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Implications for generic drug manufacturers
Though the generics market is largely risk free, the segment
not only faces intellectual property related challenges but market challenges
too, say Parikshit Bansal and Anand Sharma in the second part
of the article
Under the Medicare Prescription Drug and Modernisation Act
of 2003, some changes have been made in the existing Hatch-Waxman Act. These
are as follows:
| Paragraph IV filings
are generally accompanied by intense litigation against big pharma companies |
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Non-extension of the 30-month period: As per modified
rules, only once the 30-month stay will be permitted in case of those patents
listed in the Orange Book, when an abbreviated new drug application (ANDA) is
filed under paragraph IV certification.
Modifications to the 30-month stay are allowed based on district court judgements.
Patent holders included new patents in the Orange Book after receiving notification
regarding para IV certification and thus extended the 30-month period.
Time limit for informing patent owner: The company
filing ANDA under para IV must submit full and complete information over and
above what is necessary under current law and must notify the patent owner within
20 days.
Provision for allowing declaratory judgement: If the
patent owner does not file infringement proceeding within 45 days of notification
issued by ANDA applicant, the applicant may request for a declaratory judgement
and thus avoid being sued. If sued, applicant may file a counter claim requiring
patent owner to make changes in the Orange Book listings. This favours the patent
holder, because he does not have to pay any damages for not modifying the Orange
Book listing in time and there is apparently no time limit for making such modifications.
Benefit of exclusivity for several ANDAs filed on same day allowed: It is now
possible for many generic companies to qualify for the 180-day market exclusivity
if several ANDAs are filed on the same day.
Implications of the Act for manufacturers of generic drugs
Monopoly extension beyond Patent term: Under the Hatch-Waxman
Act, the government has a system of patent term ‘restorations’ under
which monopoly of the original patentee can be extended for a maximum period
of 5 years in addition to the initial patent term. In the European Union also
there exists a system of supplementary protection.
Reward for paediatric trials: As of 1997, the US allows
a six-month exclusivity period as a reward for studying the drugs in children.
Also the US allows, as a reward, six months exclusivity period to the first
generic manufacturer to file a successful para IV certification alleging that
a patent is invalid or not infringed. Thus, as far as the export of generics
is concerned, it faces important IPR hurdles today in the markets of EU and
the US.
How IPRs are used by patent holders to block entry of generic
drug makers
Though generics offer cheaper alternatives to existing, branded drugs, it is
not a cakewalk for the pharma companies. It is true that the generics market
is largely risk free, but the generics segment not only faces IP related challenges
but market challenges too. Paragraph IV filings are generally accompanied by
intense litigation against big pharma companies. Also, there is intense competition
from the market. Challenging patents and associated legal costs can be quite
high. Sometimes litigations can run into US $15-18 million to be successful.
- Use of legislative provisions and loopholes to apply
for patent extension. As of now, the five-year
period is already allowed to condone for delay in approval.
- Suing generic manufacturers for patent infringement
Being aware that their drug cannot come off-patent when there is ongoing patent
litigation, the original property right holder files suits against generic manufacturing
claiming infringement on one or more layers of patents subsequently filed on
various, and often insignificant elements of the drug.
To date such cases are going on in the US for Claritin, Cardizem, Buspar and
Prozac. Under the Uruguay Round Restoration Act (URRA), the US provided an extension
of three years as gratis. This way Zentac of Glaxo gained an additional nineteen
months of protection. Claritin got an extra 22 months of exclusivity. Claritin
was able to extend its patent life further by six months for an estimated $3
million paediatric trial, but for the company (Schering-plough) the gain made
through this alone was $one billion.
According to estimates, through these and other legal tricks, the total gains
for Claritin have been of the order of extra four-and-half-years of patent life
which is going to give additional $13 billion to Schering-plough.
- Merging with direct competitors to retain monopolies.
Rather than allow generic drug makers to enter the market resulting in fall
in prices and loss of profits, companies prefer to merge with competitors to
maintain monopolies and thus profits.
- Recombining drugs in different ways to claim new patents
Simply by recombining drugs or using other tricks sometimes companies are able
to get patents, which block the entry of generic drug makers. Similar trick
was used by Europe’s biggest drug maker, GlaxoSmithKline for its biggest
selling asthma drug Seretide also called Advair having global sales of US $2.2
billion. Patent granted to GSK’s product was challenged by the generic
drug makers on grounds of obviousness. The case was fought in the London High
Court. The main grounds on which the patent rested was whether an inventive
step was involved in combining two older drugs, Flovent and Serevant to make
Advair.
