Patents generally have a fixed lifetime, but some can linger on like zombies, thanks to clever lawyering that extends their life unnaturally.
Zombies’ cost to the healthcare system can be significant. Genentech’s Cabilly patent, for instance, should have expired in 2006, but instead stands to cost buyers of antibody drugs $1 billion or more over the next decade. We have the skinny over at VentureBeat Life Sciences.
I’ve been generally unsympathetic to laments that biotech and medical-device companies will suffer if U.S. patent law is reformed, and that has a lot to do with some of the grotesque but legal patent abuses biopharma companies have perpetrated over the years in order to lock out competition for as long as possible. While Big Pharma has almost certainly been the biggest offender along these lines, Big Biotech has plenty to answer for as well.
Which is why the news that Genentech’s “Cabilly” patent, which lays claim to some fundamental techniques for making bioengineered antibodies, has just been rejected for a fourth time — although it’s still not dead — strikes me as a perfect occasion for Schadenfreude. Cabilly, which continues to bring Genentech more than $100 million in royalties every year well after it should have expired, offers a terrific illustration of the the lengths companies will go to artificially extend patent terms. These zombie patents cost the healthcare system — which, of course, ultimately pays the price in inflated product costs — billions of dollars, all the while stifling innovation and enriching those who have figured out how best to game the system.
The history of Cabilly is long and convoluted — anyone interested should take a look at this Legal Times piece (PDF link), tellingly titled “It Lives for 29 Years?” — so I’ll limit myself to the high points. In 1989, Genentech found its newly issued Cabilly patent in conflict with another, issued the very same day, owned by Celltech, a U.K. biotech that also claimed ownership of basic antibody technology. The companies clashed for years, first in the U.S. Patent and Trademark Office, then in the courts, before finally agreeing to settle the case.
Their 2001 agreement remains confidential, but the aftermath was clear. The court ruled in Genentech’s favor, voided the Celltech patent and, remarkably, issued Genentech a brand-new patent — “Cabilly II” — that covered exactly the same invention as Cabilly I. Genentech also agreed to pay Celltech the same royalties it would have received from its now-worthless patent until the date it would have expired in 2006. In other words, Celltech got paid as if it had won the case, while valuable antibody technology that would have entered the public domain two years ago remains locked up by Genentech’s new patent for another decade — until 2018, in fact. It’s a win-win for the two companies and their shareholders, but a major loss for everyone else.
The Cabilly patent, which earned Genentech $133 million last year, has come under sharp attack over the past several years. In 2005, MedImmune — now a unit of AstraZeneca — sued to invalidate Cabilly II on the grounds that it resulted from an illegal, anti-competitive agreement between Genentech and Celltech. That MedImmune case won’t actually be tried until June, as it was tied up for years in a procedural argument that went all the way to the Supreme Court. In the meantime, however, the patent office has also reexamined the patent and found it wanting on several occasions — most recently just two days ago.
Like the zombie it is, however, Cabilly keeps springing back to life every time someone thinks it might finally be down. Genentech has the right to appeal the latest decision within the patent office and in the courts, and of course it has every incentive to run out the clock as long as it can. Unless, that is, MedImmune can put a bullet in Cabilly’s head first.
(Photo by Flickr user Scott Beale/Laughing Squid, used under Creative Commons license.)
(UPDATED: See below.)
Almost two weeks ago, Genentech angered doctors and elderly patients when it announced plans to restrict access to Avastin, a cancer drug that doubles as an unapproved, but quite inexpensive, treatment for eye disease. In those conditions, which can lead to encroaching blindness when left untreated, Avastin competes with a much more costly Genentech drug called Lucentis. (For background and our take on the situation, click here.)
Now the giant biotech appears to be taking a few steps back from the precipice. In an open letter posted on its site yesterday, Genentech said it will postpone plans to bar Avastin sales by “compounding pharmacies” — which can safely divide up a large vial of the drug into the tiny doses needed for intraocular injection (see photo at left) — by a month, giving retinal specialists and patients until Jan. 1 to find other suppliers. Perhaps more important, Genentech said it would continue to make Avastin available to compounding pharmacies should the FDA grant it “legal and regulatory authority to do so.”
