Evergreening
Encyclopedia
Evergreening refers to a variety of legal and business strategies by which technology producers with patents over products that are about to expire, retain rent from them by either taking out new patents (for example over associated delivery systems, or new pharmaceutical mixtures) or by buying out or frustrating competitors, for longer periods of time than would normally be permissible under the law. Evergreening is not a formal concept of patent law; it is best understood as a social idea used to refer to the myriad ways in which pharmaceutical patent owners use the law and related regulatory processes to extend their high rent-earning intellectual property rights, otherwise known as intellectual monopoly privileges, particularly over highly profitable (either in total sales volume or price per unit) 'blockbuster' drugs. Thus, while the courts are an instrument frequently used by pharmaceutical brand name manufacturers to prolong their patent royalties, evergreening is rarely mentioned explicitly by judges in patent protection cases. The term usually refers to threats made to competitors about a brand-name
manufacturer's tactical use of pharmaceutical patents (including over uses, delivery systems and even packaging), not to extension of any particular patent over an active product ingredient.
Controversy about evergreening
The evergreening process has caused some controversy in the pharmaceutical industry. In this context, evergreening may be used by manufacturers of a particular drug to restrict or prevent competition from manufacturers of generic equivalents to that drugGeneric drug
A generic drug is a drug defined as "a drug product that is comparable to brand/reference listed drug product in dosage form, strength, route of administration, quality and performance characteristics, and intended use." It has also been defined as a term referring to any drug marketed under its...
.
In 2002, an extensive and lengthy inquiry by the US Federal Trade Commission
Federal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...
(FTC), found that the Hatch-Waxman legislation or Drug Price Competition and Patent Term Restoration Act
Drug Price Competition and Patent Term Restoration Act
-Overview:The Drug Price Competition and Patent Term Restoration Act, informally known as the "Hatch-Waxman Act" [Public Law 98-417], is a 1984 United States federal law which established the modern system of generic drugs...
(which was instrumental in establishing the US generic pharmaceuticals industry) had resulted in as many as 75% of new drug applications by generic drug manufacturers experiencing legal actions under patent laws by the original brand name patent owner. These were driving up US drug costs by keeping the cheaper generic versions off the market. The FTC recommended only one evergreening injunction against a potential generic market entrant be permitted per product, and an expedited process of resolving such claims.
Linkage evergreening and international trade law
The process of evergreening may involve specific aspects of patent law and international trade lawInternational trade law
International trade law includes the appropriate rules and customs for handling trade between countries. However, it is also used in legal writings as trade between private sectors, which is not right. This branch of law is now an independent field of study as most governments has become part of...
. Linkage evergreening refers to the process whereby pharmaceutical safety, quality and efficacy regulators are required to 'link' their normal evaluation with an assessment of whether an impending generic product may breach an existing patent. In 1993, under the NAFTA-induced
North American Free Trade Agreement
The North American Free Trade Agreement or NAFTA is an agreement signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada – United States Free Trade Agreement...
Canadian Notice Of Compliance (NOC) regulations, drug safety, quality and efficacy regulators at Health Canada
Health Canada
Health Canada is the department of the government of Canada with responsibility for national public health.The current Minister of Health is Leona Aglukkaq, a Conservative Member of Parliament appointed to the position by Prime Minister Stephen Harper.-Branches, regions and agencies:Health Canada...
were prevented from issuing an authorization for market entry, until the all of the relevant patents on a brand name product had been proven to have expired. As a result, when a Canadian generic company (such as Apotex
Apotex
Apotex is a Canadian pharmaceutical corporation. Founded in 1974, the company is the largest producer of generic drugs in Canada, with sales exceeding one billion dollars a year...
) submits its application to get a product approved, it also sends a Notice of Allegation (NOA) to the patent holder claiming that no patents are being infringed. The patent holder then has 45 days in which to initiate an application in the Federal Court of Canada
Federal Court of Canada
The Federal Court of Canada was a national court of Canada that heard some types of disputes arising under the central government's legislative jurisdiction...
