enerics ulletin nforma - Generics Bulletin · CHINESE PLATFORM Jing Lou, chairman and chief executive of 3SBio, praised Samsung Bioepis’ “lead-ing biologic development and manufac-turing

18 January 2019No. 382

Pharma IntelligenceInformaBulletin

Genericsgener icsbul let in .pharmaintel l igence . informa.com

LITIGATION

US Court Denies Attempt To Silence Leaks In Pricing Litigation, p. 13

SANDOZ

Transformed Sandoz Is Important Part Of Novartis, p. 5

PIPELINE WATCH

Everolimus SPC Expiries May Not Be End Of The Story, p. 10

Samsung Bioepis Eyes China With 3SBio DealDAVID WALLACE [email protected]

S amsung Bioepis is set to expand its biosimilars business into the Chinese market through a licensing deal that

the firm has just struck with China’s 3SBio. Noting that the deal covered “multiple biosimilar candidates”, Samsung Bioepis said this included its SB8 proposed rival to Avastin (bevacizumab).

Under the terms of the deal – financial details of which were not revealed by the firms – Samsung Bioepis and 3SBio “will col-laborate across a number of areas, including clinical development, regulatory registra-tion and commercialization in China”. Sam-sung Bioepis – which will be responsible for manufacturing and supplying the prod-ucts to 3SBio – will receive an upfront sum as well as milestone payments linked to pre-specified clinical and regulatory goals,

along with royalties on eventual sales.“We are very excited to expand our bio-

similar business into China, where we hope to see our biosimilars play an important role in widening patient access to high-quality healthcare,” said Samsung Bioepis president and chief executive Christopher Hansung Ko. “We are confident we will achieve this goal through our partnership with 3SBio, which brings together Samsung Bioepis’ proven development platform with 3SBio’s strong commercialization platform.”

TAKING ADVANTAGE OF 3SBIO’S CHINESE PLATFORM

Jing Lou, chairman and chief executive of 3SBio, praised Samsung Bioepis’ “lead-ing biologic development and manufac-turing capabilities in the global market”.

“Combined with 3SBio’s advantageous integrated platform in China, the two parties can provide patients in China with safe and affordable biological thera-pies,” he stated, adding that 3SBio “looks forward to accelerating the clinical devel-opment of SB8 in China”.

Samsung Bioepis currently has four biosimilars approved and launched in Eu-rope: anti-tumor necrosis factor (anti-TNF) treatments Benepali (etanercept), Flixabi (infliximab) and Imraldi (adalimumab), as well as oncology drug Ontruzant (trastu-zumab). Meanwhile, in the US Samsung Bioepis has one approved and launched biosimilar in the form of Renflexis (inflix-imab), with adalimumab and trastuzumab biosimilars currently under review.

A joint venture between Samsung Bio-Logics and Biogen, Samsung Bioepis has previously exploited marketing partner-ships in Europe and the US with Biogen and Merck, Sharp & Dohme (MSD). “In to-tal, over 100,000 patients across the world are currently under treatment with Sam-sung Bioepis’ biosimilars, with over six mil-lion doses administered,” the firm boasted.

BROADENING ONCOLOGY PORTFOLIO3SBio describes itself as a “fully-integrat-ed biotechnology company in China with market-leading biopharmaceutical franchises in oncology, auto-immune diseases, nephrology, metabolic dis-eases and dermatology”. With a focus on its innovative pipeline, the firm has over 30 product candidates under develop-ment – including monoclonal antibodies (mAbs) – as well as “a number of small-molecule generic drugs”.

Manufacturing capabilities include re-CONTINUED ON PAGE 4

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I N T H I S I S S U E

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Anyone watching the generics industry in recent years will be keenly aware of the pricing pressures that have been experienced by firms operating in the US. Heavy price erosion has seen some industry players rethink their portfo-lio or even withdraw from the market altogether, while others have tried to weather the storm as best they can.

It was therefore interesting this week to see Teva president and chief executive officer Kåre Schultz indicate that the tide may be turning, or at least that the downward spiral of recent years was coming to an end. This, he suggest-ed, was partly a result of Teva’s own strategy to prune its portfolio to focus only on lines that can deliver a sufficient profit (p.4).

It remains to be seen whether the stability predicted by Schultz will come to pass, but his comments at least provide some reassurance to industry onlookers who have been wondering how low prices can go before they hit their nadir.

Also offering reassurance this week was

Novartis chief executive Vas Narasimhan, who confirmed that the company’s Sandoz unit remained an important part of the company, albeit one that required a shift in strategy to focus more heavily on biosimilars and hard-to-make generics. Sandoz chief executive Richard Francis offered further insights on the com-pany’s strategy (p.5).

Meanwhile, Mallinckrodt has provided more detail on its plans to spin off its generics and ac-tive pharmaceutical ingredients business into a separate entity (p.8) and Akorn has suffered a further setback after its Decatur sterile manu-facturing plant received a warning letter from the US Food and Drug Administration (p.7).

And deal-making in the generics, biosimilars and value-added medicines industries contin-ues to show little sign of slowing down, with Samsung Bioepis striking an attention-grab-bing deal with 3SBio that would offer a route into the Chinese market for its biosimilars portfolio (see front cover).

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COVER / Samsung Bioepis Eyes China With 3SBio Deal

4 US Pricing Pressures Have Stabilized, Insists Teva Chief

5 Transformed Sandoz Is Important Part Of Novartis

7 Akorn Hit With FDA Warning For Decatur Site In US

8 Mallinckrodt Details Timeline And Financing For Spinning Off Generics Business

10 Pipeline Watch: Everolimus SPC Expiries May Not Be End Of The Story

12 Price Watch UK: UK Prices Show Volatility Of Recent Launches

13 US Court Denies Attempt To Silence Leaks In Pricing Litigation

14 AAM Weighs In On Supreme Court Challenge To UCB’s Lacosamide

15 Don’t Push Mayo To The Side, Hikma Urges Top US Court

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D E A L S

combinant proteins, mAbs and chemical-ly-synthesized molecules, with Chinese production centers in Shenyang, Shang-hai, Hangzhou and Shenzhen as well as a site in Cuomo, Italy.

In particular, 3SBio says its 38,000-liter mAb facility – along with cell-based and small-molecule manufacturing capacity – “well positions it for its strategic objective of creating a profitable contract develop-ment and manufacturing organization (CDMO) business, leveraging its existing CDMO assets”.

Jing Lou said the firm was keen to “broaden 3SBio’s product portfolio in the oncology area”, observing that the indica-tions for the bevacizumab biosimilar in China “will focus on metastatic colon can-cer and non-small cell lung cancer”.

He added that 3SBio “will continue to strengthen its leadership status in the bio-pharmaceutical industry through internal research and development initiatives and strategic collaborations to bring more high-quality and urgently-needed prod-ucts to market more quickly, both in China and in the international market”. These include “selective merger and acquisition and collaboration opportunities to enrich its existing product portfolio and pipeline to sustain long-term growth”.

