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Contents

1 Introduction

2 Reason for patenting

3 Patentable material

4 Initial Patenting Strategy

4.1 Timing

4.2 Scope

4.3 Geography

5 Competitor Deterrents

5.1 Defensive patenting

5.2 Thickets

6 Strategies for increasing patent life cycle

6.1 SPCs

6.2 New formulations/ routes of administration

6.3 Stereoselectivity patents

6.4 New use/ second medical use patents

6.5 Combination patents

6.6 Polymorph patents

7 Non-patent extensions to life cycle

7.1 Period of exclusivity

7.2 Orphan exclusivity

8 Evergreening

8.1 Case study – AstraZeneca: The Losec Case

9 Conclusions

10 Bibliography

Pharmaceutical patenting strategies in the UK

1 Introduction

The pharmaceutical industry has long been an industry full of great risks and even greater rewards. Failure upon failure upon failure, all in the hope of finding the one success that, on its own, could fund another decade of research. The scarcity of these successes, and the incredible financial rewards they entail, have led pharmaceutical companies to find any and all ways with which they could protect their investment. Patents have become the key component of any IP protection in the pharmaceutical industry, and so companies must have a good strategy for using the patent system to their advantage, through the establishment of a monopoly, the defense against competitors, and the extension of patent rights for as long as possible. In the following essay, we discuss some of the strategies used by the pharmaceutical industry, as well as the legal challenges they may face.

2 Reasons for patenting

The reasons for patenting in the pharmaceutical industry are broadly similar to those in most other industries. Primarily, the patent grants a period of exclusivity, during which time a company may bring a product to market and sell without fear of competition. This period is especially important in the pharmaceutical industry, as it gives the company time to recoup the fantastically high costs of bringing the drug to market. Added to this is the fact that pharmaceutical inventions, once disclosed, are relatively simple to perform i.e. the methods used are well within the reach of competitors to reproduce, so the extended first mover advantage offered by a patent is extremely valuable.

The secondary considerations are predominantly focused around licencing of patents, in order to claim royalty income. This is more important for small pharmaceutical companies, who may find themselves with a particularly powerful patent portfolio, but insufficient resources to develop their patents into actual marketable drugs. In this case, licensing of a patent to a larger firm is in both parties' interests. Cross licensing of patents, whilst rare in the ultra-competitive pharmaceuticals industry, is nevertheless also a mutually beneficial option for when complementary technologies are owned by competing companies. In this regard patent licences can be used as assets for trading during negotiations.

Finally, there is the consideration of confidence. A strong patent portfolio can indicate a healthy company with a good R&D team, both of which can instil confidence in potential investors, whereas a lack of patents could indicate a poor research focus. Patents therefore are advantageous to attracting the investment needed for further research and development.

3 Patentable material

According to the Patents Act 1977, “A patent will not be granted for the invention of a method of treatment of the human or animal body by surgery or therapy, or a method of diagnosis practiced on the human or animal body. However, an invention consisting of a substance or composition for use in any such methods is in principle patentable” . This paragraph broadly defines the scope for material patented by the pharmaceutical industry. The majority of patents are product patents i.e. for the drugs themselves. However, there may also be a number of process patents associated with the manufacture of each of these drugs. In general, the number of patents filed covering a specific drug is a matter of strategy, and is discussed in the following pages.

4 Initial patenting strategy

4.1 Timing

For a pharmaceutical company, deciding when to file for a patent after discovery of a compound of interest is the first step in the patent process. Filing too early could mean loss of much of the exclusivity period, as time is taken up by further research and development before product launch. Filing too late opens up the company to the risk of competitors also discovering the compound and filing their own application first. In the majority of cases the industry opts with filing early, preferring to accept the reduced potential rewards rather than filing too late and risking getting nothing for their efforts.

