Can we eliminate the pharmaceutical side effect
of the patent system?

RON TOMER | 06.10.2015, JERUSALEM POST

Recently, excitement in the medical scientific arena was followed by media reports about possible advances in treatments that could cure some cancers or at least contain them as chronic non-life-threatening diseases. Although there is a long way to go before it is proven that these treatments can achieve the desired goal, as we all hope, the major “side effect” of such findings will be the rising costs of the treatments. Costs can range from tens of thousands to over hundreds of thousands of dollars a year per patient. As cancer treatments transform the disease to a chronic condition, sustained for many years, the expenditure on such medicines will dramatically increase countries’ health costs. The dilemma already exists today. Every year different patient groups and protesters around the world request funding for the treatment of their respective conditions. But as promising drugs for major illnesses such as cancer reach a widespread patient population, extreme situations will arise where the budgets required will increase tenfold. This could result in a situation whereby a cancer patient might be refused a chance at life for mere budgetary reasons. The “access to medicines movements” which currently operate mainly in the low- to middle-income countries might in future bring similar demands to the more developed countries. Recently the media reported that in the US over 100 oncologists call for new regulations to control soaring patient costs. Development of innovative medicines is an expensive process which also has a high risk of failure. There is no doubt that firms that manage to bring important medicines to market should be rewarded for their success. Patent law provides a monopoly to developers and manufacturers of these new drugs, allowing them to charge significantly higher prices, with high profitability. However in the past decade this mechanism has been subjected to abuse by unfair strategies prolonging such monopolies, thus continuing to yield the highest possible profits. Those drugs that reach the market are priced high to provide return on investment over a few years. The remaining monopoly term is used to obtain huge profits, higher than in most industrial sectors. Companies have learned over the years how to shorten the development time and expedite the launch of such drugs, so in many cases they benefit from a practical monopoly of approximately 14 years. Moreover, currently on top of the basic patent the pharmaceutical companies apply for additional follow-on patents (in many cases dozens of applications) which may provide them with an extension of their monopoly. This phenomenon is called “ever-greening” due to its aim of prolonging the monopoly “forever.” In such situations, the law is used to fend off competition rather than protect genuine innovation. Even if a patent is considered weak, legal procedures to cancel it are lengthy and costly. For medicines with a global yearly turnover of a billion dollars or more (new drugs to treat cancer may sell at the high end of the turnover scale), each week of delay will generate tens of millions of dollars in sales, most of which is pure profit. In this situation there is no doubt companies will do as much as possible to extend their monopolies for as long as possible. The innovator drug companies manage to extend their monopolies via legislative tools unique to the pharmaceutical industry that reward them for the time spent on developing the drugs (called PTE – patent term extension) and pediatric exclusivity (for conducting clinical trials to confirm suitability for the pediatric population). Yet at the same time those companies have managed to reduce the time to market of the medicines and achieved a faster launch schedule, providing them with longer monopoly than afforded by the basic patent.

Indication of the profits generated by innovator pharmaceutical companies is easily calculated when comparing the sharp drop in prices following entry of generic competitors to the market. Such low generic prices still provide reasonable profitability, allowing major generic companies to be evaluated at high market values, as recent M&A activity in this sector indicates.

The high cost of drugs will not only burden the healthcare budgets of countries but also prevent access to these new drugs to many classes in society, because countries will never be able to pay for all the treatments for everyone. The conclusion is that the patent system that should provide incentive for innovation is often misused, and as such is becoming a threat to health budgets and to availability of medicines to a wider population. The solution is to find a mechanism that would limit the monopoly which drug companies obtain through patent law, awarding them adequate reward for inventiveness but nothing more. The companies may be required to submit information that will allow governments to examinethe profitability with respect to these life-saving medicines and to determine the maximum monopoly that will be allowed.

