Orange Book Blog

At the intersection of Patent and FDA Law

Recent Posts

  • Apotex and Its CEO Ordered to Pay $3.1 Million in Attorney Fees to Eon Labs

    Apotex et al. v. Eon Labs Mfg., No. 01-0482 (E.D.N.Y. 2007)

    Apotex and its CEO, Bernard (Barry) C. Sherman, were ordered by a federal district court last week to pay Eon Labs $3.1 million in attorney fees and expenses in a patent case they pursued for years before admitting that their patent was invalid.  In a Memorandum and Order granting Eon’s motion for fees, Judge Avern Cohn of the U.S. District Court for the Eastern District of New York described the case as a "debacle" and the manner in which it was litigated as "reflect[ing] all that is bad in patent litigation."

    In the case, Apotex and Sherman sued Eon for infringing U.S. Patent No. 5,798,333 (entitled "Water-Soluble Concentrates Containing Cyclosporin," and naming Dr. Sherman as the sole inventor), alleging that Eon’s cyclosporin drug product infringed the patent.  Both Apotex and Eon (since acquired by Sandoz) are generic drug makers.  The only problem, which Apotex characterized as a "technicality," was that the ‘333 patent was invalid under 35 USC 102(d).

    Section 102(d), a relatively obscure provision of the patent statute, states that a patent is invalid if:

    the invention was first patented . . . by the applicant or his legal representatives or assigns in a foreign country prior to the date of the application for patent in this country on an application for patent or inventor’s certificate filed more than twelve months before the filing of the application in the United States.

    More than a year before Apotex filed the U.S. patent application that led to the ‘333 patent, Apotex filed a patent application on the same invention in New Zealand.  The New Zealand patent then issued before Apotex filed its U.S. patent application.  Amazingly, these facts weren’t discovered until "the morning of the sixth day of a bench trial, following five years of hard fought and sometimes contentions pretrial proceedings."  This is especially surprising because the New Zealand patent was cited by the patent examiner during prosecution and is listed on the face of the ‘333 patent.

    Judge Cohn’s opinion is well worth reading–not only for the lessons it contains for patent lawyers, but also because at times it reads like a mystery.  In the end, Judge Cohn concludes that "the record supports a finding of gross negligence and a reckless indifference to the obligations of counsel as to make this case exceptional."  However, Judge Cohn also assigned some blame to Eon, finding that Eon should have discovered sooner that the ‘333 patent was invalid.  Judge Cohn therefore reduced Eon’s award of attorney fees by 30% from the amount requested.

    Thanks very much to a helpful reader for letting us know about this interesting case.

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  • News From GPhA Annual Meeting

    The Generic Pharmaceutical Association (GPhA), the trade association representing generic drug makers in the United States, is holding its annual meeting this weekend in Phoenix.  Unfortunately, I couldn’t attend.  A number of interesting news reports are coming out of the meeting:

  • LSI “Pharmaceutical Antitrust” Conference, April 26-27, Washington, D.C.

    Law Seminars International has announced that it will hold “a comprehensive two-day conference on licensing, life-cycle management, and M&A issues in the field of pharmaceutical antitrust,” April 26-27, 2007, at the Capital Hilton in Washington, D.C.  The conference will feature a special address by FTC Commissioner J. Thomas Rosch and presentations by six other federal and state enforcers.

    With health care costs rising and political pressure mounting, Congress has proposed new laws to prevent “reverse payment” settlements of Hatch-Waxman cases, to ban authorized generics, and to stem abuse of the FDA citizen petition process.  LSI’s Pharmaceutical Antitrust conference will address these hot issues and more.  The following sessions look particularly interesting:

    • Recent Pharmaceutical Antitrust Cases and Enforcement Initiatives
    • Pricing and Distribution Agreements: Maximizing Flexibility While Controlling Risk
    • The Regulators Speak: Discussion of Important Enforcement Developments and Initiatives
    • Maximizing the Life-Cycle of Products
    • Settling Pharmaceutical Patent Disputes

    David A. Balto, Esq., Jeffrey W. Brennan, Esq., and George Frank, Ph.D., Esq. are the program co-chairs of the conference.  Additional details, as well as registration information, are available on the conference website.

