Global Insight Perspective | |
Significance | The U.S. Supreme Court has dismissed the case, brought by Canadian generic-maker Apotex, after drug giant Pfizer (U.S.) did not sue the company over the patent loss for anti-depressant Zoloft (sertraline) earlier this year. |
Implications | The issue, one of the most counterintuitive in the constantly evolving relationship between generic and research-based firms, appears to have had the door slammed in its face at the U.S. Supreme Court, thus maintaining the status quo for the near-term. However, generics companies are seeking legislative clarification. |
Outlook | Failure to sue immediately creates a great deal of uncertainty for generics firms, which are subsequently susceptible to higher-risk litigation much later, when manufacturing and marketing has commenced. However, it also creates much uncertainty on the side of the branded manufacturer, and an acceptance of loss that will deter many companies from adopting the tactic. |
Reasonable Apprehension: Suing Over Refusalto Sue
The U.S. Supreme Court has refused to accept a case brought against überpharma Pfizer by Canadian drug-maker Apotex, over the former's blockbuster anti-depressant Zoloft (sertraline). The case was not the usual run-of-the-mill patent infringement dispute over the drug, the core exclusivity patent for which expired on 30 June. Instead, it concerned an uncommon but increasingly controversial method of allegedly ever-greening product life cycles—refusing to sue generics companies that file Abbreviated New Drug Applications (ANDAs) for a branded drug. Zoloft has been the litmus test for this issue, and has involved most of the big names in the generics industry, including Teva (Israel), Ranbaxy (India) and Dr. Reddy’s (India), in addition to Apotex.
The issue has been heavily debated since December 2003, when the U.S. Court of Appeals for the Federal Circuit dismissed a motion by Teva for a declaratory judgement on the matter, which also involved Zoloft. In effect, generics companies want the courts to immediately invalidate any patent that branded manufacturers have not sued over when an ANDA has been filed. However, U.S. courts have so far held that generics firms, including Teva and Apotex, must establish a “reasonable apprehension” that they are at risk of being sued by Pfizer. Generic-makers contend that the very fact that they have not been sued yet renders the likelihood of being sued later even higher. Federal district courts sided with Pfizer in January 2005, and a federal circuit reaffirmed this status quo the following December.
Branded manufactures sue generics companies over the composition-of-matter patent (and patents intimately related to that patent, such as manufacturing processes) as a matter of course once ANDAs have been filed. However, there are often up to 7-12 patents related to any given branded drug that are left untouched, and it is often not clear how crucial the remaining patents are to the branded drug’s exclusivity. The status of these patents remains unresolved, even if generics manufacturers succeed in overturning the core patents. To compound matters for generics companies, these patents are often attached to the branded drug later in its life-cycle, and thus expire at a much later date; in the case of Zoloft, for example, one of Pfizer’s patents expires in 2010, and it is only the June 2006 patent that has been annulled.
As a result, generic sertraline is effectively being launched “at risk”. Pfizer has remained silent on the matter, but its basic case has now been repeatedly backed up by the courts. In the case with Apotex, the drug giant indicated that it had no intentions to sue the Canadian company, and that there was therefore no dispute to adjudicate. Of course, Apotex, Dr. Reddy’s, Ranbaxy and Teva (which holds the 180-day marketing exclusivity on sertraline), are now relying in part on Pfizer’s goodwill. Their case is weakened by the lack of clear precedent, and unless Pfizer makes the move to sue, there are unlikely to be developments in the matter.
Outlook and Implications
For branded manufacturers, the Supreme Court’s decision makes sense and strengthens their intellectual property (IP) portfolios. After all, if patents that are not included in a potential lawsuit once an ANDA has been filed are summarily dismissed because of that, the companies could lose valuable IP assets that could be applied elsewhere. However, from the generics manufacturers' point of view, the very fact that they are not being sued over those patents should, by implication, render them invalid. While the core patent for Zoloft has expired, and generic erosion is already occurring, the case has major implications for the generics industry, because it creates risks and removes basic incentives. Having already decided to produce in-house authorised generic versions of Zoloft via its Greenstone unit, Pfizer is therefore tackling the drug’s patent expiration on two fronts via loopholes in drug legislation, according to the generics companies. For the moment, Pfizer can sit quite innocently and say that a) there is currently nothing to stop them producing cheap generic versions of its own drugs during the exclusivity period, and b) the refusal to sue is not an ever-greening tactic.
The dispute bears some of the hallmarks of the trial between U.S. companies MedImmune and Genentech, which also has substantial implications for IP and has been accepted by the Supreme Court. The case centred on a 1997 licensing agreement, when MedImmune agreed to make royalty payments related to its respiratory syncytial virus (RSV) drug Synagis (palivizumab) to Genentech, which held patents covering antibody synthesis. MedImmune then sued Genentech in 2002, to invalidate one of these patents and cease its royalties. However, the U.S. District Courts ruled in December 2003 that MedImmune had implicitly agreed to the validity of the patents by entering into the original licensing agreement, and that there was therefore no case to hear. MedImmune maintains that it only acceded to the licensing deal because of the high risks of Genentech demanding an injunction on Synagis, which would have been devastating for the company. The Supreme Court is hearing the case this month.
These cases surrounding Zoloft and Synagis have nothing to do with the actual validity of the patents, but rather the right of a company to sue (MedImmune) or not to sue (Pfizer) to challenge or protect IP for the drugs. For MedImmune, it was a case of hedging its risks, by first agreeing to pay the smaller royalties but then suing. In the same way, generics companies feel that Pfizer is both having its cake and eating it: if the company truly believes that its supplementary patents for Zoloft are valid, then by implication it is obliged to sue to protect them once an ANDA has been filed. With the status quo remaining, smaller generics companies will feel that the unresolved nature of these patents represents too great a risk to enter the fray. This disincentive will now remain, although U.S. generics firm Mylan came out all guns blazing in July, demanding that Congress legislates that reasonable apprehension does exist, thus ensuring that the courts will accept jurisdiction on the matter.
Related Articles:
- United States: 29 June 2006: Pfizer Raises Profile of Greenstone Unit Further, to Make In-House Generic Zoloft