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Archive for March 20th, 2014

Generic Pharma Leverages PTAB

pharma patentsIPRs 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 »