Drug Patents and the High Cost of Healthcare: Case of Over-Advocacy for Under-Patentability

In my last post, I discussed a particular form of drug-patent abuse unique to “Orange Book”-listed patents covering small-molecule drugs, which can have the power to delay generic drug competition by 2.5 years merely by the filing of a lawsuit.  In this post, I would like to focus on a more foundational weakness in the patent examination system that sometimes has been exploited by drug-patent owners in their attempts to unjustly delay market entry for both generic and biosimilar versions of a drug, way-beyond the expiration of the original patents covering the drug.  This weakness is the limited ability of members of the examiner corps to effectively rebut so-called “Rule 132” declarations during ex parte patent prosecution of drug-patent applications.

Rule 132 declarations are grounded in the Code of Federal Regulations, 37 C.F.R. § 1.132, entitled “Affidavits or declarations traversing rejections or objections” (as discussed in the Manual of Patent Examination Procedure § 716).  When an applicant introduces Rule 132 declarations by alleged experts in the field during prosecution of a patent application, examiners have neither the wherewithal nor the authority to provide alternative expert analyses: Examiners are not experts (nor even those of ordinary skill in the art); and they cannot retain experts on behalf of the PTO.  At best, they may be able to assert prior art that contradicts an expert declaration.  But in the absence of directly contradictory statements or other such tangible rebuttal evidence, the examiner can effectively be forced to accept assertions by an applicant’s experts as true, even though, upon more careful scrutiny, those assertions turn out to be false.

A case in point can be found in Allergan’s “second wave” of Restasis patents, which were obtained by the drug company late in the term of the original Restasis patents that expired in 2014—and which sought to effectively extend this term by nearly a decade.  These second-wave patents include U.S Patent No. 8,629,111 (“the ‘111 patent”), which was asserted along with several others against three generic drug companies in the Eastern District of Texas, and which Judge Bryson of the Federal Circuit, sitting by designation, found invalid last October.

Allergan’s prior-art Restasis patent, U.S. Patent No. 5,474,979 (the so-called “Ding I patent”), was generally directed to pharmaceutical emulsions comprising a particular combination of an immunosuppressant, called cyclosporin A, in a suspension of castor oil, for treatment of a condition known as “dry eye.”  The Ding I patent discloses and claims pharmaceutical emulsions of cyclosporin A in castor oil generally, as well as emulsions in which the concentration by weight of cyclosporin A and castor oil are within certain ranges.

The alleged innovation in the ‘111 patent (and its siblings) amounts to the allegedly surprising and unexpected discovery by Allergan scientists that the specific combination of a certain amount of cyclosporin A within the range in the prior art—about 0.05% by weight—in a certain amount of castor oil within the range in the prior art—1.25% by weight—produced superior results, relative to other possible combinations within those ranges in the prior art, for the treatment of dry eye.

To be sure, as the Federal Circuit has noted in In re Geisler, and more recently in Galderma v. Tolmar, such combinations within ranges known in the prior art may be patentable, but only when the applicant can show that the particular combination is “critical.”  This generally means “by showing that the claimed range achieves unexpected results relative to the prior art range.”  Only if such “results of optimizing a variable” are “unexpectedly good,” however, can a patent be obtained for the claimed critical combination.  The results must be “different in kind and not merely in degree from the results of the prior art.”

With annual sales of Restasis at around $1.5 billion, one might expect that in return for nearly 10 years of additional market exclusivity, that the results with the claimed 0.05% cyclosporin A in 1.25% castor oil would have been “unexpectedly good,” indeed.  But in this case, quite the opposite was true.

The examiner initially rejected the claims of the ‘111 patent as obvious over the Ding I patent.  What is more, Allergan had even conceded the point during prosecution of the ’111 patent’s parent applications.  For example, Allergan previously argued that 0.05% cyclosporin A in 1.25% castor oil would have been obvious over the Ding reference:  “[A]pplicants concede that in making this selection (0.05% cyclosporin and 1.25% castor oil) there would have been a reasonable expectation of success; the differences between [the data in Ding I] are too small to believe otherwise. The formulation . . . is squarely within the teaching of the Ding reference, and the Office should disregard any statements by the applicants suggesting otherwise . . . .”