, seeking an order to prohibit the relevant Minister from issuing a Notice of Compliance to the generic manufacturer for a period of 24 months, or upon resolution of the court application, whichever is sooner. The problems with this were analysed in the Royal Commission on the Future of Health Care in Canada or Romanow Report
Romanow Report
The Royal Commission on the Future of Health Care in Canada , also known as the Romanow Report, is a committee study led by Roy Romanow on the future of health care in Canada. It was delivered in December 2002....
Australia's legislatively fulfilling the article 17.10.4 linkage obligation was a requirement of entry into force of the AUSFTA, and Australia had to enact consequent amendments to the Therapeutic Goods Act 1989 (Cth). The amendments inserted a new section 26B which required applicants for marketing approval to certify their
product would not infringe a valid patent claim, or that the patent holder has been notified of the application. In response, the Australian government passed antievergreening amendments in Sections 26C and 26D of the Therapeutic Goods Act 1989 (Cth) designed to prevent patent holders from manipulating the court system to lengthen the term of the patent and delay the entry of generic pharmaceuticals into the market. They are a strong statement of Australia's legitimate expectations of benefit (that is of freedom from pharmaceutical price rises due to evergreening) in this area. The Chief Australian negotiator of this aspect of the AUSFTA stated
- "We are not importing the Hatch-Waxman legislation into Australian law as a result of the free trade agreement...[Article 17.10.4] will not extend the time of the marketing approval process, and it does not add or provide any additional rights to the patent holders in that process...there is no injunction that can be applied under this article...it will be clear in the legislation tomorrow....we are establishing a measure in the marketing approval process that will fully meet the commitments under this article."
The US, nevertheless, has expressly signalled their disapproval of Australia's implementation of article 17.10.4 in an exchange of letters between the Australian Minister for Trade and the US Trade Representative on the implementation of the AUSFTA, in which the USTR stated:
- "If Australia's law is not sufficient to prevent the marketing of a product, or a product for an approved use, where the produce or use is covered by a patent, Australia will have acted inconsistently with the Agreement. We will be monitoring the matter closely, and reserve all rights and remedies as discussed below. We also remain concerned about recent amendments to sections 26B(1)(a), 26C and 26D of the Therapeutic Goods Act of 1989. Under these amendments, pharmaceutical patents owners risk incurring significant penalties when they seek to enforce their patent rights. These provisions impose a potentially significant, unjustifiable, and discrimintory burden on the enjoyment of patent rights, specifically on owners of pharmaceutical patents. I urge the Australian Government to review this matter, particularly in light of Australia's international legal obligations. The United States reserves its rights to challenge the consistency of these amendments with such obligations."
The capacity of the US to make such threats is arguably facilitated by the linkage of article 17.10.4 of the AUSFTA to a non-violation nullification of benefits
Non-violation nullification of benefits
Non-violation nullification of benefits claims are a species of Dispute settlement in the World Trade Organization arising under World Trade Organisation multilateral and bilateral trade agreements. NVNB claims are controversial in that they are widely perceived to promote the social vices of...
provision. The US has achieved a similar provision to article 17.10.4 of the AUSFTA in article 18.9.4 of the Republic of Korea-United States Free Trade Agreement (KORUSFTA). Such provisions are sometimes referred to as TRIPS-plus meaning that they are in addition to the patent requirements of the World Trade Organisation multilateral Agreement on Trade-Related Aspects of Intellectual Property Rights
Agreement on Trade-Related Aspects of Intellectual Property Rights
The Agreement on Trade Related Aspects of Intellectual Property Rights is an international agreement administered by the World Trade Organization that sets down minimum standards for many forms of intellectual property regulation as applied to nationals of other WTO Members...
agreement. Some academics prefer to refer to them as TRIPS-minus due to their potential, but controversial and still largely unproven, deleterious impact on public health.
Regulation against evergreening
The main arguments in favor of governments regulating against evergreening are that rapid entry of multiple generic competitors after patentPatent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
expiry is likely to lower prices and facilitate competition, and that eventual loss of monopoly was part of the trade-off for the initial award of patent (or intellectual monopoly privilege) protection in the first place.
