Two court decisions in the past two weeks set new bounds in the murky territory of patent infringement.

A jury last week found that Eli Lilly owes $65 million in back royalties to Ariad Pharmaceuticals for infringing on a patent that covers the biological pathway known as NF-Kappa B. Lilly was also ordered to pay a 2.3 percent royalty on future sales of osteoporosis drug Evista and sepsis drug Xigris, which act on the NF-Kappa B pathway.

The suit raised questions about the scope of patents covering naturally-occurring phenomena in the body.

Ariad has argued that its patent -- which it licenses from Harvard University, the Massachusetts Institute of Technology, and the Whitehead Institute -- covers all methods of treating diseases through regulating NF-Kappa B.

Lilly has argued that the patent is "unenforceable" and demonstrates "improper coverage of natural processes." The company issued a statement saying that it will appeal the decision.

The US Patent and Trademark Office is currently examining the patent. Neither company could immediately be reached for comment.

Bradford Duft, a partner at law firm Duane Morris, which was not involved in the case, noted that the suit raises common issues in the area of biotech law.

"These cases all depend on individual patents," he said. "Just about everything in biotechnology involves some aspect of nature."

Separately, Teva Pharmaceuticals won its suit against FDA and received 180 days of marketing exclusivity for a generic version of Merck's cholesterol drug Zocor.

Teva had challenged Merck's patent under Paragraph IV of the Hatch-Waxman Act, a provision of which provides marketing exclusivity to generic companies that can successfully prove that a brand's patent is invalid.

But when Merck decided not to fight Teva, FDA determined that the patent was not in dispute and denied marketing exclusivity for Teva?s generic product.

Gregory Glass, principal of the consulting firm Gregory Glass Associates, noted that the case clarifies what happens when a generic company challenges a patent and the brand name company does not fight the challenge.

In the past, FDA has required generic companies to win a lawsuit in order to get marketing exclusivity. "That rule's gone now," Glass said. "[This case] provides more certainty in circumstances where the brand choose not to sue the generic company."

He estimated that brand name companies decline to sue the generic company in about 15% of patent challenges.

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Courts decide patent disputes regarding natural processes, generic drug challenges

Two patent rulings raise issues for biotechs, generics

Paul Chang is an associate partner at IBM Business Consulting Services. He leads the company's Radio Frequency Identification initiative for the life sciences. He has worked closely with FDA at IBM and in previous jobs to explore the technical possibilities and limitations of RFID in the pharmaceutical industry. PharmExec Direct spoke with him recently about FDA guidance on RFID. The agency is expected to release a paper later this month, detailing the guidelines for new anti-counterfeiting technology.

PharmExec Direct: What do you think FDA's guidance will look like?

Paul Chang:  In my dealing with the FDA in the past two and a half years, one thing that struck me is that they are singularly focused on consumer safety. So my sense is they are going to fall back on a position where their primary concern is consumer safety. The counterfeiting problem is not going away; in fact it's probably increasing every year. So I think they're going to provide some guidance on how to begin adopting technology, not just RFID, but just serialization in general. But I believe they're more interested in RFID [than other technologies] because they know it can't easily be counterfeited. I think they're going to be providing guidance in terms of which products they might want to start tagging and what's the timeline associated with those implementations. I'm not sure if "mandate" is the right word, but I think they're going to try to enforce some deadlines on the industry to adopt the technology.

Would you hazard an educated best guess about the timeline?

That I have no idea. They're playing it very, very close to the vest. No one in the industry really has an idea, and I?ve talked to other pharmas who meet with them. It's really typical of how FDA makes their announcement. No one even knows when it's coming out, so I don't think I'll be able to provide you with any estimate of what that timeline might look like.

Can you give us your estimate of what FDA has to accomplish, what stand they have to take in order to be credible on this issue?

At the FDA, the primary objective is to secure the US supply chain so that the US consumers are getting the authentic product being produced at FDA-approved sites. But then I believe they may also be interested in gaining visibility into the supply chain themselves. So that if there are counterfeit cases, they can actually start to investigate and figure out where the counterfeits are being introduced.

