By Donald Zuhn --
The U.S. Court of Appeals for the Federal Circuit issued an Order today in Eli Lilly & Co. v. Actavis Elizabeth LLC, granting Lilly's request for an injunction to prevent Defendants-Appellees from launching generic versions of Lilly's ADHD drug Strattera® until Lilly's appeal has been resolved. On August 25, Lilly filed a notice of appeal seeking review of a decision by the District Court for the District of New Jersey invalidating Lilly's U.S. Patent No. 5,658,590 for lack of enablement, and then immediately moved for an injunction pending disposition of its appeal. Defendants-Appellees opposed Lilly's request for an injunction in a response that was due Monday. In granting Lilly's motion, the Court stated that Lilly had met its burden to obtain an injunction pending appeal.
In addition, two of the Appellees (Aurobindo Phrama and Mylan Pharmaceuticals) moved for clarification of the Court's August 26 Order continuing a 14-day injunction granted by the District Court one week earlier. The Federal Circuit's August 26 Order also set an expedited briefing schedule in which Lilly's opening brief is due by Thursday, September 9; Defendants-Appelllees' briefs are due by Thursday, September 23; and Lilly's reply brief and the joint appendix are due by Thursday, September 30. It is the expedited briefing schedule for which Aurobindo and Mylan sought clarification. In particular, Aurobindo and Mylan asserted that in view of cross-appeals that had been filed, the briefing schedule required revision. The Court, however, dismissed the cross-appeals for lack of jurisdiction and denied the motion for clarification.
For additional information regarding this topic, please see:
• "Federal Circuit Continues Temporary Injunction in Lilly v. Actavis Elizabeth," August 30, 2010
• "Biotech/Pharma Docket," August 26, 2010
• "Biotech/Pharma Docket," August 19, 2010
On October 2, 2008, Judge William Young of the District Court of the District of Massachusetts issued his 150-page opinion in Amgen Inc. v. F. Hoffmann-La Roche Ltd. , Amgen's patent infringement suit over Roche's Mircera® drug product (see "
The Federal Circuit considered none of Judge Young's findings of fact and conclusions of law, maintaining that none of these issues were before the CAFC since Judge Young was precluded from entering a final judgment until after the Federal Circuit made its decision and returned jurisdiction to the District Court. These decisions by the District Court included: 1) affirming the jury's infringement decision by denying Roche's motion for judgment as a matter of law (JMOL); 2) reaffirming its pretrial decision to grant summary judgment regarding infringement of claim 1 of the '422 patent; 3) "explaining" its reasoning for ruling, also pretrial, that the claims of Amgen's patents-in-suit are not invalid for obviousness-type double patenting (despite the intervening Federal Circuit decision in 
The Court denied Roche's motions for judgment as a matter of law (JMOL) that Amgen's claims were invalid. Although the Court noted that Roche's motion raised issued of invalidity on the grounds of anticipation, obviousness, indefiniteness, and non-enablement, the Court addressed two of these arguments: first, that the claims of the '422 patent were anticipated by the Goldwasser study, and second that the term "human erythropoietin" is indefinite.
Regarding the anticipation argument, this was ground well-traveled and familiar to the Court. Hoechst Marion Roussel (HMR) used the same prior art study of Goldwasser to support the same anticipation argument in Amgen Inc. v. Hoechst Marion Roussel, Inc., and the court there, as the Court here, found claim 1 of the '422 patent not to be anticipated when the Goldwasser study was applied as a § 102 reference. In this case, the Court gave effect to the limitation "purified from mammalian cells grown in culture" to distinguish over the Goldwasser EPO preparations that were made from urine, as a matter of law based on the Court's claim construction. The Court construed claim 1 of the '422 patent as reciting 5 elements:
Finally, the Court denied Roche's motion for JMOL on the question of infringement, based on evidence that Roche's Mircera® drug product contained erythropoietin that fell within the scope of Amgen's claims. In doing so, the Court rejected Roche's theory that Mircera® should be considered as a "single molecule" (i.e., peg-EPO), but rather characterized it as rEPO modified by conjugation with polyethylene glycol. In the Court's view, "[p]egylation merely attaches a sugar, via a single carbon bond, to a recombinant glycoprotein with the patented amino acid sequence; it does not alter the patented properties of EPO." This alteration was not sufficient for the Court to overturn the jury verdict of infringement. In support of its decision, the Court cited testimony, internal Roche documents, and Roche's representations to the FDA to the effect that peglylating rEPO did not change its "amino acid sequence, glycosylation or carbohydrate content," i.e., that Mircera® retained rEPO's biological properties.
