Bio/Pharma Patentee Challenges Ahead
As discussed last week, the USPTO’s Patent Trial & Appeal Board (PTAB) offers significant benefits to generic drug companies seeking to enter the market of a branded competitor. That is, the PTAB offers a short circuit to expensive district court litigation for challenging high value drug patents.
In addition to the proceedings discussed last week, three recent PTAB decisions involving DNA sequencing patents owned by the Trustees of Columbia University in the City of New York, the PTAB cancelled all challenged claims in the three patents, IPR2012-0006 and 00007 and IPR2013-00011. While not technically drug patents, their fate is indicative of what the drug industry faces in PTAB challenges. Read the rest of this entry »
IPRs and Drug Litigation
Since Post Grant Review (PGR) is designed to challenge patents on 112 and 101 grounds not available in Inter Partes Review (IPR), it is often assumed that Bio/Pharma is somewhat unconcerned with the growing trend to challenge patents in IPR at the PTAB. Today, my partner Richard Kelly and I explain that ethical drug companies are in fact very concerned with IPR.
The generic drug industry enjoyed a run of almost 20 years of enormous profits from the 180 day exclusivity period granted to the first ANDA file under the Hatch-Waxman Act — this all changed in 2003. In response to perceived abuses, The Medicare Prescription Drug Improvement and Modernization Act became law in 2003. One unintended consequence of the act was that most exclusivity periods became shared. That is more than one generic company received the right to sell during 180 day exclusivity period.
The impact on the generic industry’s profitability has been marked. First, if there is only one generic, it has been estimated that the generic company will receive about 94% of the ethical company’s wholesale price and will capture 80% or more of the ethical drug company’s market volume. In contrast, with a shared exclusivity between two competitors, only 52% of the ethical company’s price is captured, at 9 competitors only 20%, but still collectively capturing about 80% or more of the ethical company’s volume. In the recent Crestor litigation, 9 companies are eligible for the 180 day shared exclusivity. This changes the economics of drug patent litigation tremendously. No longer can generic companies afford to pay $10 million or more in legal fees to challenge a drug patent listed in the FDA Orange Book. Like many patent challengers the generics are looking to cut litigation costs — enter the PTAB. Read the rest of this entry »