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Archive for September, 2005

Brand Generics Debate

Written by on Friday, September 30th, 2005

In “The Impact of a Brand Generic Launch on the Recovery of Patent Damages” published in the Summer 2005 IPL Newsletter, James D. Veltrop and Chad A. Landmon explore the positive and negative effects of a brand name drug company making the decision to also launch a brand name generic. In light of the extensive litigation between brand and generics drug companies, the authors’ discussion raises some interesting issues to consider.

With respect to the two sides of the debate, the authors write:

On the one hand, the launch of the brand generic significantly reduces the profitability of the launch by the first generic competitor, who otherwise is often entitled to a six-month window of exclusivity before other generics can enter the market. In addition, the launch of its own generic allows the brand company to increase sales, albeit potentially at the expense of significant profits on its brand product. On the other hand, if the brand company also has patent claims against the generics, its launch of a brand generic might generate additional costs because any damages it might be entitled to recover could be substantially less than it might have recovered had it refrained from launching the brand generic in the first place. Because the brand generic would be a noninfringing alternative to the generic product, lost profits damages could be wholly or partially unavailable and the brand company would have to rely on a lower measure of damages than lost profits. . . . the launch of a brand generic might suggest that the brand company lacks confidence in either the merits of its patent claims or its ability to collect the full measure of damages from generic companies. Alternatively, it could suggest that the brand company is at least partially motivated by other factors, such as reducing the incentives of generic companies to challenge brand company patents.

According to the authors, the practice of launching brand name generics is thought by many generics companys to undermine the Hatch-Waxman Amendments, which made generics more widely available. Passed by Congress in 1984 in order to shorten the generics approval process,
the Hatch-Waxman Amendments enabled generics companies to launch a generic product simply by filing an Abbreviated New Drug Application (“ANDA”), which demonstrated that the generic product is bioequivalent to the brand drug that was already approved. In this manner, generics companies were able to quickly launch generics products, without having to bear the expense of producing safety and efficacy data. The authors go on to say, however, that

[H]aving recently passed the Medicare Modernization Act, it is doubful that Congress will take up again soon the Hatch-Waxman Amendments. Thus, the practice of launching authorized generics during the 180-day exclusivity period likely will remain a key brand company strategy for some time to come.

While the authors present an excellent summary of the issues involved with this debate, as a consumer myself, I wonder why brand name drug companies are pursuing this strategy at all, despite the litigation that is arising out of the generics-brand name disputes. How can companies think it makes good business sense to launch an expensive and then a cheaper version of its own products? While it is true that once a generic is available, some consumers will choose to buy the generic over the brand name product automatically, others will be reluctant to go with a generic simply because it was manufactured by a different company. However, if one company manufactured both versions of the drug, the majority of consumers would without a doubt simply purchase the cheaper version of the medication. In my mind, this practice seems to be a lousy business strategy that is out of sync with common sense. Although from a patent perspective, it may have some valid rationales, but from a business perspective, the brand generics strategy seems to undermine the company’s investment in the brand product.

As for the brand generics strategy itself, I can see why the generics companies dislike it, but I am conflicted as to whether or not it really undermines Hatch-Waxman. Certainly the practice has antitrust implications, but I suspect Congress intended to protect the public with Hatch-Waxman more so than the generics companies. Since the public receives a generic, regardless of whether or not it is a brand product, I don’t see how this undermines Hatch-Waxman. Apparently, however, my view is not a popular one among generic companies. Thus, the debate continues.

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Alza Loses Battle to Keep Generic Off Market

Written by on Friday, September 30th, 2005

Mountain View-based Alza Corporation, a subsidiary of Johnson & Johnson, suffered a blow this week with the ruling by the Northern District of Virginia that Mylan Laboratories’s generic version of the overactive bladder treatment Ditropan XL did not infringe an Alza patent and that the Alza patent itself was invalid as anticipated and obvious.

Mylan was the first generic pharmaceutical company to file an Abbreviated New Drug Application (“ANDA”) for 5 mg and 10 mg of Oxybutynin, the active ingredient in Ditropan XL. Mylan will be eligible for 180 days of market exclusivity after it receives approval from the Food and Drug Administration (“FDA”). Earlier this year, Mylan received tentative approval for the drug from the FDA, which generally means that approval will be granted upon the resolution of any outstanding patent issues.

Alza has already announced that it intends to appeal the decision to the Court of Appeals for the Federal District in Washington, D.C.

The decision comes after Alza initiated another suit earlier this month, along with McNeil-PPC, Inc., against Hayward-based Impax Laboratories, Inc and Andrx Pharmaceuticals LLC in the United States District Court for the District of Delaware, alleging that defendants infringed their patents by seeking to make generic versions of Concerta prior to the expiration of the patents. Concerta is marketed as a treatment for attention deficit disorder (“ADD”) and attention deficit hyperactivity disorder (“ADHD”). The patents were issued in 2005 and cover the administration of the drug methylphenidate hydrochloride in an increasing concentration over a period of time. Plaintiffs argue that defendants’ drugs also cover the administration of the drug in an increasing concentration over a period of time, therefore infringing their patents. Genetic Engineering News has reported that sales of Concerta were $770 million in the 12 months ended in July, 2005.

