US pharma companies under increasing legislative pressure, key EU SPC decision and much more in July’s life sciences IP round-up
In this month’s round-up of patent news from the life sciences, we report on the latest blow to the St Regis Mohawks’ attempt shield their Restasis patents from inter partes review, the new bill seeking to roll out compulsory licensing in the US, and the Indian Supreme Court’s hearing on seed patentability.
Market Radar
Compulsory licensing bill attracts support in the US – A proposed legislative amendment that among other things seeksto allow compulsory licences for patented drug products has been tabled in the US House of Representatives, where it has found significant support. The Medicare Negotiation and Competitive Licensing Act of 2018 was introduced by Lloyd Doggett, a Democratic Congressman from Texas. It would require the country’s health secretary to negotiate prices of prescription drugs furnished under Part D of the Medicare programme. The bill states that if the health secretary fails to negotiate “an appropriate price” for a patented drug, they “shall authorize the use of any patent, clinical trial data, or other exclusivity granted by the Federal government” for sale under the Medicare programme. In such circumstances, the patent holder will be provided with “reasonable compensation”, as determined by several stated factors. The use of compulsory drug patent licensing is virtually unknown to US rights holders, and the passing of the bill could constitute a major watershed. By the end of July, there were 81 co-sponsors of the legislation – the greatest support for compulsory licensing ever seen among US legislators.
FDA chief warns of legislative backlash against “anti-competitive” patent strategies – The US Food and Drug Administration commissioner Scott Gottlieb criticised some pharma rights holders for their patent thicketing strategies, which he argued are unduly hampering competition from biosimilar products. Current “anti-competitive behaviours” include the acquisition of a plethora of follow-on patents, not simply to protect innovations, but “purely designed to deter the entry of approved biosimilars”. The FDA would work more closely with legislators and the Federal Trade Commission (FTC) to curb these tactics, he said, before warning that the approaches being employed by pharma innovators risked provoking a disproportionate backlash against life sciences patent rights.
Canadian IP office proposes new solid forms examination guidelines – New examination guidelines for patents claiming pharmaceutical solid forms have been proposed by the Canadian Intellectual Property Office (CIPO). According to Torys, the proposals seek a clearer, but more stringent set of examination requirements for these forms, which include polymorphs, salts, hydrates, solvates, desolvates and co-crystals. The suggested new guidelines will raise the non-obviousness and utility bars for these inventions, while also addressing tests for anticipation, indefiniteness and unity of invention. They will be subjected to public consultation until 10th August, and if approved will appear in the country’s Manual of Patent Office Practice.
Patentability decisions influenced by USPTO incentives, study suggests – A new study, published in the quarterly journal of the American Intellectual Property Law Association, found that the US Patent and Trademark Office’s human resources policies have influenced the office’s patentability rulings. According to one of its authors, the study – produced by several former patent examiners – analyses the effects of “the complex network of carrots and sticks attached to the examination function” on patentability decisions by making use of USPTO transactions data from 2001 to 2012. Its analysis suggests that the USPTO’s strong incentives to maximise the rate of patentability decisions increases the incidence of notices of allowance issued in such decisions. And it revealed that examiners who have been subjected to stronger quality incentives were more inclined to withdraw erroneous rejections and issue second-action non-final rejections, and were less likely to provoke applicant appeals. As such, the study showed that the balance of quality and production incentives has a significant impact on examiners’ patentability decisions.
Unity emerges on plan to reform Section 101– Early in July, IAM reported that a proposal to reform of Section 101 of the US Patent Act was gaining traction. The Intellectual Property Owners’ Association (IPO) and the American Intellectual Property Law Association (AIPLA) earlier this year announced that they had agreed on a unified proposal for changing and clarifying the legal scope of patent subject eligibility. They were joined more recently by the New York Intellectual Property Law Association (NYIPLA), which announced that it would support their suggestions. This reflects efforts to build a consensus among relevant stakeholders on the best way to reform Section 101, whose interpretation has proved controversial in recent years - not least in the life sciences, where there is great uncertainty over which diagnostic methods and methods of treatment can be patented. And, as IAM’s Richard Lloyd pointed out, a US Representative (Thomas Massie) has recently introduced a patent reform bill bearing much of the language of the associations’ proposal on Section 101.
