Markman Advisors
Patent Valuation, Monetization and Investments

Blog

Markman Advisors Patent Blog

What are the lessons from Boehringer’s settlement with AbbVie over its Humira biosimilar?

Zachary Silbersher

And just like that, it’s over.  Boehringer Ingelheim has thrown in the towel in its patent fight with AbbVie over Boehringer’s proposed biosimliar for Humira®.  Boehringer was a lone hold-out among a long line of proposed biosimilars for AbbVie’s blockbuster.  Boehringer’s distinction was that it had raised a unique defense, namely, arguing that AbbVie had built an unfair “patent thicket” around Humira® that was unenforceable.  We previously blogged about Boehringer’s “unclean hands” defense here and here and here.  Now that Boehringer has settled, what are the larger lessons for future biosimilar patent fights?

            The interests of consumers and generics/biosimilars are not aligned. 

The first lesson is that the interests of generics and biosimilars are not completely aligned with that of consumers.  Biosimilars want to get to market as quickly as possible, but have to weigh the risks of doing so.  If Boehringer persisted with its challenge that Humira® is covered by an unlawful patent thicket, and it lost that challenge, then it might have been boxed out from entering until all the patents expire.  That could be several years after Amgen and the other biosimilars settled. 

So, even if it makes economic sense for Boehringer to settle, that doesn’t help consumers.  They are not at the table, they cannot hold up the settlements on the ground that their interests will be affected.  Consumers cannot stop the settlement and offer to take over prosecution of Boehringer’s “patent thicket” argument.  In short, without recourse to antitrust enforcement, consumers are subject to the economic whims of the biosimilars.   

            Drugs will be covered by more patents, not less.

 The second lesson is that pharmaceutical drugs are going to be covered by a lot more patents in the future.  AbbVie did not prevail on Boehringer’s “patent thicket” defense.  So that bogeyman is still roaming the countryside.  But AbbVie nevertheless showed that, for one of the biggest selling drugs of all time, which faced more biosimilar threats than any prior biologic, you can bring all biosimilars to the table with one thing—lots and lots of patents. 

Other biologic and brand pharmaceutical companies are surely watching and taking heed.  It is now a no-brainer to follow AbbVie’s patent plan followed for Humira®.  Namely, if you’re launching a biologic drug, cover it with as many patents as possible.  Don’t stop at three or five, go for a hundred.  Pursue lots of overlapping patents with barely distinguishable inventions. 

But what about the costs of pursuing lots of patents?  The costs are not a barrier.  For AbbVie, the relative cost of procuring patents for Humiar® was far outweighed by the profits that will be generated from continuing its monopoly on Humira® from 2016 (when the underlying protein patent expired) until 2023, when the biosimilars will enter.   

AbbVie claims to have about 100 patents covering Humira®.  A conservative estimate is that each patent cost between $50k to $100k.  Even at $100k per patent, the math easily rewards AbbVie’s strategy of building a wall of patents around Humira®.   

So, to the extent that consumers are disgruntled that pharma is using lots and lots of patents to delay entry of lower cost generics, Boehringer’s settlement with AbbVie guaranteed that we will see more of that strategy, rather than less.

            Drugs will be covered by lots of patents for the same invention. 

The third lesson is that it’s ok to get lots of patents covering the same invention.  For instance, AbbVie claimed in or around 2015 to have approximately 14 patents covering formulations for Humira®.  We counted eight formulation patents over which AbbVie filed terminal disclaimers.  A terminal disclaimer is typically filed after the Patent Office objects that you are trying to “double patent” – meaning, you are trying to get a patent on an invention you have already otherwise patented or are in the process of patenting. 

 To cure that objection, you can file a terminal disclaimer, which is an agreement that all the purportedly “double patents” will expire at the same time.  (The theory is that, if the patents do cover the same invention, you are not extending the permissible life of that patent by filing multiple patent applications.)  In other words, a terminal disclaimer is not a dispositive admission that you are trying to get more than one patent on the same invention.  But it’s an indication that the Patent Office perceived that you were doing so.