    Orange Book Blog is a media partner of this conference.

  • Pfizer Successfully Defends its Norvasc Patent Again, This Time Against Mylan

    Pfizer v. Mylan Labs. et al., No. 02-1628 (W.D. Pa. 2007)

    For the third time, Pfizer’s patent on Norvasc has withstood a validity challenge from a generic rival.  Following a week-long trial held last year, Judge Terrence F. McVerry of the U.S. District Court for the Western District of Pennsylvania ruled yesterday that Pfizer’s U.S. Patent No. 4,879,303 patent is valid, enforceable, and infringed by Mylan.  As we reported last fall, Pfizer previously defeated challenges of the same patent brought by two other generic drug makers, Apotex and Synthon.

    Norvasc, indicated for the treatment of hypertension, is a blockbuster drug for Pfizer, with annual sales of $2.5 billion in the United States.  The ‘303 patent covers the active ingredient in Norvasc, amlodipine besylate.  Though the patent will expire next month, the FDA granted six months of pediatric exclusivity for Norvasc, extending Pfizer’s protection until September 25, 2007.

    In his opinion, Judge McVerry rejected both of Mylan’s defenses to infringment: invalidity due to obviousness and unenforceability due to inequitable conduct.  With respect to obviousness, Judge McVerry concluded that the asserted prior art expressed a preference for the maleate salt of amlodipine and failed to teach a reason for one skilled in the art to even try to improve upon the maleate salt.  Thus, there was no motivation or suggestion to create the besylate salt of amlodipine.  With respect to inequitable conduct, Judge McVerry concluded that Mylan failed to prove both elements of the defense–materiality and intent to deceive–and "even if Mylan had proven the required elements, the degree of culpability of Pfizer’s representatives would be ever so slight and thus not sufficient to convince this Court that the proper remedy would be to invalidate the ‘303 patent."

    As the first ANDA filer for generic Norvasc, Mylan holds the 180-day exclusivity rights, which could be extremely lucrative.  Now, however, Mylan will have to win on appeal before it can launch its product.  Moreover, it seems Mylan must win the appeal before Pfizer’s pediatric exclusivity expires on September 25, 2007.  Otherwise, the FDA will likely grant final approval to other generic companies, including Apotex and Synthon, and Mylan will lose its exclusivity rights.  Mylan likely had this in mind when it immediately appealed yesterday’s decision to the Federal Circuit.

    Finally, yesterday’s court decision avoids an interesting problem: if a decision on patent validity were not made before expiration of the ‘303 patent (March 25, 2007), would Pfizer have had a legal right to the pediatric exclusivity period?  In a letter brief to the court, Pfizer acknowledged that the answer was unclear.  The district court likely sought to avoid this question entirely by issuing its decision before the ‘303 patent expires.

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  • Astellas and Boehringer Ingelheim Defeat Ranbaxy in Flomax Case

    Astellas Pharma et al. v. Ranbaxy et al., No. 05-2563 (D. N.J. 2007)

    A federal district court last week upheld Astellas Pharma’s patent on Flomax (tamsulosin HCl), preventing Ranbaxy from marketing a generic version of the drug until the patent expires in 2009.  Flomax is a treatment for benign prostatic hypertrophy (BPH), with annual sales of approximately $600 million in the United States.  Boehringer Ingelheim is Astellas Pharma’s U.S. marketing partner.

    Astellas and Boehringer filed the lawsuit in 2005 after Ranbaxy applied to the FDA to market generic Flomax and asserted that Astellas Pharma’s U.S. Patent No. 4,703,063 is invalid.  The ‘063 patent covers a class of chemical compounds that includes the active ingredient in Flomax, tamsulosin, as well as related pharmaceutical compositions.

