Compulsory License Proceedings In Germany The Raltegravir and Alirocumab Cases Dr. Fritz Lahrtz lahrtz@ib-.de

December 2019 . Overview over the Shionogi (Raltegravir) case . Legal requirements for compulsory license proceedings in Germany . The second compulsory license case: The Alirocumab (Praluent) Case . Lessons for Patentees and Third Parties

December2019 Dr. Fritz Lahrtz 2 How works HIV?

December2019 Dr. Fritz Lahrtz 3 The Shionogi-Case (1)

. EP1422218B1 was granted in March 2012 and was supposed to expire in 2022 . An opposition was filed by MSD . The patent was upheld by the Opposition Division in March 2015 . Accelerated appeal proceedings were requested by Shionogi . The patent was revoked by the TBA in October 2017 due to added matter (Art. 123 (2) EPC)

December2019 Dr. Fritz Lahrtz 4 The Shionogi-Case (2)

. Claim 1 of EP1422218 B1 as upheld by the OD:

December2019 Dr. Fritz Lahrtz 5 The Shionogi Case (3)

. MSD sells Isentress, a medicament containing Raltegravir . No dispute in Germany that Raltegravir falls under claim 1 of EP1422218B1 . Negotiations were initiated by Shionogi in 2012 . An infringement law suit against MSD was filed by Shionogi in August 2015 . MSD filed a request for a compulsory license in January 2016 and a request for a preliminary injunction for a compulsory license in June 2016

December2019 Dr. Fritz Lahrtz 6 The Shionogi Case (4)

. The hearing on the preliminary injunction before the German Federal took place in August 2016 . The appeal hearing before the German Supreme Court took place in July 2017 . The hearing in the case on the merits took place in November 2017. In this hearing, the licence rate was established

December2019 Dr. Fritz Lahrtz 7 The Alirocumab case

. EP 2215124 B1 of Amgen covers antibodies against PCSK9 . Praluent of Sanofi contains Alirocumab, which falls under claim 1 of EP 2215124 B1 . Medical approval for the treatment of hyperchlosterinemie . Opposition Division considered patent valid in preliminary opinion . Negotiations were started by Sanofi on June 20, 2018 . In view of oral hearing in litigation proceedings scheduled for September 11, 2018, request for compulsory license was filed on July 12, 2018

December2019 Dr. Fritz Lahrtz 8 The Alirocumab case

. Hearing before the BPatG ín preliminary instance proceedings took place on September 6, 2018 . Appeal hearing before the BGH took place on June 4, 2019

December2019 Dr. Fritz Lahrtz 9 Compulsory Licence Proceedings – The Law

. §§ 24, 85 German patent law (PatG) . According to § 24 PatG, a compulsory license is granted if (1) a licence seeker has, within a reasonable period of time, unsuccessfully attempted to obtain permission from the proprietor of the patent to use the invention on reasonable commercial terms and conditions, and (2) the public interest calls for the grant of a compulsory licence. . Licence rate is set by the court . Preliminary grant of the compulsory licence is possible in case of urgency (§ 85 PatG)

December2019 Dr. Fritz Lahrtz 10 Compulsory License Proceedings in Germany (1)

. Either in proceedings on the merits or in preliminary proceedings, the case is heard by the Federal Patent Court, an appeal to the Federal Supreme Court is available . One case has been decided by the Federal Supreme Court in late 90-ies (BGH Polyferon) . In this case, the Supreme Court rejected the request, because a medicament having substantially the same effect was available . No further case has been decided before the Shionogi case . Costs are the same for as for nullity proceedings

December2019 Dr. Fritz Lahrtz 11 Compulsory License Proceedings in Germany (2)

. Issues:  Sufficient negotiations  Public interest  License rate . Minor points:  Urgency  Costs  Power of the Federal Patent Court to decide on license rate

December2019 Dr. Fritz Lahrtz 12 Suffient Negotiations (1) Undisputed Publically Known Facts In DE

. Raltegravir falls under claim 1 of the Shionogi-Patent . Raltegravir makes about 1,4 billion $ per year . Negotiations have been initiated by Shionogi, Shionogi requests the payment of a royalty rate . MSD has offered a lump sum of 10 million $ for a world-wide settlement . Negotiations consisted of an e-mail exchange, no meetings took place . No movement of MSD during negotiations before infringement law suit was initiated