Why does this matter?  Because every single patent asserted by AbbVie against the biosimilars adds to the time, expense and risk of litigating those patents.  Even if AbbVie has eight patents covering essentially the same formulation, a biosimilar would have to address each patent individually in order to dispense with them.  You cannot file a single IPR that attacks eight patents—you would need to file eight separate IPRs.  All that extra time and money required to litigate a pile of patents increases the risk for biosimilars that they will lose.  And that, as we hae seen, leads biosimilars to conclude that its makes more economic sense to settle. 

            The FDA or PTO are unlikely to fix “patent thickets.”

The fourth lesson is that there is very little the FDA or the Patent Office can do about “patent thickets.”  The former Commissioner of the FDA, Scott Gottlieb, previously issued official remarks on behalf of the agency calling out “patent thickets” for delaying entry of biosimilars in the US.  Despite Commissioner Gottlieb’s laments, there is very little the FDA can do because the FDA does not regulate patents.

When it comes to the regulatory barriers to generic and biosimilar entry, they falls between two separate agencies.  Whereas the FDA regulates approval of applications to distribute a generic or biosimilar, the Patent Office regulates all the patents that can stand as additional barriers to generic or biosimilar entry.  On the one hand, the FDA does not have jurisdiction to issue a regulation that a drug can only be covered by a certain number of patents. 

On the other hand, the Patent Office issues patents blind to what they will be used for.  It would be highly unusual for the Patent Office to issue a regulation that provides that, for a certain pharmaceutical drug, a company can only acquire a finite number of patents.  It’s not clear such a regulation would be constitutional.  Worse, there would be considerable pushback from other industries that would not want the number of patents they can acquire to be limited.

At the legislative and regulatory level, fixing the “patent thicket” problem—to the extent the public agrees it is an anticompetitive problem—would almost certainly require an act of Congress.  Legislating that fix would be controversial even if there was bipartisan support for fixing the problem. 

Part of the issue is that “patent thickets” are an anticompetitive barrier that is a not a matter of kind, but rather a matter of degree.  When are too many patents anticompetitive?  When is does a pile of grains add up to a heap?  These are thorny problems that risk solutions that over-reach.  This does not mean a legislative fix is not possible.  But it does show that, even if Congress agrees on the problem, finding a politically-palatable solution will be challenging.

            Antitrust enforcement is the most feasible candidate to address “patent thickets”.

The fifth lesson is that antitrust enforcement is currently the most likely way to prevent further use of unwieldy “patent thickets” to delay biosimilar or generic entry.  What is required is for a court to find that, at least in one scenario, a “patent thicket” can be deemed to be anticompetitive.  AbbVie’s success at persuading all of the biosimilars for Humira® to settle illustrates that consumers cannot rely upon the biosimilars, themselves, to pursue this court precedent.  Rather, antitrust consumer class actions are more likely to stay the course to join the issue. 

Such class actions are already pending.  Even if the consumers prevail, it is unlikely that the courts presiding over these cases will establish any bright-line rules about when too many patents add up to a thicket.  But that is not required to cure the problem. 

For instance, even if a court holds that in the case of Humira®, which appears to be covered by more patents than any other biologic, AbbVie used an anticompetitive “patent thicket” to keep out biosimilar competition, that could have far-reaching consequences for the entire industry.  Because the line between a permissible listing of patents and an anticompetitive “thicket” of patents would not be precisely defined, pharmaceutical companies would likely err against the side of gathering and asserting too many patents.     

In sum, Boehringer’s settlement just upped the ante.  It showed that a biologic drug maker can stifle competition for lower cost biosimilars simply by stockpiling patents—even if many of those patents cover essentially the same invention.  Now that the industry has watched AbbVie’s proof of concept, the strategy is likely to be followed, and we are sure to see more patent thickets, rather than less.  This underscores that antitrust enforcement by consumers is now, ironically, crucial to liberating biosimilar entry in the US.