    Early in the litigation, Ranbaxy admitted that its generic Flomax infringes the ‘063 patent and dropped several defenses.  Ranbaxy’s only remaining defense to patent infringement was that the ‘063 patent is invalid due to obviousness-type double patenting.  The doctrine of obviousness-type double patenting prohibits a party from obtaining an extension of its exclusive rights in a later patent that is not sufficiently distinct from a commonly owned earlier patent.  Specifically, Ranbaxy claimed that the ‘063 patent is invalid because Astellas had previously obtained U.S. Patent No. 4,373,106, which covers processes for making the class of chemical compounds covered by the later ‘063 patent.

    Judge Mary L. Cooper of the U.S. District Court for the District of New Jersey issued the opinion.  Judge Cooper cited several precedents in support of the principle that later compound claims can be patentably distinct from earlier process claims.  Furthermore, according to Judge Cooper, Ranbaxy did not "point to, and the Court could not find, one double-patenting case where a later product claim was anticipated by the earlier process claim for making that product."  Ranbaxy’s expert witness admitted "that the ‘106 patent only claims the processes for making the compounds and the ‘063 patent only claims the compounds themselves," leaving no factual disputes to decide.  Accordingly, Judge Cooper granted summary judgment of patent validity to Astellas and Boehringer.

    Ranbaxy has appealed the case to the Court of Appeals for the Federal Circuit.

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  • Federal Circuit to Decide Hatch-Waxman Declaratory Judgment Jurisdiction After MedImmune

    We reported last month on a new declaratory judgment action that Apotex filed against GlaxoSmithKline in the Eastern District of Virginia.  In its complaint, Apotex alleged that Glaxo’s listing of a patent on Zantac Syrup in the Orange Book gave rise to a justiciable controversy sufficient to support declaratory judgment jurisdiction.  The Federal Circuit has rejected similar claims before, most notably in Teva v. Pfizer.  Apotex may have filed its new complaint hoping that the Supreme Court’s recent decision in MedImmune v. Genentech would force a different outcome this time around.

    It appears the Federal Circuit will decide whether listing a patent in the Orange Book creates declaratory judgment jurisdiction in a case currently pending before the court, long before the Apotex action reaches it.  The case is Teva v. Novartis, No. 06-1181, concerning Teva’s attempt to market a generic version of Novartis’s herpes treatment Famvir (famciclovir).  Teva, the appellant, presented the following issue for review:

    Whether there is an "actual controversy" sufficient to support subject matter jurisdiction over Teva’s claim for a declaration that certain patents were invalid, unenforceable or not infringed where: (i) appellee listed the patents in the Orange Book with respect to its Famvir product, thus representing that an infringement action under those patents "could reasonably be asserted" against any generic formulation of that drug; (ii) Teva committed a statutory act of infringing those patents under 35 USC 271(e)(2) by submitting an Abbreviated New Drug Application (ANDA) to market a generic formulation of Famvir before the expiration of the patents; (iii) Novartis sued Teva to prevent Teva from launching its generic formulation of Famvir alleging that Teva’s ANDA infringed another patent listed in the Orange Book with respect to Famvir; (iv) appellee has consistently and aggressively enforced its pharmaceutical patents against Teva and other generic drug companies; and (v) appellee has refused to give any assurance that it would not sue Teva for infringement of the patents.

    The case was fully briefed last Spring and oral arguments were heard in October.  Then, on January 9th of this year, the Supreme Court released its decision in MedImmune and on the same day counsel for Teva sent notice of the decision to the Federal Circuit.  In a citation of supplemental authority, Teva argued that that Supreme Court had essentially overruled Teva v. Pfizer:

    [T]he Supreme Court established [in MedImmune] that Article III does not require a declaratory judgment plaintiff to prove that it faces a reasonable apprehension of imminent suit by the patentee, as this Court had required.  Slip op. at 13 n.11 (reasonable apprehension of suit test conflicts with Supreme Court precedent).  . . .  Since the district court in this case relied on the reasonable apprehension requirement to dismiss appellant’s claim for declaratory relief, MedImmune requires the vacation of the dismissal.

