In the ongoing saga of the Coalition for Affordable Drugs (CFAD) vs. the pharmaceutical industry, there has been quite a bit of movement recently by the PTAB on institution of many of CFAD’s earliest-filed IPR petitions. To date, CFAD has filed 33 petitions for IPR, some of them multiple petitions against the same patent, and there have been 17 institution decisions by the PTAB. So, how does CFAD seem to be faring: are they having more or less success than any other petitioner? Below is a snapshot of the number of instituted CFAD petitions compared to the industry as a whole and a possible trend as to the reasons for why many of those petitions have been denied.
Of the 17 institution decisions, 10 of the petitions have been denied, and 7 have been granted, for a denial rate of approximately 59%, or to put in another way, an institution rate of 41%. Compare this rate to the general statistics for the IPRs as a whole. The rate of petitions denied on the merits is approximately 30%, giving an overall institution rate of around 70% (according to statistics published by the USPTO). Thus, in this small sample size, CFAD have been denied approximately 2 times more than the average.
CFAD stressed that its petitions are filed to bring affordable drugs to consumers, but the PTAB’s denial of more than half of the decided IPR petitions suggests that the CFAD may be less about making a strong case against the validity of the patents and more about the monetary gain of the hedge fund and their investors. Common to many of the PTAB’s decisions denying CFAD petitions is a criticism that the printed publications on which the petitions rely are not actually prior art or include only tenuous disclosure of the patented subject matter.
In at least four different IPR petitions filed against Pharmacyclics (IPR-2015-01076), Jazz Pharmaceuticals (IPR-2015-01018) and Acorda Therapeutics (IPR-2015-00817, IPR-2015-00720), CFAD relied upon printed documents it asserted qualified as prior art despite not having sufficiently established the publication date of any. In each IPR, the PTAB determined that these documents did not, however, qualify as prior art and thus denied those petitions. In a petition against Biogen (IPR-2015-01136), CFAD cited to a clinical trials internet document as well as a Pilot Study document assertedly published prior to the patent’s effective filing date. The PTAB determined that these documents were insufficient to support a determination of obviousness as their disclosures were speculative as to the effect of the drug as of that filing date.
The CFAD has enjoyed some success. Recently the PTAB agreed to institute IPR (IPR-2015-01092; IPR2015-01096; IPR2015-01102) on several Celgene Corp. patents related to the cancer drugs Thalomid, Revlimid and Pomalyst, as well as review, in part, a patent covering NPS Pharmaceuticals’ drug Gattex (IPR-2015-00990 and 2015-01093) and a patent directed to Cosmo Technologies’ drug Lialda (IPR-2015-00988). These recent decisions bring CFAD’s record to 7-17 for grounds of institution so far, which is a 41% institution rate, compared to a 70% institution rate for IPR petitions generally.
It would seem that a petitioner with a real interest in invalidating the patent would make the best possible case for invalidating the patent in question. However, if the denial rate of CFAD petitions remains high compared to the denial rate on the whole, at what point is this type of petition filing seen as an abuse of process rather than in the true interest of the system of making sure only strong patents are issued and enforceable. Additionally, where is the benefit to consumers if the CFAD’s actions simply cost the pharma companies more to defend against spurious invalidity challenges- it is hard to envision how that would translate to lower drug prices. The PTAB has already ruled that it will not sanction such entities as CFAD for abuse of process, and the PTO has proposed new rule changes in order to prevent any abuse of the IPR system. However, as more petition decisions roll in and IPR petitions are filed, it seems the rationale behind the group’s motives might warrant developing a mechanism by which to penalize filers of specious IPR petitions.