Orange Book Blog

Lilly Prevails Over IVAX, Teva, and Dr. Reddy's in Zyprexa Appeal

Eli Lilly & Co. et al. v. Zenith Goldline Pharms. et al., Nos. 05-1396, -1429, and -1430 (Fed. Cir. 2006)

          by Robert S. Dailey

Yesterday the Federal Circuit affirmed Eli Lilly’s April 2005 district court victory in its dispute with ANDA filers Zenith Goldline (now IVAX), Teva, and Dr. Reddy’s over generic Zyprexa.  The patent-in-suit, U.S. Patent No. 5,229,382, claims the the active ingredient in Zyprexa, olanzapine, and its use to treat schizophrenia.

Lilly developed olanzapine in the early 1990s.  The drug proved to be a safe alternative to clozapine and other thienobenzodiazepines that Lilly had previously developed.  The opinion, written by Judge Rader for a unanimous panel, addresses inherent anticipation, obviousness, experimental use negation, and inequitable conduct.

I. Inherent anticipation

The defendants had argued that olanzapine was inherently anticipated by a 1980 journal article that identified compounds in the same family.  The defendants argued that disclosure of a set of structurally similar compounds is sufficient for inherent anticipation, even when the prior art discloses no genus containing the patented compound.  They cited In re Petering, 301 F.2d 676 (CCPA 1962), and In re Schaumann, 572 F.2d 312 (CCPA 1987), to support their argument.  The Federal Circuit distinguished these cases, however.

Petering had addressed a situation where the prior art had not merely disclosed a broad disclosure of a genus, but had actually disclosed a set of compounds such that they formed a class containing only twenty compounds.  In Schaumann, the prior art disclosed compounds that differed only by a single variable, such that only a limited number of compounds was encompassed by the implied class.  In contrast, the 1980 journal article disclosed a wide-ranging series of clozapine-like compounds.  Any genus implied by the class would have included millions of compounds.  And the article gave no indication that the substituents could be interchanged.  Although the journal article did disclose the ethyl homolog of olanzapine, the discussion indicated that the homolog was excluded from the class of preferred compounds.

The defendants’ basic proposition appears to remain intact: that inherent anticipation does not require express disclosure of a genus containing the compound.  Disclosure of structurally similar compounds may be sufficient to anticipate if (i) the disclosure implies a sufficiently limited genus containing the patented compound; and (ii) the disclosure does not exclude the patented compound from membership in a preferred class.

II. Obviousness

The defendants made several obviousness arguments.  The court held that the prior art references generally taught away from modifying the disclosed compounds to reach olanzapine.  Prior to Lilly’s development of olanzapine, those of skill in the art believed that the therapeutic effect of clozapine-like compounds depended on the presence of an electron-withdrawing group at the 7-position of the benzene ring.  (Olanzapine has a hydrogen at this position.)  Even though one reference disclosed the ethyl homolog of olanzapine, the court held that one of skill in the art would have modified the ethyl homolog by adding an electron-withdrawing group at the 7-position rather than replacing the ethyl with methyl.

III. Other arguments

The defendants had also asserted that Lilly had used olanzapine in public in violation of the public use bar.  The court held that Lilly’s clinical trials were not public, and would have been protected as an experimental use (even if they had been conducted in public).

The defendants had also made three different inequitable conduct arguments.  The court held that none of the conduct cited by defendants was material to patentability.

Robert Dailey, Ph.D. is a physical chemist and a third-year law student at the University of North Carolina at Chapel Hill.  Dr. Dailey was a member of the 2006 class of summer associates at McDonnell Boehnen Hulbert & Berghoff.

RELATED READING:

• More at Patent Docs: Dec. 28 post by Kevin Noonan; Dec. 29 post by Don Zuhn

ACI's Pharma/Biotech Industry Forum on Patent Portfolio Management, February 27-28, 2007, New York City

American Conference Institute will present its "Pharma/Biotech Industry Forum on Patent Portfolio Management" conference in New York City on February 27-28, 2007.

Many commercialized drugs are born in universities.  Pharma/biotech companies face budget constraints, so they turn to universities to come up with early-stage drugs that the companies then refine.  But such tech transfer deals between industry and universities are not being made as frequently as they should be.  Each side is struggling with how to bridge the technology/innovation gap between discovery and commercialization.

