i 專利藥廠與學名藥廠之專利訴訟策略 學生：孫偉棟 指導教授：劉尚志博士 國立交通大學科技法律研究所碩士班 摘要 製藥業是個錯綜複雜的產業，雖然研發新藥是一項高成本，技術密集且高風 險的產業，但並非所有藥廠都以研發新藥為主要業務。整體而言，學名藥廠通常 較不進行新藥的研發。就定義而言，專利藥廠或原廠係指其主要以研發新藥為其 主要的業務，反之，學名藥廠則是以製造專利已過期之原廠藥為其主要業務之藥 廠。以公眾利益而言，兩種藥廠都有其存在的必要，專利藥廠可持續提供藥品及 其技術上的改良與創新。而學名藥則以更經濟實惠的價格提供較社會大眾，可靠 且安全的藥品，對於醫藥普及與結省政府醫藥支出有著莫大的供獻。因兩種藥廠 質上的不同而所產生的衝突為貫穿本文而持續出現的議題，本文將會以專利藥廠 和學名藥廠如何以主張專利權等法律行為來達成各自的目地。即專利藥廠會以主 張專利侵害等其它法律上的主張來阻止學名藥上市的時間來確保其市場獨佔，相 反的，學名藥廠則希望在原廠藥專利過期後能及早上市來分食市場大餅。 本文將以介紹製藥業的起源與其演變歷史為開始並對其產業特性加以著墨。 後對美國藥品市場加及其早期藥品管制機制加以介紹。本文將以解析與批判 Hatch-Waxman Act 和專利連結制度（Patent Linkage） 為介紹美國法之重點。作者 將對本法如何對藥廠間之訴爭可啟全新的戰場和訴訟策略加分析，自
Hatch-Waxman Act 以後，「處方用藥改善及現代化法案」（Medicare Prescription Drug
Improvement and Modernization Act of 2003），為另一項指標性的立法。作者將會對
本法如何成功的將數十年來因 Hatch-Waxman Act 所生訴訟的亂象改正加以剖析， 分析其成功和未盡之處。 除美國外，本文亦對其它國家（澳洲，加拿大和韓國）對藥廠間的訴爭所採 取修法上的措施加以分析比較。文末將加以參照台灣獨特的醫療環境和當地特色， 這些當地的因素如何在藥廠中的抗爭中有著重大的影響。 最後，所然台灣尚未引進專利連結等美國法相關制度，然而各大跨國專利藥 廠已經使用部份它們於美國常用的主張對抗台灣本土藥廠。隨著貿易持續性的開 放與許多明星專利藥的陸續到期，藥廠間的訴爭應會持續燃燒。希望本文能提供 台灣法院和立法者就藥廠間的訴爭有多一個觀察的面向和進而幫助立法者和法院
ii
提出一個更符合當地需求的法律機制和判決論理的過程。
關鍵字：學名藥、專利藥、Hatch-Waxman Act、專利連結、專利訴訟策略、橘皮書
iii
Patent Litigation Strategy between Generic and Brand Name Pharmaceutical Companies
Student: Wei-Tung Sun Advisor: Dr. Shang-Jyh Liu
Institute of Technology Law National Chiao Tung University
ABSTRACT
Pharmaceutical industry is a complex business. While it is without a doubt that researching new drug is a capital-intensive and risky business; however, no all drug makers are engaged in this perilous endeavor. Broadly speaking, generic drug maker is an exception of this trend. By definition, pioneer drug maker, also known as brand name company, are referring to drug maker whose primary mode of business is engaging in researching new drugs; on the other side of the spectrum, is generic drug maker. Generic drug maker are pharmaceutical company that primarily engaged in
manufacturing of known drugs whose patent term already expired. From public policy’s perspective, both types of company are useful. Brand name company provides new pharmaceutical innovation and improvement; while generic company facilitates accessibility and provides more economically friendly drug to general public and healthcare provider alike. This conflicting interest will be the main theme throughout this paper and how brand name and generic company use litigation, especially asserting patent right, to further each their own interests i.e. Brand name will want to delay the entrance of generic drug into the market for as long as possible; in contrast, generic drug maker will want to market its drug as soon as possible.
This paper will begin by providing an introduction on the history of
pharmaceutical industry and its unique characteristics that distinguish this industry from other business. Followed by an introduction on U.S. drug market and some of U.S.’s earlier attempt to control the conflicting interests between brand name and generic drug maker, this paper will start in earnest by providing a critical analysis on Hatch-Waxman Act and patent linkage system that comes with it. The author will comment on some of act’s success and failure and how it opens an era of wild litigation battles between brand name and generic companies. Following Hatch-Waxman Act is another revolutionary piece of legislation known as “Medicare Prescription Drug, Improvement, and
iv
afforded by Hatch-Waxman Act. As will discuss in detail in this paper, while Medical Moderation Act did successful in eliminating some of the problems that have plagued Hatch-Wax Act for decades, some of its problem remain unresolved and some of act’s half measure inadvertently opens door for more abuses.
However, U.S. is certainly not the only country in the world that had become battleground for pharmaceutical companies. This paper will provide a comparison of different regulatory regime implemented by Australia, Canada and Korea to combat these problems. In the latter part of this paper will present some of uniquely Taiwan element that will play a significant role in re-balance the interests.
Finally, though Taiwan have yet to fully adopt the American system in controlling drug marketing process, many of the multinational brand name company have already tried their legal tactic used in States in Taiwan’s court. Hopefully, this paper will provide some observation to Taiwan’s court and legislators when or if Taiwan decides to fully implement American system.
Keywords: generic drug, brand name drug, Hatch-Waxman Act, patent linkage, patent litigation strategy, Medical Moderation Act, Orange Book.
v 誌謝
Out of the night that covers me, Black as the pit from pole to pole,
I thank whatever gods may be For my unconquerable soul.
In the fell clutch of circumstance I have not winced nor cried aloud. Under the bludgeonings of chance My head is bloody, but unbowed.
Beyond this place of wrath and tears Looms but the Horror of the shade,
And yet the menace of the years Finds and shall find me unafraid.
It matters not how strait the gate, How charged with punishments the scroll,
I am the master of my fate: I am the captain of my soul.
