Pharma's Day in Court - Pharmaceutical Executive


Pharma's Day in Court
The court cases, settlements, and other legal proceedings that are shaping the environment in which the industry operates

Pharmaceutical Executive

Intellectual Property: Isn't It Obvious?

To be patentable in the United States, an invention must be novel, non-obvious, and useful. In one of the most important intellectual property cases in recent memory, KSR v. Teleflex, the Supreme Court examined an adjustable gas pedal connected in a specific way to an electronic throttle, and declared the invention obvious and unpatentable. In the process, the Court laid out new guidelines for obviousness that have had significant impact on the pharmaceutical industry, making pharmaceutical patents harder to obtain and easier to invalidate.

Jonathan Singer, a principal for Fish & Richardson, explains that the whole way of looking at obviousness has changed. "It used to be a much more rigid analysis," he says. The patent stood if the elements of it weren't specifically disclosed in prior art or the total body of knowledge available, and if one had to combine two or more references of prior art to create the invention. "Now it's more about, if one looks at prior art, how would one with ordinary skill interpret it? If it's a logical next step to get where the patent is, there can be a finding of obviousness. Watch for companies on trial to focus on telling the 'invention story' and demonstrating unexpected results," says Singer.

What could be at stake are formulations, controlled releases, and enantiomer patents, which in many cases represent line extensions and next-generation dosing of pharma's remaining blockbusters. KSR has already been used to invalidate several such patents. For example, Mylan successfully overturned the patent to Pfizer's Norvasc by attacking as obvious the idea of creating the besylate salt of amlodipine, the drug's active ingredient. (The patent on amlodipine itself had already expired.) The formulation of Merck's Pepcid Complete—which uses an impermeable coating on granules of famotidine—was similarly declared obvious under the new rules.

But the rules for obviousness are still being written. As a single enantiomer of a previous drug, Forest's SSRI Lexapro looked like a good target. The court found otherwise, at least partly because of the difficulty of separating the enantiomers. And Mylan argued that the chemical structure of Takeda's Actos (pioglitazone) was an obvious development on a known compound. The court said that wasn't enough, stating, "[I]n cases involving new chemical compounds, it remains necessary to identify some reason that would have led a chemist to modify a known compound in a particular manner to establish prima facie obviousness of a new claimed compound."

"The fact that the Supreme Court chose to rejigger the standard for determining whether a patent is enforceable or valid is huge," says Jim Hurst, litigation partner at Winston & Strawn. "It's too early to tell if it going to result in patents being held invalid or not, but we know that in 90 percent of patent cases, the parties and the court are analyzing KSR."

Criminal Prosecutions: DOJ Gets Personal

By now, just about every Big Pharma has been investigated for off-label marketing, and gone through what's become a fairly standard settlement process: huge fines, a Corporate Integrity Agreement, and a long list of compliance and monitoring tasks. It's only in the biggest and most egregious cases—such the Feds' whopping $875 million bust of TAP in 2001 for using kickbacks and other questionable tactics to promote Lupron (leuprolide)—that criminal charges have been levied against specific individuals. (The TAP defendants, by the way, were all found not guilty.)

But now the Justice Department is raising the specter of individual liability in the pharmaceutical industry. Over the last three years, it has brought criminal charges in three important cases. In 2006, the US District Court in Brooklyn charged Maryland psychiatrist Peter Gleason with the unlawful promotion of Xyrem, a drug approved for narcolepsy that shows promise in fibromyalgia and other conditions. (The charges were against Orphan Medical, a company that was later acquired by Jazz Pharmaceuticals.) It contains the active ingredient gamma-hydroxybutyrate, which the Drug Enforcement Agency classes as a Schedule III drug. Although physicians enjoy far greater liberties to talk about off-label uses for drugs, the state felt that Gleason went too far, taking tens of thousands of dollars from the drug's manufacturer in exchange for touring the country touting Xyrem's benefits in treating depression and pain relief. The indictment raises troubling issues about regulation of physicians' free speech and the use or lack of use of scientific evidence in forming medical opinions. The case has not yet come to trial.

In 2007, the three top executives at Purdue Pharma pled guilty to criminal charges of misbranding for their part in promoting OxyContin as safer and less subject to abuse than other pain relievers. The company paid more than $700 million to settle the case. Then-CEO Michael Friedman, general counsel Howard Udell, and former chief scientific officer Paul Goldenheim paid fines ranging from $7.5 million to $19 million.

Perhaps the most curious case is the indictment this past March of Scott Harkonen, former CEO of the biotech InterMune. Starting in 1999, InterMune marketed Actimmune (interferon gamma 1B), which was approved for chronic granulomatous disease and severe malignant osteopetrosis—both rare, hereditary conditions. However, most of the sales of Actimmune were for idiopathic pulmonary fibrosis (IPF)—also a rare disease, but a much bigger market than either of the approved uses. In 2006, the company paid nearly $37 million to settle False Claims Act violations and off-label marketing charges, and Harkonen moved on to become CEO of the biotech CoMentis.

But now, the DOJ has come back for Harkonen personally, charging him with wire fraud and felony violations of the Food, Drug, and Cosmetic Act for his part in the off-label promotion. The smoking gun: a press release, issued in 2002, reporting on a clinical trial of Actimmune in IPF. The trial, as subsequently written up in the New England Journal of Medicine, was a failure. The drug had no effect on progression-free survival, pulmonary function, or quality of life. More patients died on placebo—17 percent, compared with 10 percent on Actimmune—but the difference wasn't statistically significant. That didn't stop InterMune, though. "InterMune Announces Phase III Data Demonstrating Survival Benefit of Actimmune in IPF," read the press release headline.

"The fact that the case involves a press release as a central facet [makes it] a ripple effect case—it has importance for everybody in the PR business," says Wayne Pines, president of regulatory services at APCO Worldwide and former associate commissioner for public affairs at FDA. "It shows the seriousness with which the government takes off-label cases."

Harkonen's first court appearance, to review discovery, is scheduled for September.


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