Microsoft word - ohly-genericsweb-omeprazole-0708.doc


Omeprazole is Over - Or Nearly So1
By D. Christopher Ohly

Originally published on Spicy IP and www.genericsweb.com

July 2008

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Introduction
(b) an inert subcoating which rapidly dissolves or disintegrates in water disposed on said core region, said Omeprazole is a proton pump inhibitor used to treat peptic subcoating comprising one or more layers comprising ulcers and gastro-esophogeal reflux disease (GERD). materials selected from the group consisting of tablet AstraZeneca received FDA approval to market the drug in excipients, film-forming compounds and alkaline the United States, in 1989, as Prilosec®. By 1999, AstraZeneca’s product became one of the most widely prescribed drugs of any kind in the world, with sales of some $6.1 billion annually.
(c) an enteric coating layer surrounding said subcoating layer, wherein the subcoating layer isolates the alkaline reacting core from the enteric coating layer such that the The AstraZeneca Patents
stability of the preparation is enhanced.4 In 1999 AstraZeneca commenced suit in the United States against four generic pharmaceutical manufacturers3, The Lawsuits
alleging that the filing of their Abbreviated New Drug Applications infringed as many as eight different patents The litigation against the first four generic manufacturers issued to claimed inventors and assigned to AstraZeneca. was eventually consolidated, and assigned by the US Among these patents were U.S. Patent Numbers Judicial Panel on Multi-District Litigation to a single US 4,786,505 and 4,853,230, both of which expired in October District Court Judge, in the Southern District of New York. 2001. The ‘505 patent claims, in relevant part, Discovery was commenced. Millions of pages of documents were produced by AstraZeneca, including millions of pages in warehouses overseas. By mid-2000, 1. An oral pharmaceutical preparation comprising (a) a core region comprising an effective amount of a In early 2000, four more generic pharmaceutical material selected from the group consisting of omeprazole manufacturers were sued. Included among these “Second plus an alkaline reacting compound, an alkaline Wave” defendants were Mylan Laboratories Inc. and Mylan omeprazole salt plus an alkaline reacting compound nd an Pharmaceuticals Inc. (together “Mylan”), and its supplier, Esteve Quimica, S .A. and Laboratorios Dr. Esteve, S .A. (together “Esteve”).5 Mylan filed its ANDA on May 17, 2000 (b) an inert subcoating which is soluble or rapidly disintegrating in water disposed on said core region, said subcoating comprising one or more layers of materials Initially, each of these new, Second Wave defendants was selected from among tablet excipients and polymeric film- sued in a separate judicial district. After all were served, AstraZeneca moved before the Multi-District Litigation Panel, to consolidate all of these new cases with those (c) an outer layer disposed on said subcoating comprising already underway in the First Wave. Some of the Second Wave Defendants resisted consolidation, and sought to have their case separately heard in the judicial districts in The similar ‘230 patent, subject to a terminal disclaimer, which AstraZeneca had initially sued them. These Second Wave Defendants opposed consolidation on grounds that, by the time they were sued, fact and expert witness 1. A pharmaceutical preparation comprising: discovery in the earlier consolidated actions was nearly complete, and the most critical hearing in a US patent (a) an alkaline reacting core comprising an acid-labile case, the claim construction or “Markman” hearing, was pharmaceutically active substance and an alkaline reacting imminent. These Second Wave Defendants asserted that, compound different from said active substance, an alkaline by AstraZeneca’s motion, they would need to become salt of an acid-labile pharmaceutically active substance, or intimately knowledgeable, almost immediately, about all an alkaline salt of an acid-labile pharmaceutically active that had happened in the previously consolidated actions substance and an alkaline reacting compound different within about six weeks. They asserted that it would be prejudicial to the newcomers to require that they conduct expert discovery, file dispositive motions, and prepare for the determinative hearing on claim construction in such a Fourier transform infrared spectroscopy (“ATR-FTIR”), ultraviolet fluorescence, energy dispersive x-ray analysis, confocal laser scanning microscopy (“CLSM”) and atomic AstraZeneca’s answer was to have two Waves, and to stay force microscopy. AstraZeneca offered testimony from all litigation in the Second Wave, with the exception of several experts, as well, continuing to rely principally on limited involvement in claim construction proceedings, until one, Dr. Davies, whose laboratory in England, Molecular Profiles, Ltd., conducted the tests whose results were employed by AstraZeneca at trial in their effort to prove The Judicial Panel on Multi-District Litigation consolidated the Second Wave Defendants with the First Wave, assigning all of the cases to the same US District Court In the middle of pre-trial proceedings against