-By William Ernest Henley¸ “Invictus”-
這首詩是在偶然的情況讀到的，是鼓勵人永不放棄的精神，現在回頭看看正 是我求學的寫照。現在畢業在即，回頭看我的曲折卻有充滿轉折的求學之路，對 這一路上扶持我的父母，師長，同學及眾多貴人們，心中充滿無限感激！ 首先感謝口試委員和劉老師能在這麼短的時間內安排口試，程序上也很感謝 所辦助理們能在一片兵荒馬亂之際大力的幫忙口試事宜，能順利完成口試真是多 虧大家的幫忙與配合。此外要特別感謝 徐壁湖大法官，除破例當任我的口試委員 外，還花費許多保貴的時間幫我逐字校閱論文，在此特別感謝！ 此外，科法所的生活和同學在我研究所生活扮演這重要的份量，所上提供的 優質的讀書環境，老師們認真的辦學態度及同學們親切的互動，這一切都是伴我 一路走來重要的回憶，尤其是萱茹長期的付出的關懷與無私的陪伴更是點滴在心 頭。
vi 在就學期間有幸的能進入公司服務，感謝筱君協理對配合我完成學業寬容的 態度及多位同事對我平時對我的照顧，特別感謝洛枚，她的智慧與關懷溫暖了寫 論文時的孤寂及安撫我的心靈。 這一路走來，要感謝的人實在太多了，最後，謹將此論文獻給我父母，爸爸 媽媽的無微不至的關心和對我無條件的支持，他們無私的奉獻和支持一向是我能 持續前進的最大動力，今天如果我能有一絲的成就，他們就是我幕後最大的推手!
vii 目錄 中文摘要 ... i 英文摘要 ... iii 誌謝 ... v 目錄 ... vii
Chapter 1: Introduction, Research Purpose and Methodology ... 1
1.1 Introduction, Research Purpose and Methodology ... 1
1.2 Methodology ... 2
1.3 Literature Review and Analysis ... 3
1.4 Litigation Strategy Review and Analysis ... 4
1.5 Research Outcome Analysis ... 4
Chapter 2: Development of Pharmaceutical Industry... 5
2.1 Development of Pharmaceutical Industry ... 5
2.2 Merger and Acquisition of Pharmaceutical Industry ... 8
Chapter 3: US Market and FDA Regulation ... 12
3.1 US Market and FDA Regulation ... 12
3.2 Pharmaceutical Industry and Market Approval in United States ... 13
3.3 FDA Approval and Pharmaceutical Research ... 16
3.4 Paper NDA ... 17
3.5 Chapter Summary ... 19
3.6 Discovery to Pre-clinical. ... 19
3.7 Clinical Trial ... 20
3.8 Pioneer Drug (Brand Name Drug) ... 21
3.9 Generic Drug ... 23
3.10 Generic Drug’s Competitive Edge ... 24
3.11 Costs for Pioneer Drug ... 28
Chapter 4: Pharmaceutical Patents and Patent Evergreening ... 30
4.1 Pharmaceutical Patents and Patent Evergreening ... 30
4.2 Irony of Brand Name Drug’s Innovation ... 31
4.3 Patent is Brand Name Drug’s Most Effective Defense ... 33
4.4 Pharmaceutical Patents ... 35
Chapter 5: Evolution Regulatory Regime ... 37
viii
5.2 Drug Price Competition and Patent Term Restoration Act of 1984 ... 38
5.3 Experimental Use Exception ... 40
5.4 Patent Term Restoration ... 41
5.5 Data Exclusivity ... 43
5.6 Patent Linkage and Orange Book... 46
5.7 Warring Period of Pharmaceutical Industry ... 53
5.8 Multiple Stay Periods ... 54
5.9 Sham Patent ... 56
5.10 Reverse Payment and Approval Bottleneck ... 59
5.11 Authorized Generics ... 65
5.12 Generic Drug Challenger’s Dilemma ... 67
Chapter 6: The Medical Prescription Drug, Improvement, And Modernization Act of 2003 (MMA) ... 70
6.1 The Medical Prescription Drug, Improvement, And Modernization Act of 2003 (MMA) ... 70
6.2 Impact of MMA, Its Success and Failure ... 75
6.3 Chink in the Forfeiture Event Provisions ... 80
6.4 Me-too Drug ... 84
6.5 You-go-I-go tactics ... 86
6.6 Chapter Summary ... 88
Chapter 7: International Regulation on Patent Linkage ... 89
7.1 International Regulations on Patent Linkage ... 89
7.2 Australia and The Australia-United States Free Trade Agreement (AUSFTA)95 7.3 Korean Comparison... 103
7.4 Chapter Summary ... 106
Chapter 8: Pharmaceutical Landscape in Taiwan ... 108
8.1 Pharmaceutical Landscape in Taiwan ... 108
8.2 American Regime: ... 113
8.3 Patent Linkage in Taiwan ... 114
Chapter 9: Pharmaceutical Litigation in Taiwan ... 117
9.1 Pharmaceutical Litigation in Taiwan ... 117
9.2 Taiwan’s Legal System ... 121
9.3 Package Insert, Label and Labeling ... 125
9.4 Package Insert's Copyrightability ... 128
9.5 On Judicial Fronts ... 132
9.6 Chapter Summary ... 139
ix
9.8 Summary ... 148
Chapter 10: Conclusion ... 149
10.1 Brave New Market ... 149
10.2 Future Prospect and Conclusion ... 150
1
Chapter 1: Introduction, Research Purpose and Methodology
1.1 Introduction, Research Purpose and Methodology
There is no double drug industry is a capital intensive and highly competitive
business. Despite its high cost, it is also one of the most lucrative businesses. In US, pharmaceutical company consistently rank among top ten in Standard and Poor’s 500
index in New York stock exchange. Fortune magazine ranks pharmaceutical companies
are on average, three times more profitable than any other company within fortune 100.1
According to same magazine in 2002, the top ten pharmaceutical companies’ total
annual revenue (359 billion USD) is more than the revenue of rest 490 companies (337
billion USD) in Fortune 500 combined.2
Moreover, since 2005 there are more than 13 blockbuster drugs whose patents are about to expired and more than half of top one hundred innovator drug’s patents are
about to expired too. 3 That is more than 500 billion of market value up for grab for
generic manufacturers. In Taiwan, generic drug accounts 68.7% for prescription drug
expenditure, only 31% is on innovator drugs i.e. brand name drugs.4 In light of
Taiwan’s active generic drug sector, with the advent of many prominent innovator’s
patent being expired, one of such is Viagra from Pfizer which is the 6th greatest selling
1 Marcia Angell 著，曾育慧譯，藥廠黑幕，頁 16（2006）。 2 同前註，頁 41-42（2006）。 3 蕭詩婧，總額預算下，台灣學名藥市場的策略研究----以降血脂劑（statin）為例，陽明大學醫務 管理研究所碩士論文，頁 1（2005）。 4 朱榮宗，台灣製藥產業診所藥品行銷之探討－以 S 藥廠為例，逢甲大學經營管理所碩士論，頁 7 （2008）。
2
drug under Pfizer with market value in the neighborhood of 20 billion U.S.D in 2012.5
1.2 Methodology
Author uses a qualitative approach to study jurisprudence and competition maneuver stemmed from the manipulation of intellectual property rights in
pharmaceutical sector. The research is conducted by collecting, sorting and analyzing prominent judgments and holding from Federal Courts of United States and courts of
Taiwan coupled with literature review gathered from various sources such as thesis
papers, professional journals, periodicals, law reviews and news clips. Author will also perform case analysis on the change of regulation and analyze its impact on
competition behaviors. A portion of this thesis will be on analyzing and pointing out potential exploits by drug manufacturers on existing regulations.