Years ago, the model was as follows: a university would have early-stage venture capitalists start companies on concepts or exciting results.  Some would succeed and many would fail, but then those technologies would form the pipeline picked up by established companies. This model no longer works. Companies and VCs now want phase II drugs and/or want to license discoveries further along in the pipeline, and this is not what universities do.  Companies and VCs have moved away from licensing early-stage life science technologies, and these are exactly the types of discoveries that universities are seeking to license.  The result: it’s more difficult to get deals done and company pipelines are bare.

The Pharma/Biotech Industry Forum on Patent Portfolio Management will address the ongoing concern associated with how the target market (collectively) gets promising early scientific results developed to the point where a company wishes to take over the project.  Another topic will be the inherent culture clash between industry and academia: academia wants to educate, disseminate and publish, and industry wants to gain competitive advantage from control over the IP.

The conference is targeted at licensing executives and in-house counsel for medium-to-large biotechnology companies and large pharmaceutical companies, as well as research institutions with technology transfer/licensing offices, and outside attorneys who represent any of the parties to such deals.

Additional details are available at the conference website.

District Court Denies Abbott's TRO Motion in Biaxin XL Case Against Sandoz

Savient Pharms. v. Sandoz, No. 05 C 5373 (N.D. Ill. 2006)

In a short opinion and order signed last Friday, Judge David H. Coar of the U.S. District Court for the Northern District of Illinois denied Abbott Labs' motion for a Temporary Restraining Order aimed at keeping Sandoz from launching its generic version of Biaxin XL (extended-release clarithromycin tablets). Biaxin XL, which is used primarily to treat bacterial infections of the skin and upper respiratory system, has annual sales of $255 million in the United States.

Besides Sandoz, Teva has filed an ANDA for generic Biaxin XL.  In Abbott's litigation against Teva, Judge Coar granted Abbott's motion for a preliminary injunction.  However, last summer the Federal Circuit vacated that decision, holding that Teva had raised a substantial question regarding the validity of Abbott's U.S. Patent No. 6,010,718.  Abbott asserted the same patent against Sandoz, and while Judge Coar found that the Federal Circuit decision did not preclude Abbott's assertion that there were no substantial questions of validity (because it was a ruling made in connection with preliminary relief), he stated that "the practical effect of that court's holding still militates toward the denial of the TRO in the instant case."

Judge Coar wrote:

Given the holding of the Federal Circuit Court of Appeals and the deference owed thereto, this Court will not reach a result inconsistent with that holding absent a substantial showing that on a more complete record, the Federal Circuit would have reached a different result.  While Abbott has put forth argument and suggests some evidence that the Teva Case's analysis may have been flawed, on the limited record in the TRO hearing, this Court is not persuaded that the Federal Circuit's reasoning is not controlling in this (Sandoz) case as to the likelihood of prevailing on the invalidity claims.

Abbott and Teva settled their litigation shortly after the Federal Circuit decision in that case (link). Abbott's case against Sandoz now proceeds toward trial.

In re: Tamoxifen Citrate Antitrust Litigation, Another "Reverse Payments" Case, Appealed to Supreme Court

The plaintiffs in In re: Taxmoxifen Citrate Antitrust Litigation (who include pharmaceutical consumers, third party payors, and a health care advocacy group) have filed a Petition for Writ of Certiorari asking the Supreme Court to review the Second Circuit's decision affirming the dismissal of this antitrust case.  The plaintiffs alleged antitrust violations based on a $21 million payment from AstraZeneca (the tamoxifen NDA holder) to Barr Labs (the ANDA filer) in exchange for Barr's promise to withdraw its Paragraph IV certification and abandon its challenge of the tamoxifen patent.

Plaintiffs' cert petition presents the following question:

Under what circumstances is an agreement by a brand pharmaceutical manufacturer (and patent holder) to share a portion of its future profits with a generic market entrant (and alleged patent infringer), in exchange for the generic's agreement not to market its product, a violation of the antitrust laws?

The most recent such "reverse payments" case appealed to the Supreme Court, FTC v. Schering-Plough, was turned away this past summer.  In that case, the Court asked the Solicitor General whether cert should be granted, and the Solicitor General recommended denial.

The Tamoxifen cert petition acknowledges that the legal issue is the same as that in Schering, but suggests that the case is more appropriate for Supreme Court review:

In Schering, the United States (by the Solicitor General) recognized the importance of the issues raised, but opposed the FTC petition for certiorari because of factual findings unique to that particular case.  The same important issues are raised in this case without the complications that caused the Solicitor General to oppose certiorari in Schering.