AbbVie accused of ‘pay-for-delay’ abuses in Humira patent settlements – Two US senators asked the FTC to take a closer look at AbbVie’s recent high-profile patent settlements (see here and here) with producers of generic versions of its best-selling Humira biologic. Amy Klobuchar (a Democrat) and Charles Grassley (a Republican) raised concerns about the deals with Amgen and Samsung Bioepis. Both settlements stipulated that the Humira biosimilars would not be launched until 2023 in the US, but would come to market in Europe in late-2018. The senators suggested that the disparity between these entry dates could reflect a ‘reverse payment’ being made by AbbVie to delay the entry of competitors in the all-important US market. If they are correct, the settlements fall foul of US unfair competition rules. Regardless of whether the FTC chooses to investigate the Humira settlements, I argued in this IAM blog, it is likely that as the number of biosimilar/biologic patent litigations increases in the coming years, there will be mounting political and legislative pressure for increased scrutiny of such settlements.
Legal Radar
Tribal sovereign immunity cannot shield US patents from IPR, says CAFC - The US Court of Appeals for the Federal Circuit (CAFC) ruled that the Saint Regis Mohawk tribe cannot use its tribal sovereign immunity to exempt patents for Restasis from inter partes review before the Patent Trial and Appeals Board (PTAB). The patents were transferred to the tribe by their original owner Allergan in a highly controversial transaction in September 2017. That deal saw the Saint Regis Mohawks agree to license the patents back to Allergan in return for a significant one-off payment and ongoing royalty fees. The PTAB subsequently dismissed the tribe’s claim that the patents could no longer be the subject of ongoing inter partes review challenges, and similarly blocked Allergan’s attempts to withdraw from the proceedings. Both parties appealed, but the CAFC this month ruled against them, opining that tribal sovereign immunity protects tribes from lawsuits but “does not apply where the federal government acting through an agency engages in an investigative action or pursues an adjudicatory action”. In this IAM blog, Richard Lloyd pointed out that the rights holders are now left with a Supreme Court petition as the only legal means of trying to salvage their plan; others seeking a more favourable inter partes review regime ought perhaps now to direct their efforts towards to persuading USPTO Director Andrei Iancu – or even US Congress – to take action.
CJEU rules on crucial SPC question – The Court of Justice for the European Union (CJEU) issued its much-anticipated judgment on a question relating to supplementary protection certificates (SPCs) – the IP rights which compensate pharmaceuticals innovators for lengthy drug approval and R&D processes by extending a product’s period of market exclusivity for five years following patent expiry. Under EU regulations, an SPC can only be granted to a product that “is protected by a patent in force”, and the CJEU’s decision aimed to clarify the nature of this requirement. The dispute under consideration arose when a group of generic drug companies (including Teva, Mylan, Lupin and Accord) sought to invalidate Gilead’s UK SPC for anti-retroviral drug Truvada. This treatment contains two active ingredients – emtricitabine and tenofovir disoproxil (TD). However, the patent for which the SPC was granted does not cite emtricitabine. Instead, it discloses TD, but states no examples of TD being used in combination with any other ingredient, while containing only a broad claim to TD in composition with “a pharmaceutically acceptable carrier and optionally other therapeutics ingredients”. The generics argued that the patent therefore does not protect Truvada and cannot be the basis for SPC protection. Having been referred the case by Mr Justice Arnold, who was hearing the original case in the High Court of England and Wales and deemed European SPC law too vague on this question, the CJEU ruled that a combination product is protected by a basic patent “Where, even if the combination of active ingredients of which that product is composed is not expressly mentioned in the claims of the basic patent, those claims relate necessarily and specifically to that combination”. It implied that the Truvada patent does not satisfy these criteria.