5 「威而剛專利失效，輝瑞砸 100 億美元拉抬股價」，鉅亨網新聞中心網站：
http://news.cnyes.com/Content/20130628/KH8K8JJSHP2EE.shtml?c=us_stk（最後點閱時間：2013 年 6 月 28 日）。
3 The research procedure as follow:
Data Collection:
Sources include:
1) Cases gathered from District and Federal Courts of United States. Also cases
from Taiwan Courts and Prosecution Offices.
2) Thesis papers, official bulletin and government regulation from multiple
countries.
3) Professional journals, law review and articles from various sources.
1.3 Literature Review and Analysis Data Collection
Litigation Strategy Review &
Analysis Literature Review
Research Outcome Analysis
4 Perform analysis from following aspects:
1) Case analysis including its legal question, impact of its holding on industrial
behaviors.
2) Analyzed changes in government regulations and their impact on competition
behaviors.
3) Comparison of different competition strategy including use of different IP
strategy by different drug manufacturers.
1.4 Litigation Strategy Review and Analysis
1) Summarize and perform critical analysis on intellectual property litigation tactics
2) Summarize and analyze different litigation challenge a generic drug manufacturer may face at different stage of its product development.
1.5 Research Outcome Analysis
1) Summary of research outcome and a comparison of different legal system used by different country in their attempt to remedy the problems resulted from patent
linkage.
2) Issues that remain open to this day and lesson Taiwan can learn from its
5
Chapter 2: Development of Pharmaceutical Industry
2.1 Development of Pharmaceutical Industry
Pharmaceutical industry doesn’t really come into the existence until the turn of
20th century. The first documented drug company was Merck and Schering in Germany
in 1840, followed by Hoffmann-La Roche of Switzerland, Burroughs Wellcome of England, Etienee Poulenc of France and Abbot, Smith Kline of America during the period
of 1830 to 1930.6 Many of these companies were founded by pharmacists while some
others such as Agfa, Bayer of Germany, Cib, Sandoz of Switzerland, Imperial Chemical
of England and Pfizer of America, were started out as chemical companies before turning into pharmaceutical business. The combination of chemical synthesis and
pharmacology were to become the driving force for the next phase in pharmaceutical industry.
During the period of 1930 to 1960, pharmaceutical industry was at buzzed for the new discovery of Penicillin, a new and very powerful anti-biotic, which is hailed as one
of the greatest discoveries in pharmaceutical history. In 1953, human DNA’s double helix structure was discovered. This discovery led pharmaceutical research into a new direction.
As pharmaceutical industry starting to gain more attention from public so is government control. Food and Drug Administration is formed and given sole jurisdiction over
pharmaceutical research and market approval in the U.S. In addition, “Federal Food and Cosmetic Act” (FFDCA) was also established and approved by Congress in response to
6
the need of greater control over pharmaceutical industry.
From 1960 onward to 1980, pharmaceutical industry entered into a golden of
research, many influential drugs were discovered during this period, to name a few: oral contraceptive, sleeping pill (Valium), tranquilizer (Librium). This period was also marked
with increase of governmental monitoring of manufacturing process and equipment and lab/factory condition, these new regulatory measures are later come to known as “Good Manufacture Practice” (GMP) standards.
During 1980’s, Hatch-Waxman Act and Orphan Drug Act were passed. These new
acts will later play an influential role in global pharmaceutical scene.
Orphan Drug Act provides applicant, whose drug is for treatment of rare disease, which is defined as disease with less than 200 thousands patient population, a more
speedy market approval process and was given 7 years market exclusivity regardless of its patent status as an incentive. Furthermore, once successfully approved, drug
manufacturer is able to recoup up to 50% of expenses on clinical trial via tax reduction. 7
In 1984, Drug Price Competition and Patent Term Restoration Act, also known as
Hatch-Waxman Act (HWA) was passed by Congress. This Act is the fruition of near a century of long struggle between generic drug and branded drug companies. In the past,
for a generic drug to obtain market approval, the applicant will need to conduct clinical trial that is the same scale as its branded drug counterpart despite the fact that branded
drug may have been on the market for decades. Consequently, due to the inherent high costs for these trials, few generic drug companies were able to meet such requirement. As
7
the result, during 80’s there are close 150 branded drug whose patent terms had already
expired but with no generic version on the market to compete with them. 8
Hatch-Waxman Act is an attempt to strike a balance between the needs of continuing research and the need for more affordable drug pricing for the sake of maximizing public good. This act heralded a “Warring Period” between generic and branded drug
manufacturers and marked the beginning of increasingly more common practices of
extending patent term via cunning manipulations on patent construction, FDA and HAW
regulations or using stalling tactic to prevent generic drug from entering the market in order to secure a “de facto” monopoly. These manipulations of extending one’s patent
term beyond as originally intended period is also known as “patent evergreening”9
practice.
1990’s is the golden days for pharmaceutical industry, at beginning of 90’s, a drug
with 5 billion USD annual sales can be considered as a blockbuster drug. However, as many prominent researches began in last decade i.e. began in the 80’s are turning into
overwhelmingly profitable product, such as HMG-CoA aka Statins, an effective agent in
lowering cholesterol, Selective Serotonin Reuptake inhibitor (SSRI), commonly used in treatment of depression and is the active ingredient of Prozac. Take Statins as an example, there are several branded drug based on this family, such as Merck’s Zocor
(Simvastatin), Novartis’ Lescol (Fluvastatin) and Pfizer’s (Atorvastatin). Top 9 of
Statins class drugs generates more than 296 billion USD in 2000 and Lipitor
8 Id. at 9.
9 Robert Weissman, Victory and Betrayal: The Evergreen Patent System of Pharmaceutical Company
Tactics to Extend Patent Protections, MULTINATIONAL MONITOR (Jun., 2002), http://www.multinationalmonitor.org/mm2002/062002/weissman.html.
8
(Atorvastatin) alone generates more than 1 billion USD in its annual sales.10
2.2 Merger and Acquisition of Pharmaceutical Industry
From year 2000 and onward, meager between companies is becoming increasingly more prevalent in pharmaceutical industry. Merger and Acquisition (M&A) volume
reaches of a record high of 2233 billion USD in mere three month period from September of 1999 to January of 2001. There are several reasons behind this trend: 1) Increasing threat from generic drug 2) Patent expiration on their “blockbuster drug” 3)
new types of drug i.e. biosimilar are increasingly looking more promising as a new type of drug. All these factors threaten branded drug’s pre-existing market share.
