Drug Wars: Companies Fight Patents In Court With A Fortune At Stake

Dan Berger, Ph.D. is a former colleague of mine from Wyeth. When Wyeth went away so did we, albeit in different directions. Dan became a patent agent - a very specialized field in which a very high-stakes game is played - invalidation of drug company patents by other companies, usually generic manufacturers. This makes him uniquely qualified to explain the nuances in patents that can result in billions of dollars going to one company rather than another.

Generic drug companies have on staff patent agents and attorneys whose sole job is to scour the patent literature for weaknesses in patents that were filed (usually) by the inventing company (innovator), for example, that the drug was already covered in an older patent, which would void the new one. And innovator companies also scour the literature to make sure that the drugs they may end up producing have not been previously described in the patent or academic literature.

These weaknesses arise because patent law, especially as it pertains to drugs, has very little black or white and a whole lot of gray. But even more green. Even minuscule oversights in an original patent can lead to a court challenge in which part or all of that patent can be invalidated. If a generic company is able to convince a court to overturn an original patent then it will be able to make and sell the same drug for less, since the generic company will have spent none of the R&D money that it took to get the drug to market. For generic drug companies, this is the equivalent of a walk-off grand slam in the bottom of the 9th.

Before we get to Dan's analysis, it is important to understand what drug patents do (and do not do). Patents do not give a company the right or permission to sell anything. This is the decision of the FDA. Rather, they simply serve to provide exclusivity - a period of time (1) during which other companies can not make or sell the drug. Drug companies that do research have only a limited amount of time to recoup the $2+ billion that it took to bring the drug to market and make a profit from the drug. If a patent for an important drug is invalidated it can spell disaster for the original company.

There is a huge amount of money at stake and even minor errors can have enormous consequences. Dr. Berger explains.

Patents are of central importance to companies (and occasionally individual inventors) that have provided innovation in the form of new and novel drugs and products. Without patent protection, innovative companies would not be able to obtain a return on investment that was spent on research and development.

This is because a patent provides the patent holder with the right to prevent other companies using, selling, manufacturing or in any way copying the invention or technology without permission. Patents are of critical importance to the pharmaceutical industry, which invests large sums of money into research and development, both of which involve years of scientific research followed by long and expensive animal and human studies toxicology and efficacy studies. Without patent protection, there is absolutely no incentive for a company to invest large amounts of money and time on a product that could then easily be copied and sold cheaply by a competitor.

Under current US law, patents give the inventor exclusivity for 20 years from the date that the patent is filled with the US Patent Office (2). But this is actually a simplification. Sometimes patent terms can be longer due to extensions which are granted to compensate for regulatory delays by the FDA. Also, adjustments are also made due to delays by the US Patent and Trademark Office.

Why does any of this matter? It is because all of these details are constantly being carefully monitored by companies (typically generic companies) that are waiting to jump in and sell the same product as soon as legally possible. Here is an example of some details that can have consequences:

THE DEVIL IS THE DETAILS. ONE ERROR ADDS UP TO MILLIONS OF DOLLARS

Did the Patent Office make an error in calculating a patent term adjustment, for example adding an extra month by mistake? For a typical generic company, this may translate into millions of dollars per day which can be made by selling a drug that appears to have retained patent coverage but has not because of the error. In this case, it is well worth their time to let the Patent Office know about this error. 

TIMING IS EVERYTHING. AND ALSO A GUESS.

A perennial question for an inventing company is when to file the patent. If the company files very early, they may end up having a shorter time of useful patent life, especially if the time to get the drug to market takes longer than expected (this is very common).However, if the company waits too long, a competitor that is working in the same therapeutic area may have made the same discovery and filed sooner, in which case the first company is out of luck.

HOW INNOVATIVE IS INNOVATION?

Another way that an innovator company can retain exclusivity of a drug is by developing new forms or formulations which are significantly improved. The company can then file a follow-on patent for the “improved drug” and may be granted another 20 years of patent exclusivity. For example, drugs, like many other organic molecules can have multiple crystal forms of the same molecule (this is called polymorphism). So, the original drug may require that a large tablet must be taken four times a day to be effective. However, a different polymorph (crystal form) might enable the drug to be dosed with smaller tablets that can be taken once a day because of better absorption into the blood.

So, what may seem to many of us to be a simple modification can actually be grounds for the issuance of a new patent which will them give the company another twenty years of exclusivity from the new patent filing date! It is at this point that the generic companies will disagree, saying that this is an “evergreening” strategy used by the inventing company, solely for the purpose of making money, by keeping the generic companies from selling the drug.

OBVIOUSNESS IS NOT OBVIOUS

Generic companies can pursue a number of strategies to try to invalidate the extended patents. For example, demonstrating that under the conditions described in the original patent to crystallize (purify) the drug already generated some amount of the “new” crystal form at the same time, so it’s really not new or novel. Or the generics will argue that it would be obvious to make other crystal forms using common techniques, which may have even been discussed in general terms in the original patent. The difference between novelty, which can get a new patent, and the lack thereof, which cannot, depends greatly on obviousness, which is a term that is open to interpretation.