In Canada, the Office of Patented Medicines and Liaison under Health Canada
Health Canada
Health Canada is the department of the government of Canada with responsibility for national public health.The current Minister of Health is Leona Aglukkaq, a Conservative Member of Parliament appointed to the position by Prime Minister Stephen Harper.-Branches, regions and agencies:Health Canada...
has become an important regulatory mechanism for policing 'linkage' evergreening. No attempt has been made to create a similar multidisciplinary regulatory agency in Australia. Yet, it appears that article 18.9.4 of the Republic of Korea-United States Free Trade Agreement (KORUSFTA) has been specifically drafted to permit the establishment of such a pharmaceutical patent 'anti-evergreening' oversight agency.
The Office of Patented Medicines and Liaison is located in the Therapeutic Products
Directorate, Health Products and Foods Branch, Health Canada
Health Canada
Health Canada is the department of the government of Canada with responsibility for national public health.The current Minister of Health is Leona Aglukkaq, a Conservative Member of Parliament appointed to the position by Prime Minister Stephen Harper.-Branches, regions and agencies:Health Canada...
. The Notice of Compliance Regulations it administers require the Minister of Health to maintain a Patent Register. This consists of patent lists submitted in respect of eligible NOC-issued drugs. The Minister responsible for Health Canada may refuse to add, or may delete, information from this Patent Register. Each patent list is audited (for example as to whether potential inclusions are mere 'evergreening' attempts) by the Office of Patented Medicines and Liaison. Reports produced by that body outline statistics relating to the maintenance of the Patent Register, including the number of patents filed, the number of patents accepted and rejected, and litigation resulting from the acceptance or rejection of patents for listing on the Patent Register. In October 2006, the Canadian federal government recognized that some brand-name companies had been abusing the NOC Regulations. It limited their use of 'evergreening' follow-on patents by promulgating regulations that prevented any new patents they filed after a generic company had submitted an application for approval of its product from being considered in the NOC Regulations process. Moreover the new regulations made it clear that patents covering areas without direct therapeutic application, such as processes or intermediates, could not be used to delay generic approval.
In Australia, anti-evergreening amendments to the Therapeutic Goods Act 1983 (Cth)were part of the package of legislation required to be passed by the Australian Government as a precondition to entry into force of the Australia-United States Free Trade Agreement
Australia-United States Free Trade Agreement
The Australia – United States Free Trade Agreement is a preferential trade agreement between Australia and the United States modelled on the North American Free Trade Agreement . The free trade agreement was signed on 18 May 2004, ratified by the U.S. House of Representatives on 14 July 2004 by a...
(AUSFTA). They provide that where a certificate has been given under s26B by a generic manufacturer and the patent holder wishes to claim a patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
and institute infringement proceedings, he or she must first certify that the proceedings are being commenced in good faith, have reasonable prospects of success (as defined in s26C(4)) and will be conducted without unreasonable delay. If the certificate is found to be false or midleading, fines of up to $10 million apply and the Cth Attorney General is permitted to join the action to recoup losses to the PBS. Section 26D provides that a patent holder who seek an interlocutory
Interlocutory
Interlocutory is a legal term which can refer to an order, sentence, decree, or judgment, given in an intermediate stage between the commencement and termination of a cause of action, used to provide a temporary or provisional decision on an issue...
injunction
Injunction
An injunction is an equitable remedy in the form of a court order that requires a party to do or refrain from doing certain acts. A party that fails to comply with an injunction faces criminal or civil penalties and may have to pay damages or accept sanctions...
to prevent the marketing of the generic pharmaceutical must obtain leave from the government to do.
Regulations against evergreening and TRIPs
Both the International Federation of Pharmaceutical Manufacturing Associations (IFPMAIFPMA
The International Federation of Pharmaceutical Manufacturers & Associations is the global non-profit NGO representing the research-based pharmaceutical industry, including the biotech and vaccine sectors. Its members comprise 25 leading international companies and 45 national and regional industry...