Indian Supreme Court hears Monsanto appeal in controversial patentability case – On 18th July, India’s highest court heard arguments over whether genetically modified seeds are eligible for patent protection. The case was brought by Monsanto, whose patents for modified cotton seeds, known as Bt technology, were recently ruled invalid the Delhi High Court. That decision came after Monsanto sought to assert its patent against a licensee, Nuziveedu Seeds, which argued that seeds were unpatentable under Indian law. The high court’s judgement sent shockwaves across the Indian IP landscape, with one prominent blog describing the precedent as a “deadly blow to agro-biotech industry”. As such, the outcome of this month’s hearing will be watched closely by life sciences innovators with interests in the country.
Jazz Pharmaceuticals patent appeal fails at the federal circuit – In a precedential decision, the US Court of Appeals for the Federal Circuit (CAFC) upheld the decision of the US Patent and Trademark Office (USPTO) to cancel several patents belonging to Jazz Pharmaceuticals. The rights relating to narcolepsy treatment Xyrem were challenged at the office by Amneal Pharmaceuticals, which sought to launch its own imitation of the drug. Amneal successfully argued that the inventions claimed in the patents had been made accessible to the public prior to the effective patent filing date in December 2001 and that the rights were therefore invalid under Section 102. Given that Xyrem’s active ingredient can potentially be used as a date-rape drug, it had been approved under restricted distribution regulations, whose review process involved the FDA setting up a special advisory committee meeting. This was announced in a May 2001 Federal Register Notice, which described the meeting as open to the public, and contained a hyperlink to an FDA webpage containing background information on the drug. The USPTO’s Patent Trial and Appeal Board ruled that a person of ordinary skill exercising reasonable diligence would have been able to locate the materials on the FDA website and would have been motivated to do so. It deemed the materials prior art and cancelled the patents. The CAFC agreed to hear the case after the USPTO refused to consider an appeal against its decision, but dismissed the company’s argument that searchability and indexing of the Federal Register Notice are necessary for its contents to count as prior art. Instead, the court agreed that the claimed inventions were publicly accessible prior to the patent application date. This, it said, is the decisive consideration, rather than how many actually accessed the information.
Gilead Hepatitis C drug patent challenged by patient group – Several Indian patent applications claiming two hepatitis C drugs developed by Gilead Sciences have been opposed at the Mumbai Patent Office by a patient group, the Delhi Network of Positive People. It has been reported that the applications in question relate to the tablet formulation of fixed-dose combination of sofosbuvir and velpatasvir, as well as the polymorph form of velpatasvir. The oppositions are being made on the basis of Section 3(d) of India’s patent law, which prevents the registration of ‘secondary’ or ‘follow-on’ patents.
AstraZeneca seeks to block generic Brilinta – Pharma giant AstraZeneca initiated an Indian patent lawsuit against Dr Reddy’s Laboratories, which is seeking to market a generic version of heart illness treatment, Brilinta, it has been reported. The Anglo-Swedish company contends that the copycat would infringe its patent rights to the blockbuster drug; while one of its key rights to Brilinta expired recently – prompting generic competitors to flirt with market launch – AstraZeneca still possesses one patent for the treatment.
Deal watch
Leo Pharma buys Bayer’s prescription dermatology unit – Leo Pharma agreed at the end of the month to acquire Beyer’s prescription dermatology business. Though the value of the deal has not been disclosed, the unit is thought to be worth as much as $1.1 billion. The transaction reflects the drive towards specialisation that is one of the most notable characteristics of current business strategies in the sector. It consolidates Leo Pharma’s purchase of Astellas’ dermatology unit in 2016 for $725 million. And Bayer Consumer Health chief Heiko Schipper commented: “Moving forward, we believe that Leo Pharma is the right owner to grow and further develop the prescription dermatology business while enabling us to focus on building our core over-the-counter brands.”
Eli Lilly to sell Elanco and focus on human pharmaceuticals – Pharma giant Eli Lilly has announced that it plans to offload it animal health unit, Elanco, following an eight-month review of the business’s future. The company’s CEO David Ricks explained that the move would allow Lilly to better focus on its core prescription medicines business: “We believe this will allow Elanco to efficiently deploy its resources to those growth opportunities that best serve our customers. In addition, this will provide Lilly even greater focus on the human pharmaceuticals business to pursue our purpose of creating life-changing medicines for patients.”