The International Who’s Who of Life Sciences Lawyers brings together four of the world's leading practitioners to discuss key issues facing IP lawyers today. Brian Gray of Norton Rose Canada, Pierre Véron of Véron & Associés, Nicola Dagg of Allen & Overy and Tony Yeo of Drew & Napier LLC discuss the impact of the global financial crisis, levels of activity and the "patent cliff", among other hot topics.
Norton Rose Canada LLP
Who’s Who Legal: Due to tightening economic circumstances, increasing generic competition and greater pressure on drug pipelines, this is a challenging time for clients. How has this impacted on the type of work you are seeing – and on the legal marketplace in your jurisdiction?
Brian Gray: Between 2010 and 2014 it is estimated that patent protection in Canada will have ended for prescription drugs worth an estimated $7 billion a year, based on an estimate published in the National Post. In addition, some insurance companies in Canada are forcing patients to take the cheaper generic versions. No doubt this will continue to put pressure on brand name companies. We had seen a decrease in traditional chemical drug patent filings in the period 2008–2011, but 2012 saw a slight increase in such filings as well as increases in medical device and biotech patent filings. Pharmaceutical litigation remains strong.
Pierre Véron: The French government has strongly encouraged patients to take the generics (if they take it they have nothing to pay, while if they take original drugs, they have to pay and are reimbursed at a later stage). This puts still more pressure on the originators who have to fight fiercely to defend their positions.
Nicola Dagg: The increasing pressures and hurdles for pharmaceutical clients makes protection even more important for clients. Clients are not only being ruthless about protecting patents, but are requesting advice on other ways of protecting commercial interest in their product pipelines, including sophisticated legal advice on all ways to maintain exclusivity requiring top-notch patents, regulatory and antitrust advice combined.
In addition, clients are increasingly using collaborations and M&A deals to supplement their product portfolio. The historical focus of developing drugs from the test tube to the patient is being replaced by research labs developing products then merging or selling to multinationals to commercialise and market. Some of this is having an impact on the type of work seen in the legal marketplace.
It is no longer good enough simply to be, for example, a patent litigator. You need to be a life sciences lawyer that understands the full range of IP, regulatory pricing tools and so on.
Tony Yeo: The changing economic circumstances have resulted in increased challenges on clients in the pharmaceutical industries. In terms of the impact on the legal work, we see different developments in different spheres of work.
In the area of litigation and disputes resolutions, we have noticed an increase in the legal challenges on the entry of generics in our market. In Singapore, Section 12A of the Medicines Act provides that a party that wishes to obtain marketing approval for a drug may be required by the Singapore Health Sciences Authority to serve on a patent holder, a notice to inform them of the party’s application, details of the drug and the legal and factual grounds on which the party believes the patent is invalid or will not be infringed if marketing approval is granted. If the patent holder disagrees with the legal and factual grounds set out in the notice, the patent holder is required to commence legal proceedings for an order (either that the patent is valid or that the patent would be infringed if marketing approval is granted) within a time frame specified under the Medicines Act.
As a result, we have seen a number of lawsuits commenced in Singapore concerning the challenge by the generics on the originators’ patents which are approaching the end of the product’s patent life. I have been involved a number of these lawsuits.
We are also seeing originators enter into the generics market themselves as a way to meet these challenges.
In the corporate arena, there continues to be merger and acquisition activity although the trend appears to be that there is an upswing in pharmaceutical companies looking to diversify their product portfolio, including acquiring non-pharmaceutical companies or non-traditional healthcare related industries, such as skincare, cosmetics, and even fast-moving consumer goods.
Who’s Who Legal: It had been thought that the line between innovators and generics has become more blurred which may result in decreasing litigation. However, many lawyers we spoke with remarked on a “very active year” in terms of IP-related litigation work, with this making up a significant part of their firm’s IP life sciences practice. Is this the case with your practice? What, in your view, are the key reasons behind this?
Nicola Dagg: Yes, the year has been active. The delineation or blurring between innovator and generic has not necessarily resulted in decreasing litigation. There have been large disputes among innovators on biologics, eg, Novartis v MedImmune (AstraZeneca), Genentech v Bayer/Regeneron. However, litigation has become more complex and has required a detailed awareness of trends and competition in this sector to meet the needs of the sector. The legal press has recently reported that litigation is a priority for all firms. Furthermore, the Allen & Overy LLP board has recently endorsed a new business plan which includes life sciences litigation as a priority area.