3SBIO GREW BY OVER A QUARTERIn the first half of 2018, 3SBio reported sales that increased by 27.4% to RMB2.17 billion (US$317 million) – just 3% of which came from outside mainland China – with a gross profit of RMB1.75 billion providing a gross margin of 80.3%.

Its key products comprise Tpiao (throm-bopoietin), Yisaipu (etanercept) and re-combinant human erythropoietin prod-ucts Epiao and Sepo, all four of which are described as “market leaders in China”. For the etanercept brand, 3SBio claims a market share of 63.5% in China for the first half of 2018 – citing “significant growth as the first-to-market etanercept prod-uct in China” – while the two erythropoi-etin brands captured a combined market share of 41.3% in the same period.

3SBio also markets diabetes drugs through licensing deals with AstraZeneca and Eli Lilly and is “actively and selectively seeking op-portunities to bring in clinical-trial stage bio-logic products in order to provide a commer-cial manufacturing service”.

Published online 7 January 2019

CONTINUED FROM PAGE 1

US Pricing Pressures Have Stabilized, Insists Teva ChiefGRACE MONTGOMERY [email protected]

F ollowing several years of pricing pressures, the US generics market has stabilized and will continue to

do so, according to Teva president and chief executive officer Kåre Schultz.

Speaking at the 2019 J.P. Morgan Healthcare Conference in San Francisco, US, this week, he noted that there had been a “dramatic reduction in the total value of the US generics market space” over the last five years. “And a year ago, I think it’s fair to say we were in a negative death spiral of pricing on generics, just everybody going lower and lower.”

As a result, Teva in 2018 “took very deci-sive action”, deciding to no longer supply products “that do not contribute to our profitability”. The firm started the process

of talking to its “key customers”, noting that it had “three very big buying groups in the US”. Schultz said the company had entered into a “constructive dialogue” with all of its customers “about the roughly 10% of our portfolio where the prices had gone below reasonable profitability levels”.

“And I’m happy to say we are through that process,” he continued. “Of course, we had to give up some of the volume, that didn’t hurt us because we were not making money on it. And for some of the volume we got price increases.”

PRICING DYNAMIC IN US GENERICS “CHANGED”

“But I think the most important thing… is that the whole pricing dynamic in US generics changed, maybe as a factor of what we did, maybe due to our circum-stances, maybe that was just a new bal-ance, you never know why things like this change,” Schultz stated.

Contending that there had “been a dramatic change”, he maintained: “We no longer have this death spiral of price de-clines, but we have a much more stable situation.” Predicting that the US generics market would “in absolute value” be sta-ble throughout the second quarter to the

fourth quarter, he added: “I’m also pre-dicting that to be the case for the future.”

RESTRUCTURING AND CONSOLIDATING PROCESS CONTINUES

“We think we are part of stabilizing the US generics in how we are behaving and, of course, we also believe that our restructur-ing and consolidating the manufacturing footprint gives us more competitive manu-facturing cost,” Schultz maintained, refer-ring to restructuring plans first set out by the firm in December 2017. This included closing facilities worldwide and reducing its workforce by at least 14,000, as the Israeli firm sought to reduce its total cost base by about US$3 billion by the end of 2019.

“This is not something that happens overnight, it takes years to consolidate the manufacturing,” Schultz stressed. “We are in the process of it, we’ll continue for many years to consolidate, and hopefully we’ll see gradual improvements on our gross margins for years to come.”

By the third quarter of 2018, Teva had rid the firm of a number of its facilities and cut staff by over 9,000, producing efficiencies of US$1.8 billion. Schultz said Teva was “very much on track” to hit its US$3 billion target, adding that the company had now reduced


S T R AT E G Y

its headcount by around 10,000 people.Noting that the firm was “still executing

on the plan” throughout 2019, Schultz re-vealed that there would be more plant clo-sures. In the short-term, Teva’s “ambition is to go from roughly 80 manufacturing sites down to around 60, and we are well under-way with that, and there will probably be around 10 closures throughout this year”.

ONE-COMPANY SETUP WILL INCREASE EFFICIENCY

To make the group more “efficient and competitive”, Teva has created a “new setup where, instead of sort of being siloed into specialty products, generics products, OTC products, biosimilars and so on, we just have one company”.

As the firm was consolidating sites and shutting down offices and research and de-velopment (R&D) facilities in “big countries such as Israel, Germany, and many other places”, Schultz maintained that “the whole one-company idea is very important”.

Teva recently revealed that “to fulfil its goal of working as One Teva”, the com-pany was consolidating its global head-quarters in Israel and relocating to Tel Aviv from Petah Tikva (Also see “Teva To Relocate Global HQ To Tel Aviv” - Generics Bulletin, 19 Dec, 2018.)

MORE TARGETED APPROACH IN GENERICS

Looking ahead, Teva is keen to maintain its leadership in generics. “Given the changed dynamics in US generics, and

in worldwide generics, we’re having a more targeted approach now where we carefully analyze each and every generic project,” Schultz stated.

With “hundreds” of pending abbrevi-ated new drug applications (ANDAs) and filings in “Europe, China, Japan and so on”, the firm is opting for a “very struc-tured process where we look for the most profitable projects”. As well as a “very pro-active portfolio selection and ongoing management”, Teva plans to focus on “ar-eas where there are high barriers” – being first to market either by being first-to-file or choosing complex products.

OPTIMISTIC ABOUT BIOSIMILAR LAUNCHES

While “not much success has been seen with biosimilars in the US marketplace”, Schultz believes this is “slowly about to change”. “There’s a lot of pricing pressure on these kind of very expensive oncology therapies, and I believe we have something to bring to the party because we know how to manu-facture these cheaply and efficiently.”

He pointed out that Teva has “a com-plete biologics platform where we can develop both biosimilars and biologics in-house 100%”. The company’s in-licens-ing strategy “targets early-stage oppor-tunities that fit [Teva’s] core capabilities”.

Schultz said he was “very optimistic” about future launches, after late last year receiving US Food and Drug Administra-tion (FDA) approval for Teva and partner Celltrion’s Truxima (rituximab-abbs) and

Herzuma (trastuzumab-pkrb) biosimilars, anticipating launch “in the coming years”. “I cannot disclose the exact settlement dates we have, but we are basically set-tling on these products and looking for-ward to launching them.”

TEVA SEEKS ORGANIC GROWTH AND TARGETED INVESTMENTS

Contending that “organic growth is the path we are on”, Schultz said: “We are not going to sell off anything major at all”. “We’re keeping all the business lines we have and we’re integrating as well as we can and getting the most out of it that way.”

While the company is focused on cash flow in its restructuring phase, Schultz stressed that it “hasn’t stopped investing in the business, it’s just targeted invest-ments instead of big mergers and ac-quisitions”. This includes supporting the launch of its Ajovy (fremanezumab-vfrm) migraine drug and its Austedo (deutetra-benazine) tardive dyskinesia treatment, as well as investing “hundreds of millions” in building a biopharmaceutical manu-facturing site in Ulm, Germany.

Referring to the firm’s debt as “the ele-phant in the room” a year ago, Schultz said that this “is more tamed now”. “We came from around US$35 billion, and we’ve been doing our best to bring it down. We’re now down to around US$27 billion, and we will continue in the coming years to bring it down.”


