Section viii" statement) that the use does not infringe any listed patent.  Approval of the ANDA requires that the proposed label does not overlap (to any extent) any patented method (termed a "carve-out").

As part of the litigation provisions of the Hatch-Waxman Act, an ANDA filer can file a counterclaim in ANDA litigation that challenges the accuracy of the patent information submitted by the innovator, inter alia, that the patent doesn't claim an approved method for using the drug (which is defined by the use codes and the innovator drug label):

[The ANDA] applicant may assert a counterclaim seeking an order requiring the holder to correct or delete the patent information submitted by the holder under subsection (b) or (c) of this section on the ground that the patent does not claim either--

    (aa) the drug for which the application was approved; or
    (bb) an approved method of using the drug.

21 U.S.C. § 355(j)(5)(c)(ii)(I)

The case involves Novo Nordisk's repaglinide drug product marketed as PRANDIN®.  Novo listed two patents in the Orange Book associated with this drug:  Reissue Patent No. RE37,035, which claims the repaglinide drug product itself and expired March 14, 2009, and U.S. Patent No. 6,677,358, which claims the method of using repaglinide in combination with metformin and patent expires on June 12, 2018.  There are two other approved uses for PRANDIN®:  as monotherapy and in combination with thiazolidinediones (TZD's), but neither of these indications is claimed in any Orange Book listed patent.  All indications are for treating Type 2 (adult-onset) diabetes.

Caraco filed an ANDA for generic repaglinide having a Paragraph III certification regarding the '035 patent and a Paragraph IV certification for the '358 patent, the latter leading to ANDA litigation pursuant to 35 U.S.C. § 271(e)(2).  During the litigation, Caraco stipulated in that action that its ANDA would infringe the '358 patent if it included a label describing the combination of repaglinide and metformin, at the same time submitting an amended ANDA with a Paragraph IV certification and a Section viii statement that its ANDA would not seek approval for the repaglinide + metformin combination.  The "carve-out" label was acceptable to FDA.

However, at that time the FDA changed the use code associated with Novo's PRANDIN® product.  The original use code, U-546, specified the combination of repaglinide + metformin to lower blood glucose.  The FDA changed this use code to U-968, for "a method for improving glycemic control in adults with Type 2 diabetes."  This use code was not limited to the specific repaglinide + metformin combination, and indeed was not expressly limited to Novo's drug (i.e., it could encompass metformin monotherapy).  (There was some dispute at the Federal Circuit regarding whether the FDA changed the use code sua sponte.)

This change in the use code caused the FDA to reject Caraco's Section viii certification and "carve-out" label, requiring Caraco to include the rapaglinide + metformin combination on its label.  Since Caraco stipulated that this combination was an infringement, the FDA's decision essentially mandated judgment for Novo absent a finding at trial of invalidity or unenforceability.  In response to the FDA's determination, Caraco counterclaimed for a court order that the FDA return the use code to U-546.  The District Court granted summary judgment on this issue, granting Caraco the requested order and ordered Novo to request the FDA to change the use code in the Orange Book for Prandin® from U-968 to its former U-546 listing.

The Federal Circuit opinion, by Judge Rader joined by Judge Clevenger (with concurring opinions by Judge Clevenger and a dissenting opinion by Judge Dyk) held that the statute contained no provisions permitting an ANDA defendant to request or a district court to grant such an injunction, reversing the decision and vacating the injunction (see "Novo Nordisk A/S v. Caraco Pharmaceutical Laboratories, Ltd. (Fed. Cir. 2010)").

The question at the Federal Circuit was whether the statutory language of "an approved method" means "any approved method" (Novo's position) or "all approved methods" (Caraco's position).  In finding for Novo, the Federal Circuit found "no ambiguity" in the language of the statute:

When an indefinite article is preceded and qualified by a negative, standard grammar generally provides that "a" means "any."  See, e.g., American Heritage Dictionary of the English Language 1 (4th Ed. 2006).