the Second Judge. Although views of the Second Wave Defendants Wave Defendants, the 30-month stay imposed by the about claim construction were solicited, the balance of the Hatch-Waxman Act expired. On June 2, 2003, the FDA litigation against the Second Wave Defendants was stayed, granted final approval to Mylan’s ANDA for its 10- and 20- pending completion of trial of the First Wave cases. Of mg. omeprazole products, and tentative approval to its 40- course, the trial court’s claim construction in the First Wave mg. product. Mylan began marketing its 10- and 20-mg. effectively became the “law of the case,” and governed the products “at risk,” in August 2003.11 AstraZeneca’s complaints against Mylan was thereafter amended, to include claims for damages. In June 2003, the US Food & Trial of most of the First Wave claims occurred before the Drug Administration approved AstraZeneca’s application to court, sitting without a jury, on fifty-two trial days between market Prilosec®, its own omeprazole product, as an over- December 6, 2001, and June 13, 2002. On October 16, the-counter product in 20 mg. doses, with three years of 2002, more than two years after the litigation against the market exclusivity for its OTC product.12 Second Wave Defendants was commenced, the District Court issued its rulings on the First Wave cases, in a 175 The Trial Court Decision
page opinion.6 Only Kudco was found not to infringe the On May 31, 2007, following a 42-day long bench trial ‘505 and ‘230 patents.7 Andrx and Genpharm, under FDA between April 3 and June 14, 2006, at which the trial court rules applicable at that time, shared 180-day exclusivity, received testimony from 18 expert witnesses, the court although both lost to Astra. Both agreed to give up, to the entered its opinion on the Second Wave omeprazole world, their respective rights to 180-day exclusivity, in cases, consuming some 254 pages.13 Mylan's omeprazole exchange for a 30 percent share in Kudco's profits, which products “are oral pharmaceutical preparations in the form they split. Kudco was thus enabled to market its 10 mg and of capsules filled with omeprazole-containing pellets,” that 20 mg extended-release omeprazole capsules.8 It began to are “comprised of a sugar seed, a drug layer, two market its generic omeprazole products in December sublayers, and an enteric coating.”14 Although AstraZeneca contended, at trial, that Mylan’s formulation infringed the ‘505 and ‘230 patents for other reasons rejected by the trial Only after the First Wave proceedings concluded, following court, the principal dispute arose from AstraZeneca’s the trial court’s October 2002 opinion, did the proceedings contention that the “core region,” which is prepared by in the Second Wave begin. Once again, millions of pages Mylan “by spraying a suspension of [purified water], of documents were produced by AstraZeneca, including omeprazole, HPMC, and [micronized] Microace® talc onto transcripts of all of the depositions taken in the First Wave, sugar spheres,”15 contained an “effective amount of an and the transcript of proceedings in the First Wave trial. “alkaline reacting compound,”16 and, in particular, that Interrogatories were propounded and, after many hearings “carbonates in Mylan/Esteve's Microace® talc and HPMC” before a special master appointed by the Court to deal with were an “ARC” that was present in an “effective amount” in a plethora of discovery disputes The Second Wave Defendants noted their own depositions10 and focused their defenses, in light of the claim constructions announced in The trial court noted that “Talc is a naturally occurring the October 2002 First Wave trial decision. New expert material, which is comprised of purified, hydrated, witnesses were retained by the Second Wave Defendants, magnesium silicate,” that “[d]ifferent grades or types of talc to deal with the myriad issues raised by the First Wave can have different properties and different pHs,” and that opinion, including experts in attenuated total reflectance the “Handbook of Pharmaceutical Excipients lists a range Federal Circuit issued its opinion affirming the trial courts’ of pH values for talc, from an acidic pH of 6.5 to a highly alkaline pH of 10.” It noted that “Talc is known to contain materials such as calcium carbonate and magnesium Agreeing with the District Court that AstraZeneca had not carbonate.” Mylan’s “specifications for Microace® talc met its burden of proving Mylan’s infringement of either the require that it have a pH of not less than 7.0.” 