Transformed Sandoz Is Important Part Of NovartisAIDAN FRY [email protected]

Sandoz remains “an important part of Novartis”, even as it exits solid-dose and dermatology generics in the US,

the Swiss group’s chief executive officer, Vas Narasimhan, told investors during a J.P. Morgan Healthcare Conference.

Speaking in San Francisco, US, Narasim-han said transforming Sandoz would be “critical for our future”. Pointing out that No-vartis had chosen to divest Sandoz’ US sol-

id-dose and skincare generics operations to Aurobindo for around US$1.0 billion, he said this formed part of a wider drive to bring greater focus to the group. “We want to be a focused company,” he asserted.

With the group about to sharpen its focus on prescription pharmaceuticals by spinning off its Alcon ophthalmology divi-sion – having already divested its consum-er healthcare interests to GlaxoSmithKline

– Narasimhan said “the next thing that’s going to be high on our agenda is really enabling Sandoz to succeed for the long term by giving it more autonomy and al-lowing it to be a fully autonomous gener-ics company within the Novartis umbrella”.

“Sandoz is an important part of Novar-tis, the second-largest generics company in the industry, but clearly faces a dynam-



S T R AT E G Y

ic that is much more challenging than it was in the past,” Narasimhan continued. “We have more competition. We have more and more customer consolidation around the world.”

In light of these market dynamics, Nar-asimhan explained that Sandoz’ strategy would be “to pivot hard to biosimilars and hard-to-make molecules, while at the same time pruning our geographic footprint and pruning our portfolio to enable us to succeed longer term”. To drive efficiency and give Sandoz a leaner cost structure, the division is rationalizing its stock-keeping units (SKUs), optimizing its manufacturing footprint and consoli-dating on a regional basis. (Also see “San-doz Will Differentiate To Serve A Different World” - Generics Bulletin, 14 Dec, 2018.)

EIGHT BIOSIMILARS ALREADY ON THE MARKET

“Our Sandoz transformation will help en-able us to compete in a more challenging environment,” Novartis insisted. As the division reshapes its portfolio, biosimi-lars are central to its drive to play in less commoditized fields that potentially offer stronger profit margins. Introducing Hy-rimoz (adalimumab), Zessly (infliximab) and Ziextenzo (pegfilgrastim) during the course of last year added to launches in 2017 of Erelzi (etanercept) and Rixathon (rituximab) to take to eight the number of biosimilars that Sandoz has on the market.

And to build a pipeline of future bio-similar opportunities, Sandoz last year struck two deals. A collaboration with In-dia’s Biocon is designed to co-develop the next-generation of pipeline assets, while a tie-up with China’s Gan & Lee targets follow-on insulins.

In an exclusive interview granted to Generics Bulletin, Sandoz’ global chief ex-ecutive officer, Richard Francis, described biosimilars as “a really good business”, but acknowledged that it had taken con-

siderable time to reach the current level. Claiming that Sandoz had been “the in-novator in biosimilars”, he said the divi-sion had initially had to invest without being sure of how the sector would play out. But after more than a decade com-peting in the biosimilars arena, the com-pany had gained much more clarity on what was needed to succeed.

“I think development times are going to come down significantly,” Francis forecast-ed. “Costs will probably shrink a bit, but will still be around US$150 million, plus or minus a bit. We will have fewer US$300 million-plus development projects.”

Discussing whether development costs could be further reduced by eliminating the need for in vivo, Phase III-type trials,

Francis believed such a development was possible, but would take time.

Turning to the commercial landscape for biosimilars, Francis maintained that Sandoz enjoyed an efficient go-to-market model that was designed to layer addition-al products on top of existing infrastruc-ture. For example, he cited the synergies available from launching infliximab and adalimumab through commercial teams that were already promoting etanercept.

“The return on capital deployed is

proven,” he stated, noting that this had been facilitated by the scale achieved by bringing eight biosimilars to market. “We have a business that has the potential to hit margin levels that are not too dis-similar from some of the best innovative companies’ margins,” he predicted.

Biosimilars, Francis asserted, should be viewed as “a long-term game”. “We are still seeing double-digit growth from our growth hormone, our erythropoietin and our filgrastim in Europe, with strong gross margins after 10 years on the market,” he pointed out. And while initial discounts on more recent biosimilar entrants such as adalimumab and infliximab had, in some instances, exceeded 80%, Sandoz was focusing more on driving uptake in the medium to long term. “We will deal with the price when it settles, and we have seen ups and downs across many molecules, so I don’t always jump to the sticker-shock right away,” he explained.

BIOCON ALLIANCE OPENS UP NEXT-GENERATION BIOSIMILARS

Discussing Sandoz’ biosimilars pipeline, Francis explained that teaming up with India’s Biocon for next-generation mole-cules brought several advantages (Also see “Sandoz and Biocon strike global biosimilars alliance” - Generics Bulletin, 26 Jan, 2018.). “They are a good partner because they have actually done development, and they have a great manufacturing capability.”

Francis went on: “What we want San-doz to have is the strongest portfolio of biosimilars in the industry. To do that, it is more cost-effective to do some projects in-house, and work through partnerships for others, which is no different to how re-search and development works in the in-novative medicines space,” he explained. “

To the same end, Sandoz has also an-nounced plans to enter the biosimilar insulin business through a partnership with Gan & Lee, to bring to market bio-similar versions of glargine, lispro and as-part, the three top insulin medicines by sales. Under the terms of the agreement, Sandoz will be fully responsible for com-mercializing these medicines in the US, European Union (EU), Switzerland, Japan, South Korea, Canada, Australia and New Zealand (Also see “Sandoz Forms Insulin Biosimilars Deal With Gan & Lee” - Generics Bulletin, 19 Dec, 2018.).

“We have a business that has the potential

to hit margin levels that are not too

dissimilar from some of the best innovative companies’ margins”

“Sandoz is an important part of Novartis, the second-largest generics company in the industry,

but clearly faces a dynamic that is much more challenging that it was in the past”


S T R AT E G Y

Being first to market with biosimilars would always confer an advantage, Francis recognized. “But we have shown through our portfolio that we can come to the mar-ket later and still be successful,” he stressed, citing the example of the infliximab candi-date that Sandoz had licensed from Pfizer. “We are good at fighting through patient by patient – we have shown we can do with that with growth hormone and grow our market share, and now we are doing the same with etanercept.” While both Sandoz’

in-house developments and the projects it was developing with Biocon were aimed at being first-to-market, Francis said can-didates that were later to market could still potentially offer viable financial returns. “We have shown we are a bit of a power-house, and the more portfolio we have, the more people want to work with us.”

Sandoz also aims at becoming a part-ner of choice in digital prescription medi-cines, another designated growth pillar in the company’s transformation strategy.

Having secured US Food and Drug Ad-ministration (FDA) clearance in December for the reSET-O digital therapeutic that it developed through an alliance with Pear Therapeutics, Sandoz has just launched the treatment for opioid-use disorder. A 12-week cognitive behavioural therapy intended to be used in addition to outpa-tient treatment, reSET-O includes trans-mucosal buprenorphine.


