IP Policy Developments in the EU

and implications for the generic

medicines industry

IGPA, Montreal, September 2009

Lidia Mallo

Government Affairs

EGA represents over 1000 companies in 34 European countries

Generic medicines companies employ over 130,000 people in the EU

Generic medicines companies cover a full spectrum of pharmaceutical needs

Generic medicines companies also undertake incremental innovation

Generic Medicines: Key to

Healthcare Sustainability and

Patient Care

3

Generic medicines in EU27 represent

€25 Billion of savings to governments every year

Generic Medicines- Key to

Healthcare Sustainability

Volume dispensed medicines in EU27

Pharmaceutical expenditure in

EU27

50% generic

medicines

18% generic

medicines

3

EGA – International context

Founding member of the International Generic

Pharmaceutical Alliance (IGPA)

Observer status at WIPO

Admitted into official relations with WHO

Members of IMPACT and IGWG

Observer member at the SACEPO Committee of

the European Patent Office

Content

Conclusions of the European Commission Sector Inquiry

Key findings/Examples of delaying strategies

Recommendations

European Union Patent Court : advantages for the generic industry

Border Measures and the Seizures of Generic Medicines in Transit in the EU

Sector Inquiry

The Pharmaceutical Industry in Europe

Neelie Kroes, European Commissioner for Competition

Timelines

16 JANUARY 08:

Company

investigations

JAN – FEB 08:

Stakeholder

discussions

MAR – SEPT 08:

Questionnaires

to companies

MAR – SEPT 08:

Stakeholders

discussions

24 NOV 08:

New company

investigations

28 NOV 08:

Launch

preliminary

report

31 January 09:

Deadline public

consultation

July 09:

Publication final

report

2010 >

Implementation of

Recommendations

December –

January

EGA (other

stakeholders)

work on

submission

Aim of Inquiry: investigate

company behaviour

Observed delays in the entry of generics

Decline in innovation measured by number of

new medicines coming in the market

Tool under EC Competition Law

To investigate anti-competitive behaviour of

originator companies towards generic companies

To investigate anti-competitive behaviour

between originator companies

Sample of products analysed over 8 years in 17

Member States

Average time gap between loss of exclusivity

and launch of generic

on average: 7 months

for blockbusters: 4 months

Potential savings of €3 Billion more if generic

entry had been immediate

Time Delays & Potential Savings

1010

Delaying Strategies Used by

Originator Companies

TOOLBOX

Patent Strategies

Frivolous Litigation

Lobby Authorities

Lifecycle Strategies

Mis-information

to the Public

Source: Final report Sector

Inquiry, July 09

10

Patent thickets: Up to 1300 patents around 1

molecule

Number of patent applications doubled between

2000 and 2007

Quality problem: some patents should have

never been granted

Some patent holders admit some patents not

strong

Originator companies confirm using patent

strategies to extend duration of protection

Key Findings on patents

Patents Patent Strategies

List Follow on Medicines which

Lack Established Added Value

12

Molecule Brand name

Expiry date patent

Follow on molecule

Brand name

Remarks

OmeprazoleAnti-acid

Losec Jan 03 Esomeprazole Nexium isomer

Citalopram Anti-depressive

Cipramil Dec 06 Escitalopram Spiralexa isomer

Alendronate 10 mgOsteoporose

Fosamax April 08 Alendronate 70 mg

Fosamax EP 70 mg revoked by several EU Courts

In some cases, originator companies consider litigation not for the merits but as a tool for creating obstacles for generic companies

2000 and 2007: 1300 patent-related disputes -majority started by originator companies

Generic companies won 62% cases

Average duration of litigation: 2.8 years

Total cost for cases analysed over €420 million

Key Findings on litigation

Litigation Frivolous Litigation

EFFECT ON GENERIC COMPANIES:

•Uncertainty because of aggressive litigation

•Delays because of long court procedures

• High costs

•Uncertainty because of different court decisions

on same patent

14

Frivolous Litigation

Example of Vexatious Litigation

Teva vs Abbott case In May 2007, Abbott request pre-judgement seizure

of documents, asserting there was imminent infringement of Abbott’s patent rights.