) and the US PhRMA have stated that the Australian anti-evergreening provisions are inconsistent with obligations under the World Trade Organisation Agreement on Trade-Related Aspects of Intellectual Property Rights
Agreement on Trade-Related Aspects of Intellectual Property Rights
The Agreement on Trade Related Aspects of Intellectual Property Rights is an international agreement administered by the World Trade Organization that sets down minimum standards for many forms of intellectual property regulation as applied to nationals of other WTO Members...
TRIPs article 27 which prohibits discrimination in an area of technology (in this case pharmaceuticals). The argument is that the Australian anti-'linkage evergreening' legislation affects only pharmaceutical patents and is therefore discriminatory under TRIPs.
On the other hand, international trade law
International trade law
International trade law includes the appropriate rules and customs for handling trade between countries. However, it is also used in legal writings as trade between private sectors, which is not right. This branch of law is now an independent field of study as most governments has become part of...
recognises that where a unique problem arises specifically referable only to a particular field of technology, a solution applying sui generis only to that field of technology cannot be said to be discriminatory according to the ordinary meaning and purpose of the TRIPs agreement or the AUSFTA as required by article AUSFTA 21.9.2 (incorporating articles 31 and 32 of the Vienna Convention on the Law of Treaties (VCLT). The decision of the World Trade Organisation Dispute Resolution panel in Canada – Patent Protection of Pharmaceutical Products case, for example, accepted that it was not inconsistent with TRIPs to provide for distinct patent rules that responded to practical consequences of differences between fields of technology. Almost all nations including the United States now have anti-evergreening legislation as part of their public health policy and none of this legislation (which is clearly targeted at a problem particular to the pharmaceutical industry) has been argued to be contrary to TRIPs. Further, there are a number of obligations imposed by the AUSFTA that relate to the enjoyment of patent rights for pharmaceuticals alone, including extension of the terms of a pharmaceutical patent to compensate the patent owner for unreasonable curtailment of the effective patent term as a result of the marketing approval process(17.9.8(b)). This is clearly not discriminatory because the issue of delays in enjoyment of patent rights due to the marketing approval process arises only in the context of pharmaceutical patents.
Future: Supragenerics, Nanogenerics, Data Exclusivity, Pharmacogenomics
In terms of future evergreening strategies, patent holders may:- seek to make incremental patentable innovations to existing products with soon-to-expire patents through the generic arm of their own company and launch early to secure market share (supragenerics),
- attempt to make separately patentable nanotechnologyNanotechnologyNanotechnology is the study of manipulating matter on an atomic and molecular scale. Generally, nanotechnology deals with developing materials, devices, or other structures possessing at least one dimension sized from 1 to 100 nanometres...
or biologic versions of such pharmaceuticals through the generic arm of their own company and launch early to secure market share, - seek to exclude generic companies from the safety, quality and efficacy data they need to prepare for springboarding (early market launch after patent expiry) using TRIPs-plus data exclusivity protections and
- seek to obtain an additional intellectual property right (intellectual monopoly privilege) for soon-to-patent-expire-pharmaceutical by patenting it along with a genetic test (to establish either or both of potential toxicity or efficacy)(pharmacogenomicsPharmacogenomicsPharmacogenomics is the branch of pharmacology which deals with the influence of genetic variation on drug response in patients by correlating gene expression or single-nucleotide polymorphisms with a drug's efficacy or toxicity...
).
See also
- Chemical and pharmaceutical patent
- Submarine patentSubmarine patentA submarine patent is a patent whose issuance and publication are intentionally delayed by the applicant for a long time, such as several years. This strategy requires a patent system where patent applications are not published. In the United States, patent applications filed before November 2000...
- Supplementary protection certificateSupplementary protection certificateIn European Union member countries, a supplementary protection certificate is a sui generis, extension of a patent under a specific, different, set of right. This type of right is available for medicinal products, such as drugs, and plant protection products, such as insecticides, and herbicides...