But in a preliminary amendment filed with the application that issued as the ‘111 patent, Allergan did another about-face: “Applicants hereby rescind and retract” the above statements.  “Since these comments have been filed,” Allergan argued, the Applicants have collected evidence that supports the patentability of the pending claims.”

Allergan then went on to present expert declarations under Rule 132, in order to buttress its case of non-obviousness before the examiner.  Allergan’s experts provided data that purported to show an up-to 8-fold increase in efficacy for the claimed formulation, relative to the prior art ranges.

However, as Judge Bryson pointed out in detail in his 135-page Opinion, the alleged 8-fold increase in efficacy was statistically unfounded.  First, the data were based on a small sample size that showed no statistically significant differences.  Second, the alleged improvement in efficacy appeared in just two of 58 different indices of efficacy.  Third, and most importantly, the alleged 8-fold increase in efficacy was based on a misleading statistical reliance on a so-called “ratio of ratios.”

To paraphrase Judge Bryson’s illustrative example:   In a first experiment, compare conditions X and Y and find that X gives 10.3 while Y gives 10.1—i.e., X does 3-fold better than Y (a ratio of X:Y of 3:1).  Then, in a second experiment, compare X and Z, and find the X gives 10.1 and Z gives 10.3—i.e., Z does 3-fold better than X (a ratio of X:Z of 1:3).  Suppose as well that none of those values were themselves found to be statistically significant relative to one another.  Nonetheless, the ratio of the two ratios, X:Y and X:Z—3:1 and 1:3—gives a whopping 9:1 alleged “increase” in the efficacy of Z, relative to Y!  As Judge Bryson aptly noted, “[a]ny conclusion from the “ratio of ratios” that there was a nine-fold relative improvement in performance by the 0.05% formulation [“Z”] . . . would obviously be spurious.”

Judge Bryson thus did not mince words in finding that Allergan had persuaded the examiner to let the patent issue “by way of a presentation that was more advocacy than science.”

“In fact,” Judge Bryson continued, “a closer examination of the results” showed that in arguing to the PTO, Allergan “substantially overstated the difference between the clinical results obtained” and the prior art, and that no significant difference actually existed.  (Slip Op. at 133.)  Accordingly, the court concluded, “Allergan is not entitled to renewed patent rights for Restasis in the form of a second wave of patent protection.”  (Slip Op. at 135.)

The price-tag for non-innovative drug patents, such as these second-wave Restasis patents, is substantial.  Indeed, one cannot help but question Allergan’s true motivations for attempting to evade PTAB scrutiny of these patents by reliance on Tribal Immunity based on its deal with the St. Regis Mohawk Tribe.  The PTAB, unlike the examiner corps, does have the ability to consider rebuttal expert testimony, and is thus not-so handicapped in its capacity to vet drug patents of questionable validity, with aplomb.

Both Judge Bryson’s invalidity decision and the PTAB’s decision not to recognize Allergan’s assertion of Tribal Immunity in the PTAB proceedings are currently on appeal to the Federal Circuit.  We await the Federal Circuit’s decision in both matters, with great interest.

In my next (and last) post in this series, I will consider one final example of attempted drug-patent abuse; and will then conclude with some brief remarks about how we might best balance the need for strong patent incentives to innovate, without compromising the general public’s need for the availability of affordable medicines at the earliest time possible.



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Join the Discussion

11 comments so far.

  • [Avatar for Anon]
    May 14, 2018 10:29 am

    Xtian – you speak of problem induced quite apart from what patent law entails.

    In doing so, you (perhaps inadvertently) cede my point as being the correct one.

    The patent law is not written to accommodate the “uniqueness” that you wish to anoint Big Pharma with. The patent law IS written in those generalizations that you have to accept with or without understanding the “complexities” – as you would phrase it.

