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Pharma Collaborations in the Covid-19 Era Come With Legal Risks (1)

June 5, 2020, 9:16 AMUpdated: June 5, 2020, 6:16 PM

Major pharmaceutical and biotech companies will have to navigate a host of legal issues related to patents, trade secrets, and competition as they collaborate to find viable coronavirus vaccines and treatments.

The race to address the pandemic has brought together strange bedfellows as big-name companies partner with their rivals. Roche Holding AG and Gilead Sciences Inc. teamed up on trials for a drug combination to treat Covid-19, and GlaxoSmithKline plc struck a deal with Sanofi to produce 1 billion doses of a coronavirus vaccine booster.

Companies seeking to ensure their partnerships succeed will need to negotiate who owns each slice of intellectual property that is forged together and who will have the right to use any new inventions for non-Covid uses—all while avoiding anti-competitive pitfalls, health-care attorneys said.

“Two companies will come together, ideally because they can do something better and faster together than they could alone,” said Robert Underwood, a partner in the Boston office of Hogan Lovells.

“Each company is bringing some expertise and intellectual property to the table,” he said, noting that he can’t comment on any specific partnerships. “As they work together they’re going to create more, so you have the ‘yours,’ the ‘mine,’ and the ‘ours’ of collaboration.”

In the meantime, the companies pursuing new partnerships are confident about the steps they’re taking.

“Collaboration is a fundamental principle in biotech, and conducting clinical trials in partnership with companies like Gilead is an important example of how the biotechnology industry and healthcare communities are successfully working together,” Roche officials said in a statement. “Due to the global shared interest in curbing this public health crisis, we are confident that industry will reach reasonable agreements on partnerships.”

Accelerated Environment

While partnerships in the biopharma industry are fairly common, right now “what we’re seeing is quite different” because there are more deals between larger competitive companies, Underwood said.

“Fueling this wave of collaboration is nothing more than everybody’s desire to find a solution as quickly as possible to the pandemic,” he said.

More traditional deals are still being struck between pharmaceutical giants and smaller biotech firms, such as Eli Lilly and Co. partnering with Vancouver-based biotech AbCellera on a Covid-19 antibody treatment and AstraZeneca plc teaming up with Oxford Biomedica to produce a coronavirus vaccine.

Large and small companies alike will need to navigate partnerships carefully to ensure their interests are protected—even as those deals are being struck at breakneck speed, attorneys say.

“Traditionally, deals can take a lot more time to negotiate and the innovator company can be a lot more reluctant to share their technology,” said Mark Wicker, chair of Perkins Coie LLP’s biotechnology and pharmaceutical group. “In light of the Covid-19 world, there is an increased willingness to do this that didn’t necessarily exist before.”

But sharing technology brings intellectual property challenges to the forefront, meaning companies will need to work through who brings what to the table and who owns any new inventions before moving forward with a deal.

“The more you collaborate, the more you transfer technology, the more those issues come up,” Wicker said. “Those are things companies are or should be focusing on in this accelerated environment.”

Protecting Inventions

Many new partnerships use what is known as single application technologies— inventions with one pharmaceutical ingredient, one mechanism, or one particular disease that the new invention applies to, Wicker said.

“Those are the easier ones to do because the innovative company is willing to give more control over to Big Pharma or the Big Medtech company,” he said

Things get trickier when drugmakers are partnering on platform technologies, or inventions that can be applied across a whole array of applications. For instance, a novel ingredient that can be added to a vaccine to boost its effectiveness could hypothetically later be used for a swath of non-coronavirus vaccines.

Collaborating companies need to make sure they clearly define how their partners are able to use the technologies they’ve come up with and what limitations will be placed on using those inventions for future applications, Wicker said.

“This happens all the time,” he said. “It’s a real issue that people need to consider.”

Companies will also need to decide whether and how to share trade secrets around technologies and manufacturing processes, said Chad Landmon, chair of the intellectual property and Food and Drug Administration practice at Axinn Veltrop & Harkrider LLP.

“Those issues get tricky from a contractual basis,” he said.

Division of Labor

Drugmakers will also have to figure out how to divvy up which company does what and who pays for what going forward, said Andrew Solomon, of counsel in Polsinelli’s St. Louis office who focuses on IP issues in the pharmaceutical space.

For example, companies will have to decide who drafts and files the patents, how to structure ownership of that intellectual property, and who is funding each segment of research, development, and drug trials.

“if you’re in patent litigation down the road, who is going to take the lead?” Solomon said. “Or if it’s a shared representation, how do you do that?”

Answering those questions can be a little easier when there’s already a developed molecule that may have a new use in treating Covid-19, but with something more complicated, like a blending of two different types of therapies or regulated products—that can get complicated, Solomon said.

That’s why it’s important that companies have an “understanding of who has what role at the outset, and trying to stick to it as the collaboration develops,” he said.

Antitrust Issues

It is “vital” that drugmakers avoid anti-competitive conduct as they negotiate and work through their partnerships, said Edith Ramirez, a partner with Hogan Lovells, and former chairwoman of the Federal Trade Commission.

That means those deals must benefit the public and that communication between the different parties stays away from several critical areas, such as pricing policies, she said.

“What we counsel companies to avoid is what is referred to as ‘competitively sensitive topics,’ including discussions about companies’ current or future prices,” Ramirez said.

“You don’t want competitors to ever be talking about pricing,” she added. “That is considered to be a hardcore violation of antitrust law.”

Companies must also beware of sharing confidential business plans, sales information, or research in connection with particular customers or market areas—including strategy around their product advertising and promotion, she said.

Avoiding those situations can be challenging, so drugmakers should have a lawyer specializing in antitrust present during all negotiations for planned collaborations, Ramirez said.

“Things are moving quickly, but it’s critical they be aware of these issues because the last thing they would want is the Federal Trade Commission or the Department of Justice Antitrust Division to knock on their door to initiate an investigation,” she said.

(Adds paragraphs six and seven to include comment from Roche.)

To contact the reporter on this story: Valerie Bauman in Washington at vbauman@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Alexis Kramer at akramer@bloomberglaw.com

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