Posts Tagged: "Drug Companies"

Critics of drug patents often claim that when initial drug patents expire, drug companies stuff their patent portfolios with “trivial” patents that unjustifiably extend their patent monopoly to keep the prices up.  This argument perpetuates common myths and misunderstandings that fail on several levels… In the last decade, large molecule biological drugs have come to the fore. They provide dramatic new treatments for some conditions but can be very expensive. It is difficult to develop inexpensive generic-type versions for biological drugs.

We create two new companies around academic inventions every day of the year. The critical role such companies play in drug development is clear. The successful integration of public research institutions into the economy is based on the Bayh-Dole Act, which inserted the incentives of patent ownership into the government R&D system. Not a single new drug had been developed from NIH funded research under the patent destroying policies preceding Bayh-Dole. No one is going to spend billions of dollars and more than a decade of effort turning early stage inventions into new drugs or fund a life science startup company without strong patent protection. Yet the patent system and Bayh-Dole are precisely what the critics seek to undermine.

One reason the PTAB is convenient for reaching reverse payment deals is that there is no direct antitrust oversight, since its judges are administrators with very narrow legal authority. Further, while there is a statute requiring agreements between Hatch-Waxman firms to be submitted to the Federal Trade Commission (FTC) for antitrust review, the parties may attempt to evade it. The statute requires submission of agreements that relate to the manufacture or sale of either firm’s drug. The parties might therefore feel justified (rightly or wrongly) in not submitting a consent decree stating that the patent is valid and would be infringed by the proposed generic, since this does not expressly address manufacture or sales. Alternatively, it could be that the parties submit a district court consent decree (which includes no reverse payment), but not the PTAB settlement (which could include a reverse payment). After all, a PTAB settlement simply says that the parties agree to terminate the IPR – it need not declare the patent valid – and this arguably does not relate to manufacture or sales.

The idea of reducing drug prices through more government control is always simmering on the backburner and doesn’t require much to bring it to a full boil. Two recent actions turned up the heat to full blast. The response is often calls for more regulation, but ever increasing regulation benefits established players, which while inconvenienced, can afford to play the game. Start-ups can’t survive in endless oceans of red-tape that increase their costs while restricting market entry. Before rushing to impose more federal control, it might be wise to ask if government regulations inadvertently contribute to the problem.

The United States District Court for the Southern District of Indiana ruled in favor of Eli Lilly (NASDAQ: LLY), issuing a final judgment in the Hatch-Waxman infringement litigation relating to U.S. Patent No. 7,772,209. This matter arose as the result of the defendants’ filing of Abbreviated New Drug Applications (ANDAs) with the Food and Drug Administration (FDA). The ‘209 patent, covering a method of use, protects the co-administration of pemetrexed disodium with two nutrients – folic acid and vitamin B12, which protects against the side effects of the drug Alimta®. The district court found direct infringement by administering physicians under § 271(a), and thus inducement of infringement by Defendants under § 271(b).

During the last hearing of the House Judiciary Committee there was an attempt to insert language via amendment that would make it impossible for Kyle Bass and others to challenge pharmaceutical patents via post grant challenge at the Patent Office. Judiciary Chair Congressman Bob Goodlatte (R-VA) vociferously objected saying that if the amendment to prevent post grant challenges to pharmaceutical patents passed it would create a so-called scoring problem with the Congressional Budget Office (CBO). What an admission by Goodlatte! No legislative help is coming for pharma’s post grant challenge problem because the federal government likes the idea of some patents on important drugs being invalidated, which will save Medicare money.

There’s been a lot of positive activity in recent months for Bristol-Myers Squibb of New York City. In early March, the U.S. Food and Drug Administration approved the use of BMS’s immunotherapy drug Opvido for the treatment of lung cancer. The approval came ahead of schedule after a clinical trial of the drug was ended due to a significant improval in survival rates. In the early days of April, the company announced a partnership with Dutch-based pharmaceutical developer uniQure that will see BMS pay uniQure $254 million for the successful development of a genetic therapy for congestive heart failure. Also in early April, BMS finalized the acquisition of Flexus Biosciences, a California firm focused on developing anti-cancer therapeutics.

This year the pharmaceutical world has already seen some incredible mergers and acquisitions. This rapid pace of activity represents the highest level of pharmaceutical and biotech takeovers since 2009, according to Bloomberg Business. The week of March 30th started with the announcement of four major pharma or biotech mergers which totaled greater than $17 billion in costs, including the $3.5 billion Teva acquisition of Auspex. One particular deal, the purchase of benefits management company Catamaran Corp. by health insurer UnitedHealth Group Inc., will exceed $12 billion on its own.