A number of parties filed briefs in support of and in opposition to the Schering petition, and I would expect the same to happen here.  The Court may once again ask the Solicitor General to file a brief as well.

RELATED READING:

• September 19, 2006 Orange Book Blog post
• May 23, 2006 article by Prof. Harold Wegner in IPFrontline.com
• May 22, 2006 article in Chemical & Engineering News

Pharmacies sue Astra Zeneca for unlawful monopolization of Prilosec/Nexium market

          by David S. Harper

A group of pharmacies led by Walgreen Co. recently filed suit in the U.S. District Court for the District of Columbia, alleging that Astra Zeneca (AZ) illegally monopolized the market for its proton pump inhibitor drugs Prilosec, Nexium, and their AB-rated generic equivalents, by engaging in a scheme to convert the prescription drug market for Prilosec to Nexium.  Proton pump inhibitors are widely used for the treatment of persistent heartburn.  In its complaint, the pharmacy group alleges that the scheme was enacted solely for the purpose of impeding generic competition for Prilosec, allowing AZ to continue charging monopoly prices for its proton pump inhibitor drugs free from generic competition.

The active ingredient in Prilosec is omeprazole, a racemate of R and L enantiomers, while the active ingredient in Nexium is esomeprazole, the L enantiomer of omeprazole.  By 1999, sales of Prilosec were more than $4 billion dollars per year.  The Orange Book-listed patents for Prilosec expired in October of 2001.  The pharmacy group alleges that, in anticipation of huge losses in sales due to generic competition, AZ came up with a scheme to maintain its monopoly in the lucrative proton pump inhibitor prescription drug market by carrying out the following steps designed to convert the prescription market for Prilosec to Nexium:

• Introducing Nexium as a replacement for Prilosec, even though AZ knew that Nexium provided no advantage over Prilosec; since the active ingredient in Nexium is not the same as that in Prilosec, generic Prilosec would not be AB rated to Nexium (and thus pharmacists could not dispense generic Prilosec to a customer presenting a prescription for Nexium);
• Engaging in a false and misleading advertising campaign to convince physicians that Nexium is superior to Prilosec, thereby converting Prilosec prescriptions to Nexium prescriptions;
• Withdrawing branded Prilosec from the market and applying for over the counter (OTC) status, which was designed to cause managed care organizations (MCOs) to stop covering the cost of generic prescription Prilosec; and
• Selling its OTC Prilosec (which was granted 3 year exclusivity in 2003) as a 14 day or less regimen and advising customers to consult their physician if symptoms persisted for more than 14 days; the pharmacy group alleged that this was designed to encourage physicians to prescribe Nexium to OTC Prilosec customers, since MCOs would be unlikely to cover the cost of generic prescription Prilosec.

Generic Prilosec was introduced to the market in December of 2002, and the pharmacy group alleges that AZ's unlawful monopolization and attempts to monopolize the Prilosec/Nexium/AB-rated generic equivalent market resulted in increased costs of more than $2 billion dollars to direct purchasers of Prilosec and Nexium.  The complaint does not provide any specifics regarding price differences between generic prescription Prilosec, OTC Prilosec, and Nexium.

Federal Circuit Temporarily Enjoins Sandoz and Upsher-Smith from Selling Generic Oxandrin

In a dramatic turn of events in Savient Pharma's patent litigation against Sandoz and Upsher-Smith, late this afternoon the Court of Appeals for the Federal Circuit granted Savient's emergency appeal and temporarily enjoined Sandoz and Upsher-Smith from marketing their generic versions of Oxandrin (oxandrolone).  The Federal Circuit's order came just before a district court's Temporary Restraining Order was set to expire.

On December 1st, the FDA denied two Savient citizen petitions relating to Oxandrin and granted final approval to Sandoz and Upsher-Smith's ANDAs for generic oxandrolone tablets.  On December 4th, Savient sued Sandoz and Upsher-Smith in the District of New Jersey, alleging infringement of five method of use patents relating to oxandrolone.  At the same time, Savient moved for a TRO and preliminary injunction.  The next day, Judge Peter G. Sheridan granted Savient's request for temporary relief, ordering Sandoz and Upsher-Smith to stop efforts to market their generic products and ordering Savient to ensure that Watson Labs would not launch an authorized generic of Oxandrin.  In the next two days, both parties submitted briefs, and on December 8th Judge Sheridan reversed course and ordered the temporary restraints to be lifted as of 5:00 p.m. today.  He also granted permission for Savient to appeal to the Federal Circuit.