    Generic drug companies are hoping that MedImmune will finally solve a "bottleneck problem," where second and later ANDA filers are blocked from marketing their generic drugs when the first ANDA filer (and 180-day exclusivity holder) delays launching its own generic drug product and the innovator refuses to sue the subsequent ANDA filers.  Congress attempted to address this problem in amendments to the Hatch-Waxman Act passed as part of the Medicare Modernization Act of 2003, but in Teva v. Pfizer the Federal Circuit ruled that those amendments did not affect the Federal Circuit’s "reasonable apprehension of suit" test for declaratory judgment jurisdiction.  It appears that MedImmune has now forced the Federal Circuit to revisit that ruling.

    Links to the briefs filed in Teva v. Novartis are provided below, courtesy of the attorneys who argued the case.

    LINKS TO APPEAL BRIEFS:

  • Thailand’s Compulsory Licensing of Pharmaceuticals Under TRIPS Stirs Controversy

    The new Thai government has been experimenting with the compulsory licensing provisions of Article 31 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).  To date, Thailand has unilaterally declared compulsory licenses for three patented drugs: (i) Stocrin, a first-line anti-retroviral used in treating HIV/AIDS; (ii) Kaletra, a second-line anti-retroviral also used to treat HIV/AIDS; and (iii) Plavix, a platelet anti-aggregant that reduces the risk of clot formation.

    The TRIPS Agreement and the Doha Declaration provide flexibility for countries to grant compulsory licenses to patents under certain conditions.  The flexibility seeks to make essential medicines available to the world’s poor who cannot afford treatments for diseases like AIDS, malaria, tuberculosis, etc.  Nevertheless, this flexibility also seeks to preserve innovators’ financial incentives by preventing outright confiscation of their patent rights.

    Article 31(b) of TRIPS generally permits issuance of compulsory patent licenses only after the country has “made efforts to obtain authorization from the right holder on reasonable commercial terms . . . .”  Nevertheless, the country may waive the negotiation requirement in cases of national emergency, extreme urgency, and public non-commercial use.  Thailand appears to have waived the negotiation requirement under the argument that the licenses will be used for public non-commercial use.

    But under Article 31 of TRIPS, these licenses are not free.  Their scope of use must be limited to the purpose for which the license was authorized.  See Art. 31(c).  The licenses are non-exclusive and non-assignable.  See Art. 31(d)-(e).  They must terminate when the circumstances that led to their issuance have ceased to exist and are unlikely to recur.  See Art. 31(g).  And most importantly, the country must pay adequate remuneration for each use of the license, taking into account the economic value of the authorization.  See Art. 31(h). 

    MSF (Doctors without Borders), Oxfam, and various religious groups have praised the Thai government for its bold conduct.  But it is hardly clear that Thailand’s conduct is indeed laudable, especially in light of its TRIPS obligations.

    First, ICTSD reports that Thailand has offered patent holders a mere 0.5% royalty.  This is far below the typical 6-15% royalty that one would expect under the application of the Georgia Pacific factors.  This is especially the case for Plavix, whose sales are likely directed to upper-class Thai consumers who want access to a wide array of Western lifestyle drugs.  But when the royalty offer is extraordinarily low, the country’s conduct looks more like confiscation than a TRIPS-permitted compulsory license.