Akorn Hit With FDA Warning For Decatur Site In USGRACE MONTGOMERY [email protected]

A korn has suffered another blow at its US sterile manufacturing plant in Decatur, Illinois, receiv-

ing a warning letter from the US Food and Drug Administration (FDA) for the fa-cility, after it was last year hit with a ‘Form 483’ inspection report.

Following an audit at the Decatur plant from 9 April to 16 May 2018, the agency issued a warning letter on 4 Jan-uary identifying “significant violations” of current good manufacturing practice (cGMP) relating to the firm’s finished-dosage forms.

Highlighting concerns regarding the “accuracy of intervention, sanitization, and other records” at the facility, the FDA recommended a cGMP consultant due to Akorn’s failure to correct repeat violations.

POOR ASEPTIC PRACTICES LOGGED BY FDA

The agency said that Akorn “failed to fol-low appropriate written procedures that are designed to prevent microbiological contamination of drug products purport-ing to be sterile”, including validating aseptic and sterilization processes.

“Operators displayed poor aseptic prac-tices during aseptic set-up and filling op-erations,” the FDA noted, observing that workers “placed their head and upper torso inside the filling cabinet during in-terventions and performed interventions over open vials without clearing them”.

Furthermore, operators “excessively handled sterile stopper bags before in-

troduction into the stopper chute in the ISO 5 filling cabinet”. “Specifically, op-erators removed the outer secondary layer, the sterility barrier, and manually handled the sterile single-layer bag,” the FDA detailed. “These stopper bags were then re-placed on the non-sterile shelv-ing units located in the ISO 7 area for ex-tended periods of time. During this time, operators unnecessarily touched and manipulated the bags.”

Noting that these bags “are subse-quently introduced into the stopper chute located in the ISO 5 filling cabi-net”, the agency said that Akorn’s proce-dures “specifically prohibit manipulation of the stoppers once the outer bag has been removed”.

In addition, workers “shook stopper bags inside the ISO 5 area and the bag also contacted the interior of the stopper chute during the loading process”, despite the firm’s procedures prohibiting “agitat-ing and shaking during loading”. Person-nel also failed to disinfect stopper bags prior to their introduction into the ISO 5 area as required by Akorn’s procedure.

“Operators placed sterile wipes on a ledge below the filling line and later used the same wipes to clean the inte-rior of the ISO 5 filling area cabinet doors and part of the filling area machine where open sterile vials were exposed,” the FDA stated, observing that empty sterile vials “are located extremely close to the door”. “Although operators wiped the open door after interventions were

complete, the wiping was vigorous, only disinfected part of the door, and was performed while closing the door.”

NON-INTEGRAL CLEANROOM MATERIALS OBSERVED

The FDA also observed “non-integral packages containing sterile gloves”, dis-covered packages containing foreign matter, such as fibers, and found holes in the secondary packaging layer of sterile wipes. Noting that Akorn “assumed the outer layer provided a sterile barrier for the primary, interior package”, the agen-cy said that only by contacting the sup-plier during the inspection did the com-pany learn that this was not the case.

Management “acknowledged the pri-mary layer is never disinfected before use in the cleanroom”, the FDA commented. “Further, your supplier qualification proto-col remains insufficient, and your supplier qualification program does not require you to ensure the suitability of this supplier.”

“Your stopper hopper leans diagonally over the top of the filling line during stop-



M A N U FA C T U R I N G

per loading operations, thereby blocking first air over open, ex-posed sterile vials,” the agency stated. Smoke studies performed for the site’s ISO 5 areas “also lacked simulation of multiple critical interventions that occur during aseptic manufacturing operations”.

“DEFICIENT” ENVIRONMENTAL MONITORING PROGRAMDeeming Akorn’s environmental monitoring program “deficient”, the FDA told the firm: “Your procedures allowed personnel per-forming aseptic interventions in the ISO 5 cabinet to have one colony-forming unit (CFU) on their gloves on a repeated basis without triggering an appropriate response.”

“Your action limit for this location was two CFUs, and you had no alert limit,” the agency continued, adding that Akorn “lacked scientific justification for your limit and the associated procedure”.

Noting that workers sanitized their hands with isopropyl alcohol prior to personnel monitoring, the FDA said that “sanitizing gloved hands just before sampling is unacceptable because it can prevent microbial recovery and it undermines the reliability of personnel monitoring data”.

SANITIZATION STEPS SKIPPEDThe agency also described Akorn’s cleaning program as “defi-cient”. “While operator entries in sanitization records state that all required sanitization steps were completed in cleanrooms, many steps were actually skipped, and various pieces of equip-ment were not sanitized.”

Workers “did not ensure the mop makes proper contact with the floor”, and mops “were not wetted frequently to ensure ad-equate coverage”. According to the warning letter, an operator cleaned the walls surrounding ‘Line AH’ “for several minutes without rewetting the mop”.

Lastly, the FDA stated that Akorn “cannot ensure the stability” of its acetylcysteine 200mg/ml injectable, as the firm “had not performed L-Cystine and L-Cysteine impurity testing on stability

samples since 2016”. “At the time of the inspection, you also did not have a validated test method,” the agency added.

AKORN WILL CONTINUE TO RESOLVE ISSUESStating that Akorn would “continue to work collaboratively with the FDA to resolve all issues addressed in the warning letter”, the firm said it would respond to the letter “within the required 15 working days”.

Akorn “is committed to the highest standards of quality and compliance”, the company stressed, insisting that it had “full con-fidence in the quality of the products manufactured at the De-catur facility and expects to continue production at the plant”.The FDA’s warning letter is the latest setback for Akorn in what has been a turbulent year. It comes after the Decatur site was in July 2018 issued a 24-page Form 483 inspection report high-lighting observations including inadequate aseptic controls and cleaning procedures.

At that time, Fresenius Kabi was attempting to pull out of a planned US$4.75 billion merger with the US-based injectables and ophthalmics specialist, which officially collapsed last month (Also see “Akorn’s Chief Steps Down After Losing Kabi Deal” - Generics Bulletin, 11 Dec, 2018.)

As the Delaware Supreme Court announced its final decision al-lowing Kabi to walk away from the merger, Akorn’s chief executive officer (CEO) Raj Rai revealed that he had decided to retire, with his position quickly being filled by Doug Boothe, former president of Impax’ generics division (Also see “Akorn Selects Doug Boothe As CEO” - Generics Bulletin, 21 Dec, 2018.)

And following Boothe taking the reins from the start of 2019, Akorn’s chief operating officer, Bruce Kutinsky, stepped down from the role with immediate effect (Also see “Akorn’s Chief Op-erating Officer Heads For The Exit Days Into Doug Boothe’s Tenure” - Generics Bulletin, 8 Jan, 2019.)


Mallinckrodt Details Timeline And Financing For Spinning Off Generics BusinessDEAN RUDGE [email protected]

Mallinckrodt will in May/June begin providing financ-ing information for the planned spin-off of its spe-cialty generics and active pharmaceutical ingredient

(API) business into an independent publicly traded company, ahead of the proposed completion of the transaction in the second half of 2019.