To determine such mechanisms, a process must be applied to prevent abuse of patent law by legislating the imposition of penalties on companies found to be abusing it by filing inappropriate and simultaneous patent applications. The legislation should allow the public (health funds and patients themselves) to sue those companies to return the profits improperly generated by such monopolies after the patents have been be declared invalid. This mechanism may be restraining those cases where patent monopoly negatively impacts public health. If such measures do not provide the desired new balance between monopoly and availability, a thorough investigation into the patent system will be required, as well as the creation of alternative methods that will support and reward genuine innovation by reasonable means. Such measures will not threaten the basic requirements of the population. Elimination of such “side effects” of the patent system is essential for maintaining, literally, a healthy society. The author is the owner of Unipharm Ltd, a generic pharmaceutical company in Israel and a member of the presidential board of the Manufacturers Association of Israel and the council of the Pharmaceutical Society of Israel, acting for many years in both the pharmaceutical and IP arenas.

Read More

Close

Israeli ruling opens gates

RON TOMER, ADI LEVIT | 20.11.2015, GENERICS bulletin

A recent Israeli court ruling awarded against Sanofi for unfairly deterring generic competition by unlawfully pursuing a patent application opens the floodgates to seek damages not only in Israel, but also in other jurisdictions, according to Unipharm, the Israeli generics specialist that won the case.

Unipharrn’s vice-president, Dr Ron Tomer, told Generics bulletin that the findings of the Tel Aviv District Court in the case against Sanofi over Plavix (clopidogrel bisulphate) had reinforced Unipharm’s confidence in pursuing similar complaints in Israel against GlaxoSmithKline (GSK) over Seroxat (paroxetine) and possibly against Pfizer over Viagra (sildenafil).

Furthermore, Tomer added, the evidence of Sanofi failing to disclose material infom1ation and misleading Israel’s patent office uncovered during the Plavix proceedings bore many similarities to originators’ behaviour in other jurisdictions. He said Unipharm was currently examining where it could bring similar antitrust litigation, potentially in partnership with third parties.

Having brought a pre-grant opposition to Sanofi’s application for an Israeli patent covering a ‘Form 2′ polymorph crystalline form of clopidogrel bisulphate, Unipharm had aimed to enter the local market with its generic version of the anticoagulant when Sanofi’s local compound patent expired in February 2008.

However, Tomer explained, potential generic competitors to Plavix were deterred from launching by fears that their products would convert to the Form 2 polymorph under storage, thereby infringing Sanofi’s patent application, if granted. “At great expense, we developed more than 70 formulations of clopidogrel before we were satisfied that we could launch without infringing Sanofi’s patent application,” he commented.

Unipharm eventually introduced its generic clopidogrel in mid-2009 at around the same time as Teva entered the market, about 15 months after Sanofi’s Plavix compound patent had expired. A year later, Sanofi abandoned the Form 2 application while still under litigation. Then in 2011, Unipham1, acting alone, sued Sanofi for abuse of its monopoly under Israel’s Restrictive Trade Practices and Unjust Enrichment laws.

At trial, Tel Aviv District Judge Ofer Groskopf accepted Unipharm’s contention that Sanofi misleading Israel’s Commissioner of Patents in pursuing its application amounted to an abuse of a dominant position and unjust enrichment that merited a restitution of profits earned during the 15 months that the originator unlawfully deterred competition to Plavix (Generics bulletin, 6 November 2015, page 16).

“Awareness is rising, in Israel and in the rest of the world, of the importance to be attributed to imposing effective limitations on illegitimate tactics by originator drug companies,” Groskopf stated. “It is only a matter of time until courts a e required to draw the line between permitted and forbidden, not only on the generic side of the fence, but also on the patent side. The current case is but the first rain. However, winter is coming.”

“This ruling,” Tomer maintained, “will be a game­changer in the pharmaceutical arena, and might reflect in other centuries, allowing generics players to defend against evergreening tactics.” Noting that Unipharm had spent around US$0.5 million on legal fees to bring the case, the lawyer who represented the firm in court, Adi Levit, expressed optimism that Groskopf would reward the generics company for its persistence when he during December decided on the quantum of the profit restitution. Technical enquiries, including into Sanofi’s sales figures and accounts, were underway, he added.

