Valid but Not Infringed, Merck’s Loses Blockbuster Nasonex®
|Written by Gene Quinn
Patent Attorney & Founder of IPWatchdog
Zies, Widerman & Malek
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Posted: Jun 19, 2012 @ 2:26 pm
Last week, on Friday, June 15, 2012, Merck (NYSE: MRK) announced the U.S. District Court for the District of New Jersey (Judge Peter G. Sheridan) ruled against the company on the issue of patent infringement in its suit against Apotex Inc. and Apotex Corp. See Non-Published, Redacted Opinion and Court Order. The patent at issue in the decision was U.S. Patent No. 6,127,353, which covers the active ingredient in Nasonex® and which provides exclusivity the expiration of the patent on April 3, 2018. The District Court decision did, however, confirm the patentability of the claims in question, finding Apotex’s challenges for anticipation and obviousness unpersuasive.
The case at issue in the Merck announcement was styled Schering Corporation v. Apotex, Inc. 3:09-cv-06373. So why was Merck announcing this adverse decision? In November 2009, Merck completed a $41 billion acquisition of Schering-Plough. See Merck completes acquisition of Shering-Plough. This acquisition, making Schering a fully owned subsidiary, was reportedly part of an attempt to diversify as they seek to weather the recession and cope with the unpredictability of drug development. See Merck to buy rival for $41 billion.
In a complaint filed December 18, 2009, Schering claimed that the Abbreviated New Drug Application (ANDA) filed by Apotex constitutes patent infringement of the ’353 patent, which was issued to Schering on October 3, 2000 and claimed priority of an international patent application first filed pursuant to the Patent Cooperation Treaty (PCT) on September 6, 1991.
The filing of an ANDA can indeed constitute an act of patent infringement. ANDA applicant must make one of four certifications regarding each patent that applies to the drug for which approval is being sought: (I) no such patent information has been submitted to the FDA; (II) the patent has expired; (III) the patent is set to expire on a certain date; or (IV) the patent is in valid or will not be infringed by the drug covered in the ANDA. It is the paragraph IV certifications that are the most interesting. Although making a paragraph IV certification is not an active act of infringement, thanks to specific legislation, when a paragraph IV certification has been made the patent owner of the drug covered by the NDA may immediately institute infringement proceedings. And the plot begins.
Popular News Reports
Upon reading the press release I became quite curious. How could it be that Apotex would be able to submit an ANDA, essentially piggybacking on the information submitted to the FDA by Schering for approval of Nasonex® and not be infringing? To a pharmaceutical company there is only one claim that really matters and that is the claim to the composition approved by the FDA. Was this a case of the claim not being properly drafted? Patentability was confirmed. I figured it was worth a look.
That which passes for “news” in the patent space is disappointing at best. It would be charitable to characterize the press reports (if you can call them that) as barely informative. Website after website, news agency after news agency, blog after blog, merely reprinted the Merck press release, which itself was rather non-informing.
The lack of any serious new reporting has to be extraordinarily frustrating to investors and other seriously interested in understanding what happened. Nasonex® is a blockbuster drug and with this loss, if it stands through any appeal, will usher in a direct competitor some 6 years prior to patent expiration. This is BIG news, so the woefully inadequate information and analysis is particularly appalling. For crying out loud, according to Merck, global sales of Nasonex® in 2010 topped $1.2 billion. See Merck News. A variety of Internet sources place the Nasonex® market share of the inhaled steroid market at 47%. This is a big deal!
As is typically the case, if you want to get to the bottom of a news story in our little niche it is necessary to read the decision and figure it out yourself. Pacer password at the ready, I proceed.
The Nasonex® Patent and Composition
Schering sells Nasonex® as a metered-dose, manual pump spray unit containing an aqueous suspension of mometasone furoate monohydrate (water) equivalent to 0.05% mometasone furoate calculated on the anhydrous basis (non-water). Apotex claims its ANDA Product is different from Nasonex® because it intends to manufacture a nasal spray which contains mometasone furoate anhydrous (non-water). As such, Apotex alleges that its active pharmaceutical ingredient (“API”) is different—anhydrous as opposed to monohydrate.
The ’353 patent covers a composition of matter and focuses the novel crystalline form of mometasone furoate, as well as on various types of pharmaceutical compositions utilizing mometasone furoate monohydrate.