Speaking at the 37th Annual J.P. Morgan Healthcare Confer-ence held in San Francisco, California, Mallinckrodt’s president and chief executive officer, Mark Trudeau, detailed a timeline for the spin-off, which the company first announced last month fol-lowing a lengthy strategic review.

Trudeau revealed plans to finance the spun-off company by raising new debt and drive long-term growth by capitalising

on its pipeline of complex abbreviated new drug application (ANDA) products. Among Mallinckrodt’s list of ‘upcoming mile-stones’ for the business is the launch of up to five new ANDA products: no further timelines were given on this strategy.

According to Trudeau, Mallinckrodt’s timeline for spinning off the business in 2019 will look like this:• In February, “probably around mid-February or so,” Mallinck-

rodt will issue ‘recast’ financials, “which will give details on the full company for 2017, and 2018 through the third quar-ter.” Mallinckrodt reported its Specialty Generics division under discontinued operations as the company explored strategic alternatives for the business.

• “Then in late February, in conjunction with our fourth quar-


S T R AT E G Y

“Our intent is to make sure both businesses are very well capitalized”

ter earnings, we’ll be providing guidance on the total com-pany, but we’ll also be giving some segment guidance on each one of the businesses,” Trudeau said.

• Towards the end of the first quarter, Mallinckrodt will aim to deliver to the US Securities and Exchange Commission (SEC) a Form 10 providing additional information, “particularly” on the spun-off company. The Form 10 will give historical financials through Mallinckrodt’s fiscal year ended Septem-ber 2016, including the ‘bridge period’ in the fourth calen-dar quarter of 2016; in May 2016, Mallinckrodt announced that it was changing the company’s fiscal year end from the last Friday in September to the last Friday in December.

• Then, Mallinckrodt’s first-quarter financial results will be published, “in early May.”

• “And then our financing plan for the spin will start right around that April/May timeframe, extending into the pe-riod just before we announce the spin,” Trudeau noted.

• Mallinckrodt plans to complete the spin “sometime within the second half of 2019 or sooner if possible,” according to Trudeau. “We’ll also then be planning to raise new debt for the ‘SpinCo.’”

CFO MATTHEW HARBAUGH WILL LEAD NEW COMPANY Chief financial officer and president of the existing Specialty Ge-nerics business Matthew Harbaugh is to become chief executive officer of the new generics and API company upon completion of the spin-out, which will be executed through a pro-rata dis-tribution of common stock to Mallinckrodt’s shareholders (Also see “Mallinckrodt Plans Spin-Off Of Specialty Generics Business” - Generics Bulletin, 10 Dec, 2018.).

Assuming the Mallinckrodt name and ticker symbol, the new US-based company will be headquartered in St. Louis, Missouri.

The operation’s sales of approximately US$900 million for the 12-month period ended September 2018 comprised around US$774 million from the Specialty Generics business; US$126 million from the Amitiza (lubiprostone) brand that will go to the new Mallinckrodt business; and a handful of sales from other un-disclosed products.

At an earnings before interest, tax, depreciation and amor-tization (EBITDA) level, Trudeau said about two-fifths of profits would come from APIs, a third from oral-dose generics and a quarter from Amitiza.

‘MAJORITY’ OF MANUFACTURING WILL GO WITH NEW COMPANY

Trudeau noted that “the majority of the manufacturing assets that are within Mallinckrodt today” will go with the new busi-ness, the focus of it being the development of complex ANDAs and contract manufacturing.

He also observed that Mallinckrodt had not “choked off the R&D investment all the while this business has been in discontinued operations, and even before that. We’ve focused it,” he said, “and we’ve focused it specifically on the generation of complex ANDAs. Those are probably three-to-four years out, but longer term that will be the growth story.”

ESTABLISH APPROPRIATE CAPITAL STRUCTURES FOR BOTH BUSINESSES

“Our intent is to make sure both businesses are very well capi-talized,” management told investors during a separate question-and-answer session at the conference, “both to be able to man-age their risks, and also to manage their opportunities; and we plan to put together a capital structure for each one of the busi-nesses that’s appropriate for both the risks and the asset base, and the cash-flow generation and the growth prospects. We feel quite confident that we’re in a good position to do that in 2019.”

Quizzed by an investor on the potential for litigation “liability,” in the investor’s own words, for the company’s opioid products that will go with the new company, Trudeau underlined that “to-day” it was “not a liability, it’s a risk.”

With the planned spin-off two years in the making, Mallinck-rodt assured investors, “We’ve been giving careful consideration not only to how you separate it, but how you would fund a spin. And of course, we’ve consulted with a number of advisors about how to do that, both legally and financially.”


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Generics Bulletin

Unrivalled coverage, news and analysis of the global generics, biosimilars and value-added medicines industries



P I P E L I N E WAT C H

Everolimus SPC Expiries May Not Be End Of The StoryAIDAN FRY [email protected]

Novartis’ antineoplastic drug Afinitor (everolimus) loses its supplemen-tary protection certificate (SPC)

monopoly during January 2019 in most European Union (EU) countries. In more than 20 EU member states, six-month pe-diatric extensions SPCs linked to European patent EP0,663,916 – which covers the use of alkylated rapamycin derivatives as im-munosuppressants – or national equiva-lents run out in mid-January. The ‘916 pat-

ent expired in mid-July last year, exactly 15 years after the first EU marketing authori-zation for everolimus that was granted in Sweden on 18 July 2003.

Afinitor has been approved in the EU for treating neuroendocrine tumors (NET) of gastrointestinal or lung origin, advanced or metastatic renal cell carcinoma (RCC), and renal angiomyolipoma associated with tuberous sclerosis complex. Apart from these, Afinitor is also approved in the EU

for the treatment of breast cancer together with Pfizer’s Aromasin (exemestane), as well as for treating unresectable advanced or metastatic RCC in combination with Ei-sai’s Lenvima (lenvatinib).

According to IQVIA’s Ark Patent Intel-ligence, entry of Afinitor generics may be restricted because of patent protection of many of the treatment regimens, such as treatment of pancreatic NET among others. As Figure 1 shows, IQVIA has iden-tified three other European patents – EP1,983,984, EP2,269,604 and EP2,275,103 – that may present barriers to generic com-petition in Europe.

Novartis’ most recent annual report lists, other than the pediatric SPC extension to the ‘916 compound patent, an antioxidant patent expiring this year as well as usage patents for breast cancer, RCC and tuberous sclerosis complex (TSC)/subependymal gi-ant cell astrocytoma (SEGA), each running until 2022. Its Votubia (everolimus) dispers-ible tablets are protected by a formulation patent that expires in 2022 and orphan drug exclusivity that runs until 2021.

Of global Afinitor/Votubia sales that rose by 3% at constant exchange rates to US$1.16 billion in the first nine months of 2018, US$680 million came in the US, where the Court of Appeals for the Federal Circuit recently overturned a district court’s deci-sion that US everolimus compound patent 5,665,772 was invalid for obviousness-type double patenting. The ‘772 patent is sched-uled to expire on 9 March 2020, including a six-month pediatric extension (Breckenridge, Endo and Hikma’s Advantage On Everolimus Is Snatched Away, 10 December).