As previously mentioned, patent exclusivity is at the root of branded drug’s ability
to maintain market share and thus it is the single most reliable factor in generating
revenue for a branded drug manufacturer. Once a drug’s patent expires, its market share will be highly vulnerable to generic drug competitors and its price will quickly
plummet. With the advent of Hatch-Waxman Act and its subsequent amendments on Abbreviated New Approval Application (known as ANDA) procedure, coupled with a
more restrictive regulatory regime over patent listing/delisting in Orange Book, generic drug’s availability after innovator drug’s patent expired is becoming increasingly more
prevalent. Furthermore, since researching for a new drug is an arduous journey with no guaranteed returns. As P. Roy Vagelos, former CEO of Merck & Co., Inc. puts it: “Acquiring another company is an effective remedy when a company’s product patents
are about to expire but there is not enough eligible new drug to help maintain
9
company’s market presence.”11
For example, when Schering-Plough’s 27 billion USD worth Clarityne, an anti-allergic drug faces its patent expiration, to keep its market
presence Schering-Plough will need to market a new generation, which is unlikely in such a short order. At the same time, Merck’s Singulair, a drug that helps with asthma by
reducing swelling, still have years of its patent term left. If Schering-Plough is able to market them as a combination drug with its own Clarityne , it will effectively extend
Clarityne’s patent term. While it is a good business move, it is not without its benefits for
patients, as Dr. Clifford Bassett, a New York allergist states:
"People with moderate to severe asthma often suffer from allergies as well," he said.
"And we've seen the incidence of asthma double in recent years. So, with this, you have a
super-convenient way to moderate the symptoms of both asthma and allergies."12
In other words, what the doctor is saying even though patients with allergy may not necessarily need asthma drug but such drug will help allergy patients who are also
suffering from asthma-like symptoms triggered by allergy. So the underlining principle is such: it is better to have it and not used it than when need it but didn’t have with the
only catch being combination drug is more expensive than if consumer brought them separately to each symptom. Business-wise, however, M&A is an effective competition
measure in the face of increasing competition and low yield from its new drug research with added benefits to be potentially beneficial to patients as well. However, not all
combination of old drugs into new one is as effective as the marriage between Clarityne and Singulair.
11 傑佛瑞‧羅賓森著，廖月娟譯，一顆價值十億的藥丸：人命與金錢的交易，頁 43-44（2002）。
12 Marrecca Fiore, Allergist: Singulair, Claritin Combo Could Be Win-Win for Allergy, Asthma Sufferers,
FOXNEWS.COM(Aug.29, 2007),
10
Over the 78 new drugs that received FDA approval in 2002, only 17 of them have new therapeutic effects and only 7 of them were deemed to have provided “improvement”
from their previous generations. In other words, the rest 71 out 78 new drugs were “me-too” drug i.e. drug that have similar therapeutic effect as ones that were already on
the market.13 These “me-too” drugs are able to satisfy the FDA efficacy requirement
because FDA has a rather lax definition on efficacy. According to FDA, new drug isn’t necessary “better” than the pre-existing drug as long as these drugs can demonstrate they
are more effective than placebo and is different with its predecessor. Most common of these differences is modification in dosage regime such as change from daily to a weekly
regime which is a form of “improvement” according to FDA standard. In other words, as long as these new drugs are modified from its own predecessor and are more effective
than a placebo, such drugs will have a regulatory green light to enter the market.
As world changes so must pharmaceutical industry changes with it, brand name
company copes with these changes by expanding product line also known simply as “Pipeline”, incorporating new key technology from other company, expanding market
share and all these goals can be achieved through M&A. The merger of Glaxo Wellcome and SmithKline Beckman in 2000 is another of such example. Back in 1994, SmithKline’s 10 billion USD worth peptic ulcer treatment drug, “Tagamet” is facing
patent expiration, not surprisingly, Smith Kline was eager to expend its product line in
anticipation of the lost of Tagamet. To worsen the situation, Glaxo Wellcome had invested more than 20 billion USD in research in 1997 alone but its substantial
investment yielded less than 5% market share on U.S. prescription market. Meanwhile, SmithKline sales on Tagamet had plummeted from 10 billion to 2 billion. The merger of
11
SmithKline and Glaxo Wellcome allows the new company to have an even bigger
research budget, 37 billions to be exact. 14 Furthermore, it allows Smith Kline, a British
owned company to have a firm footing in US market.
12
Chapter 3: US Market and FDA Regulation
3.1 US Market and FDA Regulation
Securing US market is essential for a multinational pharmaceutical company in terms of its revenue. As Duncan Moore of Morgan Stanley puts it: “… for any drug
company, US market is a market they can’t offer to ignore. It is one the fasting growing market and it worth nearly 40% on global prescription drug market. More importantly, 60% of world’s drug company’s profits are from US market.” In 2007, US market is
about 2865 billion USD, followed by Japan, then European countries (Britain, France,
Germany, Italy and Span). Asian market (excluding Japan) is much smaller by comparison, but is increasing rapidly especially in countries such a China, India and
South Korean. Its market increased by 25.7%, 13%, 10.7% respectively. According to IMS Health’s estimation, 7 most promising markets or “Pharmerging Markets” that
include China, Brazil, Mexico, South Korean, India, Turkey and Russia are expected to increase in annual rate of 12 %~ 13%. Industrial growth and implementation of
national health insurance are significant factor attributable to this growth.15
Compare with other regional markets, U.S. market is one of the most profitable
(average cost of perception for brand drug is $96; while average for generic is $2916) because there is rather lax regulatory control over drug pricing, on average, US version
of the same drug is about twice as more expensive as it is in Britain. For example,
15 See supra note 6, at 13-14.
16 Lisa M. Natter, Infringement Lawsuits: The Continuing Battle Between Patent Law and Antitrust Law
13
Tamoxifen, a drug commonly used in preventing breast cancer, costs about 11.9 USD in Canada, 10.23 USD in Britain but 153 USD in the States. Furthermore, drug pricing is
rather liberal at times, for example, Levamisole, a compound originally intent for lice treatment in sheep and was marketed at 0.06 per tablet. However, Levamisole is
subsequently discovered to be rather effective in treating colon cancer in human as well.
As the result, its price soars to 6 USD per table.17
For the next 10 years, pharmaceutical industry goes through massive re-structuring.
Some prominent companies such as SmithKline, American Home Products, Roser, Sandoz were no more, in their place emerge Pfizer , Novartis and Sanofi-Aventis, these
are later known as “Big Pharma”. 18
In 1980, there are about 80 major pharmaceutical companies, after year of 2000, only about 35 of them left. Furthermore, in 2007, top 10
pharmaceutical companies constitute up to 41.3% of global market while top 20 constitute close to 58.3%.19
3.2 Pharmaceutical Industry and Market Approval in United States
As mentioned previously, United State is one of most significant market for drug
companies. According to IMS health (a multinational firm specializes in compiling and distributing medical data especially ones related to pharmaceuticals), global drug
market is about 4000 billion USD in 2003 and about half of sales numbers are generated from US. In other words, US market alone is worth close to 2000 billion in 2003 and
with a rather lenient government intervention on drug pricing. By comparison, in
17 See supra note 6, at 118. 18 See supra note 11, at 43. 19 See supra note 6, at 11.
14
Britain, drug pricing is determined by census from National Health Service (NHS), Department of Health and Drug Company. Drug pricing is also monitored by Pharmaceutical Regulation Price Scheme that is aimed to “achieve a balance between
reasonable prices for the NHS and a fair return for the industry to enable it to research,
develop and market new and improved medicines.”20
While generic drug pricing is determined by drug tariff which is a monthly publication on average market drug
pricing and is used by NHS as reference in calculation of its payment for generic drug.
