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Gilead’s HIV Patent Spat With HHS Could Keep Drug Prices High (1)

Nov. 25, 2019, 9:45 AMUpdated: Nov. 25, 2019, 3:04 PM

The Trump administration’s lawsuit against Gilead Sciences Inc. over the company’s alleged infringement of government-owned patents for the HIV-prevention drug PrEP could unintentionally lead to higher drug prices, according to attorneys watching the case.

The issue is that the government’s patents don’t cover the drug itself but the regimen that has patients take one pill daily.

Patents like this—that cover process rather than an invention—are controversial because they’re often filed late in a drug’s original patent life by brand-name companies to extend monopolies on their products. These so-called follow-on patents delay the entry of lower-cost generic versions to the market.

Now, with its lawsuit against Gilead in the U.S. District Court for the District of Delaware, the government appears to be taking the position that extending the market life cycle of brand-name drugs in this way is a valid approach.

“It is a bit contradictory because they are on the one hand trying to lower drug prices, but this could increase drug prices,” said Michael Carrier, a professor at Rutgers Law School who specializes in intellectual property law and who has testified before Congress on drug pricing issues.

Evergreening

These later follow-on, or evergreen, patents can extend the monopoly on a drug even when they are for minor changes or variations that have no impact on the efficacy of a drug.

For example, Indivior, maker of the opioid use-disorder medication Suboxone, switched its formula from a pill form to a sub-lingual film that dissolves under the tongue.

By taking the majority of the pill-forms off the market and replacing them with the newly patented film version, Indivior was able to largely delay the introduction of a generic form of Suboxone because a generic drug must be identical to the brand-name version currently on the market. So a generic pill can’t be used in place of the brand-name film.

The government is defending something similar in this case that could later be pointed to by brand-name companies seeking to protect follow-on patents.

“You could see [brand-name drug] companies citing the government’s own arguments back to a court or jury,” said Chad Landmon, chair of the intellectual property and Food and Drug Administration practice groups at Axinn Veltrop & Harkrider.

The Trump administration’s position in the lawsuit against Gilead essentially puts “the government on the side of this strategy” that prolongs the dominance of higher-cost brand-name drugs on the market, Landmon said.

“You have the federal government taking a broader position of why these patents should be valid,” he added. “It does have the potential to lead to higher drug prices by extending a [brand-name drug’s] life cycle.”

However, Amy Kapczynski, a professor of law and faculty director at the Yale Global Health Justice Partnership, noted that these kinds of patents are common and regularly enforced successfully under existing law.

“If you ask me how I’d reform patent law, I take very seriously the argument that secondary patents are a problem,” she said. “It’s possible also to argue against them—and at the same time to argue that in a world where they exist and the government holds one that could provide an immediate remedy for a serious public health problem, it has the responsibility to use it.”

The Case Against Gilead

The Department of Health and Human Services is asserting that Gilead refused to license its patents and has “willfully and deliberatively induced infringement” of the department’s patents, according to the complaint.

The government is seeking retroactive damages and ongoing royalties from the company for research done with taxpayer dollars. The complaint alleges the company has made billions from sales of the drug. The pills can cost as much as $1,700 a bottle and earned the company $2.6 billion in U.S. sales in 2018, according to Bloomberg data.

The Centers for Disease Control and Prevention was the first to demonstrate that the combination of drugs that make up the pre-exposure prophylaxis—or PrEP—drug—emtricitabine and tenofovir disoproxil fumarate—are effective as HIV prevention. The only two approved HIV prevention drugs, Truvada and Descovy, are both made by Gilead.

The conflict over the HIV prevention drug patents has become more prominent since President Donald Trump announced a plan to reduce new instances of HIV by 90% in the next decade. There are about 40,000 new cases of HIV in the U.S. each year, according to the CDC.

Gilead filed its own claims with the U.S. Patent and Trademark Office’s administrative Patent Trial and Appeal Board, arguing that the government’s patents are not valid.

Gilead Counterpunch

Part of the problem with the government’s approach is that it’s “trying to enforce patents that may not be the strongest,” Carrier said.

Many follow-on drug patents, and particularly those for how drugs can be administered, are weaker than the original patents for an actual active ingredient in a drug compound, he added.

At issue in Gilead’s challenge at the PTAB is whether the CDC’s decision to combine two pre-existing HIV drugs for the PrEP treatment was an obvious next step in HIV drug development.

Patent law holds that inventions that are obvious to someone specialized in the field are not patentable.

Gilead argues that the CDC’s prophylactic treatment was obvious, and therefore the government’s patents are invalid.

“The government says even if it was obvious to try out using the particular drug cocktail for pre-exposure prophylactic treatment, there’s nothing that says what the effective dosage would be,” said Charles Duan, a patent lawyer and director of technology and innovation at Washington think tank R Street Institute.

“They make the argument that only an expert could determine that dosage,” he added. “That, to me, stuck out as something that a drug company could latch onto later on down the road.”

In other words: A brand-name drug company could later point to the government’s position in this case when they argue that a minor tweak to drug dosage or method of use merits a new patent that would keep generic versions off the market for longer—ultimately helping drive up drug prices.

Duan noted that, “there’s nothing inherently wrong with a patent on method of use,” however when used as they often are—to extend a monopoly on a drug that would otherwise see its patent expire—it can lead to higher costs for patients.

The cases are United States v. Gilead Sciences Inc., D. Del., No. 19-2103, 11/6/19 and Gilead Sciences, Inc. v. Heneine, P.T.A.B., No. IPR2019-01454, 8/21/19.

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; Randy Kubetin at rkubetin@bloomberglaw.com