Justice Pumfray of the London High Court ruled that the combination was entirely
obvious and cancelled the patent. The victory for generic drug makers meant
that they could launch cheaper versions of the inhaled asthma treatment as early
as October 2005.
Recombining drugs in slightly different ways to secure new patents is a real
cause of concern for a country like India where the local industry has capabilities
to provide competition to global pharmaceutical industry.
According to the Report of the National Institute of Healthcare and Medicines
(NIHCM), between 1989 and 2000 incrementally modified drugs (IMDs) constitute
54 per cent of all drugs patented and approved of by the FDA in the USA.
Other case studies and examples
Benefits of ANDA filing to get six months exclusivity:
- In August 2001, Dr Reddy’s Labs (DRL) won a
180-day exclusivity for fluoxetine which netted the company $70 million in
six months.
- When ciprofloxacin went generic, 10 players including
DRL launched their version of the drug on day one. This was unprecedented
and prices collapsed by 95 per cent. Same day filings meant that those 10
companies only and not anyone else had exclusivity rights for six months.
Innovators vs generic drug makers:
Case 1: Pfizer vs Dr Reddy’s Labs (DRL)
In February 1986, Pfizer was granted a patent on a class of compounds that treats
heart disease and hypertension. The patent covered the molecule amlodipine,
including two of its salts — amlodipine besylate and amlodipine maleate.
In 1987, Pfizer filed another application for amlodipine besylate salt specifically,
as studies conducted showed it was superior in treating hypertension, and marketed
it as Norvasc. As the patent’s expiry date approached (25th Feb, 2006),
Pfizer went ahead and filed a Patent Term Extension (PTE) under the Hatch-Waxman
extension rules.
Meanwhile, in 2002, DRL tried to get approval for manufacture of AmVaz under
the generics category in view of the significant returns estimated at $200 million
over a three-year period. DRL filed an ANDA for same under USFDA’s 505(b)
2, seeking marketing approval after it was found the patent term expiry (PTE)
by Pfizer was only for amlodipine besylate. On October 31, 2002 US FDA granted
approval to DRL to go ahead. However, Pfizer sued DRL for patent infringement,
insisting that PTE covered the entire scope of amlodipine. Pfizer lost the case
in a New Jersey district court in Dec 2002 but won the same in a higher court
in February 2004, thus putting an end to DRL attempts to tap a lucrative market
in the generics segment.
The IPR issues in this case touch several facets:
- Extension of IP protection (IPP): Even after
expiry of patents, IPP can be extended to compensate for the loss to the innovator
during the approval process. Presently, this extension period is restricted
to five years. Pfizer was able to get IP protection for its drug amlodipine
besylate (Norvasc) even after expiry of the patent.
- Broad nature of IP coverage: The basic patent
coverage is quite broad and a generic drug maker may find it tough to manufacture
even the generic versions after expiry of the patent term. DRL was not granted
permission to manufacture amlodipine beslate (AmVaz) even though the drug
had not been covered under the PTE. DRL followed necessary legal procedures
and even won in a lower court, but ultimately did not get permission.
- IPR issues extend to generics also: DRL simply
wanted to make a drug whose patent term had expired and which the original
patent company had not marketed at all. Still it was unable to get permission.
- Ethical issues: A pharmaceutical giant, Pfizer is already actively making
profits on one version of the drug. It has not undertaken production of the
other version, even after 20 years. When it seeks extension, it does so for
only the version it has marketed (Norvasc). Yet when another company in the
US wants to manufacture the version which has neither been marketed nor applied
for under patent extension (AmVaz), Pfizer puts in all out effort to block
the same. It loses once. Does not give up. Fights in a higher court and wins
the case. Is it ethically correct on part of the company? What in your opinion
are the points in favour of Pfizer? After all it did win the case in a higher
court.
Case 2:Pfizer vs Ranbaxy Labs:
In Jan, 1983, Pfizer was granted a patent for its anti-fungal
drug Diflucan. When Ranbaxy initiated the process for launch of a generic version
of the drug, it was sued by Pfizer on grounds of patent infringement. Pfizer
also sought PTE for six months for a paediatric version of the drug. The infringement
suit against Ranbaxy was terminated on Jan 29, 2003 when the original term of
the patent came to an end. However, Pfizer was granted an extension of six months
till July, 29, 2003 during which Ranbaxy could not launch the generic version.