Even under this elaborate pricing scheme with significant government intervention, branded drug is still very expensive. Of the total 108 billion USD NHS had spent on
prescriptions in 2002, 97 billion was on branded drug while 55% of prescription was for generic drug.21 In comparison, in United States, drug price is even higher in general
about 60% higher than Britain.22
There is little government intervention on drug pricing because there is virtually no
social compulsory healthcare insurance in U.S. with the only exception of Federal Medicare enacted in 1965 which originally did not incorporated prescription drug under
its coverage as back in the days, drug pricing is relatively cheap and not consider a burden for most patients. It was not until 2003 with Medicate Modernization Act, did
Medicare reimburse patient on prescription drug expense. However, no all citizens are eligible for Medicare, it is only available to citizens over age of 65 or people under 65
but with disability and are under Social Security Disability Insurance (SSDI). Some specific medical conditions such as end stage of renal disease will also help people to be
20
NATIONAL HEALTH SERVICE,
http://www.dh.gov.uk/health/category/policy-areas/nhs/medicines-nhs/pprs/(last visited May 21, 2012).
21 See supra note 11, at 123. 22
15
eligible into Medicare. In other words, most of people in US must reply on private insurance to supplement such an employment benefit package for their medical needs
especially for prescription drug.
In drug manufacturer’s defense, they contribute the higher drug costs in United
States to the costs incurred during the extensive and expensive research and development period. While admitting drug price in America is significantly higher than
in other countries because other countries enact regulatory scheme on drug pricing which inevitable transfer drug company’s R&D costs to American patients as United
States is the only country in the world that is willing and has the ability to bear such
price according to Alan Holmer, a U.S. trade representative. In other words, for the world to continue to enjoy the benefits of new drug, the costs is inevitable and United
States is only country in the world that is capable to pay for drug for their true value or so says the Big Pharms.
In summary, significant market size and liberal drug pricing which, of course, is also a contributing factor to U.S. market size and its comprehensive patent protection
regulation partially due to strong U.S. lobby group such as Pharmaceutical Research and Manufacturers of America (PhRMA). These factors make US “The” market for
multinational pharmaceutical company and an important focus for this paper since U.S. market is also where competition is most fierce both commercially and legally. Consequently, many of drug company’s practices and maneuver in the area of
intellectual property right manipulation and business competition originated from U.S.
16
3.3 FDA Approval and Pharmaceutical Research
Currently there are three regulatory pathways to market a drug U.S. For new drug
i.e. pioneer drug, manufacturer can apply under New Drug Application(NDA) 505(b)(1), for drug that based on a pioneer but with significant modification, manufacturer can
apply for market approval via NDA 505(b 2) or apply ANDA for generic drug.
FDA will review all drug application based on two categories:
1) New Chemical Type or
2) The rest which include derivatives from known drug but with different manufacturers i.e. generics or drug that is based on known drug but offer improvements.
For derivative drug that offers improve, its application will receive a “P” rating which will be listed for priority review. The rest will receive an “S” rating which means the
drug has the same or similar therapeutic effects as those that were already on the market.
However, application of new chimerical type does not guarantee a priority review, some may not even have better therapeutic effect than existing drugs. Similarly,
application that warrants priority is not necessarily new chemical type application. More often, existing drug with new formulate or other modification can offer improvements
such as better therapeutic effect, reduced side effects etc.
In summary, there are three categories of New Drug Application, they are:
1) New Drug Application apply via 505(b)(1) and applicant must submit data collected from clinical trial for safety and efficacy review.
17
2) 505(b)(2) application where applicant is allow to rely at least partially on FDA’s
past approval data to prove new drug’s efficacy and safety. Most drug apply under
505(b)(2) are based on existing drug but offer different dosage, strength, route of administration, dosage regime or indication.
3) Abbreviated New Drug Application (ANDA) under 505(j). ANDA applicant only required to conduct experiment to prove new drug is of “bio-equivalence” of pioneer drug or reference drug i.e. the drug ANDA drug is based on to satisfy FDA’s efficacy and
safety requirement .
3.4 Paper NDA
FDA’s NDA 505 (b)(2) application pathway, also commonly known as Paper NDA
allows drug manufacturer to enjoy market exclusivity or even patent rights but they
must file a patent certification similar in ANDA but with less costs. In general NDA 505 (b) (1) will consider by most as the true “new drug” because it is for application with
NME while Abbreviated New Drug Application (ANDA) is reserved for generic drug. NDA 505(b)(2) is the one in between the two spectrum. The approved changes to
pioneer drugs that will be under NDA 505 (b)(2) includes:
1) Changes in dosage and strength
2) Changes in routes of administration
3) Substitution or modification on active ingredient e.g. salt, ester, etc.
4) New Indication
5) New combination with previously approved drug
18
For drug company who is applying through 505(b)(2) there are several advantages. Applying via 505(b)(2) is cost effective, creates new patent right that allows drug maker especially for brand manufacturer to continue its blockbuster drug’s product line with
the exception of biologic drug23 which is mostly approved via Biologic License
Application (BLA). 505(b)(2) allows the applicant to submit preexisting data from its other product or usually data from the drug’s previous generation as reference, these
data includes data from clinical trial. While FDA reserves the right to request additional
pre-clinical, clinical trial or literature information need to support these new formulation/combination from applicant, it still presents tremendous saving for drug
company. As for drug filed under 505(b)(2) its approval costs is about 3 to 7 million USD, comparing with approval cost for drug filed under 505(b)(1) which can costs up
to 1.3 billion USD. 24 Moreover, under 505(b)(2) it allows drug maker to change its
formulation or presents new combination of preexisting drugs to be eligible for new
patents and market exclusivity (3 years).
Filing under 505(b)(2) is not a certain bet, for example in 2002 Pfizer filed a NDA
via 505(b)(2) based on Dr. Reddy’s Labs’ amlodipine maleatetablets and in 2003 TorpharmPetition’s (b)(2) NDA on Synthon’s paroxetinemes. All of them were denied
by FDA; however, (b)(2) NDA is still an increasingly practices for brand name company. In 2007, the number of new drug application filed under 505(b)(2) was about 43%. In
2008, more than half of the new drugs approved in the United States were based on the 505(b)(2) process. This number will be expecting greater than 90% in 2012.
23
A substance that is made from a living organism or its products and is used in the prevention, diagnosis, or treatment of cancer and other diseases. Biological drugs include antibodies, interleukins, and vaccines. Also called biologic agent and biological agent.