18 ‘505 or the ‘230 patents by a preponderance of the evidence, the court noted that “[a]fter weighing the In an effort to prove that Mylan’s talc is an “ARC,” despite competing evidence, the court found that Astra failed to AstraZeneca’s description of talc, in the ‘505 patent prove the presence of carbonates in the talc of the accused specification, as an “ordinary excipient,” rather than an products.” Such a determination, the Court of Appeals said, “ARC,”19 AstraZeneca relied upon ATR-FTIR and energy “is based on the district court’s fact findings and cannot be dispersive x-ray tests performed by Molecular Profiles, overturned unless we find them to be clearly erroneous, under the supervision of Dr. Davies. Dr. Davies testified and we do not.” AstraZeneca AB, et al. v. Mylan that the ATR-FTIR tests showed peaks that were Laboratories, Inc., et al., Slip. Op. at 8. “diagnostic of carbonates present within talc,” and that the x-ray analysis “indicate[d] that calcium and magnesium are Curiously, after arguing to the Federal Circuit repeatedly that the District Judge clearly understood the burdens of proof imposed on the litigants in both the First and Second “In contrast to Dr. Davies's results,” the trial court said, Waves, in it arguments supporting its appeal from the “both Esteve and the supplier of Microace® talc, Nippon, same trial court’s ruling in Mylan’s favor, AstraZeneca tested batches of Microace® talc for the presence of argued that the judgment in Mylan’s favor “is flawed carbonates and found no detectable amount of carbonate.” because the district court applied the wrong legal standard.” According to Astra, the court said, the trial court “misapplied the legal standard by requiring ‘conclusive This result does not conclusively establish that carbonate is evidence’ that carbonates were present in the talc, rather not present, as carbonate could be present in an amount than preponderant evidence.” Rejecting these contentions, below the level of detection; however, it does suggest that the Court of Appeals stated that a “plain reading of the if there is any carbonate present, it is only in very small district court’s decision … reveals that the district judge knew, understood, and applied the proper standard of proof.” Indeed, the Court of Appeals noted, the Second Thus, the Court finds that the empirical evidence of the presence of carbonates in the talc used in Myan/Esteve's Plaintiffs bear the burden to prove their claims of infringement by a preponderance of the evidence. A As suggested above, Mylan prevailed at trial. The court preponderance of the evidence means such evidence entered a judgment in Mylan’s favor, concluding that which, when considered and compared with that opposed Mylan’s product “does not meet the limitation of claim 1(a),” to it, produces a belief that what is sought to be proved is and “that Plaintiffs have failed to prove by a preponderance more likely true than not. The fact that section 271(e)(2) of the evidence that Mylan/Esteve infringes, either literally creates an artificial act of infringement does not lessen that or under the doctrine of equivalents, any of the claim 1 of Id. Having found no clear error in the district court’s The Fed Circuit Decision
decision that AstraZeneca failed to prove that Mylan’s products contain non-negligible amounts of carbonates, AstraZeneca nevertheless appealed. The Court of Appeals and that AstraZeneca thus failed to show the presence of for the Federal Circuit heard oral argument on Astra’s an ARC, the Court of Appeals did not address Astra’s appeal from the trial court’s judgment in Mylan’s favor, in remaining contentions. It affirmed the trial court’s decision. mid-May 2008. At the same time, it heard oral argument on the appeals taken by Impax and Apotex from the judgments entered against them. On June 10, 2008, the Conclusion
The decision of the Court of Appeals in the Mylan case does not represent a major departure from any prior holding. It does not establish any new principle, or set any precedent. It simply ends a case won by Mylan after protracted litigation. Not all Hatch-Waxman litigation, and certainly not all patent litigation, in the United States takes as long to resolve. The lessons, to be learned have more to do with strategy and tactics, or at least endurance, than with any significant legal principles. The costs of litigation for Mylan were undoubtedly great. The legal costs for AstraZeneca were certainly even larger. Nevertheless, for both, the economic rewards were far greater. Almost exactly eight years after AstraZeneca commenced suit against Mylan, and nearly five years after Mylan decided to market its 10- and 20-mg. omeprazole products “at risk,” Mylan’s decision was vindicated by the Court of Appeals and, at least for Mylan, the omeprazole case is over. The Federal Circuit has yet to rule on the appeals taken by Apotex and Impax. At oral argument, attended by the author, the panel questioned counsel for AstraZeneca and Impax at length about the “public use” of technology described in the ‘505 and ‘230 patents, during the long clinical studies conducted by AstraZeneca. The forthcoming decision of the Court of Appeals, resolving the appeals in the Impax and Apotex cases, will be far more interesting and will likely bring the long history of omeprazole litigation to a final conclusion … maybe. 1 By D. Christopher Ohly. The author is a partner in Schiff Hardin, LLP. The views expressed in this article are those of the authors alone and do not necessarily reflect the views of Schiff Hardin, LLP, or any of its past, present or future clients, or those of any other person or party. 2 Prilosec sales reached their peak globally in 2000. By 2000, global Prilosec sales were $6.1 billion, accounting for 35% of all product sales in this drug class.
http://www.panopharma.com/world_pharma_sales _2000.htm. Sales remained constant in 2001. http://www.panopharma.com/world _pharma_sales_2001.htm.