Schering claims Apotex infringes upon Claims 1 and 11 of the ’353 patent. Claim 1 of the ’353 patent describes the compound 9a,21-dichloro-16á-methyl-1,4-pregnadiene-11b,17a-diol-3,20 dione-17- (2-furoate) monohydrate, which is also referred to as mometasone furoate monohydrate. Claim 5 of the ’353 patent is directed to the compound 9a,21-dichloro-16á-methyl-1,4-pregnadiene-11b,17a- diol-3,20-dione-17-(2’ furoate) monohydrate as exhibiting x-ray crystallographic powder diffraction pattern (XRPD) having certain peaks with particular spacing and intensity. Claim 6 is directed to a pharmaceutical composition comprising mometasone furoate monohydrate in a carrier consisting essentially of water. Claim 11 is dependent on Claim 6 and is directed to the pharmaceutical composition of Claim 6 formulated as a nasal spray.
No-holds-barred Battle of the Experts
One might think that the matter of determining infringement would be an easy one given that in order for Apotex to take advantage of an ANDA and bootstrap approval based on the clinical trials of Schering the generic must be essentially equivalent to Nasonex. Unfortunately, however, there was no allegation by Schering-Plough that Apotex used a monohydrate at the time it manufactured the generic. Schering’s claim is that the anhydrate in the Apotex nasal spray converts to a monohydrate between the date of manufacture and its expiration date of the medication, which is two years after manufacture. Therefore, in order for Schering to prove infringement it needed to show that conversion occurred within two years after manufacture.
During discovery Apotex supplied Schering with 41 bottles of its generic nasal spray. For reasons not explained in the Court’s decision, the testing of the Apotex nasal spray did not occur within the critical time limit. More specifically, the generic bottles of nasal spray provided by Apotex were manufactured in June 2008 but not tested by the expert retained by Schering until September 2010.
Being unable to test the now expired bottles of the generic nasal spray to determine whether conversion occurred during the critical period defined by the Court (i.e., with the 2 year expiration period) it became necessary for the Schering expert, Dr. Matzger, to make the Apotex nasal spray. In order to establish whether a conversion occurred Dr. Matzger needed to accelerate the aging process. He then needed to separate the ingredients to see if the monohydrate was present. The most difficult ingredient to separate was Avicel, referred to “sticky.” To accomplish his task Dr. Matzger centrifuged some samples (1-to-3 times), and he also shook, rotated and spun some samples. At the conclusion of his analysis he determined that a conversion did take place.
Not surprisingly, Apotex had an expert that raised issue with the testing procedures of Dr. Matzger. Specifically, a significant issue was whether the testing conducted by Dr. Matzger fundamentally changed the substance of the Apotex nasal spray.
Dr. Threlfall, the Apotex expert, noted that some ingredients in the Apotex nasal spray were “thickening agents, preservatives, or protective colloids, such as pH controlling reagents.” Dr. Threlfall went on to testify that every cell in the Apotex nasal spray is particularly important and by separating the ingredients Dr. Matzger fundamentally changed the Apotex nasal spray, thereby skewing the results. Dr. Threlfall also testified that even assuming the appropriateness of Dr. Matzger’s testing (which was of course disputed) his results only showed that 25 of 61 samples contained a monohydrate.
Ultimately, the critical testimony boiled down to Dr. Matzger opining that the Apotext generic will nearly immediately experience a conversion to a monohydrate and Dr. Threlfall opining that the Apotex nasal spray would remain stable for a least 800 years. Quite a difference of opinion to be sure.
At the end of the day the District Court repeatedly quoted for several pages the testimony of Dr. Threlfall where he was quite critical of the testimony and testing of Dr. Matzger. Dr. Threlfall even testified that it was his opinion that Dr. Matzger became an advocate and set out to prove what he was looking for. In another bit of testimony, in commenting on Dr. Matzger’s procedures, Dr. Threlfall stated “I would describe this as making scrambled eggs and then claiming you still had the eggs with the shells in the carton.” The District Court acknowledged that “Dr. Threlfall may have exaggerated some of his opinions through his colorful analogies, his demeanor was truthful.” Similarly, the District Court found Dr. Threlfall’s testimony persuasive, particularly on the issue of whether Dr. Matzger “overstepped the boundaries of a disciplined scientist.” The handwriting might as well have been on the wall at that point.