PERSEVERANCE PLUS LUCK CAN REALLY PAY OFF

A real home run for a generic company is demonstrating that a patent is invalid, and the best strategy for doing so is to demonstrate that the "new" invention is not novel. Thus, if company A patents and begins marketing miracle erectile dysfunction molecule X, but the same molecule happened to be made by years before by a graduate student working on erectile dysfunction drugs then the company's drug is no longer a novel invention. The patent can be invalidated and a generic company would then be free to sell the drug the next day. Home runs are rare occurrences, yet most generic companies still scour the chemistry literature in detail to ensure that no one else made the same molecule in the past. It could be as simple as having overlooked a doctoral thesis of a graduate student published in the Podunk State Agricultural University library.

"SKILLED IN THE ART" - THE WEAPON OF CHOICE FOR GENERIC COMPANIES

Another way to invalidate a patent is to demonstrate that it is obvious “to one skilled in the art.” This means that if someone patents a combination of two ideas that are common knowledge to scientists in the field then it is deemed obvious and can’t be patented.

For example, it may be commonly known that a molecule of a certain structure would be useful to inhibit a protein linked to certain types of cancer. If it is also commonly known that a positively charged molecule also inhibits the protein, then it would be obvious to add a positive charge to the first molecule.  So, if a company combined the two ideas in a patent, a generic company would argue that this is invalid due to obviousness. On the other hand, the patent holder could make an argument for example that the idea would not work if you used the wrong kind of positively charged group or if it was placed in the wrong area of the molecule that it wouldn't work then the invention is, indeed, non-obvious. The company could further strengthen their argument by showing other molecules which resulted from combining the two ideas was not an effective cancer drug.

BUT THE INNOVATING COMPANIES CAN FIGHT BACK

But companies which made initial discoveries also have tricks up their sleeves. One common practice for a company looking to retain exclusivity without contributing much innovation is combining two drugs to improve a therapeutical outcome, and then file a new patent for the combination. This can be possible because of the language in the original patent. An example: "Miracle drug Z can be combined with various agents A, B, C that are known to treat schizophrenia.” Then, years after selling Z the company which holds the original patent runs new clinical trials and discovers that Z works exceptionally well in combination with A, B, or C and will then file a new patent. 

WORD WARS: PATENT LANGUAGE IS OBTUSE AND CRITICAL

The company will argue that the new patent is valid because the combo is spectacular, and this was not anticipated. But this strategy is a double-edged sword. Although inclusion of A, B, and C may give the company a stronger original patent, use of general language in first patent can be used against it if the company tries to file a more specific (with a longer period of exclusivity) patent later on.

This strategy quickly gets the attention of generic companies. which claim that the second patent is invalid because this combination was already suggested in the original one. And then the inventing company will counter-argue that the combination is “unexpectedly potent” because it has demonstrated that the effect of the combination is more than just additive effects from the two drugs.

Now it gets fuzzy. The argument here comes down to the interpretation of data; how many possible combinations were suggested in the original patent? Which combinations are simply additive and which are better?  The job of the innovator company it to persuade the Patent Office that the idea is not obvious as both drugs are known to have useful therapeutic effects. It should be noted that many combination treatments can be particularly effective, for example in AIDS patients to overcome resistance.

THE RULES CHANGE. THE US JOINS THE REST OF THE WORLD.

Current US law operates under a “first-inventor-to-file” system (in alignment with most of the world). The simple version of this is: it doesn’t matter who invented something first, it only matters who files first. Prior to March 16, 2013, the US operated under a “first-to-invent” system. For patent disputes under the original system, the litigation was typically costly and complicated, with each party having to prove through testimony and scientific notebooks and other records that they were first. Many scientists remember the rules in place for needing to sign every experiment page, and having a witness signature to prove “first to invent.” While it is still good practice to sign notebooks to support scientific information for a patent, it is not as critical as previous times to demonstrate who invented first (which includes the step of putting the idea into practice).

While what I have described may seem obscure. and maybe even silly, the consequences are huge. Billions of dollars can rest upon the interpretation of a single sentence in a 1000-page document. The pharmaceutical industry is not a monolith; it consists of science and business. You have just read about a critical part of the business.

UPDATE 3/29/18:

A patent dispute between GlaxoSmithKline and Teva over Coreg, a drug for congestive heart failure, was just settled. GSK lost to the tune of $235 million. Dr. Berger explains:

"GSK argued that Teva changed the label on Coreg, which caused doctors to prescribe generic version and infringe on their patent. Teva, which has already argued that the GSK patent was invalid, disagreed and brought the case to U.S. District Judge Leonard P. Stark in Delaware. Judge Stark ruled that Teva’s label change was not proven to be the reason for doctors prescribing Teva's generic copy. Since GSK could not prove causation by Teva, Stark overruled original decision."

NOTES:

(1) A patent rewards the innovator with 20 years of exclusivity. But in reality, this is usually 5-10 years because much of this time is eaten up by regulatory requirements from the FDA and the time it takes to conduct them. The clock is running during that time.

(2) During this time there are maintenance fees which must be paid by the inventor to the patent office. Otherwise, the patent will expire.