4.2 Scope

The next strategic manoeuvre is to decide the scope of the patent. In general, as with patents in all industries, it is useful to have a broad scope, in order to increase the area over which the monopoly is obtained. In the pharmaceutical industry however, there is a second, subtler motive. By filing an initial patent with claims over an entire class of compounds, a company can make it more difficult for competitors to identify the specific compound under consideration for therapeutic use, which in turn will prevent competitors from doing their own research on the compound and filing their own patents to block further development .  However care must be taken to not make the scope too broad, as this could weaken the patent to attack on the grounds of insufficient disclosure. In some cases filing too broad a patent could also create unwanted prior art, which could hinder the progress of subsequent patent applications in the field.

4.3 Geography

Given the costs associated with filing patents in regional and national offices, it is important for a company to decide the areas in which it wants to patent its product. In this regard, the pharmaceutical industry emulates many other industries – the more important/ commercially viable an inventions, the more countries an application is filed in so as to create the largest possible market .

5 Competitor Deterrents

5.1 Defensive patenting

In the highly competitive pharmaceuticals industry, minimising overlap between companies' research will help ensure that no two companies are fighting over the same patent rights. In order to put this into effect, many companies adopt a proactive ‘defensive patenting' strategy, whereby a company will file patents on drugs that it has little intent to develop or commercialise, for the sole purpose of preventing other companies from developing competing products. While the advantages of this strategy to the general public are minimal, it reduces any competitor's freedom to operate, and thereby reduces the threat of competing products stealing market share.  

5.2 Thickets

An extension of this defensive patenting strategy, where molecules are patented simply because they are too similar to an active compound to risk a competitor developing them, can lead to the phenomenon known as a patent thicket/ patent cluster. In this scenario, the patentable area surrounding the initial target molecule is covered by a multitude of overlapping patents, to the extent that it becomes difficult for a competitor to develop a drug even remotely similar to the original without infringing on several patents. In addition to the defensive patenting strategy, patent thickets may also be created by separating out a broad initial application into several divisional applications , which, if granted, can give a very tight knit boundary of protection around the core IP. It can be argued that thicketing in the pharmaceutical industry is a necessary precaution, given that many molecules with the same basic core will interact with the body in similar ways, even if they look very different. The thicketing strategy also facilitates the licensing of more specific product, as a heavy thicket of patents can easily allow for the licensing of individual compounds on the ‘fringe' of the patented area, without compromising the core IP. Patent thickets are therefore useful tools to deter competition in an area of interest.

6 Strategies for increasing patent life cycle

Although the protection period for a patent grants a 20 year monopoly on the invention, for many pharmaceutical patents the effective monopoly period is in fact much shorter. Pharmaceutical patents often have a long time period between grant and market authorisation, largely due to the time required for ADME testing/ clinical trials, and so many drugs only have a handful of years of patent protection left by the time they come to market. It is therefore advantageous for pharmaceutical companies to have patenting strategies which will extend the lives of their patents and keep a monopoly over the invention for as long as possible. Some key methods of extending patent lifetimes are discussed below.

6.1 SPCs

Within the EEC, the first port of call for extending the life of a pharmaceutical patent is by the issuance of a Supplementary Protection Certificate (SPC). SPCs were specifically introduced with pharmaceuticals in mind, to compensate for the reduced effective patent lifetime, and extend the lifetime of a patent by up to five years, coming into force after the general patent expires. If the product to be protected is a human medicinal product for use on children an extra six months protection may be granted, provided a Paediatric Investigation Plan (PIP) is completed . Given that this method of patent extension is the easiest to implement and defend, it is not surprising that it s the most popular method to increase a patent's lifetime within the EEC.

According to EU regulation, the scope of the SPC is limited only to the specific products that have been authorized for market use . However, it was held by the ECJ  C-392/97 that SPCs might be capable of protecting derivations of the market drug, so long as said derivations are covered by the original patent7. This ruling has only increased the effectiveness of the SPCs, effectively making them an extension of the full patent, rather than only the market authorised aspects.

SPCs however do have their limitations.  The total time period of market exclusivity for the combined patent and SPC cannot exceed 15 years (15.5 with the extension), and therefore, cannot be relied upon by themselves to protect an invention for an extended period of time. In addition, there has been discussion as to the correct interpretation of SPC regulations, leading to uncertainty as to whether certain SPCs are valid/ have been infringed. Hence, pharmaceutical companies utilise other methods, in addition to SPCs, to maintain their patents more securely and for much longer periods of time.

