Dr. Reddy’s Wins Prilosec Summary Judgment

On Tuesday, March 10, 2009, Dr. Reddy’s Laboratories (NYSE:RDY) prevailed in a patent dispute with Astra Zeneca, receiving a summary judgment victory in the ongoing dispute before the United States Federal District Court for the Southern District of New York.  U.S. District Court Judge Colleen McMahon ruled that the Omeprazole Magnesium OTC Abbreviated New Drug Application (ANDA) filed by Dr. Reddy’s does not infringe the patents in suit related to AstraZeneca’s Prilosec OTC®. 

The case presented itself as a Hatch-Waxman patent infringement case.  AstraZeneca holds a number of patents listed in the Food and Drug Administration’s Orange Book, including U.S. Patent No. 5,900,424 and U.S. Patent No. 5,690,960, both of which cover Prilosec OTC, an over-the-counter version of the original Prilosec product that for years was only available with a prescription.  The inventions disclosed in the ‘424 patent and the ‘960 patent are directed to a highly crystalline form of omeprazole magnesium.  AstraZeneca took the position that only a highly crystalline form of omeprazole magnesium is maximally effective in the treatment of gastro-intestinal disorders for which Prilosec is effective.  The patents disclose a particular form of omeprazole magnesium, specifically one that is at least 70% crystalline, as well as a unique water-based process used to produce the drug.

Dr. Reddy’s developed a different form of omeprazole magnesium having less than 1% crytallinity detectable, and used a different manufacturing process.  To enter the market Dr. Reddy’s filed an ANDA for Prilosec OTC, which is allowed under Hatch-Waxman legislation.  The whole purpose of Hatch-Waxman was to make it easier for a generic drug manufacturer to piggy-back on the studies previously submitted by the original inventor of a new drug. In the United States, in order for a new drug to receive market approval a New Drug Application, known as an NDA, must be submitted to the Food and Drug Administration (FDA). To lessen the burden on generics, Hatch-Waxman allow generic manufacturers to submit Abbreviated New Drug Applications, known as ANDAs. In the event that the generic manufacturer can establish that the drug mentioned in the ANDA is the bioequivalent of a drug approved in a NDA, the generic manufacturer can sail through approval by relying on the costly and time consuming studies previously submitted as a part of the NDA.


The real wrinkle in Hatch-Waxman, at least in patent terms, comes with respect to certain statements that must be made by the generic manufacturer in the ANDA. Indeed, an ANDA applicant must make one of four certifications regarding each patent that applies to the drug for which approval is being sought: (I) no such patent information has been submitted to the FDA; (II) the patent has expired; (III) the patent is set to expire on a certain date; or (IV) the patent is in valid or will not be infringed by the drug covered in the ANDA. It is the paragraph IV certifications that are the most interesting. Although making a paragraph IV certification is not an active act of infringement, thanks to specific legislation, when a paragraph IV certification has been made the patent owner of the drug covered by the NDA may immediately institute infringement proceedings, which is fairly typical.  It was a paragraph IV certification in the ANDA that was filed by Dr. Reddy’s that lead to AstraZeneca filing the patent infringement law suit.

In addressing whether Dr. Reddy’s proposed omeprazole magnesium drug would infringe the patents owned by AstraZeneca, Judge McMahon explained that the proposed claim constructions put forth by AstraZeneca  simply ignored the plain meaning of the claims.  On this point Judge McMahon said:

AstraZeneca’s construction disregards the simple, plain and easily understood words of the claim (“by the addition of water”) in favor of a construction (“the use of water in sufficient proportion to other solvents to facilitate crystallization”) that is litigation-driven and overly complex.  Plaintiff take the clear words of the claims and renders them far less comprehensible to a trier of fact.  At no point in the patent prosecution did Plaintiff so much as suggest that the word “addition” had anything other than its ordinary and commonly understood meaning, or that it ought to be construed as some sort of term of art.  Indeed, the meaning of the words “addition” and “adding” is so obvious that AstraZeneca did not define it, but simply used it, over and over again, in its submissions to the Patent Office – which indicates that the term, far from requiring explanation, defines itself.  AstraZeneca even continues to refer to “the addition of water” in a self-defining way in its Claim Construction Brief.

In the end, AstraZeneca’s proposed construction cannot be accepted because it is inherently self-contradictory.  It reads out of the patent the patentee’s own description of the way that extra water (over and above that which is already present in the aqueous solution) gets into the mixture – via a discrete and sequenced step that facilitates controlled crystallization.  If, as Plaintiff here maintains, there is “no restriction on when or how water is added to the processes,” then the crystallization step is not really a step at all, let alone one that occurs at a specific point in the manufacturing process, after the inorganic salts are separated from the mother mixture.  And if water that is present in the raw materials used to create the mixture, or that is absorbed into the mixture from the ambient air, causes the crystallization, the crystallization is not controlled – it occurs at whatever rate, and to whatever degree, the naturally-occurring water allows it to occur!

Thus, AstraZeneca’s proposed construction does violence to its own carefully-crafted description of its invention.  While I think DRL goes too far when it describes Plaintiff’s AstraZeneca’s proposed construction as “shockingly Orwellian,” it is clearly beyond the pale.

Commenting on the judgment, Amit Patel, Head – North America Generics, Dr. Reddy’s, said, “We are very pleased with the favorable summary judgment ruling in the Omeprazole Mg OTC litigation. This is a key event supporting our strategy to deliver one upside opportunity every year. We have submitted our ANDA filing and are awaiting FDA response. At this point in time, we will continue to work through the regulatory approval process while simultaneously progressing manufacturing and commercialization preparation.”

Shares of Dr. Reddy’s surged ahead by over 5%on news of its victory in this patent litigation with AstraZeneca.  This is no doubt due to the fact that it is now looking good for Dr. Reddy’s to enter the market with a generic form of omeprazole magnesium.  The Prilosec OTC® brand product has annual sales of approximately $362 million in the United States, based on sales data as of July 13, 2008, so for those who suffer heartburn, and those that own shares of Dr. Reddy’s, this is an important decision. 

Dr. Reddy’s are awaiting FDA response to their ANDA, and will continue to work through the regulatory approval process while simultaneously progressing manufacturing and commercialization efforts.

About the Author

Eugene R. Quinn, Jr.
President & Founder of IPWatchdog, Inc.
US Patent Attorney (Reg. No. 44,294)

B.S. in Electrical Engineering, Rutgers University
J.D., Franklin Pierce Law Center
L.L.M. in Intellectual Property, Franklin Pierce Law Center
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Gene is a US Patent Attorney, Law Professor and the founder of IPWatchdog.com. He teaches patent bar review courses and is a member of the Board of Directors of the United Inventors Association. Gene has been quoted in the Wall Street Journal, the New York Times, the LA Times, CNN Money and various other newspapers and magazines worldwide


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