The EU Competition Commissioner Neelie Kroes delivered sharp criticism of some of the patenting practices of large pharmaceutical companies in announcing release of the Commission’s preliminary report on the pharmaceutical sector. The main concerns are alleged anti-competitive behaviour, such as seeking to extend patent protection for a drug beyond 20 years and suppressing competition through litigation. Although the report itself does not seek to identify wrongdoing by individual companies, the Commissioner criticised the following practices:
- Patent clustering, where a company forms a dense network of patents around a medicine, the “worst” example being 1300 separate patent filings, across the European Union, for a single medicine
- A large number of litigation cases over patents, which originator companies invoked against generic companies; on average, these cases took three years to resolve, and originator companies lost a “clear majority” of cases
- Patent settlements which constrain market entry of generic companies and sometimes involve direct payments from originator companies to generic companies
One of the “patent clustering” approaches that was criticised is the filing and enforcement of so-called “follow-on” patents in which an original patent claiming the drug per se or medical use of a drug is followed by a patent claiming a narrower aspect of the same drug, such as its physical structure, or a narrower aspect of its use. The Commissioner’s concern was that some such practices artificially extend the term of patent protection for the drug beyond the term of the original patent.
The EU report comes in the wake of a number of cases involving follow-on patents that were heard in the English courts in 2008. In Les Laboratoires Servier v Apotex Inc.  EWCA Civ 445, Servier sought to enforce its patent on “form alpha” of Perindopril. Servier had previously patented Perindopril, and that patent expired in 2006. The more recent patent for form alpha was found to be invalid in light of the earlier disclosure, and on appeal Jacob LJ left the English Court of Appeal in no doubt as to his opinion of the patent:
“[I]t is invalid. And very plainly so. It is the sort of patent which can give the patent system a bad name. …the only solution to this type of undesirable patent is a rapid and efficient method for obtaining its revocation. Then it can be got rid of before it does too much harm to the public interest…it is right to observe that nothing Servier did was unlawful. It is the court's job to see that try ons such as the present patent get nowhere. The only sanction (apart, perhaps, from competition law which thus far has had nothing or virtually nothing to say about unmeritorious patents) may, under the English litigation system, lie in an award of costs on the higher (indemnity) scale if the patent is defended unreasonably."
However, the English courts clearly do not regard all follow-on patents as “try-ons”. One example is the recent case of H. LundbeckA/S v Generics (UK) Ltd.  EWCA Civ 311, in which the patent at issue claims a specific enantiomer, escitalopram, of the racemic mixture called citalopram. Citalopram had been disclosed in an earlier Lundbeck patent, and the patent at issue related to a subsequent Lundbeck patent directed to the (+) enantiomer of citalopram, which was based on the finding that the therapeutic effect of citalopram is entirely due to its (+) enantiomer. The Court of Appeal upheld the validity of this patent.
The English Court of Appeal also upheld Merck’s patent in Actavis UK Ltd. v Merck Ltd. & Co.  EWCA Civ 444, which claimed (in Swiss-type form) the use of the compound finasteride for treatment of alopecia in a dosage of 0.05-1 mg. This was found to be valid over an earlier, expired Merck patent disclosing a higher dosage range.
However, the English Court of Appeal stressed that this is an unusual case; in most instances it can be expected that claims defining a dosage would be regarded as obvious. Additionally, the EPO Technical Board of Appeal in T 1319/04 (Kos Life Sciences) has referred to the Enlarged Board of Appeal the question of patentability of claims to a medicament defined in terms of dosage regimes.
The EC report identifies close to 700 cases of patent litigation between originator and generic companies between 2000 and 2007. Litigation in this period was reported for 68 medicines with associated costs in excess of EUR420 million. Despite this large number of cases and high costs, the report notes that generic companies won 62 per cent of cases in which a final judgment was given.
The report considers that litigation can be an efficient means of creating obstacles to generic companies, and litigation may be considered not on its merits but as a deterrent to potential competitors. The report does however acknowledge that litigation is a legitimate practice, and pharmaceutical companies will doubtless seek to justify their right to defend intellectual property protecting their very substantial and high-risk investments in drug development.
The inquiry surveyed more than 200 settlement agreements between originator and generic companies between 2000 and June 2008, of which 48 per cent put a restriction on the generic company’s ability to market the medicine in question. These settlements included direct payments to generic companies totalling over EUR200 million.
The report notes the general policy of the US Federal Trade Commission (FTC), which is that this type of payment from an originator company to a generic company is unlawful if combined with a restriction on the generic company from entering the market with its own product. Doubtless this issue will be considered in more detail in the full report, and it is interesting to note that generic drugs make up a significantly larger part of the drugs market in the United States than in Europe
Click here for more information on the preliminary report.