As governments face growing concern over rising drug prices, in-house counsel from innovator and generic pharmaceutical companies re-examine their strategies when it comes to injunctions
At a senate hearing about rising drug prices, Democratic Senator Wyden of Oregon accused a pharma innovator executive of protecting his blockbuster drug with patents like Gollum. Unlike Gollum, the pressure to lower drug prices for innovators is real.
With access becoming a hot button issue, injunctions are becoming a topic of wider debate among both generic and innovator drug companies.
“The generics look like angels trying to push the prices down,” says the IP director for a pharma innovator. “If you are a generic and you go to court to invalidate a patent, you know that the other side is simultaneously worried about losing the case and about any negative press they might receive from winning.”
Fears of bad press are not without warrant. “In exceptional cases like in Truvada, there is an argument not to pursue an injunction,” says an IP lawyer for a generics company.
Last year Gilead faced public outrage for their attempted injunction against Mylan and Teva over their blockbuster HIV drug, Truvada. Mylan and Teva were selling the drug at 15% of the cost than Gilead while fighting the validity of Gilead’s SPC. Gilead eventually withdrew its injunction appeal in the Irish courts.
In-house counsel for a pharma innovator tells Patent Strategy: “It is important for patent holders to use their IP in a responsible manner. If we are seen to use an injunction too often, it will call the whole system into question.
“We need to be mindful that in this political environment people often hear criticisms of the industry and we don’t want to do things to add to their arguments.”
Another reason pharma innovators seek injunctions is to protect themselves from price erosion caused by generics bringing copies to market. If the generic infringes on their patent and sells at a lower price, this forces the innovator to take a loss to stay competitive.
Once the injunction is granted and the generic drug taken off the market, innovators are free to put their prices back up; but drug price hikes do not look good.
“There is growing political pressure on innovators, especially in the US,” says one in-house source from a pharma innovator. If a company was charging $40 for a drug and suddenly charges $100 after being granted an injunction, this flies in the face of what politicians want.”
Making the decision to raise prices puts pharma innovators in a difficult situation. If they do not recover the cost of making the drug, it becomes more difficult to develop new ones. For some, this pits the interest of patients, who need access to medicine, against the interests of future patients who will need yet undiscovered drugs. In many cases, the damage made by infringement is irreparable.
“It will be difficult to put the prices back up,” says the in-house counsel for a pharma innovator. “And all these issues need to be considered by the patent holder when applying for an injunction. The UK will look at the balance of convenience to see who will be harmed more by granting the injunction.”
Also weighing on the mind of pharma innovators seeking an injunction is the possibility of a lawsuit further down the line if their patent is ruled invalid. In some jurisdictions, generics can sue innovators for any losses they might have suffered during an injunction.
While a concern for innovators, such lawsuits are rare. “In most countries it is very difficult for generics to seek damages when the drug was proved invalid even if you could not sue for two years. In the UK and Germany we normally get compensation but in most others it is almost impossible,” says the IP counsel at a generics company.
A new development in the UK comes from the Patents Court Guide, which sets out that any company seeking an injunction for a medication must notify the NHS. If a cheaper drug is kept off the market due to an injunction and the NHS paid a higher price as a result, they can sue the innovator for damages.
IP in-house counsel for a pharma innovator says: “We are seeing more national health care services get involved, but I don’t think the NHS will necessarily get involved in every case.
“Worst case scenario would be if the NHS as a matter of routine has to be compensated every time an injunction was wrongly granted.”
Such a situation could create an unstable patent enforcement environment. Innovators point out that there is always a real risk of losing a case and the granted injunction, even if the patent is solid. One innovator source says that sometimes, when there is expert evidence on both sides, the court will prefer the testimony of certain witnesses to others.
“Given that uncertainty, it is possible that you could pay the NHS damages every time you’ve gone through an injunction process and three years down the line are found to make the wrong call on your patent.
“That risk would make innovators far less inclined to go for an injunction,” says one in-house innovator. “It undermines the environment that you need to have in an enforcement system.”
Sources from both the generic and innovator side both agreed that injunctions speak to the heart of the patent protection system, but like with any debate, there are levels of nuance.
“If you think about the purpose of the patent system, it is to innovate and come up with new drugs,” says a generics IP lawyer. “Through development of the product to get it to market there will be further inventions made along the way. If you have a system that is difficult for the patentee to enforce their rights by seeking an injunction it makes it hard for innovation.”
Weighing up the rights to property against the right of the collective is one of the fundamental debates of our time. The particular debate around injunctions for patent infringement for medications will continue, and hopefully with shades of grey.