    Second, Thailand’s actions appear to push the limits of what qualifies as a “public non-commercial use.”  Some have argued that the public non-commercial use provision is narrow, and includes only necessary government functions such as defense and aerospace.  Critics of this approach have pointed out that negotiators rejected such a narrow reading of Article 31 in the Brussels round.  Nevertheless, Thailand reads the provision in a manner that encompasses even the most arbitrary measures.  This broad reading probably asks too much of Article 31.  After all, Article 31(b) appears to emphasize the need for negotiations between the issuing country and the patent holder.  Also, Articles 31(c) and 31(g) seem to contemplate the existence of a “circumstance” that would serve as a predicate to issuing the compulsory license.  Thailand has refused to cite any circumstances to justify its actions in these three cases.

    Few would argue with the need to make essential medicines available to the suffering poor around the world.  This has been a major consideration for all TRIPS signatories.  Article 31 of TRIPS and the Doha Declaration provide a workable and agreed-upon means for achieving these important ends without unduly expropriating the rights of patent holders.  Therefore, it is unclear why Thailand has chosen a course of action that likely places it in violation of these international agreements.

    The new Thai military government has promised to grant compulsory licenses for eleven more patented drugs, so it’s unlikely that we’ve heard the last of this issue.

    Robert S. Dailey is a third-year law student at the University of
    North Carolina at Chapel Hill.  He holds a Ph.D. in physical
    chemistry.  Rob was a member of the 2006 class of summer associates at
    McDonnell Boehnen Hulbert & Berghoff.

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  • Is a Patent that is Subject to a Terminal Disclaimer Eligible for a Patent Term Extension?

    It has always been assumed the answer is "yes."  Now the Federal Circuit will answer the question directly in Merck v. Hi-Tech Pharma., which concerns Hi-Tech’s ANDAs for generic versions of Merck’s Trusopt and Cosopt prescription eye drops.  The case was argued in December and a decision could come at any time.

    Merck owns U.S. Patent No. 4,797,413, covering dorzolamide, the active ingredient in Trusopt and Cosopt.  The ‘413 patent issued from a continuation-in-part application that claims priority from Merck’s U.S. Patent No. 4,677,115.  During prosecution of the ‘413 patent, the patent examiner rejected the claims for "obviousness-type double patenting," explaining that the claims were not patentably distinct from those of the earlier issued ‘115 patent because they "include position isomers and adjacent homologs to the previously allowed prior art compounds which are obvious variations in view thereof."  To overcome the rejection, Merck filed a terminal disclaimer, disclaiming "the terminal part of any patent granted on [the application] which would extend beyond the expiration date of U.S. patent 4,677,115, that is, June 30, 2004."

    The FDA approved Merck’s NDA for Trusopt in 1994, after several years of FDA regulatory review.  Due to the lengthy review process, the FDA granted Merck a patent term extension under 35 USC 156, thereby extending the term of the ‘413 patent to April 28, 2008.  Section 156 was enacted as part of the Hatch-Waxman Act (it is the "Patent Term Restoration" part) in a trade between innovator and generic drug companies: innovators could obtain patent term extensions and generic drug companies could develop their drug products before patent expiration.  Under Section 156, NDA holders may choose one patent for patent term extension per approved drug.  Presumably, Merck sought an extension of the ‘413 patent rather than the ‘115 patent because its claims are stronger.

    After Hi-Tech filed ANDAs for generic versions of Trusopt and Cosopt, Merck sued Hi-Tech for infringement of the ‘413 patent.  As its only defense, Hi-Tech asserted that the patent term extension on the ‘413 patent was invalid due to the terminal disclaimer that Merck voluntarily filed on the patent.  On April 25, 2006, the district court entered final judgment on the pleadings in Merck’s favor and enjoined Hi-Tech from selling generic dorzolamide products until the ‘413 patent expires.  Hi-Tech promptly appealed to the Federal Circuit, presenting the following issue for review:

    Whether a terminal disclaimer voluntarily filed to avoid double patenting, as a matter of law, precludes or disclaims the right to a patent extension under 35 USC 156 that would permit the disclaimed patent to be enforced after expiration of the earlier patent that gave rise to the disclaimer.