The Federal Circuit today issued an 
Upon questioning from the panel at oral argument on Wednesday, Amgen's counsel Rusty Day suggested that Amgen might file post-judgment motions, and indicated that Amgen expected to file a notice of appeal on some issues. Roche filed its notice of appeal last Friday; that notice will not become effective until Judge Young enters his opinion as a final judgment. The parties and the panel expected entry of judgment to happen rapidly; as Judge Plager asked, "don't you think Judge Young is waiting by his telephone [for their opinion]?"
It is unlikely that the Federal Circuit will hold oral arguments on the merits much before next summer, even if Roche moves to expedite the briefing schedule as their counsel, Leora Ben-Ami, told the panel Roche intended to do. This just delays even further Mircera®'s entry into the marketplace, to Roche's detriment. They may have to be satisfied for the foreseeable future by selling Mircera® in Europe, a circumstance mentioned by Judge Young in his opinion:
As Patent Docs has reported (see 
Oral arguments on that appeal occurred yesterday, and the consequences of Judge Young's eleventh hour decision-making were fully appreciated by both the parties and the CAFC (audio of oral arguments on this appeal can be found 
The Court asked Roche's attorney, Leora Ben-Ami, what Roche wanted them to do, and she responded by saying the Court should consolidate the appeal of the preliminary injunction with Roche's appeal of Judge Young's decision(s) below. The Court aggressively challenged the idea of consolidating -- there was "nothing to consolidate." Ms. Ben-Ami responded that in Roche's view, the District Court had come to a final judgment, but the panel told her "[w]e do not have a paper that says 'Judgment?'" They said they don't have it, and (facetiously) asked her to forward it to the bench. The panel said they have an opinion, but not a judgment, and the rules require a judgment.
The Court next heard from Amgen, represented by Rusty Day. He told the panel he had an answer to the question of what they should do. The answer was either to affirm the preliminary injunction, or dismiss the appeal and remand so Judge Young could enter judgment. Either resolution would get the case to final judgment and ready for a merits panel to address the substantive issues, he said. Consolidation would not achieve that result, Mr. Day asserted, reminding the panel that consolidation disregards Amgen's right to appeal. (To which the panel responded that there was nothing to consolidate.) Mr. Day suggested that entry of a permanent injunction would moot the appeal, but the panel disagreed -- on the record before them there was no basis for mooting the appeal. The panel also said they would be "hard-pressed" to find grounds to dismiss.
On October 2nd, District Court Judge William G. Young (D. Mass) issued a decision on post-trial motions and a permanent injunction in Amgen Inc. v. Hoffmann-LaRoche, Amgen's patent infringement suit over Roche's Mircera® drug product. In a 150-page opinion, Judge Young handed Amgen nothing less than a complete victory.
Amgen procured a jury judgment on October 23, 2007 that Mircera® infringed several Amgen patents, including U.S. Patent Nos. 
The District Court then discussed the factors it considered in determining whether the public interest would favor granting Amgen a permanent injunction. Judge Young conceded that, initially, he was inclined to decide in Roche's favor, on the grounds that introducing Mircera® would increase competition in the pharmaceutical market place and reduce prices accordingly. The Court was not willing to rest on this initial assumption, however, but held "extensive evidentiary hearings" on the effects of permitting Roche to introduce Mircera®, as well as appointing both a special master and a technical advisor to help the Court understand the economics of the pharmaceutical industry. The result was that "[t]he Court's initial impression [did] . . . not withstand a reflective and detailed analysis."
Turning to the second consideration, Medicare savings, the Court set forth a detailed "primer" on drug pricing under Medicare. This factor was an important consideration for the Court because "government purchasers comprised approximately 80% of EPOGEN sales," with 75 of that 80% being incurred under the Medicare Part B program. The Court acknowledged the assistance of "Ernest Berndt, an applied economics professor at the Massachusetts Institute of Technology Sloan School of Business," a court-appointed special master and technical advisor on these matters. (A detailed explication of this analysis would overly burden this post and risk introducing inaccuracies into the Court's careful analysis; thus, only a brief synopsis of the Court's conclusions is provided here.) Simply put, under the complex scheme for calculating reimbursements to drug providers and physicians, the Court found that introducing a new drug into an established market was likely to have the paradoxical effect of causing drug prices to increase. In this case, such increases could arise from Roche charging at least as great a price for Mircera® as Amgen charges for Aranesp® or Epogen®. The Court was clear to acknowledge that this outcome was the result of Medicare's method for calculating reimbursement rates, which provided an incentive to keep ESA prices high. The Court also noted that Amgen's expert testified that there were at least three differences between "textbook" or "plain vanilla" competition and competition between drug providers caused by Medicare reimbursement policies: first, that under Medicare it is the physician rather than the patient that makes drug choice decisions; second, that end-users (i.e., patients) pay only a small fraction of the drug costs, thereby reducing patient incentive for cheaper drugs; and third, "perhaps most important," "providers are drawn to the drugs that offer the largest difference between the amount the provider is reimbursed . . . under Medicare . . . and that the provider actually paid for the drug," a difference the Court said is called "cost recovery" in the industry.