Brian Gray: Canada has a pharmaceutical regime which creates significant legal work. Firstly, because patent validity and infringement issues can be litigated in the regulatory PMNOC cases when generics seek regulatory approval, and then litigated again in other PMNOC cases or regular infringement proceedings, sometimes with contradictory results. If the regulatory review results in a generic getting permission to market in spite of the patent, the generics can seek damages for any delay incurred. All of this means significant ongoing litigation and last year has been one of the busiest ever. In addition Canada remains out of step with international norms with respect to its approach to patent validity, particularly with respect to utility and enablement requirements.
Pierre Véron: Even though many innovative pharma companies now have a subsidiary or a division devoted to generics, patent litigation in France is still developing with many cases brought by the originators against the generic companies.
Tony Yeo: It has been a very active 2012. As mentioned above, I have been actively involved in such litigation in Singapore. For example, I am presently representing a number of clients who are patent holders and who have been served with notices pursuant to Section 12A of the Medicines Act stating either that my clients’ relevant patents are invalid and/or will not be infringed if marketing approval is granted for the new drug. As the patent holders disagree with the contents of the notices, on behalf of clients, I have commenced proceedings to obtain court orders which confirm that the relevant patents are valid and/or will be infringed by the sale of the new drug. These proceedings are presently on-going.
Who’s Who Legal: We have heard the biotechnology and medical devices sectors are keeping lawyers very busy. Are you seeing this trend? What are the other key sectors you are seeing work from?
Brian Gray: We do not see this trend in Canada yet. We are seeing a renewed interest in biotech patenting so perhaps this will be something we will see in the future – but not yet. The sectors of biotech and medical devices are becoming more closely related to each other, which may have a positive influence on growth in both sectors.
Pierre Véron: The biotechnology and medical devices sectors are also very active with several interesting cases of biotech patent decided by the French courts over the last months.
Nicola Dagg: Changes in EU legislation are increasing the work of lawyers in the biotechnology and medical devices sector. Novel pharmaceuticals now often incorporate a delivery system which can result in dual analysis of a product.
There is also a blurring of the lines between IT and healthcare, with connected health being a focus for many organisations. This has resulted in clients requesting detailed advice on the compliance issues in this sector. Social media and the interplay with the web is also having an impact on this sector, particularly in relation to advertising and connecting to patients.
Tony Yeo: In terms of patent registration work, the filing of biotech and medical device-related patents continue to be a regular feature in our portfolio of patent registration work but there does not appear to be a discernible increase.
In terms of medical devices work, 2012 has been a busy year for the industry as the Health Sciences Authority (the regulatory authority in Singapore for pharmaceutical and medical devices in Singapore) received a high volume of industry feedback which resulted in amendments to the legislative framework of medical devices in Singapore. The amendments provided principally for the exemption of certain low-risk Class A medical devices from registration requirements (prior to the amendments all medical devices had to be registered prior to marketing, sale and use in Singapore from 2012), and to introduce immediate registration processes for Class B medical devices as well as other enhancements to the registration framework for Class C and Class D medical devices. Medical devices are usually classified by the degree of risk and invasiveness of their use, with Class A being the least risky and invasive, and Class D being the most risky and invasive.
In terms of key sectors, there appears to be increased interest in other health-product related areas such as tissue banking and cell research.
Who’s Who Legal: Due to globalisation, clients are increasingly requiring local counsel in a larger number of countries. Have you experienced this? How has this been addressed by your firm and in the legal marketplace?
Brian Gray: IP has always been global and cross-border pharmaceutical cases have always had to be coordinated. They frequently use common experts and common discovery and trial evidence. However, increasingly clients feel more comfortable using the same firm in multiple jurisdictions, and this is one factor driving the globalisation of firms such as Norton Rose. Unfortunately, innovative companies are becoming increasing aware of Canada’s shortcomings regarding internationally competitive IP.
Nicola Dagg: Many of Allen & Overy’s clients are multinational companies who require a seamless approach to project management. There is an increasing desire to advance and develop products in emerging markets and clients are requesting practical experience of how other clients and potential competitors are approaching life sciences issues in selected jurisdictions.
Allen & Overy has a network of 42 offices in 29 jurisdictions who provide a full legal service to our clients in these jurisdictions. Outside of the Allen & Overy network, we have close relationships with an international network of IP relationship firms. We select these firms carefully and invest in these relationships by sharing information, precedents and market developments.
