AIPPI Congress Report 4: Should Europe embrace a patent linkage system?

The site of this year's Pharma Day -
reminding the audience that, yes, you
are in Canada

Without the slightest hint of pharma fatigue, the AmeriKat continued her Pharma Day in the SPC session.  Sadly, however, she had to leap off like the bounding feline beast of prey that she is for a meeting (::snort:: IP joke!).  But not to fear, the AmeriKat's ever-eloquent colleague, Eibhlin Vardy was in attendance and reports on what was a lively discussion on the topic of "Early Resolution Mechanisms for Patent Disputes Regarding Approved Drug Products" with Larry Welch of Eli Lilly (US) moderating panelists representing a range of views across the innovator / generic spectrum.  Over to Eibhlin:

"Welch began by explaining the background to patent linkage, by reference to the US Hatch-Waxman legislation of 1984. This was a compromise between innovator and generic companies, and resulted in legislation on a number of components including patent term restoration, data exclusivity, and patent linkage. The key aspects of patent linkage in the US system are that originator companies must notify their patents to the regulator and industry, and generic companies must notify innovator companies of marketing authorisation applications. In Welch's opinion, the US patent linkage system works fairly well, in that it allows the resolution of patent issues prior to the approval of a generic product. He observed that patent linkage systems exist to some extent in a number of jurisdictions, including Canada, Mexico, Australia, and Korea. 

Warren Sprigings (Sprigings IP Law, Canada), started by saying that other countries should learn from Canada's mistakes in implementing a patent linkage system with some similar features to the US system. The Canadian system links new drug approvals to certain patent requirements. Although proceedings under the Canadian Patent Medicines (Notice of Compliance Regulations) (known as PM(NOC)) are supposedly "summary proceedings", in practice they can be complicated, expensive and very time consuming, involving both fact and expert evidence. Once proceedings are initiated, there is an automatic 24-month stay of the generic marketing authorisation application, and in Spriging's opinion, this automatic stay provides originator companies with an incentive to issue proceedings even if they are not warranted on the facts. Once the PM(NOC) proceedings are concluded, there is a right of appeal to the Court of Appeal, and the unsuccessful party can still bring an infringement, DNI or invalidity claim as appropriate. Therefore, even if a generic company is successful in PM(NOC)proceedings it may still be subjected to litigation for years thereafter. There is one carrot for generic companies in the PM(NOC) Regulation in that damages are recoverable from the date the generic would have otherwise entered the market. However, the onus is on the generic to establish lost sales and profits which is very difficult in practice. 

Young Kim (Kim & Chang, Korea) outlined the patent linkage system in Korea introduced in 2012, which applies to both small molecule and biologics. In Korea, patent notification is optional (unlike the US system), but despite this there were over 1,000 patent notification listings up to the end of 2013. An improvement of the Korean system over the Canadian one is that any notified patent must be relevant to the product approval dossier, meaning that generic companies are less likely to get bogged down in irrelevant patents. In Korea, the system is bifurcated, meaning that generic companies can issue validity and scope of claim proceedings before the IP Tribunal/Patents Court, while infringement is dealt with separately by the High Court. A draft Bill is expected to be passed by the end of 2014, including the introduction of a stay for 12 months (directed at generic sales rather than marketing authorisation approval). Kim explained that the Korean system seeks to minimise the negative impact on generic companies, but she is concerned that it has apparently resulted in a massive increase in invalidity/scope confirmation actions by generics, leading to a significant litigation burden. 

David Rosenberg (GSK, UK) explained that although there is no patent linkage or early resolution mechanism in Europe (with the exception of Portugal), there are three European issues that need addressed: 

1.There is a significant drop in reimbursement price at generic launch, which can never be recovered;
2. This price drop has an extra-territorial effect, due to international reference pricing amongst certain European Member States; and
3. Third parties may suffer harm as a result of this price drop - for example if there are cheaper alternative drugs available to treat the same condition, the sales of a third party will be affected by a generic entrant. 

Rosenberg recognised the need to balance protection for originators, and freedom to operate for generics. However, he observed that the current system is procedurally imbalanced, given that generic companies can issue litigation to clear the path well in advance of any product launch, but originator companies have no sight of the generic company's activities until very shortly before launch. It is therefore impossible for originator companies to launch infringement proceedings at an early stage. This lack of transparency could be addressed by making generic abridged marketing authorisation applications public. Without an early resolution mechanism systems, preliminary injunctions are essential. However, the possibility of third parties (such as the payor Department of Health) obtaining a cross-undertaking in damages following the grant of a PI is a further complication in the system which could have significant ramifications for the way originator companies think about litigation going forwards."

The AmeriKat wonders whether there is scope for greater transparency of generic launch plans in Europe, either by a linkage system (avoiding the Canadian experience) or by making generic marketing authorizations public in the way described by David.  Given the general move in Europe towards more transparency in numerous respects in the pharma industry, why should transparency in relation to a generic's activities be any different?  Would the potential allegation that such launch plans are commercially confidential trump any such measure?  What do readers think?