When a counterfeit occurs, FDA doesn't know where it was infused into the supply chain right now. But with some type of a system, a network that shows the visibility along the supply chain, they can perhaps say, "Hey, we didn't see the [counterfeit] product on this part of the supply chain, but then all of a sudden we started to see it further down the supply chain. How did it get in?"

Wouldn't that only work if there were some kind of a reporting requirement or mechanism so that FDA could see into manufacturers' supply chains?

There are a couple of ways to do that. I'd have to go into a little more technical detail, but there could also be a very thin database in the sky that tracks the movement of goods. So it's not like a pedigree, but basically the thin database could allow more or less full visibility to agencies or organizations that have access to that database.

How this is going to work is still in development. So I don't want you to think that this is already in place. Basically the concept is to have a distributed database and have the partners share the data. But as you said, the FDA may not have access to this data. So there are some discussions around having a thin database in the sky, that the FDA and perhaps different states like Florida or California might have access to. Perhaps some industry associations might have access as well to really figure out product movement.

This would be frightening for a marketer, to think that other people out there can track a product. It's a competitive advantage to know where other people?s products are going, right?

Right. So the beauty of this infrastructure is you only get to see the data that you [are granted] access to. For example, Pfizer would only have access to Pfizer-related data because the [RFID] code knows who the manufacturer is. That's the concept at the high level. The state legislators or the FDA should have access for a broader perspective because they want to make sure that the entire supply chain is safe. But individual companies, if they were to do this, they may not have any [access to the broader view]. This is a thin database, which means it only has very, very limited information, because this database could obviously be rather large. So basically you would only hold event-captured information, not the entire product information: Perhaps just an [RFID] number, a record of where it was seen, and perhaps when it was seen.

For an additional discussion with Paul Chang, see the June issue of Pharmaceutical Executive.

How can FDA track billions of prescription drugs from manufacturer to patient? Paul Chang, leader of IBM?s RFID program, imagines a thin database in the sky.

Watching the Supply Chain

Terminally ill cancer patients have a constitutional right to access treatments before they receive regulatory approval, a federal appeals court ruled last week.

The ruling reinstates a lawsuit brought by the Abigail Alliance for Better Access to Developmental Drugs and the Washington Legal Foundation, a public interest law firm, against FDA.

"The problem right now is that compassionate use programs can be very difficult to get into," said Richard Samp, chief counsel for WLF. "Our concern was the unnecessary roadblocks that the FDA [has set] for terminally ill patients who have no other options."

Writing for the majority, circuit Judge Judith Rogers argued that a patient has a "right to make the decision about her life free from government interference," and that it is only in recent years that FDA has blocked access to experimental drugs.

She cited as precedent the decision that gives patients the right to refuse treatment.

One of the three judges on the panel dissented. "Balancing the risks and benefits found at the forefront of uncertain science and medicine has been, for good reason, the historical province of the democratic branches," wrote Judge Thomas Griffith, who noted that FDA already expedites the commercialization of certain drugs through Fast Track and Accelerated Approval programs.

Samp estimated that thousands of terminally ill patients who cannot enter into expanded access (also known as compassionate use) programs would be affected by the ruling. These patients would be able to access drugs after the first phase of clinical trials, unless FDA can prove a compelling interest in curtailing that right.

"The whole burden of proof changes," Samp said.

He stressed that the decision would not compel drug companies to offer investigational compounds or expand their compassionate use programs. 

"This case doesn't force companies to do anything; it just allows them to do something if they so choose," he said.

He also noted that under current compassionate use programs, companies are prevented from charging for drugs; the new ruling could even reverse that provision to provide incentives to companies to expand those programs for terminally ill patients.

FDA can now appeal the decision, but as of Monday, would not say whether it would do so.

In a statement, Dr. Scott Gottlieb, FDA's deputy commissioner for medical and scientific affairs, noted that the agency is studying the opinion and consulting with the Department of Justice.

"We remain sympathetic to the desire of terminally ill patients to gain access to experimental treatments when they have exhausted other therapeutic options," he said, "and we are exploring a number of new efforts to improve how we make investigational drugs available through expanded access programs."

Judges' decision finds constitutional right to experimental drugs when no other options are available

Pharmaceutical Executive-05-10-2006

Two patent rulings raise issues for biotechs, generics

Watching the Supply Chain

Court ruling finds terminally ill patients have right to unapproved drugs