The Federal Circuit concluded that Caraco can assert its counterclaim only if no patent listed in the Orange Book claims "any approved methods of using the listed drug," which was not the case here.  In addition to this construction of the statutory language, the Federal Circuit also referenced the legislative history "to make sure that it does not contain any clear intent to the contrary" and concluded that the counterclaim provisions of the statute were devoid of a "private cause of action to delist an allegedly irrelevant patent from the Orange Book."  The Federal Circuit also indicated that its interpretation was supported by the public policy concern that the combination of a Section viii certification and ANDA litigation "ensure that a generic drug [approved] for non-patented purposes will not be used for patented purposes via a simple section viii certification."  The Federal Circuit opinion also asserted that the statute had no provisions permitting a generic drug maker to obtain an order from a court to compel a patent holder to change or modify its use code.  The plain language of the statute authorizes the generic drug maker to "request an order compelling the 'holder to correct or delete the patent information submitted by the holder'," where "patent information" is limited to "the patent number and the expiration date.") (emphases in original).

Judge Dyk dissented on public policy grounds, stating that this construction was contrary to the "manifest purpose" of the statute, allowing "the same manipulative practices" the statute was passed to prevent, i.e., "delay[ing] the onset of competition from generic drug manufacturers."  Since the FDA "repeatedly declined to police Orange Book listings," and the Federal Circuit refused to let ANDA filers use declaratory judgment jurisdiction to do so (Mylan Pharms. Inc. v. Thompson), Congress intervened by passing the 2003 amendments, including the Section viii certification provisions thereof according to Judge Dyk.  (Ironically, in a footnote the Supreme Court indicates that on remand the District Court found the '358 patent to be invalid an unenforceable.)

In its unanimous opinion, authored by Justice Kagan (with a concurring opinion by Justice Sotomayor), the Supreme Court construed the statute to provide a generic ANDA applicant with the opportunity to challenge inaccurate use codes and designations under the counterclaim provisions of the statute.  Specifically, the Court construed the phrases the "patent does not claim . . . an approved method of using" a drug and the "patent information submitted . . . under subsection (b) or (c)" of § 355, both in the "context" of another statutory phrase, that the counterclaim is brought to "correct or delete" in accurate patent information.  The Court found neither party's position on the issue to be "plausible," and thus applied a "statutory context" analysis to decide the question.  This favored Caraco's position, because it is consistent with Congressional intent to get generic drugs to market quickly, particularly for uses not falling within the scope of Orange Book listed patents.  ("The statutory scheme, in other words, contemplates that one patented use will not foreclose marketing a generic drug for other unpatented ones.")

The Court also makes quick work of the question of whether use codes are "patent information" under the statute, holding that they "surely qualify."  Citing Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661 (1990), the Court holds that while the statute recites that "patent information" is the patent number and expiration date by the plain meaning of the statutory language, "neighboring" provisions of the statute and the use of the broad term "under" in citing the specific sections convinced the Court that use codes should be encompassed within the scope of the counterclaim statute.  These use codes are "pivotal" to implementation of the Hatch-Waxman Act (despite having been enacted almost twenty years after the Act itself), according to the opinion, justifying (for the Court) the "broad sweep" of the counterclaim provisions.

Finally, the Court rejected Novo's argument that Congress merely intended to remedy a deficiency in the law resulting from the Federal Circuit's earlier decision in Mylan Pharmaceuticals, Inc. v. Thompson, 268 F. 3d 1323 (Fed. Cir. 2001), to enable generic applicants to remove an improperly listed patent from the Orange Book.  According to the Court, Congress intended to supply generic drug applicants with a means to challenge the "accuracy" of a branded drug's patent listings; this conclusion is supported, according to the opinion, by provisions that not only permit a generic applicant to challenge branded drugs having "baseless" Orange Book patent designations (the situation in Mylan), but also instances where the designation is merely wrong.  The opinion also notes (and is seemingly influenced by) a Federal Trade Commission report that alleged branded drug companies were listing inaccurate patent information in the Orange Book to delay generic drug approval, something the Court considers to provide the motivation for Congress to have enacted the counterclaim provisions.

