Patent Infringement Special Report: Part I, The Most Pressing Case

On March 29, a US federal court validated the formulation patent for AstraZeneca’s (NYSE: AZN) big-selling anti-psychotic drug Seroquel XR. The ruling thus determined that various companies seeking to sell cheap generic versions of the medicine, including Mylan, Inc. (NASDAQ: MYL), had infringed on the patent.

In light of this ruling, OneMedPlace is publishing a special in-depth look into the state of patent infringement in drug manufacturing. Patent infringement in healthcare is a hot-button issue in the legal realm and private sector, and the recent AstraZeneca ruling drew upon untested legal precedent. Some decisions are but a few weeks old, and many cases are still in the appellate process.

In Part One of our series, we dissect the most recent compelling case and the immediate reaction of company insiders. This case seems to demonstrate the Courts are preparing to strictly define the limits of commercial imitation versus philanthropic or nonprofit imitation.

Parts Two and Three look at a similar case (currently in appeals) that seems to contradict future rulings. However, the intricacies of the technology may hold the key – it may explain the legal logic, but the details may alter the development of personalized medicine.

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The healthcare industry is experiencing the aftershocks of several landmark cases that may redefine the definition of intellectual property, and as such these decisions may change the strategy of emerging companies with unique technology.

On March 20th, the US Supreme Court ruled 9-0 in favor of the Mayo Clinic in its appeal against Prometheus Laboratories over infringement of two patents related to a diagnostic test. The Mayo Clinic, a former client of Prometheus, developed its own version of a test based on drug metabolites in the blood.

The lawsuit originated in 2004 after the Mayo Clinic developed its own version of the blood test, which is used to determine the optimal drug dosages for patients with autoimmune diseases such as Crohn’s disease. The test involves administering a drug called thiopurine to patients and then determining the levels of thiopurine metabolites in the patient’s red blood cells.

The Mayo Clinic claimed they did not have to honor the Prometheus patents because the company cannot own a monopoly on the metabolites created by a drug. The Supreme Court agreed; in the ruling, Justice Stephen Breyer wrote: “We conclude that the patent claims at issue here effectively claim the underlying laws of nature themselves. The claims are consequently invalid.”

In a New York Times story, Prometheus said that the decision against it “will, in our view, encourage imitation, not innovation.”

Bernard Greenspan, Director of Intellectual Property for Prometheus Laboratories, said that current patent law places the burden of stopping infringement squarely on the shoulders of the patent holder. Monitoring and distinguishing both non-infringing and infringing actions “will only add costs and redirect resources from new developments,” he said in a recent Genetic Engineering and Biotechnology News story. It would be difficult for labs to conduct confirming tests without infringing on the patents of primary test developers, he said of this ruling, a counter-intuitive detriment to further medical research.

“The chilling effect on research and development of new and innovative tests created by a carve-out to a non-licensed party to avoid infringement will be far-reaching,” Greenspan said. “Established companies, university technology transfer offices, and job creation by startup ventures will be faced with the proposition that they will lose proprietary benefits of patents. Any steps taken to weaken those rights, while having a presupposed short-term gain in access to current technology, will result in long-term reduction of investments needed to commercialize future innovations thus creating a decrease in access to future technologies.”

Still, there is a different crux at the core of the recent Mayo ruling. Ultimately, are exclusive patents more conducive to scientific progress? Is granting a corporation the opportunity to reap profit after investing millions of dollars in R&D – and, theoretically, simultaneously creating incentive for other companies to follow suit – the only way to ensure drug development?

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