[Ip-health] Pharmalot: An Obvious Loss: Bristol-Myers Loses A Patent Case

Thirukumaran Balasubramaniam thiru at keionline.org
Thu Feb 14 06:17:18 PST 2013


An Obvious Loss: Bristol-Myers Loses A Patent Case

By Ed Silverman // February 12th, 2013 // 10:20 am

Patent battles are won and lost each day, but a fresh defeat for Bristol-Myers Squibb may prompt greater scrutiny of so-called composition of matter patents, which essentially refers to distinct compounds and/or mixtures of two or more substances and the extent to which they are unique.* In what appears to have taken some analysts by surprise, a federal court judge yesterday decided that the Bristol-Myers patent on the Baraclude hepatitis B treatment was invalid.

Why? The judge ruled that this particular patent is obvious, which is a way of saying the invention would have been obvious to someone ‘skilled in the art’ of designing and developing drugs (read the patent law here). In other words, there was nothing so unique about the composition of matter patent for Baraclude that Bristol-Myers could cite this as a reason for fending off generic rivals which, in this instance, is Teva Pharmaceuticals (read the ruling in two parts – here and here).

The potential significance, however, is not the specific fate surrounding Baraclude, which generated $1.4 billion worldwide sales last year. Rather, the ruling appears to raise questions about “the robustness of composition of matter patents on products with only minor modifications from older drugs,” Sanford Bernstein analyst Ronny Gal writes in a research note. “…The case has the potential to reverse well-accepted drug dogma.”

The courts have “consistently upheld patents covering the drug industry practice of lead optimization,” which refers to patents that emerge from building on a “known backbone and then testing small modifications until a drug is found,” he writes. “This patentability of new compounds has thus become a core asset of the drug industry and most of us in the financial industry model the expiry of CoM patent as the first potential date of generic entry for a given compound.”

Now, though, US District Court Judge Christopher Burke has called this reasoning into question, he continues, adding that he believes the reasoning was flawed. Why? Burke apparently assigned “a lot of predictabiility” to the process by which Bristol-Myers generated Baraclude, and the judge did not explain how this differed from what occurs elsewhere.

Of course, there are bound to be other interpretations of the ruling, which may be something of an outlier, anyway. In any event, Bristol-Myers plans to appeal. Nonetheless, Gal notes that “if the precedent is upheld, it could mean a host of other cases that previously would not have been given much thought come back into play.” Bottom line: all sorts of patent litigation could break out.

Meanwhile, Bristol-Myers (BMY) had been optmistic enough about the outcome of this case to have built Baraclude revenue into its forecasts. But given that the drug has been in decline and the patent expires in 2015, the sudden potential for diminished sales is not expected to require the drugmaker to revise its forecast, ISI Group analyst Mark Schoenebaum writes in a note. He estimated Baraclude would generate about $260 million in US sales this year.

For now, Teva (TEVA) can make plans to launch its generic copy, although the drugmaker must still wait for its abbreviated new drug application to be approved by the FDA.

[UPDATE: A Bristol-Myers spokeswoman sends us this: The drugmaker "is disappointed in the decision of the US District Court for the District of Delaware finding the composition of matter patent for Baraclude invalid, and believes the court’s decision is incorrect. The Court’s ruling applies only to the company’s patent rights to Baraclude in the US. The company will appeal the court’s decision and we are evaluating all other legal options to vigorously defend our intellectual property rights."]

*EDITOR’S NOTE: Initially, this story incorrectly described composition of matter patents.


Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)

thiru at keionline.org

Tel: +41 22 791 6727
Mobile: +41 76 508 0997

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