‘No industry has ever been run by morals. And so pharma can’t be one’ – Conversation – Express Pharma Pulse

‘Current US laws allow drug companies to patent inventions forever’

Mark Pohl is a registered patent attorney with Licensing Law, a US law firm dealing with patent applications, infringement opinions and licensing. He obtained his doctoral degree in law in 1993, after which he worked as an intern with with a reputed US lawyer firm. Later, he also served pharmaceutical company Wyeth Laboratories before moving in to Licensing Law. An extremely soft-spoken man, Mark seems to be an aberration among the apparently aggressive US lawyers’ community. But he says his soft-spoken nature has proven to be his biggest asset. He says judges see pushy and aggressive lawyers all the time and with him they appreciate his honesty, directness and certain amount of humility. Mark, who claims to have never lost a case, spoke with Ananth Iyer on current law for generics in the US, their ramifications on the drug industry and on the unfolding future scenario. Excerpts:

What is the mood in the US drug industry considering that drugs worth billions of dollar face patent expiry in the next five years? What sort of strategies various stakeholders in such a scenario are playing?

The mood in the drug industry, frankly, is euphoric because this could be the largest disaster financially for the drug industry in a generation – the highest percentage of drugs going off patent in the shortest amount of time. However, the drug industry is doing all it can to minimize the impact. The US is governed by a republican congress, which is dominated by the Republican political party. The President too is from the Republican Party. The party receives a lot of funding from the drug industry and they do not intend to change the laws that may adversely impact drug companies in the US. Thirdly, the judiciary, in the past year, has given rulings on two court cases. If you take both of these court cases together, what it means is that drug companies effectively can have patent protection extended almost forever. One ruling came from a judge in New York city and she said that even if a drug company has a patent and the patent is going to expire, it has always been the rule that the drug company can apply as many new patents to cover that drug. Moreover, the judgement also freezed approval of any non-patented copycat drug for a period of 30 months for each of the new patent filed by the innovator company to allow time for a court case relating to the patent to go on. This means, for example, that a company can apply for, say, five silly patents and then five times over they can approach the court to get 30-month extension on each of the five patents. This can go on literally indefinitely.

So what are the options before the generic drug industry?

There are only two options. One way to fix this problem is changing the law. But, for this to happen, the Congress has to write a law and the President has to sign the law to approve it. The Republican legislature and Republican executive are not going to change the law. So, the second way to fix this problem is to have a government agency come in to investigate and prosecute drug companies for illegal extension of patent monopoly. Now, here again, there is a second court ruling, where the judge had said that the government agency responsible for doing such kinds of prosecution do not have the ability to approach the court for prosecution against illegal extension of monopoly, since the agency does not have the professional expertise to make evaluations of patents as it does not have any patent lawyers on the staff.

The ruling seems technically fair. So, what’s stopping these agencies to hire patent attorneys?

The enforcement agencies spent literally millions of dollars to make a political case. But they were severely reprimanded by the judge since the agencies did not have patent attorneys on staff and neither did a law firm represent them. Employing patent attorneys or hiring a law firm means paying them and that could run into millions of dollars. My sense is that people responsible for government budgets may ask the agency why we should give millions to hire attorneys when it has wasted millions of dollars for nothing.

That leaves us with the judgement of the Federal district court saying drug companies can have infinite number of 30-month patent extension stacked on and the patent does not have to be of good quality at all. They can simply be a piece of paper with PATENT written on top of it.

How is the generic drug industry in the US measuring up to this challenge?

That is a very real question right now. The generic industry is not able to put up a cohesive challenge. At least that is my personal impression. The way the law stands now, a drug company with patents should be able to prolong patent protection forever with the help of good legal advice. I spoke at a generic drug industry conference in Washington DC last year where I explained to them this problem. I asked them what do they think they are going to do about it and I did not hear any concrete proposal from any one.

What are your comments on Barr Laboratories’ model of challenging and breaking innovator’s patent?

Barr Laboratories’ model is to challenge and break a patent and get rewarded for it. But, Barr Laboratories has a problem. If Barr Laboratories challenge one patent and the drug companies are allowed to keep adding new patents, it would be extremely difficult for Barr to sustain in this game. For a manufacturer, it costs maybe USD 30,000-40,000 to get a new patent. For Barr to challenge one, the cost is 10-100 times. So, there is a great financial disadvantage to the generic company. So, Barr may recoup legal charges if it wins with one patent challenge. But, if Barr has to contest 5-6 patents, there may not be enough money to be made to compensate for that many numbers of challenges.

So, unless the laws are changed, generic companies would continue to arrive in the US with a disadvantage?

Yes. There are several ways generic companies can address this problem. One is to spend a lot of money in Washington to get the law changed. Second would be to spend a lot of money buying licenses from big pharma companies. The third way and perhaps the most cost-effective way is to spend some money on applying for patents themselves. Because once you do that it can be a very good bargaining tool with big pharma companies. This is the only cost-effective solution on the table right now considering the current environment.

How does this model work?

For a generic company the first thing to do is to look inward and examine what you make and how you make it. Second, you look at other people’s IPR and compare them with your own to see if in fact you have infringed and the third step, which goes along with the second step, is to see whether there is something new and file your own patents. Once you see whether you have infringed other’s rights and patent your own rights, you can start negotiating for a business deal with the innovator. Also, you can then trade your IPR with IPRs of either the innovator company or with a competing pharma company. Although this model is new to the pharmaceutical industry, it has been effectively used in the electronic industry, where the industry standards are maintained by different companies cooperatively exchanging patents so that the market is open to a larger universe of people who collectively advance the technology.

The very basis of generic industry model is pricing. Will this model nullify the fundamental advantages of the generic industry–the price–which may then be not very cheap compared to the innovator product?

You will have two results. The first result is that for true commodity products, the price will remain at a commodity level. For truly innovative products, they will always command a premium price. The model we discussed will create a middle level group of products and they will tend to be priced more highly than they are now. In fact, generic drugs that are in the middle level (with little degree of innovation) the price will be higher than they would have. That is the disadvantage. The advantage is that there would be more variety of products in the middle range.

In the conventional IPR regime, for number of years, we had some kind of monopolistic situation, which never brought the prices down. It now appears that in the so-called war between the innovator and generic manufacturers, we are reaching an in-between scenario. Isn’t it like saying generics are ok but there has to be some degree of innovation?

That may be the effect of what they are doing. But, as regards the cause – in my sense and I do not want to sound pessimistic -, I feel you have thought ahead more thoroughly than perhaps the senior management of drug companies have. My sense is that senior management of large companies are simply looking at how to maximize profits on a short-term basis. They think the future evolution of drug industry is the problem of their successors.