    The problem IS with Big Pharma wanting to “specialize” that which is not. That’s not a feature as you seem intent on having – it’s a bug.

  • [Avatar for Xtian]
    May 14, 2018 09:41 am

    Anon @ 8 – What other industry is required by law to make your investigative research of your invention public? Is there any law that requires the new iphone XI to be made available to the public prior to when Apple releases it?

    In contrast, when Pharma wants to study a new compound in humans, it MUST register the clinical study trial with CT.gov. This posting requires Pharma to disclose the drug and the study endpoints. This is a required disclosure. To CP in DC point, the pharmaceutical industry is unique. Let’s try to understand its complexities before we make generalizations.

  • [Avatar for Anon]
    May 11, 2018 04:57 pm

    (my comment is also directed to CP in DC – my apologies for not making that clear)

  • [Avatar for Anon]
    May 11, 2018 04:55 pm


    You err in understanding utility of you think that “the claim is to the compound” is enough.

    Claims to mere things (ANY mere thing) does not in and of itself resolve the utility question.

    As to utility and NOT being safe and effectIve for its purpose, please feel free to claim only that which you possess (and NOT claim that which is the real utility: human use).

    You still want a “gimmie” for the industry, and that is just not there (leastwise, not there for the aspect at point).

    This is NOT a matter of mis-castigation because the differences in industries is supposedly not known – this is a castigation because a difference in legal treatment is wanted based on differences in industries, but no such difference is recognized by the law at point.

    Pharma receives a benefit no other art unit gets. And then to turn around and attempt to use that benefit as an excuse of “less ‘real’ market payback time” is just over the top. There is NO guarantee anywhere for any level of “market payback,” and no other art unit even deigns to advance such a concept.

  • [Avatar for Arie Michelsohn]
    Arie Michelsohn
    May 11, 2018 04:40 pm

    To be sure, there may well be many circumstances where additional advances beyond the initial discovery of a drug or treatment are patentable, indeed. My point is not to disregard such circumstances, but rather to highlight examples where such circumstances did not exist. We cannot stand to ignore such injustices, lest they be further encouraged.

  • [Avatar for CP in DC]
    CP in DC
    May 11, 2018 01:55 pm

    Where to begin…

    PTE is at most 5 years, and total patent term not to exceed 14 years. So recovery time is limited.

    As to “FAIL the FDA process” the law is clear, FDA standards for safety and efficacy are not the PATENTABILITY standards for utility. Generally, the compound is tested at the cellular level. What we don’t start with humans? Yes, we don’t start with humans. First cell data from the appropriate model (yes pharma uses models to determine drug utility, it’s call screening) is used to demonstrate utility. Then small mammals, yes rats, rabbits, gerbils, etc. And so goes the process. Human data is not required to demonstrate utility, the appropriate cell model is enough for patentability.

    Possession is demonstrated by the description of the drug and data demonstrating efficacy at the cellular level. Simply because a compound later fails the FDA standards for safety and efficacy, does not mean the inventor did not possess the invention. It means it is unsafe or ineffective for human consumption according to the FDA.

    No other industry is required to add a delay to the launch of their product. If tech had to spend the time pharma does to get approval, then tech would be obsolete by the time it goes to market. These are two industries that operate differently. Nothing more.

    To illustrate the differences in industries, the FDA offers exclusivity periods, new molecular entity, pediatric exclusivity, orphan drug exclusivity, just to name a few. All available regardless of patent protection. That means the FDA won’t approve other sellers (generics) for a period of time.

    And lets not forget Hatch Waxman litigation, yes the congressionally approved incentive to challenge patents. No other industry has this gem. Incentivize competitors to challenge your patents by offering early entry into the market.

    I agree that pharma tries to evergreen their patent portfolio, which is what the article is talking about, but pharma also has challenges unique to the industry. I have argued that second wave patents generally lose at the IPR stage or district court, but also argued that compound, composition, method of treatment patents tend to be solid and difficult to challenge.