6.2 New formulations / routes of administration

One such method is to obtain additional patents that cover new formulations of the drug, which represent an improvement over the current product. These improvements can include, but are not limited to, improved outcomes, reduced dosage, easier use or reduced side effects. In addition to the 20 year effective extension this method can grant over the product, it also has the added benefit of having a reduced development time, provided the improved drug is similar enough to the original. Such new formulation must however demonstrate that the improvement to the original drug is non-obvious, which is not always possible. In Teva UK Ltd & Ors v AstraZeneca AB [2014], it was held that AstraZeneca's new formulation with an extended release was non-inventive, as it would have been obvious to the skilled person to use an extended release delivery mechanism as an improvement . This method of patent extension is therefore used with caution, when the improvement of the new formulation over the old is deemed to be inventive enough to overcome any challenge.

In similar fashion to new formulation patents, it is also possible to obtain additional patents over new routes of administration of a drug (e.g. injection vs. inhalation vs. oral administration). As with new formulation patents, care must be taken to prove inventiveness, although this is less problematic for new routes of administration due to the inherent challenges posed in e.g. making a drug orally bioavailable.  

6.3 Stereoselectivity patents

In cases where the drug consists of a racemate, a new issue arises. In many cases, only one of the two enantiomers present in the racemate is biologically active/ produces the desired biological effect. If a company is able to separate the racemic mixture to obtain an enantiomerically pure form of the drug, it is possible to obtain a new patent on this ‘new' drug, thereby extending the effective monopoly by 20 years. These patents also have the added benefit of not requiring clinical trials, as the active ingredient in exactly the same as in the original drug. An argument against the obviousness of such a drug could be made, however in the escitalopram case of Generics (UK) Ltd v H Lundbeck A/S [2009] it was held that, because the person skilled in the art would not know how to separate the enantiomerically pure escitalopram from the racemic mixture of the original drug, the new drug could be considered non-obvious . However, it is still possible for other companies to make generics with the exact same active ingredient as the new drug, so long as the generic is not enantiomerically pure. Given that the purification at best provides a twofold increase in efficacy, and that generics can be priced at a fraction of the cost of the new drug, obtaining a new patent in this way is not always financially sensible.

6.4 New use / second medical use patents

In addition to obtaining new patents on a drug for the original use, in certain cases it may also be possible to obtain patents for new uses. Such ‘second medical use' patents can give new life to drugs with soon-to-expire patents, as it introduces a secondary revenue stream, while adding nothing to manufacturing costs. However, these drugs must also undergo clinical trials for the secondary medical use before they can be marketed, which reduces the effective monopoly period in similar fashion to the initial drug. Such secondary medical use patents are therefore used either defensively, or if the company is sure the revenue stream for the new use will exceed the R&D costs. There is also the danger that once the original patent for the drug has expired, generics produced will also be prescribed for the second medical use covered by the new patent. In Warner-Lambert v Actavis & Ors [2016], the Court of Appeal held that a generic drug prescribed for a patented second use could not be said to infringe on the patent if it was not the intention for the supplier of the generic for it to be prescribed in this way . While this may initially seem to be a cause for concern, it has been suggested that confusion between generic and patented forms of the drug could be avoided if the drugs are prescribed using their brand names, rather than general or scientific names. In any case, new use patents can be a useful tool in prolonging the economic lifetime of a drug, provided the correct steps are taken to avoid confusion with generics.

6.5 Combination patents

It is also possible to obtain a patent on an old drug by combining it with one or more other active drugs, to create a new product. Such combination patents can be doubly effective in extending patent lives if more than one of the drugs used in the combination is due to expire. As with new formulation patents, it must be shown that the combination of the drugs is either non-obvious, or produces a therapeutic effect greater than the sum of the individual active components (i.e. there is an element of synergy between the ingredients in the combination) which is non-obvious. However, as can be seen in Glenmark v GSK [2013], this non-obviousness can be difficult to prove .  It seems that combination patents may be particularly vulnerable in UK courts on the grounds of obviousness, and so this strategy may not be as efficient as was first thought. In addition to this, there are no regulations against prescribing the generic forms of the individual active ingredients in the combination patent, once their individual patents have expired.