By 2002, Prilosec sales dropped to $5.2 billion worldwide, as a result of “competition mentioned above and AstraZeneca's promotion of its follow-up product,
Nexium (esomeprazole). http://www.panopharma.com/ world_pharma_sales_2002.htm. By 2005, both Prilosec® and omeprazole were among the top 100 selling
drugs in the United States, with AstraZeneca’s follow-on isomeric replacement, Nexium®, in the top 30. See http://www.rxlist.com/script/main
/art.asp?articlekey=79509. By 2007, Nexium® was the second largest selling drug in the United States, with sales of $4.355 billion; prescription Prilosec® still
accounted for another $174 million in sales (the 171st largest selling product). See http://www.drugs.com/top200.html. By 2007, generic omeprazole was the 24th
most prescribed drug in the United States, and the 10th largest selling generic pharmaceutical product, with sales of more than $835 million, a 30% increase over
2006. See http://drugtopics.modernmedicine .com/drugtopics/data/articlestandard//drugtopics/ 072008/491181/article.pdf; and
http://drugtopics.modernmedicine.com/drugtopics/ data/articlestandard//drugtopics /102008/500218/article.pdf.
At their peak, at the beginning of AstraZeneca’s litigation against Mylan and the other Second Wave Defendants, global sales of Prilosec were occurring at the
rate of $696,347 per hour, 24 hours per day, 365 days per year. At the end of 2001, AstraZeneca reported total sales of $16 billion and operating profits before
extraordinary items, of $4.1 billion, or approximately 25%. See sec.edgar-online.com/2003/02/07/0000950103-03-000557/Section4.asp. Assuming that the same
profit margins were earned on its sales of Prilosec, introduced to market may years earlier, in 2001 AstraZeneca would have had operating profits of $174,086
per hour, every hour of the year. Those operating profits, of course, would have been calculated after deduction of all legal expenses. The army of lawyers
employed by AstraZeneca to pursue litigation against generic manufacturers surely cost less than even this amount.
3 The first four generic manufacturers sued were Genpharm, Cheminor, Andrx and Kudco.
4 In the context of the ‘505 and ‘230 patents, the trial court found that the term “inert subcoating” in both patents required “a coating or covering that is physically
on, or in contact with, and conforms to the contours of the core region,” that is “substantially continuous,” and that is “pharmaceutically, chemically, and
pharmacologically inactive.” It construed the term “to require that the subcoating be chemically, pharmaceutically, and pharmacologically inactive such that the
subcoating does not adversely affect the properties of the active ingredient or the enteric coating material in the formulation,” adding that “A person of ordinary
skill reviewing the ‘505 and ‘230 patent specifications would understand that the invention is a stable formulation. That requires a subcoating that protects the
omeprazole and maintains the integrity of the enteric coating. … The meaning of “inert” flows directly from the invention described in the specification—the
subcoating layer cannot adversely affect the properties of the omeprazole or the enteric coating. The patent specification provides that “not adversely affecting . .
. the enteric coating” means that the formulation retains gastric acid resistance.”
