Pharma’s Cutting Edge

I’m not sure I’ve commented on this issue previously, so I thought now would be a good time, as legislation has now been proposed, and presumably there will be some debate in Congress.

The issue of bringing US inventorship criteria more in line with the rest of the world has been around for some time. In most of the world, inventorship is determined in part by first-to-file status. In the US, by contrast, inventors do not have to be first to file a patent application, but they must be first to conceive of the invention and they must be diligent in reducing the invention to practice. Practically speaking, the US system places a substantial burden on inventors to document their inventions (i.e. the ideas) and their reduction to practice (i.e. activities and observations supporting the ideas) prior to filing an application. This burden is shared by anyone that desires US patent protection, which is to say nearly everyone in our industry, because the US is the largest single market for drugs and devices. If you work in drug discovery you know this burden first-hand all too well. Switching to a first-to-file system would not eliminate the need to document experimental details and new ideas, but it would reduce the burden on scientists by eliminating some administrative tasks that serve only to meet current US patent requirements (e.g. the need to have lab notebooks signed on a regular basis).

The article suggests that the pharmaceutical industry is against this change to the US system, but it doesn’t explain why. At first blush, it seems that everyone would be well served by a European-like inventorship determination, because it would reduce work that doesn’t contribute directly to innovation (i.e. it would boost innovation productivity). But remember that patent life is a fixed period that begins with filing of the final patent application. Effective patent life (i.e. actual time for patent protection of a marketed product) is determined by the date of patent filing, the time between filing and product launch, and the time of generic entry into the market. As we all know, there is a relatively long time between initial discovery of a potential therapeutic and its realization as a product, often a decade or more. Under the U.S. patent system, companies are now able to maximize effective patent life by waiting to file their first patent applications, while protecting themselves by documenting the inventions and their reduction to practice internally.

In a first-to-file system this type of strategic patent filing isn’t possible. Companies practically cannot wait to file in a first-to-file system, since the filing itself represents the only acceptable way to assert inventor status. All else being equal, the result is that effective patent life for drugs in the US would be reduced relative to the current system. Exactly how much it would be reduced in an individual firm can be estimated by using internal data. Calculate the time interval between the dates of first filings for successfully marketed products and the dates the inventions were first documented in the lab (in the lab notebook). This interval is the maximum reduction in effective patent life that would be expected from a change in inventorship criteria. Actual effective patent life reduction would be less than this, and may be estimated subtrating the amount equal to administrative tasks (i.e. preparation of the filing) plus the time interval between the idea and the filing filing (approximated as the time between the provisional and final patent applications). The calculation looks like this: Effective Patent Life Reduction = (Date of actual first final patent filing-Date invention first conceived)-(Time to prepare patent applications+(Date of final patent application-Date of provisional patent application)).

The life science industry won’t be alone in opposing this legislation, but they will be in the minority. Few industries use patents to appropriate their inventions as much as the innovative life science industry, and fewer still have the long development times “enjoyed” by the drug industry. In particular, industries such as software and consumer electronics strongly favor the first-to-file criterion. Look for spirited debate in Congress–assuming legislation reaches the point of debate–fueled by intensive lobbying activity behind the scenes.

Pfizer’s bold, but flawed, strategy to market only the combination formulation of its experimental CETP inhibitor, torcetrapib, with atorvastatin (Lipitor) has apparently been reversed late in the game. Although Pfizer never detailed its reasons for the initial strategy, it’s obvious that it was predicated on commercial rather than therapeutic considerations. Indeed, there was no therapeutic reason to limit development to a single combination tablet rather than pursue both the combination and separate tablets from the get-go. As this NYT article points out, Pfizer had earlier argued that the cost of developing both the combination and the stand-alone would be prohibitively expensive. Pfizer’s recent decision reveals this excuse for what it was.