Genentech also offered a more detailed explanation for its original decision to limit Avastin distribution, noting that the FDA had warned a compounding pharmacy about the sterility and repackaging of the drug. Worse, at least from the big biotech’s perspective, an FDA inspection of a Genentech manufacturing facility raised questions about the suitability of some Avastin production lots for use in the eye due to a “higher visual inspection standard.” (More on that when I know more.) Genentech says that to “resolve” the FDA’s concerns, it destroyed four batches of Avastin, amounting to 350,000 vials with a market value of more than $200 million — a vastly inflated estimate of the company’s actual loss, given that the marginal production cost to Genentech is almost certainly far lower than that.
To be fair, the issues here are complex, although it’s also important to bear in mind that we’re only hearing one side of the story — the FDA doesn’t comment on regulatory matters. If we take Genentech’s version of events at face value, then the company does appear to face additional regulatory scrutiny related to the ocular use of Avastin, with the potential for further unexpected losses if inspectors require the destruction of additional production lots. It’s hard not to sympathize with management under such conditions.
But there’s still something missing in this explanation. Even with the compounding pharmacies out of the picture, no one expects Avastin use in eye disease to go away, since ophthalmologists will still be able to get it from hospitals or other doctors. As a result, Genentech’s regulatory risk doesn’t really go away, either — if the FDA is concerned about Avastin’s suitability for ocular use when, say, half of elderly patients with wet age-related macular degeneration are using the drug, is the agency really going to be that much less concerned if only one-quarter of these patients are using Avastin? That’s still a lot of people.
So while Genentech’s concern about potential problems with the FDA certainly can’t be dismissed, it’s still not really sufficient to explain their actions. The only way for the company to really placate a safety-obsessed FDA — Genentech’s implicit characterization, not mine — would be either to declare total war on ocular Avastin use or to improve Avastin manufacturing so that the product would satisfy the FDA’s alleged concerns. So far, of course, Genentech hasn’t done either, although its allusion to getting FDA permission to supply compounding pharmacies suggests that it may be weighing the latter. If so, that’s all to the good.
Still, the company’s first instinct was clearly to inconvenience patients, many of them desperate, with a move that might also improve its bottom line, instead of taking steps that would clear up the problem for good, albeit at some expense and potential harm to future Lucentis sales. That still says a great deal about the company’s claimed commitment to “the best interests of patients.”
Hat tip to the WSJ health blog
UPDATE: David Williams raises some similar questions at the Health Business Blog, and apparently manages to dig up the FDA warning letter to the compounding pharmacy as well.
Committing your biotechnology giant to “the best interests of patients,” as Genentech CEO Arthur Levinson does on its his company’s Web page, is certainly a fine sentiment.
But what if you restrict use of a drug used by many elderly individuals to ward off encroaching blindness? That’s what Genentech did last week, when it announced new limitations on the distribution of its cancer drug Avastin. That drug is a certifiable hit — and dirt cheap — also treated macular degeneration, a progressive eye disease of the elderly.
The problem for Genentech is that it also sells a newer and far more expensive related drug called Lucentis, which runs close to $2,000 per monthly shot. By contrast, Avastin, only cost about $40 a shot. Read the story about why Genentech has limited the use of that cheaper, very successful drug, by David Hamilton, of VentureBeat LifeSciences. It’s dispiriting.
(UPDATED: See below.)
Committing your biotechnology giant to “the best interests of patients [and] the medical profession,” as Genentech CEO Arthur Levinson does on its his company’s Web page, is certainly a fine sentiment. When you subsequently decide to restrict use of a drug used by many elderly individuals to ward off encroaching blindness, however, you probably shouldn’t be surprised if people begin wondering whether that commitment is anything more than an empty slogan.