Tony Yeo: There is an increase in cross-jurisdictional work, where we have assisted as Singapore counsel on cross-border pharmaceutical transactions, as well as advisory matters. We would typically be asked to advise specifically on matters under Singapore law in such multi-jurisdiction matters. We have also been instructed by clients to assist local counsel in an advisory role, with patent litigation actions based on pharmaceutical patents in other regional countries.
Pierre Véron: Véron & Associés are mainly involved in multi-jurisdictional cases where coordination with firms acting in other jurisdiction is vital. We have several cases pending in parallel in five or six jurisdictions. We have developed a network of firms specialising in patent litigation with the best track record in their jurisdiction and our clients are very happy with this system.
Who’s Who Legal: How has the “patent cliff”, the huge wave of drug patent expirations, impacted on the type and volume of work you are seeing? Do clients have to be increasingly innovative to compensate for this? How has it affected the industry?
Brian Gray: Brand name companies whose products are going off-patent (and you can go back to my answer to the first question for this) have to be increasingly innovative in the marketing and communications sphere. They have to sell the value proposition of brand name drugs both in respect of quality and service. They also have to promote efficiencies in manufacturing and distribution and this may be fuelling some of the consolidation we have seen in the industry in the last few years. Some innovative companies have created “ultra-generic” divisions to sell their own drugs after patent expiry.
Pierre Véron: Although the number of patents in force decreases, the number of patent disputes increases. The battles are fiercely fought.
Nicola Dagg: Clients are finding novel approaches to product protection. There is an increasing demand for product portfolio management where issues such as data exclusivity and second medical use are being exploited to maintain commercial advantage in products facing the patent cliff.
The traditional scattergun approach to R&D for the prospect of finding a blockbuster is being superseded by approaches driven by targeted healthcare and personalised medicines. Clients are being smart on technology, and when defining products (medicine/medical device) are requesting advice on the regulatory/legal issues and considerations before formulating a program of development.
Some of our key innovator clients are now concentrating on numerous ambitious new product launches over the next two to three years.
Tony Yeo: The initiatives to address the patent cliff have been gathering momentum for a number of years. As already noted, a combination of various strategies seem to have been adopted including (a) originators entering into the generics market, (b) an increase in patent litigation commenced pursuant to Section 12A of the Medicines Act, (c) an expansion into non-pharmaceutical sectors and industries, (d) looking at outsourcing as a means of costs management, (e) continued research and clinical developments for new pharmaceutical products and therapies, and (f) development and growth of new markets, including a continued interest in China as well as other markets within Asia.
Who’s Who Legal: What do you foresee in the year or so ahead in terms of the big trends in the IP life sciences sector?
Brian Gray: Long-term, personalised medicine is likely to be the wave of the future. New discoveries in the genetic world will enable drugs to be more targeted to individual needs. In addition drugs made by biologic and not traditional chemical processes are likely to be increasingly the norm. These trends may push the major pharmaceutical companies to look closely at acquiring or linking up with emerging biotech companies. In the short term, traditional life sciences patent litigation is likely to remain strong in Canada.
Canada is currently engaged in negotiations on a Comprehensive Economic and Trade Agreement (CETA) with the EU. These negotiations are trying to resolve three areas: an effective right of appeal for innovators, patent term resolution and increased data protection. Canada is also engaged in trade discussions with Pacific Rim countries in the Trans-Pacific Partnership talks. These talks will also focus attention on IP trade issues such as those mentioned above.
Pierre Véron: The introduction of the European patent with unitary effect within the next two or three years may have a major impact in patent litigation in the life sciences sector. There are reports that the number of national patent filings are increasing to avoid the jurisdiction of the future Unified Patent Court. We will see whether this is an accident or a real trend.
Nicola Dagg: The unique nature of regulatory impact on the life sciences IP is likely to have a bigger focus. There is likely to be more blurring of the lines between pure IP and regulatory management, in particular the considerations of data exclusivity in portfolio management and commercial development. Antitrust and privacy, which were traditionally considered secondary to patents and regulatory approvals may increase in prominence and lead to potential disputes or compliance control. Pure IP is unlikely to be considered in isolation but will be one tranche of the multifactor commercial approach to product development.
Tony Yeo: We anticipate that the various efforts and initiatives to address the “patent cliff” will continue to gather momentum. The current tension between originators and generics entering into the pharmaceutical markets is also likely to intensify.