6.6 Polymorph patents

Polymorphism in a pharmaceutical context is the ability of a drug to exist in different crystal forms. This is important to the patenting procedure, since different crystal forms may be more effective or easier to manufacture than others, and when patenting a new drug, a company may choose to patent the drug's structure, or any one of its crystal forms, of a combination of the structure and any number of crystal forms. It may therefore be possible to extend the life of a patent by patenting one of the polymorphs after the original drug has been patented. However, leaving polymorphs unpatented to use in this way opens a company to the risk that a competitor will discover and patent that same polymorph and take the corresponding revenue stream with them. In addition, a recent decision by the European Technical Boards of Appeal has stated that polymorph patents in which the polymorph has the same effect as the original patent are invalid on grounds of obviousness, as the skilled person would have knowledge of the concept of polymorphs, and it would be obvious for him/her to perform a search to determine polymorphs for an active ingredient . However, polymorphs with different effect to the original can be said to be inventive, and so are good candidates for polymorph patents to extend the life of a drug.

7 Non patent extensions to drug life

In addition to strategies to extend the market life of a drug through extending the life of patents covering it, EU law has also made provisions to ensure that pharmaceutical companies have a guaranteed period of exclusivity from the date of market authorisation. This is particularly useful for drugs that could not be granted and SPC, or those that did not receive market authorization until very late into the patent lifetime.

7.1 Period of exclusivity

EU rules since 2005 have allowed for an ‘8 + 2 + 1' period of exclusivity . First granted is a period of data exclusivity lasting 8 years from the date of first market authorisation. During this period, a generic company cannot make use of the pre-clinical or clinical data gathered by the owners of the original patent. After these 8 years, the original drug is granted a further 2 years of market protection, during which time generic companies cannot market a generic version of the original product. A further 1 year market exclusivity may be granted under certain conditions, such as the granting of market authorisation for a new indication/ secondary medical use. These rules grant a newly authorised drug up to 11 years of exclusivity, even without the presence of an active patent to protect the monopoly. Reliance on these rules is however seen as a fallback options, as ideally market authorisation would be granted as soon as possible after patent grant, and so the 11-year period of exclusivity would fall within the years of monopoly granted by the patent and/or SPC.

7.2 Orphan exclusivity

Special considerations are made for drugs with an ‘orphan' designation i.e. drug which treat serious, but rare (<5 in 10000), conditions. In these cases, orphan drugs are granted a period of complete market exclusivity lasting 10 years from the date of market authorisation . This can be extended by a further two years if the product is intended for use on children, and a PIP is completed. These special considerations are in place to remove unnecessary competition in the high cost, low revenue system associated with rare drugs.

8 Evergreening

While all the aforementioned strategies for extending the life of a patent are perfectly legal, there has understandable been an element of controversy surrounding some of these practices. The extending of a monopoly over a potentially life saving drug purely to maximise profit margins has been seen as a moral grey area. This is of particular note when the patent life is extended using a combination of these methods, by incremental (but non-obvious) improvements to the previous patent, which are used to keep a monopoly on the best form of the drug indefinitely. This process of ‘evergreening' has been subject to much scrutiny, especially with regards to Article 102 of the TFEU , following the decision against AstraZeneca in 2012.

8.1 Case study – AstraZeneca: The Losec Case

The case of AstraZeneca v Commission [2012]  is of particular importance to the concept of evergreening, as it was one of the only cases where the CJEU considered the strategic use of patent regulations to be an abuse. The judgement in 2012 was based upon an earlier decision by the Commission in 2005, which was then upheld by both the General Court  and the CJEU. AstraZeneca was found guilty of abuse of dominant position on two grounds.

The first abuse consisted of making misleading statements to patent offices in order to obtain an SPC, and thereby increase the life cycle of the patent . AstraZeneca argued that they had interpreted the regulation around SPCs differently, and had not deliberately misled patent offices, instead acting in good faith . They further claimed that in order to be found guilty of abuse of the regulatory framework, the deception must be deliberate.