Although some defendants in the First Wave of the Omeprazole litigation argued over the meaning of the term “inert subcoating,” none clearly argued to the trial court that the claims of the ‘230 patent, as written, were not enabled and simply would not work, at least to the extent that they contemplated an “inert subcoating” comprised of “alkaline compounds” (not alkaline reacting compounds), because such a “subcoating” would react chemically with known “enteric coatings” disposed on such “subcoatings.” The court defined an enteric-coating to be made of a “material is a polymer that is insoluble in acid media but soluble in neutral to alkaline media,” and that “resists breakdown in the stomach.” The court noted that examples of enteric coatings may be found in the ‘505 patent and “include hydoxypropyl methylcellulose phthalate and Eudragit L-100 brand enteric coating, which is a methacrylic co-polymer.” These materials, like other enteric coating materials that are “soluble in … alkaline media,” would, of course, ordinarily be expected to react in the formulation process, especially a spray coating process that employs water as a solvent, with a subcoating made of “alkaline compounds.” 5 Also sued in the Second Wave were Apotex Corp., Apotex Inc., and Torpharm Inc. (together “Apotex”), Lek Pharmaceutical and Chemical Company D.D. and Lek USA, Inc. (together “Lek”), Eon Pharmaceuticals (“Eon”) and Impax Laboratories, Inc. (“Impax”) (collectively "Second Wave Defendants.” ) Eon, like Lek, was acquired by Sandoz. Eventually, Eon dropped its Paragraph IV claims, and litigation against Eon was terminated. Eventually, AstraZeneca sued other manufacturers in a Third Wave. In April 2008, as part of its settlement with Ranbaxy of Hatch-Waxman litigation over AstraZeneca’s esomeprazole product, Nexium®, AstraZeneca agreed to permit Ranbaxy to market generic omeprazole products in the United States. See AstraZeneca Settles Ranbaxy Patent Suit, http://online.wsj.com/article/SB120824391214015579 .html?mod=googlenews_wsj. 6 Astra Aktiebolag, et al., v. Andrx Pharmaceuticals, Inc., 222 F.Supp. 423 (S.D.N.Y. 2002), aff’d 84 Fed.Appx. 76, 2003 WL 22928641 (C.A.F.C. 2003). 7 AstraZeneca’s claims against Andrx under another patent (US Patent No. 6,013, 281), were resolved against AstraZeneca at a later time. See Recognizing a Novel Characteristic After the Fact Doesn’t Make a Novel Composition New Again, http://patentbaristas.com/archives/ 2007/04/24/recognizing-a-novel-characteristic-after-the-fact-doesnt-make-a-known-composition-new-again/. 8 See Retail Pharmacy May be Winner in Generic Prilosec Decision, http://findarticles.com/p /articles/mi_m3374/is_16_24/ai_94673269 (November 18, 2002); and Commercialization Agreement, dated October 30, 2002, Andrx Pharmaceuticals, Inc. 2002 Annual Report, Ex. 10.67, http://sec.edgar-online.com/2003/03/31/0000950144-03-004118/Section33.asp. 9 http://www.orangebookblog.com/2006/12/pharmacies_sue_.html 10 By way of example, the Second Wave Defendants took their own depositions of the inventors named in the ‘505 and ‘230 patents, as well as the deposition of a Japanese pharmaceutical librarian (in Tokyo), to whose affidavit - proffered testimony AstraZeneca would not stipulate, and several depositions of AstraZeneca’s reticent corporate designee. 11 Lek Pharmaceuticals, also victorious after the Second Wave trial, began marketing its FDA approved 10- and 20-mg. omeprazole products “at risk,” on August 19, 2003. AstraZeneca did not appeal the trial court’s judgment of non-infringement in Lek’s favor. 12 http://www.fda.gov/bbs/topics/news/2003/NEW00916.html. 13 In re Omeprazole Patent Litigation, 490 F.Supp.2d 381 (S.D.N.Y. 2007), aff’d as to Mylan No. 2007-1476 (C.A.F.C. June 10, 2008). 14 Id., 490 F.Supp.2d at 425. 15 Id. 16 According to the trial court, an “‘alkaline reacting compound’ (“ARC”) is ‘(1) a pharmaceutically acceptable alkaline, or basic, substance having a pH greater than 7 that (2) stabilizes the omeprazole or other acid labile compound by (3) reacting to create a micro-pH of not less than 7 around the particles of omeprazole or other acid labile compound.’ Astra v. Andrx, 222 F.Supp.2d at 453. The term ‘effective amount’ ‘applies to both omeprazole and the ARC and requires an amount of each substance such that the combination of omeprazole plus the ARC meets the stated goal of the invention of stabilizing the omeprazole.’ id. at 463.” Id., 490 F.Supp.2d at 427 - 28. 17 As noted above, the ‘505 patent claimed “An oral pharmaceutical preparation comprising (a) a core region comprising an effective amount of . . omeprazole plus an alkaline reacting compound.; (b) an inert subcoating which is soluble or rapidly disintegrating . ; and (c) an outer layer . comprising an enteric coating.” 18 Id., 490 F.Supp.2d at 428 - 29. 19 Id., 490 F. Supp. 2d at 430. See ’505 patent, col.4 ll.54-56, col.5 ll.16-18; ’230 patent col.9 ll.48-50, col.10 ll.10-12. 20 Id., 490 F. Supp. 2d at 429 - 30. 21 Id., 490 F. Supp. 2d at 447 - 48. About the Author D. Christopher Ohly has been a trial lawyer for more than 30 years. A former Assistant U.S. Attorney, Mr. Ohly now concentrates his practice in intellectual property, including Hatch-Waxman generic pharmaceutical litigation, as well as complex business litigation. Mr. Ohly has argued more than 25 cases in federal appellate courts in several judicial circuits, as well as a number of others in state appellate courts, and he has participated in controversies before the U.S. Supreme Court.
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