In her concurring opinion, Justice Sotomayor argues that the statutory regime of ANDA filing (i.e., suit under § 271(e)(2), counterclaim assertion by the generic drug maker, "correction" of the use codes followed by resubmission of the ANDAn with a the Section viii certification) is flawed because "it results in delay and expense the statutory scheme does not envision" and "there is no guarantee the process will work," either because the generic drug maker will not prevail on its counterclaim or, even more troublesome, the branded drug maker will not file suit under § 271(e)(2).  Under these circumstances, the FDA will be able to approve the ANDA, but the generic is then forced to launch at risk of a patent infringement lawsuit if it markets a generic product that falls within the scope of a use that is patented.  Justice Sotomayor takes the Agency to task for this situation, calling the relevant regulations "remarkably opaque" and suggests that Congress has created precisely the "excessive litigation" it sought to avoid in enacting the statute in the first place.

Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S (2012)
Opinion by Justice Kagan
Concurring opinion by Justcie Sotomayor

Abbott Asks FDA to Refuse Certain Biosimilar Applications

By Donald Zuhn --

In a Citizen Petition filed with the U.S. Food and Drug Administration on April 2, Abbott Laboratories requested that the FDA refrain from accepting biosimilar applications under the Biologics Price Competition and Innovation Act (BPCIA) that cite reference products (biologics) for which a biologics license application (BLA) was submitted to the FDA prior to March 23, 2010.  The BPCIA, which provides an approval pathway for biosimilar biological products and constitutes a portion of the Patient Protection and Affordable Care Act that was signed into law on March 23, 2010, allows the FDA to accept biosimilar applications four years after a reference product has been licensed and to approve such applications twelve years after the reference product has been licensed.

In its Petition, Abbott specifically asks the FDA to:

[C]onfirm that it will not accept for filing, file, approve, or discuss with any company, or otherwise take any action indicating that the agency will consider, any application or any investigational new drug application (IND) for a biosimilar that cites, as its reference product, BLA 125057 for Humira® (adalimumab) or any other product for which the biologics license application (BLA) was submitted to FDA prior to March 23, 2010, the date on which the BPCIA was signed into law.

Abbott explains that the FDA should refuse biosimilar applications for all pre-enactment reference products, including its own biologic Humira®, because to approve such applications would constitute a taking under the Fifth Amendment of the U.S. Constitution, which requires just compensation.

Noting that "the reference product sponsor has invested massive amounts of capital . . . and has taken great risk to develop, test, and seek a license to market the reference product," Abbott argues that "[a]n innovator's resulting license application typically reflects more than a decade of research and contains analytical, preclinical, and clinical data, as well as detailed manufacturing information, most of which qualifies as trade secrets," and contends that "[t]hese trade secrets are the private property of the reference product sponsor and are therefore protected by the Fifth Amendment to the U.S. Constitution."  According to Abbott's Petition, "[w]hen FDA approves a biosimilar biological product on the grounds that the reference product has been shown safe, pure, and potent, it uses these trade secrets."

Abbott also notes that when it submitted its BLA for Humira® in 2002, the company "had no notice, or reasonable expectation, that the agency would use its trade secrets to approve another company's product," and in fact, had "developed and submitted those trade secrets in reasonable reliance on FDA's lack of legal authority to approve biosimilars, confirmed by years of agency statements that it lacked such authority."  The Petition suggests that other innovators who submitted pre-enactment BLAs also "reasonably expected -- on the basis of applicable law and agency statements -- that the trade secrets contained in their applications would not be used to benefit a competitor."  Abbott argues that "[u]nder well-established Supreme Court jurisprudence, FDA's use of the trade secrets in pre-enactment sponsors' BLAs to support approval of competitor products would frustrate these sponsors' investment-backed expectation regarding their property and would constitute a taking under the Fifth Amendment to the U.S. Constitution that requires just compensation."

With regard to whether the information in a BLA constitutes a trade secret, the Petition explains that the Uniform Trade Secrets Act (UTSA), which has been adopted (with minor variations) in 45 states and the District of Columbia, defines a trade secret as constituting information that (a) derives independent economic value from not being generally known to, or readily ascertainable using proper means by, other persons who can obtain economic value from its disclosure or use, and (b) is the subject of reasonable efforts to maintain its secrecy.  With respect to the first prong, Abbott states that "maintaining the secrecy of the data and information in a license application gives the submitter an economic advantage, because the license holder's competitors cannot obtain approval of a competing similar product without undertaking an investment of similar magnitude or compensating the innovator for a right to reference that information and data."  As to the second prong, Abbott notes that "biologics innovators go to great lengths to ensure that the data and other information submitted in their applications are not publicly released, whether inadvertently or purposefully, or otherwise accessible to potential competitors."  Abbott, therefore, contends that the information submitted to FDA -- including analytical, preclinical, and clinical data to support a marketing application -- constitute trade secrets.