AstraZeneca’s Farxiga (dapagliflozin) loses its US new chemical entity (NCE) data exclusivity in early January 2019. However, the SGLT2 inhibitor for improving glycemic control in patients with type 2 diabetes mellitus is protected by a raft of 18 patents listed against the diabetes drug in the Or-ange Book maintained by the US Food and Drug Administration (FDA). Those patents have expiry dates ranging from October 2020 to May 2030.


DATA EXCLUSIVITIES IN JANUARY 2019

INN COUNTRY

Colestilan TurkeyDabigatran etexilate JapanDapagliflozin USDolutegravir AustraliaFebuxostat JapanFimasartan/Hydrochlorothiazide South KoreaFlorbetapir (18F) TurkeyGalantamine JapanIngenol mebutate1 Canada1

Insulin aspart/Insulin degludec TurkeyInsulin degludec TurkeyMedroxyprogesterone South KoreaMemantine JapanMetformin/Dapagliflozin USMirabegron TurkeyParathyroid hormone2 US2

Pegloticase TurkeyRepaglinide JapanRufinamide SwitzerlandSarpogrelate South KoreaSecukinumab2 US2

Tasimelteon USTriamcinolone South KoreaUstekinumab Japan1 This will be followed by a no-marketing period of two years during which a notice of compliance will not be granted to a generic manufacturer.

2 This will be followed by 8 years of biosimilar application approval exclusivity, during which a biosimilar will not be approved.

Figure 2: Molecules for which data exclusivity expires in certain markets during January 2019 (Source – Ark Patent Intelligence)

SPC EXPIRIES IN JANUARY 2019

INN COUNTRY

Everolimus1

Austria, Belgium, Cyprus, Czech Republic, Denmark, Finand, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Spain, Sweden, UK

Ibritumomab tiuxetan Latvia

Lipegfilgrastim Austria, Denmark, Greece, Italy, Luxembourg1 Expiry of a pediatric extension

Figure1: SPC expiries in certain markets during January 2019 (Source – Ark Patent Intelligence)


P R I C E WAT C H U K

BIGGEST RISERS

PRODUCT/STRENGTH/PACK SIZE

DEC 18

MINIMUM

MINIMUM

CHANGE

(%)

DEC 18

AVERAGE

AVERAGE

CHANGE

(%)

Losartan tabs 25mg 28 £2.99 232% £8.29 +147%

Fluoxetine caps 20mg 30 £0.29 -3% £1.31 +134%

Furosemide tabs 40mg 1,000 £5.98 11% £46.31 +122%

Amiloride tabs 5mg 28 £2.47 24% £6.98 +115%

Losartan Tabs 50mg 28 £4.25 554% £7.75 +109%

Biggest average trade-price rises between 1-30 November 2018 and 1-31 December 2018. Averages calculated from at least 13 data points. Recently-launched products are excluded from the comparison. (Source - WaveData)

BIGGEST FALLERS


DEC 2018

MINIMUM

MINIMUM

CHANGE

(%)

DEC 2018

AVERAGE

AVERAGE

CHANGE

(%)

Ondansetron tabs 8mg 10 £0.80 0% £5.39 -34%

Olanzapine tabs 7.5mg 28 £0.93 -15% £2.49 -33%

Tamsulosin XL tabs 400µg 56 £1.35 0% £2.78 -26%

Levetiracetam 100mg/ml 300ml £17.40 -16% £25.35 -25%

Domperidone tabs 10mg 100 £0.49 -6% £1.12 -23%

Biggest average trade-price falls between 1-30 November 2018 and 1-31 December 2018. Averages calculated from at least 13 data points. Recently-launched products are excluded from the comparison. (Source - WaveData)

FAST MOVERS


OCTOBER

2018

NOVEMBER

2018

DECEMBER

2018

Lansoprazole caps 30mg 28 129 113 70

Simvastatin tabs 40mg 28 139 130 67

Bisoprolol Fumarate Tabs 2.5mg 28 102 118 64

Omeprazole caps 20mg 28 158 129 64

Loratadine tabs 10mg 30 67 79 62

Ranking of fastest-moving products subject to the most price offers made to independent UK pharmacists (one strength per ingredient; offers recorded by 31 December). Recently-launched products are excluded from the comparison. (Source - WaveData)

RECENT LAUNCHES


DEC 2018

MINIMUM

MINIMUM

CHANGE

(%)

DEC 2018

AVERAGE

AVERAGE

CHANGE

(%)

Aripiprazole Tabs 10mg 28 £0.73 -3% £1.43 -3%

Carbimazole Tabs 5mg 100 £15.20 -10% £23.01 -10%

Celecoxib Caps 200mg 30 £0.83 0% £1.44 0%

Cilostazol Tabs 100mg 56 £3.18 0% £4.78 -3%

Duloxetine Caps 30mg 28 £0.79 0% £1.43 -19%

Eplerenone Tabs 25mg 28 £2.75 0% £4.48 -3%

Escitalopram Tabs 10mg 28 £0.45 +2% £0.90 +2%

Etoricoxib Tabs 90mg 28 £2.20 +8% £2.85 -2%

Ezetimibe Tabs 10mg 28 £1.26 +1% £1.78 -4%

Frovatriptan Tabs 2.5mg 6 £2.95 -2% £4.77 -8%

Ivabradine Tabs 5mg 56 £3.75 +3% £5.13 -12%

Memantine Tabs 10mg 28 £0.61 +3% £1.03 +18%

Nefopam Tabs 30mg 90 £4.15 -9% £9.99 +2%

Nortriptyline Tabs 10mg 100 £1.51 0% £6.35 +42%

Olmesartan Tabs 10mg 28 £0.61 +11% £1.14 -2%

Pregabalin Caps 150mg 56 £2.39 +10% £3.73 +6%

Rasagiline Tabs 1mg 28 £0.95 -10% £2.06 0%

Rizatriptan Tabs 10mg 3 £3.31 -3% £6.22 +3%

Rosuvastatin Tabs 5mg 28 £0.68 0% £1.02 -2%

Sevelamer Tabs 800mg 180 £22.99 0% £119.64 +66%

Sildenafil Tabs 100mg 4 £0.23 0% £0.40 +5%

Tadalafil Tabs 10mg 4 £0.82 -8% £1.42 -11%

Telmisartan Tabs 80mg 28 £9.50 +620% £13.75 +13%

Travoprost 40µg/ml 2.5ml £2.09 +2% £3.17 -10%

Zonisamide Caps 100mg 56 £2.74 -9% £5.08 -12%

Comparison between the periods 1-30 November 2018 and 1-31 Decemberr 2018 of UK trade prices of the most recently-launched generics listed in category M of the Drug Tariff of pharma-cy-reimbursement prices. Averages calculated from at least 23 data points. (Source - WaveData)

Up-to-the-minute live retail market pricing is available for the UK and Eire on WaveData Live at wavedata.net.

