To date, the Patent Trial and Appeal Board has reached a final decision in eight instituted inter partes review (IPR) challenges, including seven IPRs filed by the Coalition for Affordable Drugs and one IPR filed by Erich Spangenberg and me personally on a not-for-profit basis. The outcomes were favorable in seven of the eight IPRs. Our results continue to validate the view that, in many cases, the pharmaceutical industry has abused the U.S. patent system by obtaining and exploiting invalid patents, thereby unjustly benefiting from government-granted monopolies on non-innovative drugs and treatments. Making matters worse, many of the same pharmaceutical companies which have profited through unethical “life cycle management” practices have also avoided paying U.S. taxes by inverting into tax-advantaged foreign companies.

Kyle Bass: The U.S. Still Has A Drug Problem

Over the past 15 years, the pharmaceutical industry has been one of, if not, the largest political contributor in the U.S. By making these contributions to both sides of the aisle, Big Pharma has won over the hearts, minds, and wallets of key politicians, influencing policy and protecting its special interests. The system must be fixed, and the IPR process continues to be a critical tool for change by providing a mechanism through which pharmaceutical companies are held accountable and denied unjustified premiums placed on drugs that otherwise would be affordable to Americans. We look forward to continuing our work of challenging dubious patents that enshrine monopolies protecting drugs that lack innovation to the detriment of Americans suffering from illness. Included below are summaries of the IPRs that have reached final decisions to date.

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Gattex – Shire PLC

  • Patent: 7056886
  • PTAB Decision: Patent Claims Invalidated (October 21, 2016)

The Patent Trial and Appeal Board (PTAB) ruled in favor of the Coalition for Affordable Drugs (CFAD) and invalidated all instituted claims related to the formulation of Gattex. There were certain claims that we strategically did not challenge because they were related to methods of manufacturing which are easier for generics to work around without infringing on the patent. In addition, there were certain “dependent” claims that were challenged and not instituted. These claims were ultimately “dependent” on claims that were invalidated and as a result, are effectively unenforceable. Furthermore, the Gattex decision will accelerate the entry of generic competition in the treatment of Short Bowel Syndrome (SBS), a treatment for which Shire currently charges $376,0001 per patient a year (making Gattex one of the most expensive drugs in the world). Gattex generates almost $200 million in annual sales, despite only treating a very small population of patients (<1,000), while Shire also avoids paying its fair share of U.S. taxes on profits through its inversion into a tax-advantaged Irish company.

The patent on the formulation of Gattex never should have been issued as it was obvious, and as a consequence, it was invalid from the beginning. The PTAB’s decision will hopefully help expose the broad, troubling practice in the pharma industry of securing invalid patents which are obvious based on existing prior art in order to stifle competition, potentially overcharging state and federal payors, and game the system. In a January 22, 2016 letter to Gilead Chairman, and then CEO, John Martin, the Massachusetts State Attorney General wrote that the high price of Sovaldi (Hepatitis C drug manufactured by Gilead) “may constitute an unfair trade practice in violation of Massachusetts law.” The letter went further to say that the AG’s office was looking into bringing an unfair commercial conduct complaint against the company. The Sovaldi matter is highly relatable to Gattex and Shire should similarly prepare itself for state attorneys general and federal payors inquiring as to why they are peddling such an expensive drug that should have never received a U.S. patent.

Lialda – Shire PLC

  • Patent: 6773720
  • PTAB Decision: Patent Claims Not Invalidated (October 5, 2016)

The PTAB ruled that the claims securing Shire’s patent on Lialda were valid. The decision was determined based on an extremely narrow definition of “wax” rather than looking at the obviousness of using a “waxy substance,” suggesting that the PTAB was grasping for a reason not to kill the claims. In a telling excerpt from the PTAB’s decision, the judges reasoned “[i]n addition, the two U.S. patents listing cetyl alcohol or higher alcohols generally as ‘waxes’ are outweighed significantly by non-patent extrinsic evidence in the form of relevant treatises, textbooks, and dictionaries that chemically define ‘waxes’ as being esters.”

The arguments around the obviousness of a matrix are almost cruel; the PTAB acknowledged that the types of matrices were well known but that the patent challenge did not pick the right one. In doing so, the PTAB has reverted back to virtually requiring single art anticipation2. More concerning, PTAB Judge Jacqueline Bonilla (the author of the final opinion) asked Shire’s attorneys, in an oral hearing, whether the patent being challenged was the only patent listed in the Orange Book; Shire’s attorney confirmed that it was. Clearly, the question was irrelevant to the matter before the PTAB. The ONLY question before the PTAB was exclusively whether the patent was valid or not. While the question as to whether Shire’s monopoly was protected by a single patent was not applicable to the matters of obviousness, it was evidently a concern of Judge Bonilla. Why would Judge Bonilla ask this question?

If the Lialda patent at issue – which is set to expire in 2020 – were found invalid, there would be no barrier to generic entry, pending Food and Drug Administration (FDA) approval. Currently, there are six known generic manufacturers seeking permission to market a generic version of Lialda which have all filed abbreviated new drug applications (ANDA) with the FDA. The unfortunate outcome in this case is that generics stand ready to enter the market and lower drug prices, but instead will likely be embroiled in years of costly legal proceedings over a patent which the PTAB should have invalidated on the grounds that it was obvious.

Drug Prices IPRs

IPRs

Read the full article here.

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