Should be of particular interest to India, given that this involves Actos, an anti-diabetic drug by Takeda Chem Industries, Japan’s leading pharma company. Bloomberg recently reported that “Actos” overtook GlaxoSmithKline Plc’s “Avandia” as the world’s top-selling diabetes medicine after the Glaxo drug was linked in a May 21 report to a higher heart attack risk.
The Orange Book blog captures the essence of this ruling quite well:
“In an opinion released today, the Federal Circuit affirmed the validity of Takeda’s U.S. Patent No. 4,687,777, which covers pioglitazone HCl (among other compounds). Pioglitazone HCl is the active ingredient in Actos, Takeda’s blockbuster drug for the treatment of diabetes. The decision is particularly important because the generic challenger, Alphapharm, had argued on appeal that the Supreme Court’s recent decision in KSR v. Teleflex, as well as the Federal Circuit’s recent decision in Pfizer v. Apotex, mandated reversal.
Alphapharm argued that pioglitazone HCl would have been prima facie obvious over a prior art compound, named “compound b,” that is structurally similar to pioglitazone. According to the Federal Circuit, in chemical cases “normally a prima facie case of obviousness is based upon structural similarity, i.e., an established structural relationship between a prior art compound and the claimed compound.” Moreover, to prove prima facie obviousness based on structural similarity, “a showing that the prior art would have suggested making the specific molecular modifications necessary to achieve the claimed invention is also required.”
The district court found that there was no motivation in the prior art to select compound b as a lead compound in the first place, and that the prior art taught away from its use as a lead compound. The Federal Circuit agreed with this finding, stating that it alone was a sufficient basis for concluding that Alphapharm had failed to establish a prima facie case of obviousness.
The Federal Circuit squarely addressed whether KSR affects its “structural obviousness” jurisprudence:
[The] test for prima facie obviousness for chemical compounds is consistent with the legal principles enunciated in KSR. While the KSR Court rejected a rigid application of the teaching, suggestion, or motivation (“TSM”) test in an obviousness inquiry, the Court acknowledged the importance of identifying “a reason that would have prompted a person of ordinary skill in the relevant field to combine the elements in the way the claimed new invention does” in an obviousness determination.
The Federal Circuit concluded: “Thus, in cases involving new chemical compounds, it remains necessary to identify some reason that would have led a chemist to modify a known compound in a particular manner to establish prima facie obviousness of a new claimed compound.”
Let’s try and think through how such a case might be decided in India. Firstly, the Indian patent office/courts would have applied the much celebrated “section 3(d)”. As SpicyIP has argued in several posts, section 3(d) can be best explained as a refined non-obviousness test that applies in the specific context of chemical inventions. To this extent, it starts off by mirroring the US position on non-obviousness by presuming that structurally similar chemical substances are functionally equivalent as well—and if this is not the case, then it is upto the patentee to demonstrate “increased efficacy” and to thereby establish that the compound is functionally different.
The CAFC held that, despite structural similarities between compound “b” and “pioglitazone”, there could be no finding of prima facie obviousness, since:
i) there was no evidence to suggest that the skilled person would have started out with compound “b”.
ii) it wouldn’t have been obvious to the skilled person to attempt to reach “pioglitazone” by modifying “b” in a certain way.
Now compare this with a section 3(d) approach. Under section 3(d), all one has to show is “structural similarity” between the “new” form and an existing substance. Whether a skilled person would have started out with the existing substance (“b”) or would have found it obvious to reach “pioglitazone” from “b” is immaterial.
Therefore, the standard of proof for knocking down a patent is lower under section 3(d) –or put another way, it is more difficult to get a patent under section 3(d).
Lets move to the second and more “problematic” part of section 3(d)—does the “new form” have increased “efficacy”, when compared with the old substance?
Interestingly, the CAFC in the US found that since “pioglitazone” (the new form) was not “toxic”, this amounted to an “unexpected property”. So even assuming that Alphapharm had established “prima facie obviousness”, the court would have still held pioglitazone to be a non-obvious invention. The court relied on a report which “contained results of preliminary toxicity studies that involved selected compounds, including pioglitazone and compound b. Compound b was shown to be “toxic to the liver, heart and erythrocytes, among other things,” whereas pioglitazone was “comparatively potent” and “showed no statistically significant toxicity.”
Under section 3(d), would less “toxicity” (or a complete absence of toxicity) qualify as increased “efficacy”? Note that the Madras High Court relied upon a medical dictionary to hold that the term “efficacy” in section 3(d) meant “therapeutic” efficacy and therefore “what the patent applicant is expected to show is, how effective the new discovery made would be in healing a disease”.
Would “less toxicity” constitute an increase in effectiveness in “healing a disease”? If it doesn’t, then does not the Indian patent regime wish to incentivise these sort of innovations? Are these not worthy enough? To answer this issue, one has to step back and ask the question: How much does the Indian patent system matter for pharmaceutical companies (both Indian as well as the MNC’s)?
Let’s take Indian companies first, since we in India care more about them than the MNC’s. The leading Indian pharma companies get more than 80% of their revenue from other markets (besides India). Even if India does not provide product patent protection, would this impact their R&D decisions, since the US and EU are the main markets and provide them patent protection anyway. The exception to this is the case of neglected diseases and other diseases that are specific to India (for which there is no US or EU market). Since MNC’s have even lesser of a share in the Indian market (relative to their global market), the Indian market and therefore the Indian patent regime matters to them even less.
I had raised this issue in the comments section to Duncan’s excellent post highlighting a licensing deal between Eli Lilly and Glenmark. Duncan concluded by asking: in the light of growing innovation from Indian companies, would there be pressure to repeal section 3(d)?
Duncan appropriately opines that there is a complex cost benefit economics at work here, and loss of patent protection in India might make a difference to Indian companies. My responsze to him was as below:
“Loss of patent protection in India could mean a loss of revenues for “X”, an Indian pharmaceutical company, since Y and Z (other Indian pharma companies) would now be free to manufacture the same drug in India. But remember that X will still be able to make considerable monopoly profits through patent protection in its main markets (US, EU and Japan). More importantly, its losses in India through a lack of patent protection for its new drug may not amount to much when compared to the losses resulting from the presence of a patent regime in India i.e. if patents were granted to Y and Z for other drugs in India. Remember, X is primarily a generic company that has had a free run thus far (till 2005). Freedom to manufacture and sell a variety of drugs in India and also sell to other countries (where there are no patents) may mean much more in revenues for X. So perhaps on the balance, loss of patent protection in India may be relatively insignificant for X??”
We’re interested in hearing what readers think about this complex issue: how much does the Indian patent regime matter for pharmaceutical companies and their R&D incentives??