24 FDA Approval of Biologic Drugs under 505(b)(2) Expected to Increase
19
3.5 Chapter Summary
One of the most profitable but also most challenging among these there is 505(b)(1) i.e. the development of a new drug. Developing a new drug is certainly a very arduous
endeavor. A new drug on average takes about 15 years to develop and costs between 500 millions to 2 billions USD. A new drug’s development can be divided into 4
phases: Discovery to Pre-clinical, Clinical, NDA Review and Post-Market Surveillance.
3.6 Discovery to Pre-clinical.
During the initial discovery phase, 250 most promising New Molecular Entity
25 Very limited change.
26 Yes when against other generic drugs.
505(b)(1) 505(b)(2) ANDA
Review time 12 months 12 months 21 months
Scientific study Full Partial Bio-equivalence
New Ingredient Yes Yes/No No
New Formulation Yes Yes Yes25
New Dosage Yes Yes No
Patent Yes Yes No
Market Exclusivity Yes (5 years) Yes (3 years) No 26 (180
20
(NME), among one of them will later be the active ingredient of a new drug, are selected from a sea of rough 10,000 possible compounds. Normally, a drug is consisted
of binder or solvent or other additive that facilitates the delivery of drug into a human system or improved drug’s retention by human body. Active Ingredient, as its name
suggests, is the actual chemical entity that is responsible to the intended therapeutic effect of any given drug. Animal testing will be conducted with these NME. Among the
250 NME, roughly 5 of them27 will be selected for clinical trial, discovery to animal
trail will usually takes about 6 to 7 years to complete.
3.7 Clinical Trial
Before Clinical Trial, FAD will conduct a 30 days safety review. There are three phases within clinical trial, each phase with involved with ever more subjects. From 20
to 100 volunteers in phase 1, to 100 to 500 volunteers in phase 2 to finally 1000 to 5000 volunteers in phase 3. In phase one, the purpose is to establish new drug’s optimal
dosage by conducting trials on healthy people, in order to study the change of human metabolism due to the drug and observe side effects if any. Most often, it is during this
phase that drug company will begin to apply for patents on innovations associated with the new drug. Timing on patent application is a dilemma for drug company: on one
hand, company wishes to protect its innovation as soon as possible especially during the later phases of clinical trial with so many people and professionals involved, it will be
virtually impossible to keep its innovation a secret. On anther hand, as soon as it applies for patent, new drug’s patent term clock starts ticking and along with its precious time
for market exclusivity.
21
In phase two, usually a comparison groups will be set by patients of the targeted illness and people who are already taking medication to establish new drug’s efficacy. In
phase three, an even larger scale of patients will be enrolled into the study to examine new drug’s safety and efficacy with greater pool to account for possible different
pharmaceutical reactions on different physiology. Not all drugs that approved for clinical trial will enter phase three, many are pulled out during phase one and two. Only
drug that passed all three phases will be qualified to FDA market approval.
Clinical trial usually takes 7 years to conclude and gathered enough data to apply for a New Drug Application (NDA) review with United States Food and Drug
Administration. FDA review procedure usually takes roughly one and half year to complete.
After drug has been approved for market, FDA will continue to monitor it for any adverse drug reaction when it is introduced to general public. Despite the people
involved in clinical trial, it is still relatively very small with very limited variety of medical conditions comparing with general population. Post Marketing Surveillance
allows both FDA and drug manufacturer to further refine and confirm the safety of a new drug.
3.8 Pioneer Drug (Brand Name Drug)
Pharmaceutical that is approved via a NDA is also known as brand name drug,
pioneer drug or simply branded drug because such drug is usually first of its kind and has more than one patents associated with its active ingredient or other methodologies
22
also the patentees for these patents and such company is known as brand name Company as they usually market new drug under a catchy commercial name such as
Zentact, Lipitor and etc. so in a sense these drug is branded by the company. As mentioned, developing a new drug is a risky and costly business, among the NME that
has successfully passed FDA safety review and eligible for clinical trial, only 11.6% to 16% of them successfully pass NDA review. Furthermore, not all drugs that enter the
market are going to profitable. Under such dire and uncertain circumstance, when a
drug that actually make substantial revenue for the company, it is only natural that brand name company will do all they can to ensure these so-called “blockbuster” drug stay on
the market for as long as possible.
Blockbuster drug is an essential source of revenue for a brand name company. One
blockbuster drug can account for up to 30% of a company’s total revenue. In 2006, there are total of 114 drugs that can be considered as blockbuster drugs and each generates more than 10 billion USD in annual sales in U.S. alone. By comparison, Taiwan’s
pharmaceutical market is about 600 billion in 2009. These 114 drugs are hold among 30
pharmaceutical companies.
Despite brand name drug’s ability to generate high revenue, pharmaceutical is not
like other regular consumer commodity, there is little brand loyalty. Doctors and patients, most of the time, choose brand name drug simply because it is only one available. In other words, blockbuster drug’s ability to generate high revenue is largely
23
3.9 Generic Drug28
Generic drug, on the other hand, is referring to drug that is manufactured based on
a brand name drug after its patent has expired. By definition, generic drug has the same active ingredient as the brand name drug it is based on, and it has passed
bioavailability and bioequivalence (BA/BE) tests that certify generic drug has the same efficacy and safety as its brand name ancestor such drug is also known as the “reference drug” of the generic drug.
Bioequivalence Test
BE test or bioequivalence test is meant to test whether two drugs when introduce
into human body (in vivo) under the same condition and same dosage, the difference in rate and extent of active ingredient available at drug’s intended site or absorption rate
within circulation between the two drug to be statically significant or not. If not, then the two drugs is said to be bioequivalence of each other. In other words, if two drugs are said to be BE with each other, they are “with respect to both efficacy and safety, [they]
can be expected to be essentially the same.”29
BA or bioavailability is a measurement on the rate and extent of a drug’s active ingredient or its therapeutic ingredient when
utilized in a human circulation system. In summary, if a generic drug passed BA/BE test
with its reference drug i.e. brand name drug, it shall be utilized by human body and achieve the same therapeutic effect as a brand name drug. Any difference between
28 Generic Drug is defined as a pharmaceutical compound that contains the same "active ingredient" as
its patented counterpart…. the generic drug is identical to the patented drug in terms of its bioequivalence, more specifically; the generic version of the brand name drug should have the same pharmacokinetic and thermodynamic properties. The FDA requires the bioequivalence of the generic product to be between 80% and 125% of that of the patented drug.
29
24
generic drug and brand name drug is, by definition, statically insignificant.
In U.S., FDA will assign an “AB” rating to generic drug that are bioequivalent to
brand name drug. FDA defines bioequivalent of a generic drug that has the same: 1) active ingredient 2) dosage form 3) route of administration and 4) strength as its
reference drug.