Alternatively, contact Charles Joynson at WaveData Ltd on +44 (0)1702 425125

UK Prices Show Volatility Of Recent LaunchesPRICE WATCH UK – DECEMBER 2018

DAVID WALLACE [email protected]

T he end of 2018 brought steep UK price movements in both directions for recently-launched generics, according to the latest figures from market researcher WaveData.

Nortiptyline 10mg tablets saw their average price to independent UK pharmacists increase by more than two-fifths to £6.35 (US$8.10) for 100 tablets, while sevelamer 800mg tablets saw an even steeper rise of two-thirds to £119.64 for a 180-tablet pack. And telmisartan 80mg tablets in 28-count packs experienced a 13% rise to £13.75.

However, double-digit average price declines were also seen for certain molecules in the basket of recent launches. These included travoprost eye drops and carbimazole tablets, that both dropped by a tenth; ivabradine tablets and zonisamide capsules that both ex-perienced a 12% decline; and duloxetine capsules that fell by 19%.

Meanwhile, the steepest average price rises across all generic molecules in the UK were frequently met with reimbursement price concessions granted by the UK’s Department of Health and Social Care (DHSC), even if these pharmacy-level concessions did not always match the rising trade averages recorded by WaveData.

Losartan 25mg and 50mg tablets in packs of 28 saw respec-

tive trade average increases of 147% to £8.29 and 109% to £7.75. Concession prices of £6.00 and £5.50 failed to match the aver-ages in both cases.

Among December’s biggest fallers were ondansetron 8mg tablets and olanzapine 7.5mg tablets, both of which saw their average price drop by around a third. Tamsulosin, levetiracetam and domperidone were among other molecules in our table of biggest fallers, with average drops of around a quarter.

And lansoprazole led our fast movers, reflecting the molecules with the highest number of offers in the marketplace. This was fol-lowed by simvastatin, bisoprolol, omeprazole and loratadine.



P R I C I N G & R E I M B U R S E M E N T

US Court Denies Attempt To Silence Leaks In Pricing LitigationDAVID WALLACE [email protected]

M ore than a dozen generics firms have been denied an attempt to obtain an order from a Penn-

sylvania district court to stop parties to a multi-state lawsuit over generics pricing from leaking information and releasing prejudicial information to the press.

Apotex, Aurobindo, Citron, Dr Reddy’s and Glenmark were among the compa-nies filing the request, along with Lan-nett, Lupin, Mayne Pharma, Mylan and Endo’s Par. Perrigo and Sandoz were also on the list, alongside Sun with its Taro unit and Teva, including its Actavis busi-ness. (Also see “Leaks And Prejudice Must End In US Multi-State Pricing Case” - Gener-ics Bulletin, 21 Dec, 2018.)

The generics firms’ complaint referred to an article published by the Washing-ton Post in early December titled ‘Investi-gation of generic ‘cartel’ expands to 300 drugs’. They complained that “certain plaintiffs continue to appear far more interested in litigating their claims in the media rather than before this court in this multidistrict litigation proceeding”.

But the District Court for the Eastern District of Pennsylvania denied without prejudice the request of the generics companies, following opposition filings from the states involved as well as from private purchasers and payers.

INFORMATION WAS IN THE PUBLIC DOMAIN

Insisting that “defendants’ request to im-pose a gag order on the states is com-pletely without merit”, the opposition fil-ing from the concerned states argues that state representatives – including attor-neys general from Connecticut and Louisi-ana identified in the complaint – “have not violated any court order or rule of profes-sional conduct, and have not leaked any sealed information to the press”.

“Recent media reports attributed to the states merely confirm public state-ments made previously to this court and in other venues many times, including in the states’ complaints, press releases,

briefs and in open court on several occa-sions,” the opposition filing asserts.

“All of this information has been in the public domain for months, if not years. The fact that it is only now being report-ed by the media does not justify the relief defendants’ seek.”

“The states understand that the de-fendants do not want the public to learn the full extent of their unlawful conduct and the allegations made by the states,” the opposition filing declares. “But that does not justify imposing a gag order on public officials.”

MISGUIDED ATTEMPT TO FRUSTRATE OFFICIALS

Emphasizing that the “ongoing investiga-tion of generic drugs is massive, industry-wide and expanding”, the opposition filing says the firms’ complaint is “noth-ing more than a misguided attempt to prevent the state attorneys general from carrying out one of their core functions as elected government officials account-able to the public: disseminating accurate information, consistent with their office policies and state law, about an important issue of great public concern that affects the public’s health, safety and welfare”.

Moreover, the states suggest, “none of the statements attributed to the states would create a substantial likelihood of material prejudice to a civil trial occurring years from now”.

Referring to the leak of an unredacted version of the states’ complaint against the generics firms, the opposition fil-ing insists that “the states did not leak” this document. “Except for some veiled implication in the defendants’ motion, there is no credible suggestion that the states leaked the unredacted version of their complaint to a media outlet called Business Insider,” they maintain. “Indeed, the defendants concede that ‘the identi-ty of the violating party is unknown’,” the opposition filing highlights.

“State attorneys general and their rep-resentatives have complied with the gov-

erning standards of conduct and have not violated Connecticut law,” it concludes, “and there are serious First Amendment [constitutional] implications raised by de-fendants’ request for a gag order.”

In an appendix to the opposition filing, the states dissect reports by the Washing-ton Post and other media outlets to sup-port disclosures made by state officials with relevant sections of applicable ‘safe harbor’ provisions.

Meanwhile, a separate opposition filing by private purchasers, payers and resellers insists that the generics firms’ motion for an order limiting extra-judicial statements “fails to identify a single act or omission by any private plaintiff that would justify the relief sought”.

“In fact,” they emphasize, “private plain-tiffs have committed no such violations or engaged in any improper conduct that would merit any admonishment.”


“Defendants do not want the

public to learn the full extent of their unlawful conduct.”



I N T E L L E C T UA L P R O P E R T Y

AAM Weighs In On Supreme Court Challenge To UCB’s LacosamideDAVID WALLACE [email protected]

U S off-patent industry body the Association for Accessi-ble Medicines (AAM) has leant its backing to a Supreme Court petition filed by Alembic, Mylan and Sun Pharma

that calls on the top US court to correct an obviousness test ap-plied by the US Court of Appeals for the Federal Circuit.

In a petition for a certiorari review by the Supreme Court, the three firms at the end of November 2018 questioned whether the ‘lead compound test’ imposed by the Federal Circuit – which revolves around whether a person of ordinary skill in the art (POSA) would select a specific lead compound for further devel-opment from a range disclosed by prior art – should enable firms to obtain multiple patents covering the same subject matter.

Questions posed by the petition ask whether patentees should be able to obtain a second patent on the same inven-tion covered by one of its pre-existing patents; and whether the Federal Circuit’s ‘lead compound test’ should allow a patent to be obtained when differences between a claimed invention and prior art were obvious to a POSA.

The related litigation – which revolves around UCB’s Vimpat (lacosamide) brand and associated reissued US patent RE38,551 – also involved a host of other generics firms, including Actavis, Amneal, Apotex and Aurobindo, as well as Breckenridge, Cadila, Intas and its Accord affiliate, MSN and Zydus.

