Special Guest Post by Beau H. Miller, Jefferies
This article was originally published as part of research issued by the Jefferies Biotechnology Equity Research group.
Since the Amgen v. Regeneron ruling that resulted in Judge Robinson of the District Court of Delaware granting a permanent injunction removing Regeneron’s Praluent from the market (pending appeal), there have been a number of media and twitter commentaries providing their insights on the case.
These reactions have overall been of the opinion that it is a “shocking” precedent for a judge to remove an FDA-approved drug from the market for patent infringement – a remedy which patent owners, even pharmaceutical manufacturers, are justly able to obtain under the circumstances outlined in eBay v. MercExchange.
Given this, there are a few facts that have been overlooked in these reviews that lead us to disagree with some of the conclusions they reach, and also which led us to anticipate an injunction in this case.
First and foremost, the approval and marketing of Praluent and Repatha began while litigation surrounding the infringement of Amgen’s patents by Regeneron’s Praluent was still ongoing. Regeneron actively chose to launch Praluent at risk before the completion of the jury trial and injunction hearing. This was, therefore, not a case where a product with a long-standing market position was subsequently taken off, but rather one where a market position began over the course of litigation as per the calculated business decision of the defendants.
In fact, Amgen filed its lawsuit alleging infringement in October 2014, two months after Regeneron filed their BLA, well in advance of Praluent’s launch – giving adequate notice informing Regeneron of the risks accompanied by launching a potentially infringing product. Amgen obtained U.S. approval for Repatha in August 2015 and Praluent in July 2015 – but only after Regeneron paid $67M to purchase a priority review voucher to expedite Praluent’s review.
During trial, it was also negotiated that the parties would move quickly to a permanent injunction phase, should Amgen’s patents be infringed and valid, if Amgen agreed to forgo a decision on its preliminary injunction motion, which could have prevented Regeneron from launching until after the trial was completed. Preliminary injunctions are notoriously harder to obtain and may have been fruitless for Amgen, only delaying trial and extending the time Praluent had at risk market access. If a preliminary injunction was a requirement to prevent a defendant’s market entry, but a plaintiff would not be able to remove an at risk defendant after trial if they were unsuccessful in obtaining a preliminary injunction (e.g., due to a pending instituted IPR initiated by the defendant), this would create a Catch-22 in which an injunction could systematically be avoided. A preliminary injunction is not required to obtain a permanent injunction. It was also clear that Amgen intended to pursue a permanent injunction very early on in the trial.
This differs from other notable pharmaceutical patent cases throughout the past year in which patent owners did not pursue an injunction and sought an ongoing royalty as equitable relief instead. However, the facts of these cases differed significantly from Amgen v. Regeneron. In two cases involving Gilead and Merck, both of which involved Merck (and its partners/subsidiaries) asserting patents against Gilead’s sale of Sovaldi and Harvoni, would likely have not achieved an injunction if it were pursued, because 1) the patents did not cover Merck’s own comparable product, Zepatier, and 2) Zepatier was not available until after trial began, leaving Gilead’s products as the only available therapy of its class for two years. Removing the most commonly prescribed and only drug available that had also already been used to safely cure millions of Hepatitis C patients, a deadly and costly disease, would have been a clear harm to the public. This is in contrast to Repatha and Praluent, which have only been used to treat a handful of patients to-date with no dominant market player, and both therapies have yet unproven long-term cardiovascular health benefits, likely only incremental on top of the current standard-of-care of less-expensive, generic statins.
Under the eBay factors, Amgen’s loss of long-term market share and pricing power due to a competing, undifferentiated product covered by patents for their own invention seems adequate to demonstrate irreparable harm for which compensation (even a high royalty) would substantially diminish their anticipated return on investment. Furthermore, the fact that this is between two large, multi-product companies does not seem to push the balance of hardships significantly in any one direction, given the small proportion of overall sales the products contribute to each company’s bottom line (~4% of Regeneron’s 2016 annual estimated revenue). Amgen also has the manufacturing capacity and negotiating leverage to ultimately cover and treat all patients with its equally efficacious drug.
Given the commentary during the hearing and in the decision, it seems that whether or not an injunction should be granted hinged on the public interest, and if the degree to which it is disserved outweighs the incentives of the patent system. As acknowledged by Judge Robinson in her decision, increased choice for pharmaceuticals will always serve the public, but this is nearly true in all situations for live-saving products, pharmaceutical or otherwise (see WBIP v. Koehler involving low-emission houseboat generators). A focused analysis of the differing benefits of these two competing cholesterol-lowering medications, where one product is also offered at a lower dose (Praluent), and how that outweighs the benefit of the patent system rewarding those who bring drugs to market in the first place, may have been beneficial in this case. And indeed, the appeals court ought to address whether differences between choices of competing products, besides increased competition – which Judge Robinson chose not to address, instead relying on other factors – should be taken into consideration on a circumstantial basis when examining the impact to the public. Even so, in this case, the lower dosing option may not be significantly meaningful or differentiated such that it could shift the overall balance of factors against an injunction.
Now, this does not go without saying that there are situations in which a pharmaceutical should not be removed from the market, and likely would not under proper analysis in light of all of the eBay factors, including the public interest. Examples that could be taken into consideration include:
- The defendant had a market position prior to litigation or the patent it infringes were granted after it was already on the market
- The patent owner does not have its own competing product on the market, or its own product is not covered by the patents it is asserting
- The defendant is a small and/or single-product company
- The defendant’s product provides a clinical, safety, delivery, or tolerability benefit that is meaningfully different than the plaintiff’s product
- The disease is of a significant severity or unmet need not served by the plaintiff’s product options (e.g., if approved for a different indication or disease population)
- The plaintiff is unable to manufacture enough product to serve all patients
A sweeping decision granting infringing competing pharmaceutical products compulsory market access simply because it increases competition, even though benefiting patients through lower cost, is certainly a detriment to pharmaceutical development and the goals of the patent system. Allowing competitors to simply develop a near-identical drug that was technically invented by another, while evading regulatory exclusivity and avoiding the repercussions of a patent owner’s attempt to exclude them from the market, poses broad policy concerns. Therefore, other factors must also be considered when examining how the benefits of a life-saving product outweigh those of the patent system.
Patents are meant to promote competition through innovation of products that improve upon previous inventions, not ones that are substantially identical. The view of this permanent injunction’s consequences of reduced competition is near-sighted, and is not an unintended consequence of this ruling, but rather is intended. If Amgen knew they would be competing with a product of their own invention, they may not have even developed their own product at all, a disservice to patients in and of itself. Furthermore, products like the Medicines Company’s inclisiran, which targets the same biological pathway as Repatha but has a novel mechanism of action not covered by Amgen’s patents, demonstrate the ‘design-around’ improvements that the patent system seeks to promote.
The Amgen v. Regeneron ruling is a win for a patent system that enables truly innovative pharmaceutical manufacturers to assert their patent right to exclude others under reasonable circumstances, without risk of losing their investment to infringing products. While there are obvious impacts to patients, which are worthy of ethical exploration, these may not always necessarily outweigh the overall incentives patents create. In a world of increasingly complex biologics, in which non-identical, yet similar, iterations have equal benefit, a robust patent system is necessary to promote innovation and competition long-term – either in the form of biosimilars that can compete later on or pioneers that can develop new therapies that improve upon current treatments.
Per the author: this article is not intended to serve as legal advice. The content of this article is not guaranteed to be accurate, is for informational purposes only, and does not establish an attorney-client relationship.