According to the Petition, as of February 2012, the FDA had received 35 requests for pre-IND meetings for proposed biosimilar products for eleven different reference products, had held 21 pre-IND sponsor meetings, and had received nine INDs.  Indicating that it "believe[s] that some (if not all) proposed biosimilar product applications that have been or will be the subject of such meetings will reference innovator biologic products that were approved via BLAs submitted prior to March 23, 2010," Abbott argues that the constitutional issue raised in its petition is "both timely and urgent."  Abbott also expresses a belief "that at least three companies have begun preclinical and/or clinical testing of biosimilar adalimumab," but notes that it "does not know whether FDA is advising any companies about the contents of a biosimilar application citing approval of Humira[®]."

Abbott asserts that even if the biosimilar applicant receives no information from the FDA regarding the contents of an innovator's BLA, the approval of a biosimilar application based on the approved biologic results in a taking.  In particular, Abbott contends that:

Any FDA approval of a biosimilar application necessarily uses the trade secrets that were submitted in support of the BLA that the biosimilar is referencing.  Such a use occurs even though the BPCIA directs FDA to base approval of the biosimilar product only on information in the biosimilar application and directs the biosimilar applicant to include in its application only publicly available information regarding FDA's prior finding of safety, purity, and potency for the reference product.  The approval of a biosimilar necessarily relies on and uses the trade secrets that the innovator sponsor submitted in support of the BLA.  Were it not for those trade secrets -- generated at great effort and expense by the sponsor -- there would be no pioneer biologic for the biosimilar sponsor to reference.

The Petition further argues that:

FDA's reliance on its earlier finding that the reference product is safe, pure, and potent -- to grant another company a license to market a competing biosimilar product -- diminishes the economic value of the reference product sponsor's trade secrets that made the finding possible.  The trade secrets generated at great risk and expense by the first entrant lose value and provide a diminished competitive advantage if the government can simply proceed with approving competitor products on the basis of subsequent applications that omit trade secrets comparable to those required of the reference product sponsor.

Abbott notes that "[w]ithout the [innovator] company's efforts to create the trade secrets in the BLA, the license 'simply would not exist,'" and "FDA's reliance on the finding accompanying the license is therefore reliance on the underlying trade secrets."  Abbott argues that "FDA may not, in other words, separate the 'public finding' [of a biologic's approval] from the underlying data."

Citing Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984) -- which involved Monsanto's submission of trade secret data to the EPA in support of its application to register a pesticide -- Abbott argues that:

[W]hen an applicant submits trade secret data as part of a license application, at a time when the government has provided assurances through law, regulation, and/or agency guidance that the data will not be used by the agency to benefit a competitor of that applicant, later "consider[ation of] those data [by the agency] in evaluating the application of a subsequent applicant" would frustrate the applicant's "reasonable investment-backed expectation" that the data would, instead, remain inviolate.

Abbott notes that in Monsanto, the Supreme Court "first acknowledged that trade secrets are property protected by the Fifth Amendment's prohibition on taking private property for public use without just compensation," and determined that Monsanto had a reasonable, investment-backed expectation that the EPA would not use data submitted to it between 1972 and 1978 (when the statutory scheme prohibited the EPA from publicly disclosing an applicant's trade secret data) for the benefit of a competitor.

Abbott contends that "approving biosimilars of pre-enactment reference products would take the trade secret property of an identifiable class (i.e., pre-enactment reference product sponsors) and impose a very large financial liability on the United States," adding that "retrospective application of the BPCIA would call the statute's constitutionality into question."  Abbott suggests that the FDA should therefore "apply the BPCIA prospectively only."  The Petition concludes by requesting that the FDA "interpret the BPCIA as applying only to post-enactment reference products, thereby avoiding both significant constitutional questions and significant governmental liability."

Court Report

By Sherri Oslick --

About Court Report:  Each week we will report briefly on recently filed biotech and pharma cases.

