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PATNEWS: More on drug knockoffs - Lehman ending NEH role (fwd)
---------- Forwarded message ----------
Date: Fri, 12 Dec 1997 12:41:58 -0500
From: Gregory Aharonian <email@example.com>
Subject: PATNEWS: More on drug knockoffs - Lehman ending NEH role
!19971212 More on drug knockoffs - Lehman's watch ending at the NEH
Yesterday I sent out a news item about a strategy to "extend" drug
patents. Here are a few comments from some readers after part of my
news item. Also, it looks like Lehman is done with the NEH.
> A Massachusetts company, Sepracor, has an interesting strategy to
>help some of these large companies. What Sepracor has been doing is
>developing and patenting near-knockoffs of these popular drugs - drugs
>close to or better than the original in terms of potency, but different
>enough to be patentable. The idea is that people using the soon to-be
>patent expired drug will prefer to switch to a similar drug that is
>better, especially if Sepracor licenses their patented drug to the
>company whose drug's patent is about to expire.
The Sepracor's "near-knockoff" compound strategy is really a subset of the
increasingly very popular theme for several years now of "chiral chemistry"
in drug development. Many of the older drugs with chiral centers are
mixtures of both the R-enantiomer and the S-enantiomer, but in many cases
only one of the two enantiomers has the desired biological activity, and in
some cases, the other enantiomer has negative properties, e.g. as an
antagonist of the desired activity and/or a secondary toxic effect.
Thus, a new drug product with only the active enantiomer is more desirable,
especially as viewed by the FDA. However, in some cases, such as Seldane,
the new single enantiomer drugs racemize back to produce both enantiomers
after being administered to the patient, and this is where Sepracor's
strategy provides a solution. Sepracor produces active metabolites (i.e.
the "near-knockoff" compounds) of the original drugs, but the metabolites
can not racemize to a second undesirable enantiomer.
I believe the FDA still has not ruled on whether a single enantiomer from a
mixture of an existing racemic drug is a "new chemical entity", eligible to
5 years of marketing exclusivity. Sepracor built its orginal strength in
chiral chemistry by producing single enantiomers for a host of racemic drug
mixtures soon to be off patent, and Sepracor probably has the strongest
patent position for that approach. If the FDA does rule in favor of the
5-year limit, Separacor's single enantiomer patents will likely be
challenged by a variety of large and small drug companies. Competitive
intelligence on the timing of the FDA's ruling and a careful analysis of
Sepracor's enantioselective patents would be well-advised in deciding when
and how much to invest in Sepracor's stock.
However, I do not know the strength of Sepracor's patent position for the
active metabolite ("near-knockoff") approach, used in the case of the
Seldane replacement, but, as I understand it, there should be no question
that the active metabolites are new entities.
It sounds like a very interesting strategy...to attract infringement lawsuits,
and _possibly_ anti-trust lawsuits, considering that Sepracor and the
original patentees are trying to exert market power beyond the simple
monopoly power granted to a patentee. The rights of patentees to exert
monopoly power are not absolute. For example, suppose I had a brand
new "killer app" for home computing. (Of course, everyone who gets your
newsletter knows that it is entirely unlikely for that software patent to
be a good one. But for the sake of argument.. :-) I believe there are
restrictions on who I can get to distribute my product; to wit, Microsoft
would probably be ruled out on anti-trust grounds. I believe that Nancy
Gallini, an economist at the University of British Columbia has worked on
the intersection of patenting and anti-trust.
The difference between Sepracor's strategy and rudimentary "inventing-
around" circumvention of patent protection is that they get the most
likely plaintiffs -- the original patent-holders -- on board.
But what about the generic producer/followers? Once they start producing
the original drug, collectively they'll have the incentive to attack the
Sepracor product, which is a substitue for their own product. Given the
consanguinity of the Sepracor patent, it is very likely that they'll be
able to find some grounds to get the Sepracor patent invalidated. (Maybe
they are relying on the fact that the generic followers will be locked in
such fierce competition that profits will be small, and thus (a) collective
action to share litigation costs will be ruled out in favor of cutthroat
competition, and (b) the profits in the generic market will be low enough
and divided enough that they expected gains don't outweigh the expected
costs of litigation -- especially pursued seperately.)
>From a practical point of view, Sepracor needs to make sure that its sales
reps do a thorough job in lauding the replacement drug to doctors and,
more importantly, to HMOs. It's fairly common for drug patentees to have
reps to get doctors to prescribe the drug. But it seems an uphill battle to
convince cost-cutting HMOs that the replacement drug -- which I gather is
only barely sufficiently different to get some patentable claims -- is so
much more effective in the first place, and COST effective in the second.
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