Monthly Archives: September 2015

Evergreening and Nucynta Pain Medication

As we announced on this blog a few days ago, we’re making draft inter partes review (IPR) documents available for anyone who wishes to use them to challenge patents for certain drugs that we find overpriced and protected by seemingly invalid patents.

An IPR is an administrative procedure at the United States Patent and Trademark Office (USPTO) to challenge the validity of a patent. The Patent Trials & Appeals Board (PTAB) is the particular administrative body at the USPTO that handles the review of IPRs. We now know from a recent ruling that anyone can file an IPR – the filer’s motives, intent, status as a competitor, lack of altruism and all the other specious arguments raised by pharma are simply irrelevant.   Now we know “anyone” actually means anyone.

The first draft IPR document we’re releasing is for Nucynta and Nucynta ER — medications used in the treatment of chronic pain that are currently marketed by DepoMed, Inc. It’s available here.

Nucynta was approved in 2008, and the “extended release” version was approved in 2011. Today, these medications cost about $7,000 per year — up from less than $3,000 when the medication was first launched.

That’s a 133% increase in seven years – at a time when inflation’s been running about 2% per year.

Depomed’s Business Strategy

Depomed’s business strategy is to buy lesser-known drugs and then massively increase the price of those drugs immediately after acquisition.

When Depomed bought the rights to Nucynta and Nucynta ER in 2015 from Johnson & Johnson, the first thing the company did was raise the price by 44%.

Pharmaceutical companies love to argue that high drug prices are critical to support research. But of the five medications currently offered by Depomed, only one was developed internally.

According to the company’s 2014 Annual Report, Depomed slashed spending on R&D from $15m in 2012 to $7m in 2014 — while revenues have gone up from $90m to $390m.

Revenues up, research down. That’s not the way pharmaceutical companies say it’s supposed to work, but from a business perspective, it makes a lot of sense: why spend time and money on tedious research to invent something new to benefit the public when you can buy up old drugs, jack up the prices, and pocket the profits?

Nucynta’s Patent Protection

The FDA’s Orange Book is a list of approved drugs. The information in the database includes which patents supposedly protect each drug and when they expire.

Nucynta is protected by three Orange Book patents. Nucynta ER (the extended release version) is protected by eight Orange Book patents.

The longest-dated patent currently claimed to cover Nucynta expires in June 2025 and is designated as US Patent No. 7,994,364 (the ‘364 patent).  The ‘364 patent is probably invalid. There is one patent with a later expiration date than the ‘364 that covers Nucynta ER, but we’ll discuss that in a future post.

As discussed in the draft IPR petition attached, inconsistent statements were made during the prosecution of the ‘364 patent in the US and in Europe with respect to the active ingredient in Nucynta and Nucynta ER. We caught this, had experiments conducted, and confirmed this deception. It will now likely come back to bite DepoMed.

Draft IPR

The draft petition is available in Word format here and a PDF version is available here. Feel free to use this free of charge for any purpose.

If you’re so inclined, make comments in the comments section below.

You can also send comments to us at info@nxn.com with “Nucynta” in the subject line.

Or you can create your own community to deal with this issue and leave us out of it.

If you’re interested in filing the IPR petition, we can make available two expert declarations and related experimental data in support of the petition.

If you’re a law firm or expert that would like to help put an end to evergreening and other bullshit practices like buying old drugs and implementing huge price increases, we are happy to connect you with interested filers.

The ideal filer would be a charitable organization, law school, or consumer-focused action group — but perhaps someone will come up with other ideas.

To be clear—I do not hold a long or short position in Depomed. I’m not asking for – nor will I accept – compensation from anyone for this petition or related declarations: it’s all now public property.

I’m hoping that additional IPR filings will help stop the US Patent Office from continuing to over-indulge the pharmaceutical industry — at the expense of patients and the American taxpayers.

If the United States Patent Office would do its job and stop bending its knee to pharma by permitting evergreening and holding pharma IPRs to higher legal standards than other technologies, drug prices would fall. As politicians look for ways to lower drug prices, let’s hope they keep this in mind and encourage the US patent office and the PTAB to do its job.

Our guess is that few Americans are familiar with the USPTO, and even fewer have heard of the PTAB—but perhaps as more become familiar with evergreening they will reach out and let politicians, the USPTO, and the PTAB know they are not fans of evergreening, and that it needs to stop.

