Evergreening


Evergreening is any of various legal, business and technological strategies by which producers extend the lifetime of their patents that are about to expire, in order to retain royalties from them, by either taking out new patents, or by buying out, or frustrating competitors, for longer periods of time than would normally be permissible under the law.

Overview

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-earning intellectual property rights, particularly over highly profitable "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, not to extension of any particular patent over an active product ingredient.

Controversy

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.
In 2002, an extensive and lengthy inquiry by the US Federal Trade Commission found, in the wake of the Hatch-Waxman legislation or Drug Price Competition and Patent Term Restoration Act, as many as 75% of new drug applications by generic drug manufacturers had been contested with 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.

Linkage evergreening and international trade law

The process of evergreening may involve specific aspects of patent law and international trade law. Linkage evergreening is 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 infringe an existing patent.

By country

Australia

A requirement for the AUSFTA to come into force was fulfilment of the article 17.10.4 linkage obligation; done by amendments to the Therapeutic Goods Act 1989. 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 had been notified of the application.
In response, the Australian government passed anti-evergreening amendments in Sections 26C and 26D of the Therapeutic Goods Act 1989 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 in this area. The Chief Australian negotiator of this aspect of the AUSFTA stated:
In November 2004, the US expressly signalled their disapproval of Australia's implementation of article 17.10.4 in an exchange of letters between the Australian Minister for Trade and the US Trade Representative on the implementation of the AUSFTA, in which the USTR stated:
The capacity of the US to make such threats is arguably facilitated by the linkage of article 17.10.4 of the AUSFTA to a non-violation nullification of benefits provision.

Canada

In 1993, under the NAFTA-induced Canadian Notice Of Compliance 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 submits its application to get a product approved, it also sends a Notice of Allegation 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.

India

was amended in 2005 under obligations to TRIPS. Novartis v. Union of India & Others is a landmark decision, in which Indian Supreme Court upheld rejection of Novartis patent by Indian patent office. The key basis for the rejection was the part of Indian patent law that was created by amendment in 2005, describing the patentability of new uses for known drugs and modifications of known drugs. That section, Paragraph 3d, specified that such inventions are patentable only if "they differ significantly in properties with regard to efficacy."

South Korea

The US has achieved a similar provision to article 17.10.4 of the AUSFTA in article 18.9.4 of the Republic of Korea-United States Free Trade Agreement. Such provisions are sometimes referred to as TRIPS-plus meaning that they are in addition to the patent requirements of the World Trade Organization multilateral Agreement on Trade-Related Aspects of Intellectual Property Rights agreement. Some academics prefer to refer to them as TRIPS-minus due to their potential, but controversial and still largely unproven, deleterious impact on public health.

United States

Various laws have provisions to limit the practice, but as of 2018 the issue remains a concern among legislators. According to one study, 12 top-selling drugs attempted an average 38 years of patent protection, above the granted 20 years. Another study found that nearly 80% of the top 100 drugs extended the duration of patent protection with a new patent.
Issues which prevent generics from reaching the market include:
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 protection in the first place.
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 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. The Notice of Compliance Regulations it administers require the Minister of Health to maintain a Patent Register. 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 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.
In Australia, anti-evergreening amendments to the Therapeutic Goods Act 1983 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. 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 and will be conducted without unreasonable delay. If the certificate is found to be false or misleading, 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 seeks an interlocutory injunction to prevent the marketing of the generic pharmaceutical must obtain leave from the government to do so.

TRIPS

Both the International Federation of Pharmaceutical Manufacturing Associations and the US PhRMA have stated that the Australian anti-evergreening provisions are inconsistent with obligations under the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights TRIPS article 27 which prohibits discrimination in an area of technology. 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. The decision of the World Trade Organization 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. Almost all nations including the United States now have anti-evergreening legislation as part of their public health policy and none of this legislation 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. 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

In terms of future evergreening strategies, patent holders may:
  1. 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,
  2. 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,
  3. seek to exclude generic companies from the safety, quality and efficacy data they need to prepare for springboarding using TRIPs-plus data exclusivity protections and
  4. seek to extend exclusivity on a soon-to-patent-expire-pharmaceutical by patenting a genetic test to establish potential toxicity or efficacy.