Transcript The Gaming of Pharmaceutical Patents - Berkeley-Haas

The Gaming of
Pharmaceutical Patents
Brief Overview
Hatch-Waxman Act
 Hatch-Waxman was designed to speed entry of
generic drugs to compete with patented
pharmaceuticals
 The results of the act seek to balance the interests of
the branded manufacturers with those of generics
 The reality has been that as branded manufacturers
learned how to “change the game”, they gained an
advantage in keeping generics out

Average time keeping generics out increased from 9 to
11.5 years
The Mechanics of Hatch-Waxman
 Branded manufacturer files a New Drug
Application (NDA) to market branded
pharmaceutical


There’s an automatic five-year exclusivity
period for a successful NDA
Successful NDA listed in the FDA “Orange
Book”
Hatch-Waxman: Enter the Generics
 Generics seek to “engineer around” the branded
patent.
 They file a less expensive ANDA asserting
bioequivalence

In the interesting case, this is a “Paragraph IV
Certification” invalidity or non-infringement of branded
patent
 This triggers an automatic 30-month stay while
litigation occurs.
 If successful, the first to file an ANDA has a 180
exclusivity period.
Branded Strategy: Hoechst-Andrx
 Andrx is first to file a Paragraph IV ANDA for a
generic bioequivalent to Hoechst’s popular drug
Cardizem
 Hoechst sues alleging infringement and the suit is
settled as follows
 The Settlement

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Andrx agrees not to market its generic for at least 18
months after the 30 month stay expires
Andrx is paid $40 million/year to stay off in the event it
loses the suit and $60 million/year if it wins
Andrx agreed to retain the 180 day exclusivity
Questions:
 Why would Hoechst do this?
 How is the agreement structured to take
advantage of the Hatch-Waxman game?.
More Tactics: Many Orange Book
Filings
 In response to the FTC, branded
manufacturers have evolved new strategies

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Successive Orange Book filings
Settlements of non-infringement as opposed
to invalidity

Why might this be useful?
Take Aways
 The 180 day exclusivity provides leverage for the
branded manufacturer to block multiple generics
while negotiating with only one
 The 30 month stay allows for creative delaying tactics
 By negotiating to delay the entry of the first filer, the
brand effectively delays entry by all filers
 Thinking strategically pays: Clever strategies by
brands in the legal environment of Hatch-Waxman
have unambiguously increased their profitability.