A search was conducted in the Teva offices in Utrecht and Haarlem including a search of the computer server.

However, the District Court found the seizure to be unlawful and should be lifted.

The Court recognised that it was of the utmost importance to generic companies to enter the market as soon as possible after the relevant patent protection expires.

Originator companies “intervene” before

national authorities (in MA and P&R procedures)

raising alleged patent infringement and

safety/quality issues

Very limited success rates of originator

companies in court (2% as regards MA)

On average, granting of MA delayed of 4 months

due to interventions

Key Findings on intervention/patent linkage

Patent Linkage Lobby Authorities

An Example: Portugal

Since July 2007, generic medicines have been

effectively blocked from access to the market

Why?

More than 70 court cases against generic

medicines companies and national authorities

based on market authorisation (MA) granted

before patent expiry, which is in fact possible

by the Bolar Provision(Art 10.6 of Directive 2001/83/EC as amended )

Lobby Authorities

Claiming non-interchangeability of generic

medicines

Causing doubts about quality, safety

and efficacy of generic medicines

Misinformation

campaigns

Mis-information

to the Public

For 40% of investigated products, originators

used follow-on/second generation products that

not always have therapeutic added value

Second products normally launched 5 months to

one year before patent expiry

Sometimes first product is withdrawn and

patients are switched to follow on product

Key Findings

Lifecycle StrategiesLifecycle Strategies

20

Lundbeck Switches Citalopram to

Escitalopram to Undermine

Generic Entry and to Remain Own

Sales

0

20,000

40,000

60,000

80,000

100,000

120,000

VOLUME CIPRALEX (SU) VOLUME CIPRAMIL (SU) TOTAL VOLUME (SU)

2002:

Expected generic entry after

loss of exclusivity

2006:

Actual generic entry due to

blocking tactics

Source: IMS Data 2002-200720

Revenue increase of

50% due to switch

21

Commission Recommendations

to Get EU System Right

Patent Law

Pharmaceutical

Legislation

Dir 2001/83

Competition

Law

Price Transparency

Directive

1991

21

•Reform EPO

system

•Community Patent

•EU Patent Court

•End unjustified

litigation

•No patent linkage

•Respect timelines

•No interventions

•No misinformation

•Immediate P&R for

generic medicines

•No patent Linkage

•No interventions

•Competition Law

Enforcement

•Monitor settlements

EGA Recommendations on the

Sector Inquiry Would:

Foster Innovation

Increase competition

Improve the image of

the sector

Improve patient access

to affordable treatments

Ensure healthcare

sustainability

To Make the Market Work Properly

22

IP Barriers to Innovation and

Competition

“Patents have a key role in

incentives & rewarding

crucial pharmaceutical

research & development”

Misuse of the patent system

however will

a) restrict

access/affordability and

b) discourage real

innovation.

Obtain this report from www.egagenerics.com

EGA key recommendations on

patent quality

Improve quality of applications

– Rigorous assessment of patentability requirements-inventive step

– Introduce “Information disclosure statement” on patentees to ensure that all information/prior art relevant to the patent is disclosed

– Grant examiners stronger incentives to reject « bad »applications

Accelerate opposition procedures

Prohibit filings for substantially identical divisional patents- First results of EPO reform: EPC Rules amended to limit divisional filings strictly to a period of 24 months from the first examination communication.

What is needed is “fewer, better” applications that “pay what it costs.”

Such a system helps those that are “gaming” it, she added. Part of the expectation of the market is that innovative companies have pending patents, so that it is economically helpful to have applications filed. She said she had quotes such as “I don’t really care if you grant or not, I just need the patent pending.”

But, she said, “this isn’t what the IP system is meant to do.”

EPO President Mrs. Brimelow, at

WIPO forum, Sep 2009:

EGA Key Recommendations

On litigation:

a central, European patent court with technically and legally qualified judges

Interlocutory injunctions not to be granted so easily

On patent linkage:

clarification that all regulatory and P&R activity is allowed during patent period.

prevent all intervention in regulatory procedures by originators

On Market Access:

automatic P&R status for generic medicines.

