Patents given to innovative drugs from “pioneer” companies typically last from 17 to 20 years. Once the patents expire, generic drugs can hit the market.
In the next few years, several blockbuster drugs, such as Lipitor for cholesterol, are scheduled to go off patent, opening up lucrative global markets for generics. This has brought drug legislation enacted two decades ago back into prominence.
The Drug Price Competition and Patent Term Restoration Act enacted in 1984, otherwise known as the Hatch-Waxman act after its sponsors Sen. Orrin Hatch (R-Utah) and Rep. Henry Waxman (D-Calif.), helped establish generic drugs.
Hatch-Waxman amended the original Federal Food, Drug and Cosmetic Act, allowing generic drug makers to file an abbreviated new drug application (ANDA) for Food and Drug Administration approval, and to challenge the validity of the patent filed by the pioneer, without the risk of big damages for patent infringement by entering the market.
"It was an attempt to balance and encourage innovators to recoup the dollars they invested in it but at the same time make affordable drugs available for the public — it really was designed to balance those competing interests," said Juanita Brooks, a principal at Fish & Richardson with a trial practice in intellectual property litigation.
Brooks pointed out how it takes millions of dollars to develop a drug, get FDA approval and bring it to market. "And that's only for drugs approved, there are many that don't make it," she said.
So if generic drug makers were allowed to enter the market without spending time and money on the research process, there would be no motivation for the pioneers to invest in innovative research and development.
But sometimes, generic drug makers don't want to wait for the patent to expire, they want to come on the market much sooner, and that's when patent litigation comes into play.
Brooks recalled several successful cases that went to trial, including one involving Allergan (NYSE: AGN), an Orange County-based company with an eye medication called Alphagan P for glaucoma.
A generic drug came on the market before the patent expired, claiming Allergan's patent was not valid. The case was tried in the regional courts and decided in Allergan's favor. It went to the federal circuit, and Brooks got a decision in their favor again.
With Hatch-Waxman legislation, when a generic drug wants to come on the market, the company files an ANDA with the FDA, then it looks up the patents held by the pioneer, which are listed in the so-called “orange book,” to ensure there are no violations.
According to Douglas Carsten, a partner at Wilson Sonsini Goodrich & Rosati, a generic drug maker has four options at this point: It may find there are no related patents; patents have expired at which point it informs the FDA to go ahead and review its application; if any valid patents are found, it will ask the FDA to approve its application and give final approval when the patents do expire; or it can find patents and decide they are not valid, that its own generic drug does not infringe on those patents, at which point it asks the FDA to give approval right then.
The generic drug maker would also inform the pioneer that it sees no patent infringement, which gives the pioneer a heads-up and the opportunity to sue the generic drug maker, even before it comes on the market.
Once the pioneer sues, the generic drug will not be allowed on the market for 30 months, even if it has approval.
"Hatch-Waxman provides for this unique process, even before the generic hits the market, because once it does, the innovator will lose market share," Brooks said.
She contends that the legislation is really a framework for allowing this litigation to be resolved before the generic comes to market and that beyond that, it really does not favor one side or the other.
But there is a constant push to allow generics to get on the market quicker, to get rid of the 30-month stay or shorten it.
Brooks also said many assume the generic is the exact same thing as the original, but in actuality, it's a biosimilar — equivalent to, but not the same.
With biosimilars, generic drug makers only need to show the FDA that they have the same amount of the effective ingredient, but she cautions that it may not have the same therapeutic effect.
In the case of Allergan, the generic company manufactured the drug with a lower pH or acidity level, thinking to avoid the patent infringement, but the pH amount was essential for the drug to be effective, so reducing it also reduced the drug's efficacy.
Brooks recommended that innovators check if the generic is truly as effective as the branded drug. If it isn't, a citizen's petition can be filed with the FDA, to show that the generic they're considering is not as therapeutically effective or may even be dangerous.
"That's a second front that not all innovators think of — is there a safety or efficacy situation they can consider and act on — that it really isn’t a bioequivalent," Brooks said.
She recalled going into this field without strong feelings one way or the other. But once she saw the time, effort and money that went into the development of drugs, she was firmly on the side of the pioneers.
"I represent patent litigation on both sides in other industries, but as far as pharma goes, you only represent the pioneers or the generics, but not both," Brooks said.
On the other side of the coin are patent attorneys who work on behalf of generic drug makers.
Carsten, who focuses on complex patent litigation, agreed that Hatch-Waxman gives some advantages to both sides.
"The branded drugs weren't keen on it, so Congress sweetened the deal by adding the 30-month stay. But it has done well by generics, which have grown like gangbusters since then," Carsten said.
The expiring patents provide generics with big opportunities, but Carsten thinks there's much ado about this “patent cliff,” since there have been similar periods in history when big drugs went off patent.
"There will always be a future in small molecule drugs and new opportunities for brands and generics," he said.
He also thinks biosimilars are the way of the future.
With small molecules, one can show that sample A is the same as what sample B has in its product. But with biosimilars, it's different, because it's very difficult to demonstrate that sample A is the same as sample B with complex proteins.
Carsten explained that until President Barack Obama's Patient Protection and Affordable Health Care Act, there was no formal approval pathway for a generic version of a biologic product.
Obama's reform laws included for the first time an outline for how the FDA would handle biosimilar applications.
"The FDA has decided to take it on a case-by-case basis, since it does not want to use a one-size-fits-all approach for products that are widely different. This is exciting, sort of the next frontier for pharma patent litigation going forward," Carsten said.
But there's also worry that the case-by-case approach is no approach at all, since there is no certainty that a biosimilar will get approved at the end of the road.
"I think the jury is very much out on how the FDA is going to implement the biosimilars law since it's different from the Hatch-Waxman area for small molecule," Carsten said.
-- Nagappan is a San Diego-based freelance writer.