“There is no Israeli case law in this area,” Levit acknowledged. But given Groskopf’s clear finding in favour of Unipharm, as well as the generics fim1’s warnings issued to the originator over its behaviour, a generous award would be appropriate. Levit is currently reviewing the possibility of using this precedential mling against Sanofi in other countries where similar situations occurred. He believes the detailed and reasoned nature of Groskopf’s verdict means it is unlikely to be overturned if appealed to Israel’s Supreme Court, which would review the case only for errors of law.

Whatever the scale of the disgorged profits, Tomer pointed out that the Israeli public would still have lost out by having paid monopoly Plavix prices for an extra 15 months. It was possible, he noted, that health insurance funds would seek restitution in future cases.

In the Tel Aviv District Court, Unipharm has sued under antitrust laws GSK over abuse of a monopoly postion using a polymorph patent protecting Seroxat. Levit pointed out that Unipharm arguably had an even stronger case than in its Plavix litigation, because -unlike in its battle with Sanofi – Israel’s Commissioner of Patents had already found that GSK misled the patent office in obtaining the paroxetine polymorph patent.

Noting that GSK’s lawyers had been present during the Plavix trial against Sanofi, Levit said the Seroxat case was currently at the discovery stage, during which Unipharm was seeking disclosure of the originator’s local sales data and accounts. Cross-examinations of witnesses were scheduled to take place next year, ahead of a potential verdict in 20 l 7.

Having been sued by Pfizer over its at-risk launch of generic Viagra, Unipharm is planning to initiate a counterclaim against the originator, alleging unlawful evergreening by obtaining a method-of-use patent that had been invalidated in several other countries.

Tomer argued that by suing generics firms that launched at-risk of infringing patents that had been obtained improperly, originators were chilling competition. This was because the generic entrants tended to price less aggressively and chase lower volumes for fear of being exposed to damages.

Whereas previously the balance of risk had been heavily skewed towards generics companies that could be hit by painfl damages, the Plavix ruling had restored balance by punishing originators that acted fraudulently, Tomer asserted. Acknowledging that the financial impact alone might not deter evergreening, he posited that the harm to originators’ reputations and relationships with payers might serve as a greater disincentive.

“The message to originators from this ruling is clear,” Tomer insisted. “Patent applicants need to be far more carefl about disclosing material facts to patent offices around the world, and to avoid evergreening.”

Read More

Close

Prevailing against cost-leader competitors in the pharmaceutical industry

GIL TOMER | 30.05.2008, JOURNAL OF GENERIC MEDICINES.

Recently, excitement in the medical scientific arena was followed by media reports about possible advances in treatments that could cure some cancers or at least contain them as chronic non-life-threatening diseases. Although there is a long way to go before it is proven that these treatments can achieve the desired goal, as we all hope, the major “side effect” of such findings will be the rising costs of the treatments. Costs can range from tens of thousands to over hundreds of thousands of dollars a year per patient. As cancer treatments transform the disease to a chronic condition, sustained for many years, the expenditure on such medicines will dramatically increase countries’ health costs. The dilemma already exists today. Every year different patient groups and protesters around the world request funding for the treatment of their respective conditions. But as promising drugs for major illnesses such as cancer reach a widespread patient population, extreme situations will arise where the budgets required will increase tenfold. This could result in a situation whereby a cancer patient might be refused a chance at life for mere budgetary reasons. The “access to medicines movements” which currently operate mainly in the low- to middle-income countries might in future bring similar demands to the more developed countries. Recently the media reported that in the US over 100 oncologists call for new regulations to control soaring patient costs. Development of innovative medicines is an expensive process which also has a high risk of failure. There is no doubt that firms that manage to bring important medicines to market should be rewarded for their success. Patent law provides a monopoly to developers and manufacturers of these new drugs, allowing them to charge significantly higher prices, with high profitability. However in the past decade this mechanism has been subjected to abuse by unfair strategies prolonging such monopolies, thus continuing to yield the highest possible profits. Those drugs that reach the market are priced high to provide return on investment over a few years. The remaining monopoly term is used to obtain huge profits, higher than in most industrial sectors. Companies have learned over the years how to shorten the development time and expedite the launch of such drugs, so in many cases they benefit from a practical monopoly of approximately 14 years. Moreover, currently on top of the basic patent the pharmaceutical companies apply for additional follow-on patents (in many cases dozens of applications) which may provide them with an extension of their monopoly. This phenomenon is called “ever-greening” due to its aim of prolonging the monopoly “forever.” In such situations, the law is used to fend off competition rather than protect genuine innovation. Even if a patent is considered weak, legal procedures to cancel it are lengthy and costly. For medicines with a global yearly turnover of a billion dollars or more (new drugs to treat cancer may sell at the high end of the turnover scale), each week of delay will generate tens of millions of dollars in sales, most of which is pure profit. In this situation there is no doubt companies will do as much as possible to extend their monopolies for as long as possible. The innovator drug companies manage to extend their monopolies via legislative tools unique to the pharmaceutical industry that reward them for the time spent on developing the drugs (called PTE – patent term extension) and pediatric exclusivity (for conducting clinical trials to confirm suitability for the pediatric population). Yet at the same time those companies have managed to reduce the time to market of the medicines and achieved a faster launch schedule, providing them with longer monopoly than afforded by the basic patent.