    So before we castigate an industry, why not understand the differences.

  • [Avatar for Disbelief]
    May 11, 2018 01:25 pm

    Totally incorrect.

    Pharma files patent applications on their NCEs just prior to submission of an IND before the FDA, which requires mandatory disclosure of the compounds.

    The utility possessed by the compounds is ordinarily exhibited through in vitro data showing that it binds to a particular target and/or affects a particular cellular pathway. The claims are to the compound, and often not to a method of using the compound for treatment of any particular condition. Possession of the compounds are absolutely had at the time of filing.

    If pharma did not file when making the submission to the FDA, then the compound would become public domain.

    I am more than happy to dispel any other radically incorrect notions regarding pharma patent filings.

  • [Avatar for Anon]
    May 11, 2018 08:22 am

    My post at 3 forgot one point: the number of drugs that FAIL the FDA process is an indication that possession is NOT had at the time of filing.

    Pharma abuses the process by filing too early. And then wants to argue that “time is lost” in showing something is there that is required to be there. Sorry, but I am not buying that line. Far too often, the FDA process shows that “the invention” never had the utility as required to begin with, that is required at the time of filing. Had Pharma waited appropriately to file when they had utility, then there would be no “time lost.”

    (and mind you, we have not even begun to fold in the “make-up time” mechanisms afforded NO OTHER industry except Pharma)

  • [Avatar for Anon]
    May 11, 2018 08:18 am


    Let me counter your “but the time is impacted” and cry for “what other markets suffer so” with the point that ONLY the Pharma market allows filing BEFORE actual possession of the claimed advance. That “lost window” is a fallacy, because Pharma should not be filing before they have the possession of the advance claimed.

    It’s called “utility.”

    It’s also a requirement to have AT FILING.

    (and please, do not tell me that if one does not do this improper “jump the gun” that others would beat the inventor in line – that proper “in line” requirement applies to all)

  • [Avatar for Disbelief]
    May 10, 2018 04:08 pm

    I can’t believe this nonsense.

    Do you really think the only patent to which drug companies are entitled to is the original compound? Is everything post-discovery to you not an invention? How are new formulations, dosing regimens, methods of administration, etc. not considered worthy inventions to you?

    Do you take issue with having hundreds of patents covering a phone? Why should a pharmaceutical product be any different? If the formulation is inventive because of XYZ, how is that not entitled to a full 20 years?

    By the way, the base compound patents, even with full PTE, rarely extend more than a decade after marketing authorization. Name another industry where that’s the case.

    For a patent blog which is supposed to champion innovation rights, these series of “hit pieces” on drug patents are an abomination.

  • [Avatar for xtian]
    May 10, 2018 09:24 am

    The author’s premise is that members of the examiner corps cannot effectively rebut so-called “Rule 132” declarations during ex parte patent prosecution of drug-patent applications.

    Thus the question is twofold: 1) do the examiners have the power supported by the MPEP to rebut these declarations, and 2) do the examiners have the cognitive ability to understand these declarations in order to determine whether to wield that power?

    The Examiner’s have the power to reject such declarations. See e.g., MPEP 716 generally and 716.06 specifically. Consideration of Evidence: Where the evidence is insufficient to overcome the rejection, the examiner must specifically explain why the evidence is insufficient. General statements such as “the declaration lacks technical validity” or “the evidence is not commensurate with the scope of the claims” without an explanation supporting such findings are insufficient.

    Do the examiners have the ability? In this case, Judge Bryson concluded the alleged 8-fold increase in efficacy was statistically unfounded. Judge Bryson understood statistics. By inference, the examiner did not.

    It appears that in this case, the Examiner could not interpret the statistics as well as Judge Bryson. So wouldn’t the conclusion be that the Examiner’s need better technical skills, not that submitting declarations under 132 are some nefarious way to get a patent granted?

    Finally, I take issue with Judge Bryson’s statement about the declaration being “by way of a presentation that was more advocacy than science.” Isn’t all prosecution advocacy for your client?