Restricting access to such a drug, of course, exactly what Genentech did last week, when it announced new limitations on the distribution of its cancer drug Avastin. That drug, a certifiable hit in treating colon, lung and breast cancer, has recently taken on a new role as an apparently effective — and dirt cheap — way of treating wet age-related macular degeneration, a progressive eye disease of the elderly that generally leads to near-total blindness.
The problem for Genentech is that it also sells a newer and far more expensive AMD drug called Lucentis, which runs close to $2,000 per monthly shot. By contrast, Avastin — a close biochemical cousin to Lucentis — is priced for use in far larger doses as a cancer treatment, so the tiny amount needed for injections into the eye costs only about $40 a shot.
For more than two years, retinal specialists have obtained Avastin through compounding pharmacies, which can safely divide up a large vial of Avastin into syringes for individual eye injections. Last Thursday, however, Genentech announced that it would no longer permit compounding pharmacies to obtain the drug. (Avastin is still available through wholesale distributors.) The move will almost certainly crimp the availability of the drug for the roughly half of elderly AMD patients who have been using it as an alternative to Lucentis. That drug, even when covered by Medicare or private insurance, can still cost patients $400 or more in co-payments for every shot.
Genentech dressed its decision in the corporate doublespeak that’s long been associated more with Big Pharma than Big Biotech, saying it was prompted by FDA concerns about the sterility and repackaging of Avastin. (Last time I checked, there were no actual case reports of sterility problems with Avastin use in AMD — and if there are any now, surely Genentech would have cited them.) The company also notes in its letter that “Avastin has not undergone any formal, randomized, controlled clinical trials for ocular use.” This is true, but it’s pretty rich to hear that objection coming from Genentech, which has refused to cooperate with a head-to-head trial of Avastin and Lucentis planned by the National Eye Institute.
This item ended up longer than I expected, so it continues below the fold: Read the rest of this entry »
(UPDATED: See below.)
For at least a decade, biotech futurists have been predicting that the genomics revolution will lead to medical treatments tailored to the genetic quirks of individuals. And for at least as long, we’ve all been waiting for evidence that this “personalized medicine” revolution is coming to pass.
On Monday, the field took a baby step forward when the FDA approved Selzentry, a new AIDS drug from Pfizer. Selzentry is unique in a number of ways — for instance, it’s the first drug that tries to “lock down” T-cells to prevent HIV (that’s the culprit, above and to the left) from entering and infecting them. Fuzeon, a less-than-successful drug from Roche and Trimeris, does something similar, although it works to gum up HIV’s “landing gear,” not the T-cell’s docking port.
But the particularly interesting thing about Selzentry is that it only works against a particular sub-strain of HIV — those that dock to a T-cell surface protein called CCR5 in order to invade. (Most HIV strains use another protein called CXCR4 or a combination of the two.) That means would-be Selzentry users first have to be tested to ensure that their HIV strain will respond to the drug. And that, in turn, makes Selzentry one of the first drugs to be paired with a diagnostic test that limits the number of people who can try it, but which also greatly enhances the odds that it will work in those who do.
That test, offered by Monogram Biosciences, requires “amplifying” the HIV genome in the lab, producing scads of genetically identical viruses that are used to infect cultures of T-cells that lack either CCR5 or CXCR4. When infection occurs, a transplanted gene in the cell cultures begins to produce fluorescent proteins, making it easy to tell whether the viral strain is CCR5-specific. (There’s more info in this Monogram press release.)
Of course, Selzentry — generically known as maraviroc — most likely wouldn’t appear to work at all if tested in a general population, which helps explain why Pfizer was willing to pair it with a diagnostic. Genentech’s breast-cancer drug Herceptin — long the sole poster-child for the nascent field of personalized medicine — likely would have gone the same way had researchers not realized that it appeared to work particularly well in an identifiable subset of tumors.
So far, however, there aren’t too many other similar personalized treatments out there, or even in development. One exception is the beta blocker bucindolol being developed by Arca Discovery, which aims to test the drug in patients who have specific genetic variants; I wrote about them here.