Despite the insufficiency in Dr. Matzger’s methodology to obtain separated samples, the District Court specifically addressed what a proper analysis of those samples showed. Schering relied again on Dr. Matzger while Apotex offered an additional expert, Dr. Cockcroft. Dr. Cockcroft explained that it is industry standard to require three peaks on a resulting graph obtained through x-ray diffraction in order to identify a material. The samples produced by Dr. Matzger produces only two peaks, but Dr. Matzger opined that the results were still consistent with the presence of monohydrate.
The District Court, however, was not persuaded. The District Court ultimately believing Dr. Cockcroft, saying: “The testimony of Dr. Cockcroft about the need to find three peaks seems more reasonable than Dr. Matzger’s ‘subset’ analysis.” Later concluding: “In the Court’s view, the practice of finding three peaks as per the Hanawalt practice is very sound.”
Similarly, in addressing yet another alternative testing protocol employed by Dr. Matzger to prove the presence of a monohydrate, the Court was faced with conflicting testimony between Dr. Matzger and another Apotex expert, Dr. Spingarn. Both performed the same Raman Spectroscopy test, but both came to completely opposite conclusions regarding the presence of a monohydrate. Ultimately the District Court decided to give “little weight” to the Raman Spectroscopy test conducted by Dr. Matzger “because it does not identify three peaks, and there is a significant difference in test results between Dr. Spingarn and Dr. Matzger.”
Not surprisingly, all of this lead the District Court to dismiss the patent infringement complaint “because Schering has failed to present credible evidence sufficient to meet its burden of proof by a preponderance of the evidence standard.”
With this testimony it is difficult to understand exactly how Schering could have anticipated a victory. Schering would, however, go on to prevail on invalidity and obviousness, which is of much less importance if Apotex will be given permission by the FDA to market their formulation. Schering will still have valid patent claims on Nasonex®, but they will lack the ability to stop an Apotex nasal spray. Still, I guess an oligopoly is better than nothing, assuming Schering will be able to prevent others from marketing a generic.
The Next Move for Merck / Schering?
In the press release announcing the loss Merck explained they were contemplating an appeal. “While we are pleased with the court’s ruling that the patent for Nasonex® is valid, we are disappointed the court ruled that this patent would not be infringed by the Apotex product. We believe the patent for Nasonex® in the United States is valid and would be infringed by the Apotex product,” said Bruce N. Kuhlik, executive vice president and general counsel of Merck. “Today’s decision reflects just one step in the lengthy patent litigation process, and we plan to review all of our options, including a likely appeal of the decision.”
Frankly, having read the decision of the District Court, I just don’t know how there could be a viable avenue for appealing the infringement ruling. The ruling is completely based on believability of the experts. Time and time again throughout the ruling the District Court found the Apotext experts more persuasive, credible and their science sound. Issues of credibility are left to the sound discretion of the District Court. For those in the know that means that it would be an extremely difficult uphill battle to demonstrate reversible error. Abuse of discretion always means the deck is stacked against the losing party. I just don’t see any Federal Circuit panel disturbing this infringement determination, which seems perfectly rationale and reasonable to me.
At the end of the day Kuhlik may well be right. The Apotex product may indeed infringe the ‘353 patent. Unfortunately for Schering and Merck, that reality no longer matters insofar as Apotex is concerned. If the testing of the Apotex bottles of nasal spray were tested within the relevant period defined by the District Court (i.e., the 2 year expiration period) the tests may have shown the presence of a monohydrate. At the very least testing before the expiration of the nasal spray would have nullified the issue of whether the testing of Dr. Matzger fundamentally altered the composition of the Apotex nasal spray.
About the Author
Gene Quinn is a US Patent Attorney, law professor and the founder of IPWatchdog.com. He is also a principal lecturer in the top patent bar review course in the nation, which helps aspiring patent attorneys and patent agents prepare themselves to pass the patent bar exam. Gene started the widely popular intellectual property website IPWatchdog.com in 1999, and since that time the site has had many millions of unique visitors. Gene has been quoted in the Wall Street Journal, the New York Times, the LA Times, USA Today, CNN Money, NPR and various other newspapers and magazines worldwide. He represents individuals, small businesses and start-up corporations. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.