EU Patent Court – main

features

One single EU Patent Court with jurisdiction for European and future Community patents for infringement and revocation actions

EGA supports the EUPC, why?

Eliminating parallel court cases in different MS

Avoidance of conflicting rulings

Significant cost and efficiency improvements (potential savings of between 148 and 289 million €/year (2013)

Stop forum shopping

Transit cases

Netherlands: detention of medicines en route to Brazil/Colombia/Peru from India Dr Reddy’s: Losartan Potassium

Bftalactamicos S.A: Clopidogrel

Cipla: Rivastigmine / Olanzapine

Aurobindo: Abacavir

Warning letters –for ex. Dupont, MSD, Eli Lilly-asking for destruction of the goods detained based on patent infringement in the NL (basis: Court in NL has determined that products in transit also qualify as infringing IPRs as if manufactured in the NL)

“Transit” detention cases –

some controversial examples (i)

UK, Dec 2008: 2 consignments of product en

route to Czech Republic from India detained by

Customs at Heathrow whilst in care of

transport company

Customs (apparently) acted on own initiative

Patentee informed/ Representative of

patentee inspected & took samples

Goods released 7 days after detention

“Transit” detention cases –

some examples (ii)

EC Regulation 1383/2003:

Key Provisions

Customs action against goods “suspected” of infringing intellectual property rights

Customs can act on own volition or further to application by patentee to watch for identified goods

Customs may suspend the release of goods/detain them

Patentee notified of detention

Customs can disclose to patentee names and addresses of consignee, consignor, and holder of goods, as well as origin of goods

Customs may invite patentee to inspect goods, and may provide patentee with samples for analysis

Patentee has (typically) 10 days to commence litigation in country of detention, or goods released

EGA views

EGA welcomes the fight of DG Customs against

counterfeit products

MEDI-FAKE: first EU coordinated action with tremendous

results, with more than 34 million illegal

pharmaceutical products seized.

However, EC-wide issue of counterfeit medicines =

increased risk of bona fide generic pharmaceutical

goods being “accidentally” detained?

EGA concerned that Regulation (EC) 1383/2003

– misapplied by customs authorities or

– misused by IPRs holders to restrict legitimate competition and

prevent the free movement of goods through Europe.

Reactions to incidents (i)

EGA letter to Commissioner DG Customs:Whilst we understand that under EC Regulation No 1383/2003, any EU MS is entitled to detain or seize products that appear to infringe a patent, we would ask for caution to avoid detentions that have no basis and present no public health risk.

EGA meeting with DG Customs: express concern by potential abuse of Regulation

and asks for legislative change/clarification of EC Regulation

Reactions to incidents (ii)

MEPs letter to EU Commissioners for Trade,

Commissioners for Taxation and Customs Union

EFPIA distances itself from Dutch detentions: “it is not

the policy of our members to encourage Member States

to use the powers of detention available to them to

prevent the flow of legitimate generic products from

manufacturer to customer outside the EU…. Where the

product is not counterfeit and it is ascertained that no

IPRs apply at either country of origin or destination, the

customs authorities should allow the product to be

released, irrespective of the IP status of the product in

the EU.”

Conclusion

Legitimate generic products in transit through EU countries should not be the target of actions by customs authorities such as detentions, seizures or destructions.

Regulation (EC) 1383/2003 should focus on the real threat of copyright and trademark abuses perpetrated intentionally by criminal groups.

IMPORTANT to keep counterfeit separate and distinct from patent infringement: “Violations or disputes concerning patents must not be confused with counterfeiting of medical products” (acc. to definition of counterfeit drugs as adopted at the WHO IMPACT Third Meeting in Hamamet 5-7 December)

Thank you for your attention!

For further information consult:

www.egagenerics.com

http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/index.html

http://ec.europa.eu/taxation_customs/resources/documents/customs/customs_controls/counterfeit_piracy/statistics/2009_statistics_for_2008_full_report_en.pdf