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September 29th, 2015|Categories: Pharma|Tags: , |1 Comment

Evergreening, Altruism and Crowd Sourcing

Drug prices in America are out of control.

In one recent outrageous example, Turing Pharmaceuticals acquired the rights to Daraprim, a 62-year-old drug used to treat toxoplasmosis—a common infection that has serious consequences for people with weakened immune systems. Overnight the price was raised from $13.50 a pill to $750 a pill – an increase of 5,000%. The company was forced to back down after an article in the NYTimes led to a huge public outcry.

Beating Inflation (By Miles)

Barron’s shares a Credit Suisse report that shows branded drug prices are going up at a rate of 11-12% a year — at a time when inflation is running under 2% per year.

Some companies, such as Eli Lilly and Pfizer, have averaged one-year price increases of over 17%.

That 9-15% difference between the inflation rate and the rate of increase in drug prices translates into billions of dollars of profits for pharmaceutical companies. This price gouging also puts many drugs out of reach for people who desperately need them, and drives up overall healthcare costs for everyone. Playing by the rules, drug companies can charge whatever they like—it is when they become beneficiaries of a massive corporate welfare program and misguided policies of an obscure government agency (the US patent office) that most people have never heard of that it raises serous issues.

There are many reasons for the big increases in drug prices. They include:

  • “Niche” drugs whose market is too small to support more than one manufacturer. That one manufacturer may feel free to charge astronomical prices since no one is interested in competing with them. That was the case with Daraprim.
  • By law Medicare, the largest purchaser of drugs in the world’s largest market, can’t negotiate prices with drug companies. An article in the Wall Street Journal claims drug costs could be reduced by $16 billion per year by changing this. Medicare pays double what health care systems in other countries pay for the same drugs.
  • “Evergreening,” a process whereby drug companies extend patent protection for drugs from the statutory (and reasonable) 10 to 20 years to 30 years or more by getting new patents for “innovations” that aren’t at all innovative.

I don’t have a solution to the first two problems. Write your Congressperson. But I do have a solution for “evergreening” — one that could save consumers billions of dollars a year.

Stop Evergreening

The solution is very simple: get the US Patent and Trademark Office (USPTO) to do its job. Stop treating pharmaceutical patents as a privileged class of technology to which the usual rules don’t apply.

By law, inventions are supposed to be “novel” – new – and “not obvious to one skilled in the art” in order to qualify for a patent.

For some reason, the same “novelty” and “obviousness” standards that apply to other fields of endeavor don’t seem to apply to drug patents.

In a practice the drug companies call “life cycle management” (and everyone else calls “evergreening”), pharmaceutical companies are getting patents on highly questionable “innovations.” It is not so much that they are “incremental” (which the patent law promotes) as they are simply not patentable for various reasons.

These bogus “new” patents can extend a drug’s patent protection by a decade or more – allowing drug manufacturers to charge legally sanctioned monopoly prices far longer than deserved.

The patent office has granted patents where the only “novelty” is:

  • siliconized rubber bottle stoppers
  • micro tablets (rather than the full-size versions or granulates)
  • using computers to manage drug distribution

There are many more examples and I will write on this topic soon. Perhaps we’ll give an annual award for the most ridiculous pharma patents.

You can tell when you’re getting into evergreening territory just by looking at the patent. Evergreening patents will typically have the following attributes:

  • more than 100 references on the cover page
  • a four (or greater) year gap between the expiration date of the patent and the previous patents listed with the drug in the FDA’s “Orange Book” of approved drugs
  • a convoluted prosecution history — typically the patent was prosecuted by some mega law firm that simply wore down the patent examiner
  • multiple uses of the phrase “surprising result” or “unexpected result” in the patent specification

When these four attributes are present, it’s likely that there’s nothing really patent-worthy here. It’s just a case of evergreening — extending the patent monopoly to hold generic manufacturers at bay.

The algorithm we use to analyze the Orange Book patents is a bit more complicated, but if you don’t have time to build and test an algorithm, you’d do well just looking at these four attributes.