Enzo Life Sciences Inc. v. Affymetrix Inc.
1:12-cv-00433; filed April 6, 2012 in the District Court of Delaware

Enzo Life Sciences Inc. v. Agilent Technologies Inc.
1:12-cv-00434; filed April 6, 2012 in the District Court of Delaware 

Enzo Life Sciences Inc. v. Illumina Inc.
1:12-cv-00435; filed April 6, 2012 in the District Court of Delaware

The complaints in these cases are substantially identical.  Infringement of U.S. Patent No. 7,064,197 ("System, Array and Non-Porous Solid Support Comprising Fixed or Immobilized Nucleic Acids," issued June 20, 2006) based on defendants' manufacture, use, and sale of nucleic acid array products.  View the Affymetrix complaint here.

 

Incyte Corp. v. Kappos
1:12-cv-00380; filed April 6, 2012 in the Eastern District of Virginia

Review and correction of the patent term adjustment calculation made by the U.S. Patent and Trademark Office for U.S. Patent No. 8,034,953 ("Modulators of Indoleamine 2,3-Dioxygenase and Methods of Using the Same," issued October 11, 2011).  View the complaint here.

Sanofi-Aventis U.S. LLC et al. v. Strides, Inc. et al.
3:12-cv-02070; filed April 5, 2012 in the District Court of New Jersey

• Plaintiffs:  Sanofi-Aventis U.S. LLC; Sanofi-Aventis; Debiopharm S.A.
• Defendants:  Strides, Inc.; Onco Therapies Ltd.; Strides Arcolab Ltd.

Infringement of U.S. Patent Nos. 5,338,874 ("Cis oxalato (trans 1-1,2-cyclohexanediamine) PT(II) Having Optically High Purity," issued August 16, 1994) and 5,716,988 ("Pharmaceutically Stable Preparation of Oxaliplatinum," issued February 10, 1998) following a Paragraph IV certification as part of Strides' filing of an ANDA to manufacture a generic version of Sanofi's Eloxatin® (oxaliplatin for injection, used to treat colorectal cancer).  View the complaint here.

Ferring B.V. et al. v. Allergan Inc. et al.
1:12-cv-02650; filed April 5, 2012 in the Southern District of New York

• Plaintiffs:  Ferring B.V.; Ferring International Center S.A.; Ferring Pharmaceuticals Inc.
• Defendants:  Allergan Inc.; Allergan USA, Inc.; Allergan Sales, LLC; Serenity Pharmaceuticals Corp.; Serenity Pharmaceuticals, LLC; Reprise Biopharmaceutics, LLC; Seymour H. Fein; Ronald V. Nardi

Correction of inventorship of U.S. Patent Nos. 7,405,203 ("Pharmaceutical Compositions Including Low Dosages of Desmopressin," issued July 29, 2008), 7,579,321 (same title, issued August 25, 2009), and 7,799,761 (same title, issued September 21, 2010) relating to Ferring's Minirin® (desmopressin, used to treat central diabetes insipidus, nocturnal enuresis, and nocturia) and various tort claims.  View the complaint here.

Teva Pharmaceuticals USA, Inc. et al. v. Synthon Pharmaceuticals, Inc. et al.
1:12-cv-02556; filed April 3, 2012 in the Southern District of New York

• Plaintiffs:  Teva Pharmaceuticals USA, Inc.; Teva Pharmaceutical Industries Ltd.; Teva Neuroscience, Inc.; Yeda Research and Develpment Co. Ltd.
• Defendants:  Synthon Pharmaceuticals, Inc.; Synthon Holding B.V.; Synthon B.V.; Synthon S.R.O.

Infringement of U.S. Patent Nos. 7,199,098 ("Copolymer-1 Improvements in Compositions of Copolymers," issued April 3, 2007), 6,939,539 (same title, issued September 6, 2005), 6,054,430 (same title, issued April 25, 2000), 6,620,847 (same title, issued September 16, 2003), 5,981,589 (same title, issued November 9, 1999), 6,342,476 (same title, issued January 29, 2002), and 6,362,161 (same title, issued March 26, 2002) following a Paragraph IV certification as part of Synthon's filing of an ANDA to manufacture a generic version of Teva's Copaxone® (glatiramer acetate injection, used for the reduction of frequency of relapses in patients with relapsing-remitting multiple sclerosis).  View the complaint here.