Unfortunately, neither Judge Sheridan's opinion lifting the TRO nor the Federal Circuit's order are publicly available at this time.  However, a declaration submitted by Sandoz and a reply brief filed by Savient reveal several interesting facts.  Apparently, at the time Sandoz and Upsher-Smith filed their ANDAs, the Orange Book did not contain any patent information for Oxandrin.  Accordingly, they filed with Paragraph I certifications.  Later, Savient listed its method of use patents, but Savient late-listed four of the patents and therefore Sandoz and Upsher-Smith were not required to certify to those patents.  Savient timely listed the fifth patent, U.S. Patent No. 6,828,313, but Sandoz and Upsher-Smith carved out from their ANDAs the indication claimed in that patent and informed the FDA accordingly.  The defendants later carved out the indications claimed in Savient's other patents.

It appears that Sandoz and Upsher-Smith are currently approved to market generic oxandrin only for two very specific indications:  (1) to offset protein catabolism associated with prolonged administration of corticosteroids and (2) for the relief of bone pain accompanying osteoporosis.  Meanwhile, Barr Labs recently filed an ANDA to sell Oxandrin for all approved uses (and Savient responded by suing for patent infringement).  The primary indication for Oxandrin is the promotion of weight gain following extensive surgery, chronic infection, or severe trauma.  Oxandrin has annual sales of approximately $60 million.

RELATED READING:

• Savient press releases
• Savient citizen petitions:  2005P-0383 and 2004P-0074
• Sandoz approval letter
• Upsher-Smith approval letter
• Barr Labs press release

Federal Circuit Affirms Preliminary Injunction in Plavix Case

Last Friday, a unanimous panel of the U.S. Court of Appeals for the Federal Circuit affirmed a district court decision that granted a preliminary injunction against Apotex in the Plavix case.  The result is not a surprise, given that the Federal Circuit took over five weeks to release its opinion.  The court heard the appeal on an expedited schedule and likely would have released an opinion sooner had it reversed the district court.

Apotex conceded that its generic version of Plavix infringes Sanofi's U.S. Patent No. 4,847,265, leaving the validity and enforceability of the '265 patent as the key issues.  In a twenty-seven page opinion written by Judge Lourie, the Federal Circuit methodically discusses each of Apotex's invalidity arguments (anticipation, obviousness, and obviousness-type double patenting) and its unenforceability argument (inequitable conduct), and concludes that the district court properly disposed of each one.

Apotex's lead argument was that Sanofi's own U.S. Patent No. 4,529,596 anticipated the '265 patent and rendered it obvious.  Apotex argued that claim 2 of the '596 patent, directed to the free base of a compound the parties called "MATTPCA," inherently anticipated claim 3 of the '265 patent, directed to the d-enantiomer of the bisulfate salt of MATTPCA (clopidrogel bisulfate, the active ingredient in Plavix).  The Federal Circuit, however, determined that the district court correctly found that "a person of ordinary skill in the art would not be led to the bisulfate salt."  The court likewise found that the district properly rejected Apotex's obviousness argument, noting "the extensive time and money Sanofi spent developing the racemate before redirecting its efforts toward the enantiomer, and the unpredictability of salt formation."

Thus, the Federal Circuit agreed with the district court that Sanofi had satisfied the first of four factors required to obtain a preliminary injunction:  likelihood of success on the merits.  The second factor, whether there would be irreparable harm if an injunction did not issue, is often presumed in patent cases upon a showing of liklihood of success.  Interestingly, in this case Apotex suggested that the district erred by applying a presumption of irreparable harm, arguing that such a presumption directly conflicts with the Supreme Court's recent decision in eBay v. MercExchange.  However, the Federal Circuit sidestepped this argument, concluding that the district court properly found several kinds of irreparable harm in any event, including irreversable price erosion.

The next stage of the case will be a trial before Judge Sidney H. Stein of the U.S. District Court for the Southern District of New York, the same judge who granted the preliminary injunction against Apotex back in August.  The trial is scheduled to begin on January 22, 2007.

RELATED READING:

• More at Patent Docs
• Dec. 8, 2006 Bloomberg.com article
• Nov. 28, 2006 OnThePharm post: Pharmacy supplies of generic Plavix run low
• Earlier Orange Book Blog posts on the Plavix case: Aug. 8, 2006; Sept. 21, 2006; Nov. 2, 2006

Overseas Sales and Cancer Treatments Drive Pharma’s Future

          by Robert Dailey

This week's issue of Chemical and Engineering News features a year-end summary of what many believe has been a dismal year for the pharmaceutical industry (click here for article).  Despite Wall Street's gloom, the report predicts a solid future for pharma.