The FDA requires the bioequivalence of the generic product to be between 80%
and 125% of that of the patented drug. The two drugs are said to be of bioequivalent if
"they are pharmaceutically equivalent and their bioavailability (rate and extent of availability) after administration in the same molar dose are similar to such a degree that
their effects, with respect to both efficacy and safety, can be expected to be essentially the same. Pharmaceutical equivalence implies the same amount of the same active
substance, in the same dosage form, for the same route of administration and meeting the same or comparable standards." However if two drugs were said to be
bioequivalent of each other, as in the case between generic and the innovator drug it is based on, it does not mean that two drug were identical with each other. In fact, many
generic drugs may have different binders or other inactive components known as “excipient” in addition with the active ingredient. Consequently, chemically branded
drug and generic drug will have slightly different properties with each other. Even among other generics drug of the same type will have slightly different formulation with
each other to achieve different effects, curative or otherwise, such as better delivery etc.
3.10 Generic Drug’s Competitive Edge
25
however, it does not come cheap. Brand name drug industry is one of the most profitable industries in the United States. In 2005, of the total of 250 billions that were
spent on prescription drug, over 229.5 billion were spent on brand name drug. Furthermore, the cost of drug is on a steady raise at rate of 14% to 18% per year from
2004 to 2007. Interestingly, while price for brand name increase by an average of 21%, in comparison, the price for generic drug actually decreases by an average of 12.8%.
Brand name drug is expensive and maybe too expensive to more and more people.
During the period of 2004 to 2008, the prescription number for generic drug increase by 12%, while number for branded drug decrease by 6% during the same period. Generic
drug use has come a long way, from less than 20% of prescription in 1984 to 78% in 2010.30
Generic drug has several distinctive advantages over branded drug, generic drug is:
1) Substantially cheaper
2) Significantly easier to manufacture with little research & development effort 3) Has very high market erosion rate against branded drug.
One of the most obvious advantages of generic drug is its pricing. Generic drug
priced substantially lower than brand name drug. 1998 Congressional Budget Office (CBO) concluded that by using generic drug instead of its branded counterpart part, it
has saved consumers between 8 to 10 billion USD this year. Another study publish by Generic Pharmaceutical Association based on independent analysis of IMS
30 C. Scott Hemphill & Bhaven. N. Sampat, Evergreening, Patent Challenges, and Effective Market Life
26
(Intercontinental Marketing Services) Health’s data, during the period of 1998 to 2008, by using generic drug instead of branded drug have saved 734 billion USD for average
consumers and healthcare providers, about 121 billion USD were saved in 2008 alone.
Federal Trade Commission (FTC) estimates that first generic drug typically priced
at about 70% to 80% of its reference drug when it first enters the market. As first generic drug’s 180 days market exclusivity expires and more generic drugs enter the
market, price will continue to drop. For example, Prozac, a popular anti-depressant
that often hailed as one of the most popular drug after the invention of antibiotic. During its patent term, Prozac sells for 2.13 USD per capsule. After its patent expiration,
the first generic version sells for 1.91 USD per capsule when it first enters the market, about 12% less than the brand name Prozac. Price plummet to 0.32 USD per capsule
after first generic drug’s market exclusivity expired.
Developing a new drug is never an easy endeavor, it takes average of 15 years and
millions of dollar and provided if the research is successfully. Moreover, even if a drug company is able to conquer many obstacles and successfully obtains market approval,
new drug will not necessarily guarantee a financial success. Generic drug, on the other hand, is a much safer and reliable venture financially. The catch is: As long as generic
company can secure its supply of active pharmaceutical ingredient (API) manufacturer, generic drug only need to pass BE/BA test to obtained market approval and save its self
all the costs in discovery and clinical trial. Unlike a lot of brand name companies who synthesize their own API and have direct control over its product from the initial
manufacturing to final marketing. Usually General drug manufacturers do not synthesize its product’s own API, they obtain their supply from manufacturers who
27
specialize in synthesis API. The source of API can be from plants, fermentation of microorganism or synthesis of chemical compounds. Currently there are about 4000
types of API on the market, 60% of them are generic drugs and rests of the 40% are for pioneer drugs. API can be further categorized into high tech-level API and low
tech-level API. As its name suggests, High tech-level API is referring to API that requires sophisticated level of manufacture technique and equipment. For example,
there are only 5 supplier of API in the world for Topotecan, a widely used active
ingredient in cancer treatment. Low tech-level API referring to active ingredients that are relatively easy to make and usually are for drug that have been widely used, such as
anti-inflammatory agent or anti-biotic.31
Not surprisingly, generic drug company represents the greatest client sector for API
manufacturers since many brand name companies synthesize their own ingredients. The relationship between drug manufacturer and API supplier can be illustrated as a cook
and his foodstuff supplier. API supplier provides raw material for drug manufacturer to “cook” into a dish i.e. a drug. Consequently, for a generic drug company the greatest
challenge is to secure a reliable API provider, generic company’s main contribution lies
in devising a better delivery system or possible combination with other known drug and
marketing, these activities, however, are a lot less time-consuming and capital intensive than researching for a new active ingredient. As the result, once a brand name drug’s
patent expired, generic drug company is able satisfy BA/BE test and market its version of branded drug in relatively a short time.
31 「台灣原料藥公司闖出一片天！」，財子學堂網站：
28
Since generic drug is cheaper and relatively easier to produce, it presents great threat to branded drug once it enters the market. Takes previously mentioned Prozac as
an example; Generic Prozac claims 65% of market share from brand name company within a month after its introduction and close to 90% after an year. This outlines the
basic dynamic within pharmaceutical industry. Brand name company specialized in pioneer drug which is expensive and difficult to make; however, once brand name
company succeed in making a blockbuster drug it is going to bring tremendous revenue. However, the ability to bring revenue lies in its market monopoly granted by patent’s exclusivity. Once branded drug’s patent expires, it will lose its market share rapidly to
generic competitors due to their cheap price. In other words, patent right is instrumental in branded drug’s ability to generates revenue and it is only natural for brand name
company to want these patents to be last as long as possible especially for their blockbuster drugs.
3.11 Costs for Pioneer Drug
While innovator drug a.k.a. pioneer drug is indispensable in furthering medical
research and improve human health, it can also places significant burden on a country’s treasury. For example, since the implementation of National Health Insurance (NHI) in
Taiwan, from year of 2000 to 2007, expenditure on drug prescription constitutes to up
25% of total NHI budget and it is growing steady annually from 2% to 15%. 32 From a
government’s perspective, generic drug provides an enticing alternative that is able to
provide drug that is as effective as branded drug but only 1/2 or even just 1/3 of the
32 湯澡薰等著，各國藥品支付制度及藥價政策分析及評估，行政院衛生署九十八年度委託研究，
29
costs. Introduction of generic drug into a market helps greatly in stabilizing drug price. However, if government policy favors too greatly to the generic drug company, it may indirectly discourage research effort of brand name drug or in Taiwan’s case discourage
new drug from entering the market which in a long run is also detrimental to public’s
30
Chapter 4: Pharmaceutical Patents and Patent Evergreening
4.1 Pharmaceutical Patents and Patent Evergreening
There is nothing more important and more profitable for a drug company
especially brand name drug company to extend its market monopoly (usually via
exclusivity right granted by patents sometime even through copyright claims). Following chapters will elaborate how drug companies have devise numerous strategies
either through manipulation of FDA regulation or other intellectual property rights such as patents and copyright for the sole purpose of keeping out or at least delay generic
drug from entering the market for as long as possible.
