Healthy Skepticism Library item: 771

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Generics See Evergreening as Red
Corrs In Brief 2004 Dec 16

Full text:

Australian Pharmaceutical Benefits Scheme (PBS) data shows that on average the price for a drug falls by 30% when a generic manufacturer enters the market. The financial implications for a pharmaceutical company keeping generics from the market by extending its patent rights over a drug can be very substantial. One way a company may attempt to prolong its patent monopoly is by a process called “evergreening”.

Broadly, it refers to extending the expiry of a patent by seeking additional patent claims late in the life of the patent. This then delays competitors from producing a generic version for a much lower price.

On 13 August 2004 the Federal Parliament passed enabling legislation for the US Free Trade Agreement (FTA). This legislation included amendments initiated by the Australian Labor Party (ALP) to discourage improper legal action by pharmaceutical companies to delay generic market entry.

The passage of the new legislation and a recent Federal Court case have put “evergreening” in relation to pharmaceutical products on the political and legal agenda.

What is it?

Evergreening is a mechanism most commonly associated with pharmaceutical drug manufacturers of “blockbuster” (high volume) drugs. The process involves filing “new use” patent claims over the process, dosage form, or method of administration, rather than the active ingredient itself.

When successful, the patent term effectively is extended for either the “new use” or even the “old use”. This extension of the pharmaceutical company’s monopoly delays the generic manufacturer’s entry into the market.

Determination of whether a pharmaceutical company has a truly patentable “new use” is a complex and time consuming process. This means that potential generic entrants can be delayed for long periods.

Evergreening is seen by some as the single most important strategy used by US drug manufacturers to retain profits from “blockbuster” drugs for as long as possible. Unlike the US and Canada, evergreening has not been widely used in Australia.

How does the FTA affect it?

As a result of the FTA, a manufacturer of a generic drug seeking inclusion of its drugs on the Australian Register of Therapeutic Goods (TGR) will have to notify the original patent holder that registration is being sought for the generic, but the generic would not be released to market before the patent has expired.

The ALP raised a concern that the serving of this notice could trigger frivolous infringement claims by a patent holder as a device to delay registration for generic products.

As a result of the ALP’s amendments, if a patent owner seeks to commence infringement proceedings against a generic manufacturer which has applied to include pharmaceutical goods on the TGR, the patent owner must provide a certificate confirming that proceedings will be commenced in good faith, have reasonable prospects of success and be conducted without unreasonable delay (ie. that the proceedings are not vexatious and will not be pursued unreasonably).

If a Court finds find that the actions were not in good faith, and in accordance with the certificate, then the drug company will be liable to pay up to $10 million in fines. This amount will take account of both losses by the generic manufacturer, and losses to the Australian taxpayer for PBS medicine hold-ups.

One case that has put the spotlight on evergreening is the recent Federal Court case of Arrow Pharmaceuticals Limited v Merck & Co., [2004] FCA 1282.

Briefly this case involved an attempt by Merck & Co., Inc. (Merck) to ‘evergreen’ its patent over the use of aminobisphosphonates (i.e. alendronic acid), and its treatment of certain diseases such as osteoporosis. Merck claimed a patent for a particular dosage regime for the osteoporosis drug. All pharmaceutical uses for the drug were already the subject of a patent owned by Merck and due to expire in 2010.

Arrow Pharmaceuticals opposed the patent and challenged its validity.

The Court concluded that, in this particular case, the dosage regime did not involve any newly discovered technical effect and that even if the dosage regimen were novel, that of itself did not confer novelty on the manner of administration involved.

The Court further held that it was plain on the face of the specification that there was no inventive step by Merck involved in formulating the composition in a form appropriate for administration – whether in liquid or tablet form. In essence, the Court concluded that Merck’s claims were mere directions and described them as an example of an attempt to evergreen a patent.

It is interesting to speculate on the impact on the parties if these circumstances had arisen after implementation of the new legislation.
Generic manufacturers clearly will need to carefully consider the timing of their notifications to the patent holder, while the patent holders will need to carefully assess their exposure under the new requirements, especially if the “new use” claim is not particularly strong.