One interesting example is Celgene’s Revlimid, a drug used to treat anemia and multiple myeloma. This drug has gone up in price from $18,000 a year in 2005 to almost $200,000 a year in 2015. This 1,000%+ increase has resulted in Medicare Part D costs for Revlimid in 2014 of $1.35 billion – for treating approximately 25,000 patients.

Revlimid is based on thalidomide, a drug that’s been around since the 1950s. An article in SeekingAlpha points out:

…examiners of Celgene’s ‘517 patent should have found it obvious that a closely-related chemical analog like lenalidomide would reasonably exhibit similar properties and therefore should not have issued this core Revlimid® patent upon which all of the Revlimid® patents are based. There has been nothing unexpected or unanticipated about the effects or uses of the pharmaceutical compounds claimed by Celgene over the precedent scientific literature.

In May, the European Patent Office revoked one of Celgene’s patents on Revlimid. The USPTO should follow its lead.

Reducing Drug Prices—Get the USPTO to do its Job

Two simple steps by the US patent office would dramatically reduce drug prices:

Step One:

The US patent office should stop allowing evergreen patents that turn what should be 10- to 20-year monopolies into 30+ year monopolies. This will have a medium- term impact on prices, as generics become available more quickly, and the associated savings would be considerable.

Step Two:

The US patent office (technically the Patent Trial and Appeal Board or PTAB) should stop giving ridiculous deference to pharma patents in Inter Partes Review (IPR) proceedings.

Inter Partes Review

An IPR is an administrative procedure for challenging the validity of a US patent. The procedure is conducted by the PTAB.

A study from DLA Piper shows the preferential treatment the pharmaceutical industry is getting.

When filing an IPR, the first hurdle is getting the PTAB to agree to institute a proceeding. In all other technology areas, the institution rate is approximately 80%. For pharmaceutical patents it’s only 46%. In other words, non-pharmaceutical patents are nearly twice as likely to be subjected to an IPR. Is it that pharma patents are somehow of higher quality than other patents? According to a 2009 European Patent Office study, it is likely just the opposite is true and that pharma patents are generally of lower quality given European Patent Office invalidation rates in proceedings similar to US IPRs.

If the Director of the US patent office would take her thumb off the scale in favor of pharma patents — or direct whoever owns the thumb to remove it — this would have a near-term impact, accelerating generic entry and lowering drug prices.

According to the Congressional Budget Office, the cost of excluding pharma patents from IPRs (at least in part what the US patent office is now doing) will exceed $1.3 billion over the next 10 years. According to the Center for Economic and Policy Research this cost will exceed $200 billion over the next 20 years.

That windfall will be paid by patients and taxpayers to pharma companies – unless we do something about it.

Can a “Troll” be Altruistic?

As I thought about this more, it became apparent to me that I was probably the wrong person to be the face of this effort – particularly on Step Two. Drug companies constantly remind me that I am a “patent troll” and lacking altruistic motives.

But it’s because of the money I’ve made from patent monetization that I can afford to be altruistic (at times) – and to offer others the resources to fight the pharma industry. I truly believe that it is outrageous that pharmaceutical companies get away with misusing the patent system to gouge consumers, and I want to help fix this.

Here is how it will work.

I’ll make publically available substantially final draft versions of IPR petitions for pharma patents that I think are invalid. My hope is that, via crowd-sourcing or some other way, people far smarter than me will comment on the petitions and make them even better.

After the petitions are polished and suitable for hanging in The Louvre of IPR petitions, perhaps some person with altruistic motives will file them or maybe a person that is mean to puppies will file them.

I don’t care who files. It could be a law school student group, a charitable organization, a health insurance company, a consumer protection group, or a government entity sick of seeing and outrageous example of corporate welfare that results in harm to patients and taxpayers.

To help whoever takes on the task, I’ve found a number of law firms and experts that have offered fee arrangements that are a fraction of normal market pricing. If you email info@nxn.com, this information along with additional materials you will need will be provided. If there are any law firms or experts who are interested in helping out in this effort, happy to make introductions.

Unfortunately, I can’t pay the legal or expert fees or that would make me part of the IPR as a “real party in interest,” and then we’d be back to dealing with the lack of altruism rubbish from these corporate welfare-benefiting thieves that engage in the most outrageous activities.

The first draft IPR should be up on the blog early next week. Enjoy.

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September 25th, 2015|Categories: featured, Pharma|0 Comments