Patents Articles

The Drug Price Competition and Patent Term Restoration Act (1984), more commonly known as the Hatch-Waxman Act (herein "the Act"), seeks to give a patent owner at least partial restoration of the patent term period lost while obtaining regulatory approval for a patented article or method, typically a drug, medical device, or therapeutic method.

Nagendra Setty

An important new law went quietly into effect at the beginning of this year. It promises to have immense effects on the pharmaceutical industry: It will reshape one of the world's largest markets, make an important population of scientists and researchers more accessible to American companies, alter the infrastructure that supplies the developing world with drugs for AIDS and other diseases, and push a group of ferociously competitive companies away from generics and toward proprietary drugs.

Significantly, it wasn't passed either by the United States or the European Union, but rather, by India, the world's fourth-largest pharmaceutical market and the home of significant resources in pharma manufacturing and R&D.

Until very recently, brand managers could rely on the timing of a patent expiration. Decisions about sales force allotment, marketing and promotion, manufacturing, and long-term product planning were made under predictable environments during launch and mid-lifecycle phases. Likewise, exit strategies could be created with predictable timing: removing sales and marketing support was the last step of the so-called "harvest" phase before the entry of generic competition.

But the dramatic rise in generics manufacturer challenges to brand patents has significantly complicated product management. Now, for many brands—whether they are blockbusters from large companies or small life-blood products for single-product companies—timing certainty has left the product management equation.

Patent issues have moved to center stage in Washington. In June, the Supreme Court ruled unanimously that pharma companies can do research on patented materials without infringing on intellectual property rights. Patent-extension proposals continue to pop up as incentives for desirable new drug research. Congress has launched a serious effort to overhaul the current US patent system and policies. And, somewhat ironically, industry strategies for transferring valuable patent rights to overseas subsidiaries put pharma companies in a prime position to benefit from a one-time tax break for companies that bring some of those foreign profits back to this country. (See "Bringing It All Back Home.")

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the great battle between pharma companies and their generic competitors, drug delivery technologies have an outstanding track record. Numerous large pharmaceutical companies have successfully relaunched blockbusters as novel formulations with an enhanced method of delivery, orodispersible and sustained-release dosage forms being the most popular. Indeed, life-cycle management was the single most important factor that drove the rapid growth of the delivery sector during the 1990s and the first years of this decade. Yet more recently, involvement with pharma life-cycle management has been conspicuous in its absence from the core business strategies of delivery companies, where many believe even its mention nowadays can trouble investors.

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Drug Delivery Executive: Dr. Joseph Mo, President and CEO of NexMed, explains how his company’s transdermal drug delivery system has been incorporated with existing drugs to develop new patient-friendly transdermal products, thereby extending patent lifespan and brand equity.

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How much of an impact does patent reform, real or imagined, have on biopharmaceutical stocks?

Plenty. Consider Pfizer as an example.

Brian O'Connell
The pharma giant sent shock waves up and down Wall Street in December '05 when it announced that third-quarter profits had plummeted by 52 percent. That in turn sent company stock down almost nine percent, reaching a 15-year-low.

While declining sales of linchpin drugs like Lipitor and Viagra had a lot to do with Pfizer's financial woes, analysts noted that many investors were jumping ship over the fact that the company has a slew of patents ending their run in 2006. Pfizer will have to battle it out with generic drug makers encroaching on its turf.

Investors spent 2005 nervous about Lipitor's patent, which seemed vulnerable after Ranbaxy Pharmaceuticals filed a patent infringement lawsuit. With $2.9 billion in Lipitor sales, Pfizer had a lot riding on the outcome of this patent case, which ended in Pfizer's favor.

Increasingly global markets have rewarded biopharmaceutical companies with operations outside the United States and Europe with ample opportunities to expand successfully into new marketplaces around the world. At the same time, innovative companies in the biotechnology and pharmaceutical industries depend heavily on the protection of their intellectual property. In today's international markets, biopharmaceutical companies still face rampant piracy and counterfeiting of patented products. Since the establishment of the World Trade Organization (WTO) in 1995, important progress has been made in achieving better international harmonization of patent laws; however, many challenges for innovative biopharmaceutical companies remain, and new obstacles continue to emerge.

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Patents, trademarks, copyrights, and trade secrets constitute private intellectual property (IP), and the owners of such property, like owners of real property, are entitled to exclude trespassers.

Enforcing intellectual property (IP) rights need not involve litigation. Owners of IP who are not solely interested in exclusivity frequently work out private licenses with perceived infringers.1 Similarly, a carefully worded cease-and-desist letter might convince an infringer to halt the infringing activity without judicial intervention. Letters and licensing negotiations, however, often simply serve as preludes to litigation.

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