On Friday, the U.S. Court of Appeals for the Federal Circuit denied a petition to rehear by Apotex asking the Federal Circuit to reconsider a ruling that Apotex is barred from selling its generic version of the anticlotting drug Plavix while Apotex continues its five-year patent lawsuit with Sanofi-Aventis.

The trial began this week with Apotex urging that the underlying patent should be declared invalid saying that the development of Plavix was anticipated in a prior patent held by Sanofi and that its development would have been obvious to a person of ordinary skill in the field who examined the prior patent. Apotex also claims that Sanofi made several misstatements and omissions in its prosecution of the patent in the USPTO. The trial is expected to last about four weeks.

A reader recently asked the question about how often generics succeed in challenging branded drugs. I don’t have recent statistics for just generic drug challenges but some earlier studies for all patent cases showed that out of the 2,500 cases filed each year, barely one in seven terminates with a court’s judgment. Most of the remaining cases were settled. Thus, the vast majority of the patents remain intact. Of those patents that go all the way through to a court ruling, many do not survive validity challenges.

Approximately 40% of those patents challenged on validity grounds are found invalid on summary judgment. Assuming summary judgment of validity is survived, approximately 30% are found invalid at trial. However, validity is only one piece of the equation on whether the patent will survive. There are also equitable challenges so the cumulative effect of all validity and equitable challenges results in a patent surviving a challenge to its validity approximately 55% of the time. (If you have information you can share on generic challenges, drop me a note)

Keep in mind, this all comes down to money and the balance of risk. If you are talking about a blockbuster patent, which could mean over $1 billion in yearly sales, then spending a few million dollars on a patent suit is not a bad investment if you feel there is a substantial ground for challenging the patent, e.g., invalidity. While it is true that basic active ingredient patents are challenged more and more frequently, no generic drug has been legally permitted to enter the US market before a branded drug’s initial active ingredient patent’s expiration — it is also true that patents are often challenged, found invalid, and (only) then a generic may enter the market. The incentives for challenging a patent are quite high.

The provisions of the Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Amendments) which govern the generic drug approval process give 180 days of marketing exclusivity to certain generic drug applicants. The statute provides an incentive of 180 days of market exclusivity to the “first” generic applicant who challenges a listed patent by filing a paragraph IV certification and running the risk of having to defend a patent infringement suit.

The statute provides that the first applicant to file a substantially complete ANDA containing a paragraph IV certification to a listed patent will be eligible for a 180-day period of exclusivity beginning either from the date it begins commercial marketing of the generic drug product, or from the date of a court decision finding the patent invalid, unenforceable or not infringed, whichever is first.

Given last year’s sales of Plavix of $6.3 billion, for example, you can see why a 180-day exclusivity period (i.e., being the only approved generic drug) can be worth the risk of a patent challenge. All the generic risks is the cost of the suit. The generic would only need to be successful a few times to be quite lucrative.

In the Apotex case, the disputed patent, U.S. Patent No. 4,847,265, covers Plavix’s main ingredient and does not expire until 2011. The first patent covering Sanofi’s oral antiplatelet chiral drug clopidogrel bisulfate (US 4,529,596), was filed in 1983 and expired in July 2003, and claims both enantiomers and their mixture, whereas the ‘265 patent, due to expire in 2011, claims only the (+)-enantiomer. In the description of the activities of each enantiomer in the ‘265 patent, data show that the (+)-enantiomer is pharmacologically superior in activity and less toxic than both the (–)-form and the racemate.

The U.S. District Judge agreed that Apotex would infringe the patent issued an injunction blocking the sale of generic Plavix citing the likelihood that they will prevail in the patent case. The judge said Sanofi had demonstrated that questions Apotex raised as to the validity and enforceability of its patent were without substantial merit. Therefore, Apotex has been unable to sell its generic drug thus far. (But see: Court Blocks Generic Plavix by Apotex and Apotex To Launch Generic Plavix At Its Own Risk)

On the question of pay-offs of generics to not introduce their drugs, things are never simple. As I mentioned above, generic-drug companies regularly make legal challenges to brand-name companies’ patents in the hopes of getting their generic versions on the market more quickly. They have little to lose. For the cost of a lawsuit, the generic company gets a shot at hundreds of millions (perhaps billions) of dollars in revenue.

The threat of a lawsuit claiming that the brand-name drug companies patent is invalid is close to being held at gunpoint since a jury may find the patent invalid and the drug company will be left twisting in the wind. Patent invalidity suits often come down to a nuanced, battle of experts trying to decide what some hypothetical person skilled in the art would or would not have found obvious a decade or two ago.

Having these matters put in front of a jury can feel a lot like a game of Russian roulette. Therefore, the drug company will often decide to resolve the dispute out of court, with the generic companies agreeing to give up their claims in exchange for cash settlements. The generic versions of the drugs then enter the market when the patents expire. But, the alternative would be for the companies to continue legal battles through endless appeals.

For now, Sanofi’s patent runs through November 2011.

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4 Comments

  1. […] The Patent Baristas wonder whether it is worth it for Generics to challenge Branded Drugs. […]

  2. Just a note to consider- vast majority of H-W litigation is not carried out in front of a jury. Unless the generic challenger alleges noninfringement (and over 90% do not challenge this since the 505(j) filing requires a bioequivalent API, aka a copy or near copy), only validity and unenforceability, both questions primarily of law, are decided. I’ve been involved with a couple of dozen H-W suits and only 2 (both pre-Markman) were tried in front of a jury.

  3. An interesting question that is raised here.

    Coming back to the success of Paragraph IV patent challengers, the FTC released a study (already back in 2002) on “pre-expiry” competition between brand name drugs and generic drugs. It indicates that “generic applicants prevailed in 73% of the cases in which a court has resolved the patent dispute.” The data used for this study may be somewhat out of date now and not be representative, but “73%” is nevertheless quite surprising.

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