Sales in 2006 continued to grow at a 6% clip in the United States.  Growth figures for Western Europe and Japan showed similar single-digit increases.  But China, Brazil, Korea, India, Russia, and Turkey all showed double-digit growth.  China and Turkey are likely the brightest stars in this emerging class of pharmaceutical consumers.  Of course, much of the growth potential in these countries depends on their ability to develop stable and fair health care systems.

The oncology market, though, has increased 22% within the past year.  Much of this is due to the increased ability to manage cancer over a patient's lifetime.  Oncology drugs are already the top class of sellers in Japan and Europe.  The market for these treatments should continue growing in the United States.  But demand is not the only factor in the equation.  Sales growth will also depend on changes in the system's manner of delivering cancer care and the payers' demands for affordability.

The article also points out that we are far from seeing the end of blockbuster drugs.  Several key products, notably Pfizer drugs Norvasc and Zyrtec, will likely lose patent protection within the coming year.  Nevertheless, analysts project that 2007 will see 112 blockbuster drugs--eleven more than in 2006.

Robert Dailey, Ph.D. is a physical chemist and a third-year law student at the University of North Carolina at Chapel Hill.  Dr. Dailey was a member of the 2006 class of summer associates at McDonnell Boehnen Hulbert & Berghoff.

Federal Circuit Vacates Rilutek Decision, Remands Case Between Impax and Aventis to District Court

          by Mark L. Chael

On November 20, 2006, the U.S. Court of Appeals for the Federal Circuit handed down its decision in Impax's case against Aventis related to Rilutek, which is marketed by Aventis for the treatment of Lou Gehrig's Disease (amyotrophic lateral sclerosis or ALS).  In the twelve months preceding August, 2006, Rilutek (riluzole) had U.S.sales approaching $37 million dollars.  Rilutek is the only FDA-approved treatment for ALS.

Impax filed an ANDA on March 16, 2001, to market a generic version of Rilutek and during the course of the approval process became aware of Aventis's U.S. Patent No. 5,527,814.  At the time, the '814 patent was not listed in the Orange Book, and thus Impax filed a declaratory judgment action seeking a declaration that it had not infringed the patent and asserting that the patent was invalid and unenforceable.

The Federal Circuit affirmed the district court's holding that the '814 patent was not unenforceable due to inequitable conduct, but vacated the lower court's holding that claims 1-5 of the '814 patent were anticipated by Aventis's own U.S. Patent No. 5,236,940, and remanded the case.

The lower court had found that even though the '940 patent disclosed riluzole as a member of a broad class of compounds, the '940 patent did not show riluzole's effectiveness in treating ALS and therefore it was not anticipatory.  Impax Labs v. Aventis Pharms., 333 F. Supp.2d 365 (D. Del. 2004).  The Federal Circuit disagreed with the lower court.  Citing Rasmusson v. SmithKline Beecham, the Federal Circuit stated that a prior art reference need not show utility in order to be anticipatory:

Under Rasmusson, the effectiveness of the prior art is not relevant . . . .  Rather, the proper issue is whether the '940 patent is enabling in the sense that it describes the claimed invention sufficiently to enable a person of ordinary skill in the art to carry out the invention.

Thus, the Federal Circuit remanded the case to the district court in Delaware for further proceedings under this statement of the test.

Interestingly, Judge Rader concurred with the majority on all points except the anticipation determination.  Judge Rader wrote:

While the trial court referred to effectiveness, its findings go beyond that narrow ruling and suffice to uphold its judgment.  For example, the district court noted first that formula I [of the '940 patent] encompasses a particularly large number of compounds.  In addition, the district court examined the specification of the '940 patent and determined that riluzole was not meaningfully discussed . . . .  Thus, I read the district court to have found that the '940 disclosure did not put one of skill in the art in possession of the invention at all.  When it found that the disclosure leaves 'substantial uncertainty,' the trial court sufficiently supported its holding.  The '940 disclosure does not make [riluzole] a potential treatment in any way.

Thus, Judge Rader was inclined to affirm the district court's ruling on all counts.

RELATED READING:

• Don Zuhn's take, at Patent Docs