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Venture & Technology Conference 2005

Written by on Friday, September 30th, 2005

The San Jose Business Journal will be hosting the Venture & Technology Conference 2005 on Friday, December 2, 2005 from 8 a.m. to 1 p.m. The conference will include 2 keynote speakers, a panel discussion, and the opportunity for companies to give a five minute pitch to venture capitalists in a breakout room.

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Venture & Technology Conference 2005

Written by on Friday, September 30th, 2005

The San Jose Business Journal will be hosting the Venture & Technology Conference 2005 on Friday, December 2, 2005 from 8 a.m. to 1 p.m. The conference will include 2 keynote speakers, a panel discussion, and the opportunity for companies to give a five minute pitch to venture capitalists in a breakout room.

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Genentech Hit with Adverse Patent Ruling

Written by on Friday, September 30th, 2005

The U.S. Patent and Trade Office has issued a preliminary ruling against a Genentech patent, which brings in an estimated $300 million in patent royalties each year from companies such as Johnson & Johnson, MedImmune, and Amgen. Examiners have said that the Genentech patent, which expires in 2018, covers the same inventions as another Genentech patent which expires in early 2006.

The Genentech patent at issue, known as the Cabilly patent (named by its inventor Shmuel Cabilly), covers a method of making antibodies and has been the subject of extensive litigation, including dispute with the European biotech company Celltech, as is summarized by Stephen Albainy-Jenei in his Patent Baristas blog:

[O]n March 25, 1983, Celltech filed in the United Kingdom a patent application directed to the methods of making recombinant antibodies and antibody fragments, together with vectors and host cells useful in these processes. Celltech filed a related patent application in the United States, which issued as U.S. Patent No. 4,816,397 (“the Boss Patent”). On April 8, 1983, about two weeks after Celltech’s original U.K. filing, Genentech filed a United States patent application directed to similar technology, which issued as U.S. Patent No. 4,816,567 (“the Cabilly Patent”). The Boss Patent and the Cabilly Patent issued on the same day, and both were scheduled to expire on March 28, 2006.

After Celltech’s Boss Patent issued, Genentech copied the Boss Patent claims into a previously-filed Cabilly Patent continuation application. As a result, the United States Patent and Trademark Office declared an interference between Celltech’s issued Boss Patent and Genentech’s Cabilly Patent continuation application to determine who was the first to invent, and therefore which company would be entitled to a patent on, the claimed invention. Seven years after the Genentech-Celltech interference began, the Patent Office determined that Celltech’s inventors, and thus Celltech, were entitled to the patent. . . . Genentech appealed. . . .Following two years of discovery, i.e. more than nine years into the dispute, the District Court denied Genentech’s motions that it was entitled to a patent on the disputed technology. . . . Shortly after the District Court ruled on those motions, Genentech and Celltech settled their dispute [in 2001]. . . .

In addition, one of Genentech’s Cabilly patent licensees, MedImmune, filed a lawsuit against Genentech and Celltech claiming violations for antitrust, patent,and unfair competition laws, and asking for a finding of invalidity of the Cabilly patent. The MedImmune case has not yet been resolved.

According to Red Herring, the Cabilly patent covers only 3-4% of Genentech’s antibody product sales; however, the ruling may still raise reporting questions for Genentech. CNN Money reports that a loss of this matter could curtail a significant portion of Genentech’s $641 million in annual royalty income.

Genentech will now have the opportunity to respond to the ruling, which the company is anticipated to do within the next sixty days. Forbes reports that it is expected that all of the licensees will continue to pay royalties until such time as a final adverse ruling is made.

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LES-SVC/LES Women in Licensing Holiday Reception

Written by on Thursday, September 29th, 2005

The Silicon Valley Chapter of Licensing Executives Society and the Women in Licensing will be holding their annual holiday party on Thursday, December 1, 2005 at 6 PM at Stanford University’s Schwab Center in Palo Alto, California.

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BIOCOM Legislative Roundtable

Written by on Thursday, September 29th, 2005

BIOCOM will be holding its Monthly Legislative Roundtable Series on Thursday, December 1st, 2005 at the BIOCOM Boardroom from 8:30-9:30 a.m. Breakfast will be served. Assemblywoman Lori Salda

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WorkIt.com’s Annual Silicon Valley Mixer

Written by on Thursday, September 29th, 2005

WorkIt.com will be holding its Annual Silicon Valley Mixer on Wednesday, November 30, 2005 from 6:00 p.m. to 9 p.m. at the Fenwick & West Silicon Valley Center at 801 California Street, Mountain View, CA. The event will celebrate the people involved in Silicon Valley startups, including the entrepreneurs and investors.

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International Licensing

Written by on Thursday, September 29th, 2005

The event International Licensing, sponsored jointly by the Silicon Valley Chapter of the Licensing Executives Society and the IP Society, will be held on Wednesday, November 30, 2005 between 11:30 and 1:30 PM at The Eagle Room, Bldg. 943, at NASA Ames Research Center in Moffett Field, CA. The speakers will be Emily O’Conner of USCIB and Richard Horton, attorney at Minter Ellison.

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San Diego Biotech Discussion Group

Written by on Thursday, September 29th, 2005

The next meeting of the San Diego Biotech Discussion Group will be held on November 30, 2005 at 5:30 pm at

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