Generally just a single generic drug on the market will not present too much a
threat to brand manufacturer since the first generic drug company usually price its generic drug just a little cheaper than brand name drug. However, all hell break loose
especially for brand name company when other generic drugs are entering into the market as well, significant profits are at stake for brand name drug, more so if the drug
in danger is a blockbuster drug. Entrance of generic drugs usually means billions of USD in profit will vanish within just couple months for brand name companies.
Consequently, if a brand name company can stall entrance of generic drug even for just a few months, it will be highly profitable, usually worth many times over the legal
expenses incurred during the process. As Stock Analyst, Hemant Shah said in Wall Street Journal: “Brand Name Drug Manufacturer’s counter-generic drug strategy is
31
perhaps the most profitable one in all of their other business ventures.” 33
4.2 Irony of Brand Name Drug’s Innovation
Brand name drug company distinguish themselves from their generic counterparts in their capability in conducting research for new drugs. Bayh-Dole Act opens door
for major drug company to utilize the research result including patent rights from National Health Institute (NHI), universities or other government- funded small
business in the form of licensing. In other words, Bayh-Dole Act allows entity such as
universities that received government funding for conducting research to have control over its intellectual properties.
Not surprisingly, fruit of research is a tempting subject for brand name company when its own research hits a dry spell which is increasingly more to be the case. Over
one third of new drug that hit the market recently is based on patents licensed from NHI, universities or small biotech firm.34 Taxol is one of such drug that is developed by
government funding but brand name company is the one that is able to ripe its commercial benefit.
Taxol is the brand name of paclitaxel which is a medicinal compound gathered from pacific yew tree’s bark. Taxol is one of the most popular drugs used in the
treatment of lung and ovary cancer. It was originally discovered in 1960 and most of clinical research effort was conducted by National Cancer Institute (NCI) and
subsequently gained FDA approval as an effective new drug for ovarian cancer.
33 Chris Adams & Gardiner Harris, Drug manufacturer step up legal attacks that slow generics, W
ALL ST. J., July 12, 2001, at A-1.
34
32
However, its patent right is licensed to Bristol-Myers Squibb (BMS) for 5 years of market exclusivity. The deal is controversial to say the least, as NCI, for all intents
and purposes, gives BMS a practical monopoly on research founded mostly by the government, in other words, from tax payer’s money. NCI defenses its decision
because the financial scale needed to supply the tree i.e. the government alleges in order to ensure the raw material of paclitaxel meet the demands for general public the
association of a pharmaceutical company as a commercial partner for marketing Taxol is needed. Regardless, BMS is the biggest winner in this bargain as Taxol’s revenue is
close to 10 billion USD.
Gleevec is another case where brand name company steps in to ripe the fruit of others’ labor. Imatinib Mesylate which is brand named as “Gleevec” by Novartis.
Gleevec is a revolutionary drug in the treatment of leukemia. Gleevec, however, is not developed by Novartis. In 1960, it was discovered people who has leukemia carry a unique set of chromosomes known as “Philadelphia Chromosome” which is responsible
in triggering the production of abnormal enzyme that causes leukemia. Novartis had
developed several enzyme inhibitors that may possible inhibited the production of these enzyme and applied for patents on all these inhibitors accordingly. However, no further
action was taken by Novartis until Brian Druker of Oregon Health & Sciences University in Poland who is funded by National Health Institute. He discovered one of Novartis’ enzyme inhibitor is practically effective in suppressing cancer cells while
leaving the normal cells intact. This is when Novartis steps in and carry out the clinical
33
Government funded research plays an integral in developing new drug. At turn of the millennium, of all the academic papers that were cited when applying for new drug
patent, only 15% were from drug company’s research, 54% were from academia while
rest of 13% were from research done by government agency.35
To sum up, brand name company has a competitive edge over generic manufacturer in its size and financial prowess. As in the case of Taxol, BMS is
brought in by NCI as a commercial partner because NCI lacks the financial resources to
keep up the Yew tree supply. In the case of Gleevec, Novartis can step in and ripe the benefit because a researcher simply does not have the commercial channels needed to
distribute the product.
4.3 Patent is Brand Name Drug’s Most Effective Defense
Patent is the first and last line of defense for drug company, patent is what enable
drug company to make substantial profits.36 By comparison, Information technology
industry (IT) is another sector of business where patent plays an integral part in doing business. However, unlike in IT industry where better, faster and bigger product is being
introduced in a fanatic rate and leads to the price drop. In pharmaceutical industry, the next generation of new drug will not necessarily cheaper than its first generation nor
will it be substantially better. In addition, unlike consumer product that consumer is free choose other brands, in drug industry that choice is left to the doctors or
pharmacists, This is particularly peculiar phenomenon in drug industry, only with the
35 Darren E. Zinner, Medical R&D at the Turn of the Millennium, 5H
EALTH AFF. 202(2001).
36 藥品專利的雙刃劍將刺傷多少人，CRIonline 國際在線網站：
http://big5.cri.cn/gate/big5/gb.cri.cn/9083/2005/11/04/[email protected]（最後點閱時間：2013 年 7 月 6 日）。
34
influx of generic drugs will the drug pricing start to drop.
As mentioned, brand name drug is no match with generic drug in a pricing battle.
Consequently, market exclusivity afforded by patent is really brand name drug’s only defense against generic competitors and branded drug company will go to great length
to defense it.
For example: Tamoxifen, a drug used in the treatment of breast cancer, which is
sold under brand name “Nolvadex” by Zeneca. In 1985, Barr Laboratories intended to
market its own generic version of Tamxifen, filed an ANDA paragraph IV certification, challenged Tamoxifen’s patent which is hold by Imperial Chemical. A litigation battle
ensued and ended against Imperial Chemical as U.S. Federal court found Tamoxifen’s patent invalid and Imperial Chemical appeals in 1992.
However, in 1993 Barr settles with Zeneca which is a former subsidiary of Imperial Chemical, as one of the terms of settlement, both parties agree to vacate the Federal court’s decision of holding Tamoxifen’s patent invalid, in exchange, Zeneca
agrees to license Barr to market Tamoxifen while Zeneca supply Barr the drug. This
agreement is a win-win situation for both Zeneca and Barr , Zeneca was able to maintain its market since both Barr’s generic Tamoxifen and brand named Nolvadex
were all from Zeneca. Zeneca was able to keep rest of competitors out of Tamoxifen market as long as it can keep its patent valid while Barr is allow to have a piece of
Tamoxifen market provided it agree to keep others out by vacating the judgment that holds the patent invalid. Both parties were winners in this case with customer being the
only loser as they still need to pay a patented drug price for a product whose patent does not warranted such protection.