December2019 Dr. Fritz Lahrtz 13 Sufficient Negotiations (2)

. Section 24 (1) PatG …. 1. a licence seeker has, within a reasonable period of time, unsuccessfully attempted to obtain permission from the proprietor of the patent to use the invention on reasonable commercial terms and conditions, … . Both the Federal Patent Court and the Supreme Court considered these requirements as fulfilled

December2019 Dr. Fritz Lahrtz 14 Sufficient Negotiations (3) - Opinion of the FSC (1)

. It is necessary that the licence seeker has tried to obtain a licence over a reasonable period of time . This was the fact in the current case . Doubts on may be taken into account by the license seeker when making an offer . In the current case it was not inappropriate that MSD believes the patent is invalid . This justifies the offering of a lump sum

December2019 Dr. Fritz Lahrtz 15 Sufficient Negotiations (4) – Opinion of the FSC (2)

. License seeker must be prepared to take the license at the conditions set by the court . This condition must be fulfilled at the end of the oral hearing . Such a declaration has been made by MSD during the hearing

December2019 Dr. Fritz Lahrtz 16 Sufficient Negotiations (5) – Alirocumab Case

. Term for negotiations (22 days) was considered too short both by BPatG and BGH . In addition, license offer of 2 % was considered low, and style of letter of considered as “rough” with the consequence that more time for negotiations should have been assessed . Amgen replied that in principle they would not like to give a license, but would need more information to judge on public interest, ie did not completely reject the request . Sanofi did not further reply to this letter before the oral proceedings before the BPatG

December2019 Dr. Fritz Lahrtz 17 Sufficient Negotiations (6) – Alirocumab Case

. Therefore, the requirement of § 24 (1) No. 1 was considered to be not fulfilled . 1st Headnote of BGH decision In welchem Umfang und über welchen Zeitraum sich der Lizenzsucher um eine Lizenz zu angemessenen und üblichen Bedingungen bemühen muss, hängt auch von der Reaktion des Patentinhabers ab. Weiterer Bemühungen bedarf es in der Regel nicht, wenn der Patentinhaber die Zustimmung zur Benutzung der Erfindung schlechthin verweigert. Hierfür reicht es jedoch nicht aus, wenn der Patentinhaber erklärt, die Vergabe einer Lizenz zwar grundsätzlich abzulehnen, unter außergewöhnlichen Umständen aber zu erwägen.

December2019 Dr. Fritz Lahrtz 18 Public Interest (1) – Undisputed Facts In DE (1)

. Raltegravir is an integrase inhibitor . Raltegravir is taken by about 10000 patients (of about 80000 HIV patients totally) in Germany every day . ART therapy consists of at least two medicaments with different modes of action . A regular administration of ART therapy is essential for the success of the anti-HIV therapy . For each patient, individual therapy regimen has to be established . In summary, about 18 preferred combination therapies currently available in Germany

December2019 Dr. Fritz Lahrtz 19 Public Interest (2) – Undisputed Facts In DE (2)

. Apart from Raltegravir, at least Dolutegravir is available which has substantially the same anti-viral activity as Raltegravir . A further integrase inhibitor is Elvitegravir . Dolutegravir has a (slightly) different side effect profile . Raltegravir is currently the only integrase inhibitor with a market authorization for pregnant women and children under 6 years . Other non-integrase inhibitor ART therapies have a market authorization for these two patient groups

December2019 Dr. Fritz Lahrtz 20 Public Interest (3)

. Section 24 (1) PatG …. 2. the public interest calls for the grant of a compulsory licence. . Both the Federal Patent Court and the Supreme Court considered these requirements as fulfilled . Compulsory license was preliminarily granted

December2019 Dr. Fritz Lahrtz 21 Public Interest (4) – Opinion of the FSC (1)

. Public interest depends on the individual facts of the case . In principle, it is the right of the patent owner to decide on its patent . Consequently, a compulsory licence can only be granted under specific circumstances . Such circumstances are not present if alternatives to the medicament-in-suit are available

December2019 Dr. Fritz Lahrtz 22 Public Interest (5) – Opinion of the FSC (2)

. The FSC acknowledged a public interest for young children pregnant women and for treating people which have been exposed to the virus . The FSC saw no reason to limit the compulsory license to these patient groups since it acknowledged that also in other patient groups, there may be individual patients for which Raltegravir is essential . This also includes patients for which the risk of a switch to another medicament is inacceptable . Procedural behavior of the licence seeker is of low relevance

