Why did Dr. Reddy’s file three IPRs against Celgene’s Revlimid patents?
On August 3, Dr. Reddy’s filed three petitions for inter partes review (IPR) against three patents owned by Celgene and listed in the Orange Book for Revlimid®. Does this indicate that Celgene and Dr. Reddy’s are close to a settlement? If not, what are the take-aways?
Dr. Reddy’s filed three petitions for inter partes review (IPR) against three patents owned by Celgene and listed in the Orange Book for Revlimid®. The patents include U.S. Patent Nos. 7,189,740; 8,404,717 and 9,056,120. Notably, each of these patents are directed to methods of using lenalidomide for treatment of transfusion-dependent anemia due to myelodysplastic syndromes (MDS). This is one of three indications for Revlimid®, also including multiple myeloma (MM) and mantel cell lymphoma.
As we previously discussed, when Dr. Reddy’s first filed its Paragraph IV notice letter in connection with its ANDA for Revlimid®, it does not appear to have contemplated selling a generic for the MDS indication. Indeed, Celgene’s first Revlimid® lawsuit against Dr. Reddy’s in October 2016 did not assert the three MDS patents. Rather, several months later, in July 2017, Celgene commenced another lawsuit against Dr. Reddy’s in response to a second Paragraph IV notice letter. That new suit (Case No. 2:17-5314, D.N.J.) asserted the MDS patents.
It is clear why Dr. Reddy’s filed the IPRs when it did. What is less clear is why Dr. Reddy’s filed them at all, and what takeaways we can glean from the filing.
On the first question, Dr. Reddy’s filed the IPRs now so as to avoid being time-barred from doing so. Under the statute governing IPRs, a company sued for infringing a patent must file an IPR within one year of being served with that lawsuit. (See 35 U.S.C. § 315(b)). Otherwise, the company risks waiving the right to IPR those patents.
Celgene originally sued Dr. Reddy’s in connection with its Revlimid® ANDA in October 2016. Yet, that lawsuit did not assert the MDS patents. Rather, the MDS patents were subsequently asserted in a complaint filed on July 20, 2017. The time-bar runs from the date of service of that complaint, which appears to have been August 4, 2017, at the earliest. Thus, to avoid being time-barred, Dr. Reddy’s filed the IPRs within one year of service, on August 3, 2018.
That said, why did Dr. Reddy’s file the IPRs in the first place? Notably, Dr. Reddy’s did not file any IPRs challenging the validity of the patents asserted in the October 2016 litigation (Case No. 2:16-7704, D.N.J.). That case asserted seven patents in total – two patents directed to polymorphs for lenalidomide, and five patents directed to methods of treating MM. Dr. Reddy’s can no longer filed IPRs against any of these patents since, having failed to do so within a year of service, it is now time-barred.
Dr. Reddy’s decision not to file IPRs against the polymorph patents was likely strategic. Dr. Reddy’s has already indicated (as we previously discussed) that it may have a strong non-infringement argument against the polymorph patents, namely, that its drug is amorphous, whereas the patents require the polymorph is crystalline. If so, Dr. Reddy’s would want to avoid invalidating the polymorph patents through IPRs. That would give its competitors—namely, the other generics—the same freedom-to-operate around the polymorph patents. By contrast, if Dr. Reddy’s can prevail over the polymorph patents by showing it does not infringe them, that freedom-to-operate does not automatically transfer to its competitors.
Dr. Reddy’s decision not to IPR the MM patents, but affirmatively IPR the MDS patents is a bit more difficult to reconcile. Yet, by filing these IPRs, Dr. Reddy’s creates settlement leverage with Celgene in a way that no other generic currently can.
Some commentators have indicated the MDS patents expire in April 2023. They appear to be relying upon the filing date for the ‘740 patent, which is April 11, 2003. Yet, that ignores that ‘740 patent claims priority to a provisional application, dated October 15, 2002. Thus, the ‘740 patent actually expires before 2023, in October 2022. The other two MDS patents (‘717 and ‘120) were terminally disclaimed over the ‘740 patent. That’s another way of saying that all three MDS patents expire in October 2022.
The IPR process, including an appeal to the Federal Circuit, typically takes about two-and-a-half to three years. That range is relatively firm since, unlike district courts, the PTAB is required to complete an IPR within 18 months. That means that Dr. Reddy’s IPRs are unlikely to be resolved, through appeal, until at least January 2021. That means, if Dr. Reddy’s can get around the polymorph patents and the MDS patents, it stands to gain a 21 months head start on any generic. That may end up being very material to Celgene because, if Dr. Reddy’s can enter in January 2021, that would be more than a year before Natco, which previously agreed to enter with limited sales in March 2022.
If that is the case, then Dr. Reddy’s IPRs may create settlement leverage with Celgene. That is because the IPRs increase the odds that a generic will enter before Natco. If that happens, that may likely force Celgene to offer the same earlier entry date to Natco under the terms of their agreement.
But wait a minute—the MDS indication comprises a much smaller percentage of Revlimid® revenue than MM, so what does any of this matter? It matters because the Natco settlement essentially guaranteed the market that there will be no generic entry before March 2022, and Celgene’s revenue will be protected at least until then. But if generics can come in more than a year earlier, in early 2021, that may still inadvertently eat into Celgene’s sales. Even if the generics come in for a small indication such as MDS, Celgene’s sales may take a hit to the extent the generics are distributed off label, whether intentionally or not. Increasing the threat of that may be exactly what Dr. Reddy’s is playing at.
A number of stars would still have to align for Dr. Reddy’s to enter in January 2021. Even if Dr. Reddy’s prevails in these IPRs, it must still circumvent the critical polymorph patents. That is why the polymorph patents still remain the critical factor most likely driving a settlement. Yet, Dr. Reddy’s may not have the same concerns about invalidating the MDS patents that it does about the polymorph patents. Even if it invalidates the MDS patents through these IPRs, the other generics can only enter in 2021 if they also find a way around the polymorph patents. That remains to be seen. And in most cases it won’t matter. In fact, two of the three generics (Zydus and CIPLA) did not pursue an MDS indication. (Although Lotus has pursued an MDS indication, it is already time-barred from filing the IPRs that Dr. Reddy’s just did.) Thus, Dr. Reddy’s may be attempting to knock out the MDS patents any way that it can, seeing very little risk from doing so—either through invalidating them in IPRs or in district court.
Does any of this mean that Celgene and Dr. Reddy’s are close to a settlement? No. It does not mean anything. They may be close to a settlement, or they may not. Even if the parties were close to a settlement, Dr. Reddy’s would have still likely have filed its IPRs when it did because it would not want to risk being time-barred.
Overall, it seems as if Dr. Reddy’s believes it is playing with very good cards, and Celgene is hamstrung by its earlier settlement with Natco to offer Dr. Reddy’s anything it will agree to. And so it all continues.