On October 2nd, District Court Judge William G. Young (D. Mass) issued a decision on post-trial motions and a permanent injunction in Amgen Inc. v. Hoffmann-LaRoche, Amgen's patent infringement suit over Roche's Mircera® drug product. In a 150-page opinion, Judge Young handed Amgen nothing less than a complete victory.
Amgen procured a jury judgment on October 23, 2007 that Mircera® infringed several Amgen patents. That verdict found Roche's Mircera® infringed claims 3, 7, and 8 of Amgen's U.S. Patent No. 
The District Court then entered a preliminary injunction on February 28, 2008 foreclosing Roche from launching Mircera®; Roche had been 
The Court left open the possibility that the injunction could be modified under the following four conditions: that Roche would pay Amgen a royalty of 22.5% (Amgen having already rejected an offer for a 20% royalty from Roche; see "
The 
On February 28, 2008, the U.S. District Court for the District of Massachusetts (Judge William G. Young, presiding) granted a preliminary injunction to Amgen against Hoffman La-Roche, preventing Roche from selling Mircera®. Using the four-factor test set forth by the Supreme Court in 
The District Court set out conditions under which it would modify the injunction, conditions that amounted to a compulsory license. These included: first, that Roche would pay Amgen a royalty of 22.5%; second, Mircera® would be introduced to the Medicare patient population at a cost no less than the average sales price of Amgen's EPO products; third, Roche would have to provide clinical evidence to permit the Court to determine a "dosage conversion factor" between Mircera® and Epogen®; fourth, Roche would pay for an independent agency to monitor sales and determine royalty payments owed to Amgen; and finally, Roche would agree to supply Mircera® to any patient needing it, at or below the authorized price. Although Roche agreed to these terms (see "
BIO's brief addresses a single issue before the Federal Circuit: should the public interest prong of the eBay four-factor test be construed to encompass the "public interest" in lower drug prices. BIO's brief argues that it should not. First, BIO argues that the prospect of patent exclusivity is an important part of the patent grant, particularly for biotechnology companies. The brief recites the economic realities: that it can cost $1.2 billion to get a biologic drug to market; that "[b]iologics research and development is high-risk, with greater capital costs, higher material costs, greater manufacturing costs and uncertainties, longer development times, and lower late-stage success rates than small molecule pharmaceutical drugs"; and that sales of a biologic drug reach the break-even point for recovering the research and development costs at between approximately 12 and 16 years after the drug enters the marketplace. These economic realities are important, according to BIO, because investors will not be willing to take the significant risks attendant upon this technology unless there is a sufficient likelihood that a biologic drug will retain its market exclusivity for the maximum patent term.
The brief makes one more, forceful and thoughtful point. If the Federal Circuit should hold that district courts can consider the "public interest" of lower drug prices as part of the public interest prong of the injunctive relief test under eBay, then the hallmark of the patent grant, exclusivity, would be decided in a case-by-case, ad hoc manner that would completely undermine the economic basis for patent protection and the benefits of the patent grant relied upon by investors. Moreover, appellate review of the district court's decision would be "under the deferential abuse of discretion standard," which would do nothing to ensure predictability of outcomes or the Federal Circuit's supervisory role under its Congressional implementing statute to bring consistency to U.S. patent law. Indeed, the brief argues that the effect of permitting district courts to consider lower drug prices would result in each district court acting as a drug "price czar," thereby undermining public policy and substituting Congressional deliberation with "a limited evidentiary record and the exercise of [a court's] equitable discretion." And the irony according to the brief is that the result may not be lower drug prices: in the case before the CAFC, the proposed compulsory license required Mircera® to be priced "at or less than" Amgen's erythropoietin products. This raises the real possibility that a compulsory license could be granted to an infringing competitor "with no price advantage to the consumer."
Last week, the Federal Circuit issued an opinion in Ortho-McNeil Pharmaceutical, Inc. v. Mylan Laboratories, Inc. In Mylan Laboratories, the Federal Circuit determined that the District Court for the District of New Jersey properly construed claim 1 of U.S. Patent No. 
On the same day that the Federal Circuit issued its decision in Mylan Laboratories, it also issued a nonprecedential opinion in a companion case: Ortho-McNeil Pharmaceutical, Inc. v. Cobalt Pharmaceuticals Inc. In this case, Defendant-Appellant Cobalt Pharmaceuticals Inc. (Cobalt) stipulated that it would be bound by the District Court's final judgment order in Mylan Pharmaceuticals. Although Cobalt retained its right to appeal, it also stipulated that the appeal would be based on the record in Mylan Pharmaceuticals. Thus, in affirming the District Court's judgment against Mylan, the Federal Circuit affirmed the District Court's judgment against Cobalt.