In regards to this first abuse, the CJEU found that the consistent flow of misleading representations and the lack of transparency form AstraZeneca fell outside the scope of competition on its merits . Furthermore, with regards AstraZeneca's argument for the requirement of deliberate deceit, the CJEU argued that this was a misinterpretation of Article 102, deciding that Article 102 was an objective concept, and so good faith was irrelevant .

The second abuse consisted of deregistering the market authorisation of the original drug Losec in Norway, Sweden and Denmark at the same time as launching the new Losec MUPS in those states. This made the launching of generic versions of Losec in those countries much more time consuming and expensive, as generic companies no longer had access to the fast-track marketing authorisation that would have existed if Losec's authorisation could have been used as a reference . AstraZeneca argued that their actions could not constitute an abuse, as withdrawal of market authorisation was not prohibited under EU law .

In regards to the second abuse, the CJEU maintained that a strategy aimed at dealing with competition from generics and minimising the erosion of sales could be legitimate, provided that such a strategy does not fall outside the scope of competition on the merits, and become of detriment to consumers . The CJEU ruled that AstraZeneca's conduct was designed, inter alia, to prevent generic competition, and was not based on the legitimate protection of an investment . The lack of an objective justification for their conduct therefore classed the conduct as an abuse, and thereby unlawful under Article 102.

The commentary published on the CJEU case gives some insight as to the consequences of this judgement. Batchelor and Healy note that, in regards to misleading a patent office, a simple mistake is probably not enough co constitute a breach of Article 102, whereas a systematic or large-scale deception would be more likely to be considered an abuse . In regards to the second abuse, Batchelor and Healy conclude that, since the CJEU leaves room for justification of strategies aimed at blocking competition, the judgement on the second abuse may not have as far reaching consequences as the judgment on the first . They are also disappointed that the CJEU decision does not provide any concrete rules for what is considered abusive .

9 Conclusions

The patenting strategies employed by the pharmaceutical sector cover the entire period of a patent's life cycle. Initial patenting strategies tend to focus on competitor deterrent, by making the patent space surrounding a target drug impossible to penetrate. Towards the end of the life cycle of the patent, strategies move away from deterring competitors, and more towards prolonging the period of exclusivity until generics flood the market. While some of these strategies are endorsed in law (SPCs, data exclusivity), pharmaceutical companies may resort to slightly more underhanded tactics to artificially prolong the market life of a drug. While some of these patents may indeed be worthy of grant (for large improvement etc.), the continuous use of incremental improvement patent filings to ‘evergreen' a patent is seen as potentially anti-competitive. Indeed, in the UK, conditions for the justification of such evergreening have become increasingly stringent, as evidenced in the AstraZeneca case study. Pharmaceutical companies may have to find new, less anti-competitive methods of prolonging the life of their drugs, such as creating a generic arm to their company, which would attempt to make e.g. nanotechnology or biologic based versions of a soon to expire drug, launching early to secure market share.

10 Bibliography

Cases

- Generics (UK) Ltd v H Lundbeck A/S [2009] UKHL 12

- Teva UK v AstraZeneca AB [2014] EWHC 2873 (Pat)

- Lambert v Actavis & Ors [2016] EWCA Civ 1006

- Glenmark Generics (Europe) Ltd & Ors v The Wellcome Foundation Ltd & Glaxo Group Ltd [2013] EWHC 148 (Pat)

- Case T 777/08 Atorvstatin Polymorphs OJEPO 12/2011 633-643

- Case C-457/10 P AstraZeneca v Commission [2012]

- Case T-321/05 AstraZeneca [2010]

- Case C-392/97, Judgment of the court [1999]

Literature

- Batchelor B, Healy M  ‘CJEU AstraZeneca Judgment: groping towards a test for patent office dealings' (2013) 34(4) ECLR 171-173

Official Documents

- The European Commission, Pharmaceutical Sector Inquiry Final Report (8 July 2009)

Legislation

Article 36, Regulation (EC) No 1901/2006

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