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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 <srctran@world.std.com>
  Reply-To: patent-news@world.std.com
  To: patent-news@world.std.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.
  Greg Aharonian
  Internet Patent News Service