“This case will define Americans’ access to affordable essential medicines,” the petitioners state, insisting that Supreme Court review “is necessary to reconcile the legal fiction of the Federal Circuit’s restrictive approach to obviousness with the realities of pharmaceutical development and tactical patenting”, citing UCB’s “history of tactically patenting lacosamide” by claiming the molecule “again and again”.

SERIAL PATENTING ALLOWED UCB MONOPOLYArguing that UCB should not have received three separate patents covering the same anti-epilepsy drug – especially since the chemical structure of lacosamide and how to make and use it were already known to the public – the petitioners emphasize that “serial patent-ing of the same invention without further innovation has extended [UCB’s] monopoly over lacosamide to more than a quarter century”.

The Federal Circuit had “failed to give meaningful effect” to Su-preme Court precedents against double-patenting, the petition claims, arguing that the appeals court’s error “stems from its im-balanced application of the hypothetical POSA”, revolving around how the POSA would view the scope and content of prior art.

“The Federal Circuit’s deviations from obviousness doctrine are not esoteric questions of patent law,” the petitioners underline. “They distort the market by favoring improperly obtained rights to old pharmaceutical technologies that should be in the public domain.”

AAM SAYS SUPREME COURT MUST ACTIn the recent amicus brief in support of the petition, the AAM

insisted that the Supreme Court should “correct the Federal Cir-cuit’s legally erroneous ‘lead compound’ test and replace it with the statutory obviousness test of comparing the claimed inven-tion to the prior art as a whole”.

Noting that the Supreme Court had set out an “objective stan-dard for determining obviousness” – involving determining the scope and content of the prior art; comparing the differences between the prior art and the claims at issue; evaluating the level of skill in the art; and assessing objective evidence of non-obviousness – the AAM argued that there was “no separate re-quirement to prove that a particular prior-art disclosure would have been recognized, subjectively or otherwise, as the ‘best’ or ‘closest’ or ‘lead’ disclosure”. Rather, the AAM said, “the claims of a patent are objectively compared to the prior art as a whole”.

‘LEAD COMPOUND TEST’ PRODUCES ABSURD RESULTSThe ‘lead compound’ analysis “is far more subjective, and adds a step”, the AAM pointed out, suggesting that it could lead to “absurd” results by making any compounds disclosed among several in prior art – but not identified as the ‘best candidate’ –


I N T E L L E C T UA L P R O P E R T Y

patentable and non-obvious despite the prior disclosure.“The artificial first step of excluding prior-art disclosures from

consideration is not required by, and is inconsistent with, the statute,” the AAM argued, “and is not employed for patents in all technological fields.”

Referring to the ‘lead compound test’ as an “extra-statutory standard the Federal Circuit applies to avoid finding obvious patents invalid”, the AAM said this had the effect of “unnecessar-ily blocking generic pharmaceutical drug entry and thus harms patients, taxpayers and all others who are required to pay mo-nopoly prices for prescription medicines due to invalid patents”.

“In doing so,” the AAM said, “the Federal Circuit’s standard cre-ates a special obviousness standard for pharmaceutical com-pounds which is inconsistent with the patent laws.” The certiorari petition was, the association argued, seeking to eliminate the ‘lead compound’ step “so that compound patents are treated like every other kind of patent”.

“Certiorari should be granted so that this court can stop the

Federal Circuit from retreating to its own rigid formulations of obviousness in this important area of patent law.”

AHIP ALSO BACKS PETITIONA further amicus brief in support of the petition has been filed by America’s Health Insurance Plans (AHIP), encouraging the Supreme Court to “correct the overly rigid test applied by the Federal Circuit that protects duplicative patents and makes it more difficult for generic drug companies to combat this type of gamesmanship by brand-name manufacturers”.

“This case presents an ideal opportunity for this court to clar-ify that rigid legal tests for obviousness are as unwelcome in the realm of pharmaceutical compounds as they are in the sphere of mechanical patents,” the AHIP argued, claiming that the Federal Circuit’s use of such a test “departs from constitutional and statu-tory directives and flouts this court’s precedent”.


Don’t Push Mayo To The Side, Hikma Urges Top US CourtAIDAN FRY [email protected]

H ikma is urging the US Supreme Court to revisit a Court of Appeals decision that a method-of-treatment patent pro-tecting Vanda’s Fanapt (iloperidone) schizophrenia drug

until November 2027 was automatically eligible for patenting. According to the Jordanian company, the stance taken by a

split panel in the Court of Appeals for the Federal Circuit contra-venes Supreme Court precedent, particularly its landmark 2012 decision in Mayo vs. Prometheus, which held that patents claim-ing methods of treatment or diagnosis must satisfy an ordinary analysis of eligibility under Section 101 of the US Patent Act.

In its Mayo decision, the Supreme Court had, Hikma points out, maintained that “to transform an unpatentable law of nature into a patent-eligible application of such a law, one must do more than simply state the law of nature while adding the words ‘apply it’”.

“As a result, diagnosis claims can now be redrafted as treat-ment claims that merely direct doctors to follow the natural law in administering known drugs for their known purposes – effec-tively rendering Mayo a dead letter.”

But the Federal Circuit found that Vanda’s claims in US patent 8,586,610 for treating schizophrenia with iloperidone by di-recting doctors to measure patients’ metabolite levels and ad-just the dosages based on the patients’ genotypes fell outside of the scope of Mayo. This, Hikma argues, rendered method-of-treatment claims – “such as administering a known drug for a known purpose” – automatically eligible for patenting under Section 101. (Also see “US appeals court split as it backs up Fan-apt” - Generics Bulletin, 20 Apr, 2018.)

“As a result, diagnosis claims can now be redrafted as treatment claims that

merely direct doctors to follow the natural law in administering known

drugs for their known purposes – effectively rendering Mayo a dead letter.”

THREATENS TO RENDER MAYO RULING A ‘DEAD LETTER

“As a result,” Hikma asserts in its petition to the Supreme Court for a writ of certiorari, “diagnosis claims can now be redrafted as treatment claims that merely direct doctors to follow the natural law in administering known drugs for their known purposes – effectively rendering Mayo a dead letter.”

Drawing on the Federal Circuit’s decision, the US Patent and Trademark Office (USPTO) in June 2018, Hikma observes, issued a memo to examiners. This stated that it was not necessary for method-of-treatment claims “that practically apply natural rela-tionships to include non-routine or unconventional steps to be considered patent eligible under Section 101”.

Given that method-of-use patents can be listed in the Orange Book maintained by the US Food and Drug Administration (FDA), Hikma stresses that such patents can be asserted to obtain auto-matic 30-month stays on generic approval. Thus, the Federal Circuit’s position will, the company says, “heighten patentees’ incentive to list weak ‘method-of-use’ patents in the Orange Book – further delaying low-cost generic medicines’ market entry – safe in the knowledge that such patents will now receive a free pass under Section 101”.



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enerics ulletin nforma - Generics Bulletin · CHINESE PLATFORM Jing Lou, chairman and chief executive of 3SBio, praised Samsung Bioepis’ “lead-ing biologic development and manufac-turing