December2019 Dr. Fritz Lahrtz 23 Public Interest (6) – Opinion of the FSC (3)

. Limitation to certain patient groups is impossible since it cannot predicted which patients will be in need of Raltegravir . The risk of a false decision cannot be imposed on the medical doctor . Size of patient group needing the medicament is irrelevant

December2019 Dr. Fritz Lahrtz 24 Public Interest – The Alirocumab Case (1)

. Amgen has Repatha on the market, which contains the anti-PCSK9 antibody Evolocumab . Burden of proof is on the Plaintiff / applicant to show that product has a superior property which justifies a public interest . No statistically significant data on file that Alirocumab is superior to Evolocumab nor that is has less side effects . Public interest was denied

December2019 Dr. Fritz Lahrtz 25 Public Interest – The Alirocumab Case (1)

. 2nd Headnote of BGH decision Ein die Erteilung einer Zwangslizenz für ein Arzneimittel gebietendes öffentliches Interesse kann zu bejahen sein, wenn durch nach anerkannten Grundsätzen der Biostatistik signifikante Ergebnisse einer klinischen Studie nachgewiesen ist, dass der Wirkstoff des Arzneimittels bei der Behandlung schwerer Erkrankungen therapeutische Eigenschaften aufweist, die für andere auf dem Markt erhältliche Mittel nicht oder nicht in demselben Maße belegt sind, ins-besondere durch die Behandlung das Risiko des Patienten gesenkt wird, infolge der Erkrankung zu versterben, oder wenn solche überlegenen Eigenschaften auf andere Weise nach- gewiesen werden (Fortführung von BGH, Urteil vom 5.Dezember 1995 - XZR26/92, BGHZ 131, 247 -Interferon-gamma, und Urteil vom 11. Juli 2017 -X ZB 2/17, BGHZ 215, 214 -Raltegravir).

December2019 Dr. Fritz Lahrtz 26 Licence Rate (1)

. Section 24 (6) PatG: …. The proprietor of the patent shall be entitled to remuneration from the proprietor of the compulsory licence, such remuneration being equitable in the circumstances of the case and taking into account the economic value of the compulsory licence. . In the hearing of November 21, 2018, the Federal Patent Court decided that a licence rate of 4 % is appropriate . No appeal was filed

December2019 Dr. Fritz Lahrtz 27 Licence Rate (2) – Guidance of the FSC

. The licence rate to be set by the court has to be independent of any considerations on patentability . Consequently, the licence rate is that of a non-exclusive licence to a patent of which patentability is certain . Should compensate for the justified financial interests of the Patentee

December2019 Dr. Fritz Lahrtz 28 Licence Rate (3) – Guidance of the FPC

. Rate should be based on what a reasonable Patentee would request and what a reasonable Licensee would accept . Important factors for determination are:  Usual licence rates in the given technical field (in the pharma field usually between 10 and 15 %)  Contribution of the patent to the product (not to the )  Value of the patent for the Licensee  Further rights of the Licensee

December2019 Dr. Fritz Lahrtz 29 Licence Rate (4) – Guidance of the FPC

. Further factors determining the licence rate  Possibility of the Licensee to seek for revocation procedures  Grant of licence represents support for a competitor  Non-exclusive licence  Less obligations of the Licensee

December2019 Dr. Fritz Lahrtz 30 Licence Rate (5) – Guidance of the FPC

. Factors not influencing the license rate:  Breath of the claims  Revocation of the patent  Duration of compulsory license . License rate of 4 % was mainly justified by the very little contribution of the patent to Raltegravir (not entioned in the patent, active residues not mentioned, only provision of broad formula)

December2019 Dr. Fritz Lahrtz 31 Lessons

. Compulsory license proceedings are an option for patent infringers to avoid an injunction . Weakening of the position of the Patentee in patents affecting the public interest . So far, public interest has only been established in pharma cases . In the Shionogi case, the FSC has established a rather low standard for the formal requirements . What is the public interest? Is one superior property sufficient?

December2019 Dr. Fritz Lahrtz 32 Further Questions?

Dr. Fritz Lahrtz +49 89 99 88 54-0 [email protected] December 2019