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Forget everything you thought you knew about protecting your IP

Pharmaceuticals require an entirely different patent strategy

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Getting a new drug to market may cost as much as $800 million. With this type of investment, patents are necessary to protect market exclusivity. A strategic, creative and effective approach to patenting pharmaceuticals is crucial to minimizing competition and maximizing profit margin.

Ned Israelsen

Mallary deMerlier

Whether you are trying to protect chemicals or computer chips, the patent game is almost always played the same way: take a basic, inventive concept and protect it as broadly as possible.

Traditionally, interactions with the United States Patent and Trademark Office nearly always focus on claim scope: is the invention defined so broadly that it encompasses the prior art, or is just an obvious modification of the prior art? The patent examiner says "yes," the applicant says "no," and the back-and-forth negotiation process begins. Applicants fight hard to get the broadest protection, while examiners try to prevent over-broad claims.

This traditional approach might be seriously out of date when it comes to protecting drugs.

Unlike most areas of technology, pharmaceuticals are not subject to unfettered competition. In fact, patents are not the only competitive obstacle. Instead, the U.S. Food, Drug, and Cosmetics Act carefully regulates what drugs can be sold, and under what conditions. For new drug products, one must obtain permission from the Food and Drug Administration before going to market, which necessitates conducting the requisite clinical trials, submitting the requisite data, and waiting for the requisite regulatory review period.

Even generic drugs, launched in the absence of effective patent protection, must strictly comply with these regulations or they cannot be sold. Generic manufacturers face a complex maze of patent exclusivities, data exclusivity, and regulatory requirements before they can launch a generic version of a new drug. Effective protection for a new drug -- or a new use for an old drug -- requires careful coordination of both the patent and regulatory strategies.

Two "truisms" of patent law simply do not hold up in the pharmaceutical setting: "bigger is better" and "compound protection is the gold standard." To understand why, you must understand what requirements a generic manufacturer must satisfy prior to product launch.

New drugs, new uses for old drugs, or new drug combinations, can only be sold after rigorous safety and efficacy testing. A drug "label" is negotiated with FDA authorities, setting forth in great detail the prescribing information, indications, contraindications, pharmacology and a number of other details.

A generic drug product does not require safety and efficacy testing; instead, the generic manufacturer must adopt the labeling of the approved product, and must show that its new drug is bioequivalent to that product.

Contrast that with a competitor who adopts a minor chemical variation of the approved drug -- and must spend 100 times what a generic competitor would to get that new drug on the market.

For this reason, drug makers can fight similar look-alike drugs on an even footing, but due to the huge disparity in development costs, they lose most of their market within a very short time when a generic version appears.

And, it seems that no matter how comprehensively and broadly one drafts the "new chemical entity" ("NCE") patent, a competitor can design another molecule with the same mode of action. Moreover, its very breadth can make the broad, NCE patent vulnerable to invalidity attacks, since it encompasses more potential prior art. Thus, the gold standard is not a patent that broadly protects the chemical space around a new drug, but one that prevents generic competition.

Because every additional month of market exclusivity can mean an extra $50 million or more in revenue, there is tremendous pressure on pharmaceutical companies to block the entry of generic competition.

Generic competition can be prevented by any patent that protects the essential portions of the new drug label. This is true whether the patent is an NCE patent, a method of treatment patent, a patent on a particular mixture of old drugs, a patent on an essential step in the diagnosis that is listed in the label, or a patent covering the labeled mode of administration.

Oftentimes, the most narrow patents can be the best. Since the generic competitor cannot alter certain portions of the label, a patent focusing on exactly that part of the label will block adoption of the label by the competitor. The narrowness of the patent may well be an advantage, since it greatly narrows the field of potential prior art that a generic manufacturer could use in an invalidity challenge. Multiple narrow patents may effectively eliminate any generic threat.

Pursuing the same old strategy for pharmaceuticals that is used for other inventions does not provide optimal protection in today's complex regulatory environment. Careful coordination between regulatory labeling strategy and strategic patenting is essential to prevent generic competition.

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