Indication of the profits generated by innovator pharmaceutical companies is easily calculated when comparing the sharp drop in prices following entry of generic competitors to the market. Such low generic prices still provide reasonable profitability, allowing major generic companies to be evaluated at high market values, as recent M&A activity in this sector indicates.

The high cost of drugs will not only burden the healthcare budgets of countries but also prevent access to these new drugs to many classes in society, because countries will never be able to pay for all the treatments for everyone. The conclusion is that the patent system that should provide incentive for innovation is often misused, and as such is becoming a threat to health budgets and to availability of medicines to a wider population. The solution is to find a mechanism that would limit the monopoly which drug companies obtain through patent law, awarding them adequate reward for inventiveness but nothing more. The companies may be required to submit information that will allow governments to examinethe profitability with respect to these life-saving medicines and to determine the maximum monopoly that will be allowed.

To determine such mechanisms, a process must be applied to prevent abuse of patent law by legislating the imposition of penalties on companies found to be abusing it by filing inappropriate and simultaneous patent applications. The legislation should allow the public (health funds and patients themselves) to sue those companies to return the profits improperly generated by such monopolies after the patents have been be declared invalid. This mechanism may be restraining those cases where patent monopoly negatively impacts public health. If such measures do not provide the desired new balance between monopoly and availability, a thorough investigation into the patent system will be required, as well as the creation of alternative methods that will support and reward genuine innovation by reasonable means. Such measures will not threaten the basic requirements of the population. Elimination of such “side effects” of the patent system is essential for maintaining, literally, a healthy society. The author is the owner of Unipharm Ltd, a generic pharmaceutical company in Israel and a member of the presidential board of the Manufacturers Association of Israel and the council of the Pharmaceutical Society of Israel, acting for many years in both the pharmaceutical and IP arenas.

Read More

Close

Generic Bulletin Prize of 2016 Awarded to UNIPHARM

Generics Bulletin – the leading journal covering the generic arena worldwide – distributed in an annual ceremony awards that are given to generic companies, chosen by an independent referees,   that have shown excellence in different various fields.

In 2016 Unipharm was chosen to receive the Patent Litigation of the Year Award for the court case of Unipharm vs. Sanofi. The Unipharm suit dealt with the delay in generic competition by Sanofi for a blockbuster anti-coagulant product – Clood (Clopidogrel) by abusing the patent system and by means of anti-competitive activity.

Judge Ofer Groskopf, for the Israeli Central  District court, ruled in favor of Unipharm.

The honorable award ceremony took place in Barcelona in conjunction with the CPhI exhibition.

(The attached picture presents Dr. Ron Tomer of Unipharm receiving the award)

Read More

Close