Diflucan which treats fungal infections had sales of US $1.2 billion in 2003.
Case 3: Aventis SA and Albany Molecular Research vs DRL
and others.
Five companies which sought to market generic versions of Allegra, anti-allergy
pill were sued by the parent company for infringement of its patents which expire
in 2013. Dr Reddy’s Labs (India), Barr Pharmaceuticals, Mylan Pharmaceuticals,
Impax Laboratories of US and Israel’s Teva Pharmaceuticals were all sued
by Aventis SA, France’s biggest drug maker and partner Albany Molecular
Research. Production of generics halted.
Case 4: GlaxoSmithKline vs Cipla Ltd, Ivax (USA) and two
other generic firms.
The case pertained to Europe’s biggest drug maker, GlaxoSmithKline. Patent
granted to GSK’s biggest selling asthma drug Seretide also called Advair
having global sales of US $2.2 billion was challenged by the generic drug makers
on grounds of obviousness. The case was fought in the London High Court.
The main grounds on which the patent rested was whether an inventive step was
involved in combining two older drugs, Flovent and Serevant to make Advair.
Justice Pumfray of the London High Court ruled that the combination was entirely
obvious and cancelled the patent. The victory for generic drug makers meant
that they could launch cheaper versions of the inhaled asthma treatment as early
as October, 2005.
Case 5: UCB vs DRL
Dr Reddy’s Labs has been sued by Belgian pharma major, UCB for patent infringement.
DRL had filed ANDA with the USFDA for Levetiracetam tablets (250, 500 and 750
mg). Levetiracetam is the generic version of UCBs Keppra TM, for which patent
rights are held by UCB. It is used for the treatment of epilepsy. The brand
has annual sales of US $234 billion.
Compulsory licensing of patented drugs
Case one: Compulsory License granted to Cipla for anti-retroviral
(HIV-AIDS) formultions. Cipla became the first company in the world to benefit
from the issuance of compulsory license (CL) for import of drugs issued after
August 30, 2003. WTO decision to allow flexibilities in the patent laws to deal
with health emergencies.
The CL was issued by the Malaysian government to a national firm, Syarikat Megah
Pharma Vaccines, to import specified anti-retroviral patented drugs in different
doses from Cipla. These drugs are didanosine and zidorudine. The patent for
the first drug is held by Bristol Myer Squibb and the other drug is held by
GSK. The drugs have to be supplied to government hospitals in Malaysia for a
period of two years.
Case two: Issue of Compulsory License (CL) by Kenyan
government for manufacture of anti-pneumonia drug
The Kenyan government has initiated a process to issue a compulsory license
to procure antibiotic azithromycin, a new generation drug for which Pfizer Inc
holds patent rights. Indian drug companies who manufacture and market the drug
include Wockhardt, Alembic and FDC. The license issued by the Kenyan Government
would expect the CL holder to produce azithromycin formulations in quantities
that are enough to treat over two million cases of pneumonia in the Sub-Saharan
Africa. The market of the drug which is marketed by Pfizer under the brand name
Zithromax is close to US $one billion.
Some definitions of generic drugs on the web
A prescription drug, which is chemically equivalent to a brand-name product,
dispensed under its generic chemical name.
benefitsu.stanford.edu/glossary/glossary.html
Drugs marketed under their nonproprietary name rather than a brand name.
www.hsl.unc.edu/lm/druginformation/glossary.htm
A prescription drug that has the same active-ingredient formula as a brand-name
drug. A generic drug is known only by its formula name and its formula is available
to any pharmaceutical company. Generic drugs are rated by the Food and Drug
Administration (FDA) to be as safe and as effective as brand name drugs and
are typically less costly because advertising costs are not included. www.cwru.edu/med/epidbio/mphp439/Dictonary.htm
Copies of innovative products sold by multiple manufacturers once any limited
market exclusivity period has expired.
www.canadapharma.org/Patient—Pathways/Glossary—Terms/ Less expensive
drugs, but of the same therapeutic value.
Generic medicines appear on the market when the protection of original leading
medicines, assured by a patent is expired.
www.euromut.be/uk/lexique.htm
Important site for information on Orange Book
www.fda.gov/cder/ob/default.htm
Parikshit Bansal is with IPR Cell and Anand Sharma is with
Dept of Pharmaceutical Management at National Institute of Pharmaceutical Education
& Research (NIPER), Punjab. E-mail: pbansal@niper.ac.in
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