Analogies of plausible combination tablet development scenarios abound in the cardiometabolic arena, especially in hypertension and diabetes. Typically, a stand-alone formulation is developed first, tested in combination with a number of different add-on therapies, and then a combination tablet is developed by bridging to the stand-alone data. The advantage to patients of the traditional development scheme is that the new drug is typically approved with broad combination claims (e.g. Actos plus any sulfonylurea), allowing the prescriber maximal flexibility to tailor therapy. Pfizer will be taking the opposite path now with torcetrapib, limiting prescriber flexibility initially to just the combination with Lipitor and only at the dose(s) of Lipitor Pfizer chooses to develop in combination.

As shares of Encysive are trading down 42% as I write this, I can’t help thinking again that most of this industry and its investors operate out of ignorance when it comes to managing its new-drug (and biologics) applications to FDA. And I can’t help wondering why, when information is available for guidance. I’m speaking (again!) about the purgatory known as the approvable decision.

Approvable letters are written by FDA when a drug meets minimum regulatory requirements, avoiding the dreaded “not approvable” decision, but when it lacks the necessary demonstrations of efficacy and safety to warrant marketing approval. In April, I published a report that describes comprehensively the recent history (1998 through 2005) of FDA’s approvable decisions. Over 100 approved products (small molecules and proteins) received such decisions during this time period. Of the eventually approved small molecules that were not approved following the first review cycle only 24% received an approvable letter following the second review cycle. Thus, Encysive joins an inglorious minority of sponsors that failed to achieve approval for its new molecular entity after the second review cycle (I’m assuming Thelin will eventually be approved). Will Encysive go for three approvable letters, or will they change tactics?

If there is one thing I learned when researching these approvable decisions it’s this: Argue with FDA over “matters of judgment,” and argue strenuosuly if you believe you have a good case to make, but make your best case in your NDA/BLA, well prior to the first action date for your NME. Repeating prior arguments, with minimal additional evidence in support of them, to answer an approvable letter is nearly always futile. If FDA states that it needs more data prior accepting your arguments, get FDA the data they want. Giving them data you think they need, if not the same as what they think they need, very rarely results in a winning argument. These and other lessons may be drawn from the historical record as described in the report.

Well, as you’ll read some action is happening in the US Senate to address the authorized generics conundrum. You’ll recall that the issue has sparked consternation among major generics makers–and some lawmakers–who compete for 180-day exclusivity under Hatch-Waxman. The authorized generic effectively undermines the first-to-file generic house from enjoying the 6-month monopoly aimed at encouraging challenges to innovator patents and thus earliet possible generic entries. However, Merck’s recent tactic of undercutting the price of a first-to-file generic (Teva) with their brand drug (Zocor) would not be affected by pending legislation that seeks to limit authorized generics until after the 180-day exclusivity period has expired.

It remains to be seen how effective Merck’s Zocor strategy will be relative to (1) the no-generic (i.e. “usual”) approach and (2) the authorized-generic approach, and whether it will be imitated by other innovators. In particular, analysts will be looking at whether low Zocor prices return the same profit to Merck as does Merck’s authorized generic simvastatin sold by Dr. Reddy’s. As pricing for Zocor will be likely be more variable than the pricing for the authorized generic, with little local-market overlap between the two, apples to apples comparisons will be difficult. Was Merck anticipating legislation limiting AGs, and did anticipation lead to their bold pricing experiment with Zocor? If they were, they haven’t said so publicly.

BioPartners failed to impress the CHMP with its biosimilar application for Alpheon, a biosimilar to Roferon A. Had Alpheon been approved, it would have marked the first non-GH biosimilar approval in Europe. This case demsnstrates some of the technical hurdles that must be cleared to receive EU approval. I would expect that similar issues would be raised by FDA for a Roferon-A biosimilar in the U.S. submitted via the 505(b)(2) path. If anything, FDA is likely to be stricter than the CHMP. I’ve followed the biosimilar story closely for the past three years and will continue to keep you updated on its evolution. If your firm sells recombinant products, there is no single issue more likely to change your firm’s long-term prospects than this one.