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Changes to pharmaceutical patent laws, a consumer market begging for cheaper drugs and challenges to perceived sweetheart settlements between generic drug companies and drug patent holders have law firms boosting their patent practices to meet the demand. Bolstered by revisions to the Hatch-Waxman Act made last year, generic companies are increasingly challenging lucrative patents, spurred on by the cry for less expensive medications from U.S. consumers. At the same time, practitioners say they are seeing more claims that the settlements in patent disputes between pharmaceutical companies and generics violate antitrust laws. The result is law firms funneling more resources into entering the pharmaceutical fray. “It’s good news for us,” said Bill Warren, a partner at Sutherland Asbill & Brennan, which has about 330 lawyers. In the last three years, his firm’s drug patent work has grown from eight attorneys to about 30, the Atlanta-based lawyer said. The group there primarily represents generic drug makers, as opposed to the patent holders, or “pharmas,” as they are known in the industry. The opportunities for work stemming from disputes between generics and pharmas are multifaceted. First, as generics more often challenge existing patents, the firms representing pharmas also see more action by responding to those challenges. Second, third parties and consumers have brought their own actions alleging that the settlements that pharmas have struck with generics in patent disputes violate antitrust laws by squelching competition. Third, to retain some of the market of an expiring patent, pharmas have begun contracting with “authorized generics” to give a generic the right to market the product, for a price, without having to get Food and Drug Administration (FDA) approval. Challenges to those kinds of agreements from other generics pinched by the deals also have popped up. The generic-pharma market has exploded because generics have little to lose by challenging Goliath drug makers, said Dan Binstock, a managing director with BCG Attorney Search, a recruiting firm. “They’re essentially saying, ‘We dare you to sue us,’” he said. “If they sue, maybe they lose a few million, but if they win? These are billion-dollar companies.” Indeed, the nation’s largest drug maker, Pfizer Inc., is expecting revenues of $53 billion this year, according to a recent Wall Street Journal report. Law firms with practices in New York, New Jersey and Connecticut have beefed up their drug patent groups, as have firms in Delaware and Philadelphia, Binstock said. Practitioners are also deriving much business from what is known as Paragraph IV work. The term comes from a provision in the Hatch-Waxman Act, the law created in 1984 to spur growth in the generic drug market. In general, the law gives the first generic company seeking rights to a drug an exclusive 180-day period to market it. Several portions of the law were revised last summer, some centering on Paragraph IV actions. With such actions, generics pursuing approval for a version of a patented drug assert in their application that the drug’s patent will not be infringed upon (because of expiration) or is invalid for some reason — a more contentious claim. After a generic files the Paragraph IV document with the FDA, the patent holder can respond by arguing that its patent is valid and that the generic version will infringe. Once the pharma files a response to the Paragraph IV application, it gets a 30-month stay blocking the generic from entering the market. Before the Hatch-Waxman Act amendments, a pharma could receive a series of 30-month stays, called “stacking.” That strategy was eliminated. Other changes to Hatch-Waxman relate to the notice a generic must give to a pharma of a Paragraph IV challenge. Another revision affects the impact of amendments that a generic may make to its application if new patents are recorded after it first filed. One revision designed to help generics get to market allows them to seek a declaratory judgment in federal court to determine the validity of the pharma’s patent. While it’s uncertain whether generics will benefit from this revision, it is clear it has sparked litigation. Teva Pharmaceuticals USA, a generic seeking to market a version of Pfizer’s Zoloft, has filed an appeal to the U.S. Court of Appeals for the Federal Circuit challenging a district court’s ruling. The lower court’s decision in Teva Pharmaceuticals USA v. Pfizer, No. 03-CV-10167 (D. Mass.), threw out Teva’s declaratory judgment action for lack of subject-matter jurisdiction because no case or controversy existed. And earlier in August, a New Jersey federal court ruled similarly in a declaratory judgment action brought by Dr. Reddy’s Laboratories Ltd., a generic seeking to market GlaxoSmithKline PLC’s Zofran, an anti-nausea drug. The court in Glaxo Group Ltd. v. Dr. Reddy’s Laboratories, No. 01-CV-4066, said that it lacked subject-matter jurisdiction, despite Reddy’s argument that a reasonable apprehension of a case or controversy conferred jurisdiction. Litigation between generics and pharmas has increased dramatically, said Barbara Carter, an attorney with Bromberg & Sunstein. Her research shows that from 1984 to 1994, just 30 lawsuits were decided. However, from 2002 to the present, 127 cases were filed and 36 were decided. More opportunities have prompted Howrey Simon Arnold & White to add four attorneys to its 12-member team that handles Hatch-Waxman cases. Michael Padden, a partner at the Washington-based firm, said that he has seen significant increases in drug-patent work in the last few years. Gaining the most attention right now, he said, are antitrust challenges that result when generics and pharmas settle their patent disputes and when the parties contract for an “authorized generic” to have the rights to market a product on a royalty-like basis. Makers of the popular anti-depressant Paxil made such an arrangement with a generic last year, much to the ire of Apotex, another generic approved by the FDA to market its own version. Apotex argued that the authorized generic received as much as $400 million in expected revenues that it would have garnered. The sometimes competing purposes of patent law and antitrust law are evident in two recent cases resulting in a split in the circuits. One involves a $100 million settlement that the maker of Cardizem, a heart medication, reached with Andrx Corp., a generic challenger. Under the agreement, the pharma paid the generic not to enter the market for two years. However, the 6th Circuit last year in In re Cardizem, 332 F.3d 896, found that the agreement was a per se violation of antitrust law because it restrained trade. On the other hand, the 11th Circuit reversed a lower court decision and determined last year that a similar agreement concerning the patent for a blood pressure medication, Hytrin, created a legal monopoly, although the court found that some of the contract’s provisions could be anti-competitive. The U.S. Supreme Court has scheduled a conference next month regarding a petition for a writ of certiorari filed by a generic company fighting the agreement. The number of unsettled issues is bound to increase, said Brian D. Coggio, a partner in Orrick, Herrington & Sutcliffe’s New York office. He is worried that patent law will be unable to keep up with the flood of biologics — products made from living sources and used as immunity against diseases — whose patents will expire in the next three years. An example of a biologic is human insulin. “These are not the old-fashioned drugs,” he said. “These drugs have unpredictable properties.”

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