Evergreening refers to a variety of legal and business strategies
by which technology producers with patents over products that are about
to expire retain royalties 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.[1]
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,[2]
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.
In Canada, the Office of Patented Medicines and Liaison under 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.[14] The Notice of Compliance Regulations it administers require the Minister of Health to maintain a Patent Register.[15] 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.[16]
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 (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 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 injunction to prevent the marketing of the generic pharmaceutical must obtain leave from the government to do.[17]
On the other hand, international trade law 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.[19] 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.
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 drug.[4] In 2002, an extensive and lengthy inquiry by the US Federal Trade Commission (FTC), found that the Hatch-Waxman legislation or Drug Price Competition and Patent Term Restoration Act (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.[5][6]Linkage evergreening and international trade law
The process of evergreening may involve specific aspects of patent law and international trade law. 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 Canadian Notice Of Compliance (NOC) regulations, drug safety, quality and efficacy regulators at Health Canada were prevented from issuing an authorization for market entry, until 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) 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, 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 [7] 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." [8]
- "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." [9]
Regulation against evergreening
The main arguments in favor of governments regulating against evergreening are that rapid entry of multiple generic competitors after patent 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.[13]In Canada, the Office of Patented Medicines and Liaison under 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.[14] The Notice of Compliance Regulations it administers require the Minister of Health to maintain a Patent Register.[15] 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.[16]
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 (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 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 injunction to prevent the marketing of the generic pharmaceutical must obtain leave from the government to do.[17]
Regulations against evergreening and TRIPs
Both the International Federation of Pharmaceutical Manufacturing Associations (IFPMA) 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 TRIPs article 27 which prohibits discrimination in an area of technology (in this case pharmaceuticals).[18] 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 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.[19] 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 nanotechnology 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 extend exclusivity on a soon-to-patent-expire-pharmaceutical by patenting a genetic test to establish potential toxicity or efficacy (pharmacogenomics