    According to Hi-Tech, "[t]his case arises solely because the PTO regulation implementing 35 USC 156 added words to the statute which are not there."  Thus, the arguments in the appeal center on the proper statutory interpretation of Section 156.  Hi-Tech argues that the district court misinterpreted Section 156 as overturning settled law on the irrevocable nature of terminal disclaimers.  Merck argues, on the other hand, that the structure, legislative history, and "twenty years of consistent PTO interpretation of Section 156" support the district court’s "plain language construction" of the statute that allowed the patent term extension on the ‘413 patent to stand.  Thanks to the attorneys who argued the case, links to the briefs are provided below.

    A decision in favor of Hi-Tech would have far-reaching consequences.  Many of the most valuable patents owned by innovator drug companies would lose years off their terms, potentially costing billions of dollars in lost revenue.  Innovator drug companies routinely file for patent term extensions, and terminal disclaimers are quite common simply due to the nature of pharmaceutical patenting.

    LINKS TO APPEAL BRIEFS:

  • JAMA Report Finds Economic Benefits of FDA Pediatric Exclusivity Program Vary Widely

    A recent report published in the Journal of the American Medical Association found that the FDA’s Pediatric Exclusivity Provision (PEP) does not necessarily yield lucrative returns for innovator drug companies.

    The PEP authorizes the FDA to grant innovator drug companies a six-month extension of marketing exclusivity (beyond patent expiration) in exchange for conducting studies of the drug’s effect in children.  The program sought to improve product labeling for pediatric uses.  The provision, passed as part of the Food and Drug Administration Modernization Act of 1997, is set to expire later this year.

    Critics have alleged that the PEP generates a lucrative windfall for innovator drug companies, while providing consumers with few additional benefits.  The JAMA report examined the degree to which Big Pharma has financially benefited from the program.

    The authors studied nine different drugs in a variety of therapeutic classes.  The six-month net economic return for the participating drug company varied from -$8.9 million to $507.9 million.  The return-to-cost ratios varied from -0.68 to 73.63.

    The authors found that the PEP did not consistently generate large financial returns for innovator drug companies.  In some instances, complying with the program generated a net loss.  Yet the authors found that the program has created incentives for innovators to carry out much-needed clinical drug trials in children.

    Robert S. Dailey is a third-year law student at the University of North Carolina at Chapel Hill.  He holds a Ph.D. in physical chemistry.  Rob was a member of the 2006 class of summer associates at McDonnell Boehnen Hulbert & Berghoff.

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  • Bill Aimed at Prohibiting Reverse Payment Settlements Clears Senate Judiciary Committee

    The Senate Judiciary Committee passed the "Preserve Access to Affordable Generics Act" (S. 316) today by unanimous consent.  If enacted, the bill would prohibit "reverse payment" settlements of Hatch-Waxman litigation, in which an innovator drug company pays a generic drug company to delay marketing its generic drug product.  Specifically, the bill would amend the Clayton Act by adding a new Section 28, reading in part:

    (a) It shall be unlawful under this Act for any person, in connection with the sale of a drug product, to directly or indirectly be a party to any agreement resolving or settling a patent infringement claim in which–

    (1) an ANDA filer receives anything of value; and

    (2) the ANDA filer agrees not to research, develop, manufacture, market, or sell the ANDA product for any period of time.

    (b) Nothing in this section shall prohibit a resolution or settlement of a patent infringement claim in which the value paid by the NDA holder to the ANDA filer as a part of the resolution or settlement of the patent infringement claim includes no more than the right to market the ANDA product prior to the expiration of the patent that is the basis for the patent infringement claim.

    The bill is thus a legislative solution to reverse payment settlements, which have been endorsed by federal courts in cases such as FTC v. Schering and In re: Tamoxifen Citrate Antitrust Litigation.  The FTC has been a vocal critic of such decisions.

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