Why aren’t there more? The simplest explanation is that most drug developers, whether pharma companies or biotechs, don’t want to risk circumscribing their patient population unless they have to, since doing so by definition limits the potential sales of a new drug. Up to now, drug makers haven’t really faced much economic pressure to embrace personalized medicine, or “pharmacogenomics,” as it’s technically known. With pipelines drying up and the patent environment getting a lot harsher for the me-too drugs drug giants have long relied on, however, they may soon have little choice.
(Brief aside: Pharmacogenomics, of course, is also the answer to the oft-touted assertion that me-too drugs — meaning a variety of drugs that all target the same biological mechanism, such as the half-dozen statins approved to lower cholesterol — aren’t the waste that drug-industry critics often assert. This argument holds that patients who, for instance, don’t respond to one statin might actually benefit from a different one. The short and simple response is, Where’s the proof? If the makers of statins, or of the depressants known as SSRIs, really want to know which patients their drugs work best in, it’s certainly within their ability to find out. The fact that no one is conducting such tests tells you quite a bit of what you need to know about decision-making in the drug industry.)
UPDATE: Apropos of nothing, I just stumbled across this Reuters story describing a Royal Society report on personalized medicine. The bottom line:
“Personalized medicines show promise but they have undoubtedly been over-hyped,” said David Weatherall, who chairs the working group that produced the report.
UPDATE REDUX: For more on the FDA’s big push behind personalized medicine, see this more recent post.
Updated
In one of the more eye-opening investment moves we’ve seen lately, Google has invested $3.9 million into a biotech company run by Google co-founder Sergey Brin’s new wife.
VentureBeat’s life sciences blogger, David Hamilton, who formerly covered biotech for the WSJ, has done some digging and has the full story (see here).
Called 23andme, the Mountain View, Calif. company is run by Anne Wojcicki. It lets people take DNA tests to find out about themselves, and even how they may relate to others. It has raised around $10 million from New Enterprise Associates, Mohr Davidow Ventures and biotechnology giant Genentech.
He found some interesting blurbs:
“By connecting you to others, we can also help put your genome into the larger context of human commonality and diversity,” the company says (our emphasis added).
Most notably, David writes of a blog post by entrepreneur Martin Varsavsky, who we’ve heard is well-informed about the project (Update: Indeed, we’ve since confirmed Varsavsky is an investor; he comments below):
Maverick tech entrepreneur Martin Varsavsky, for instance, wrote on his blog in January that 23andMe will take in saliva samples through the mail, then subject them to a fast and relatively inexpensive genetic analysis. That data, he suggested, would go into a database that people could search for both personal and scientific reasons — a vision that, if true, would also help explain Google’s involvement, given the company’s oft-stated desire to index all of human knowledge…
This shouldn’t be surprising. Google has long been fascinated with various far-out projects, from building a chip for the brain, to constructing an elevator that would go into space. It has had Genentech CEO Art Levinson on its board since it went public, so a sensible DNA search-related project like this makes relative sense.
Update: The Mercury News’ Elise Ackerman has a story on the perception of conflict of interest. Google says Brin recused himself from the acquisition discussions and that a separate committee made the decision, based on several criteria. She also talks to several corporate governance watchdogs.
(UPDATED: see below.) 23andMe, a stealthy Mountain View, Calif., “personal genetics” startup, has raised a first round of funding from some heavy hitters — Google, Genentech and two blue-chip VC firms, Mohr Davidow Ventures and New Enterprise Associates.
That’s some significant megatonnage for a low-profile and potentially controversial startup, although it all starts to make sense once you realize that Google co-founder Sergey Brin is newly married to 23andMe co-founder Anne Wojcicki. In addition, Genentech CEO Art Levinson sits on Google’s board. Those insider ties triggered disclosure requirements for Google, which revealed its new $3.9 million stake in 23andMe earlier this afternoon in an SEC filing. Among other things, the financing allowed 23andMe to pay back $2.6 million it had previously borrowed from Brin.
23andMe didn’t disclose the overall size of the round, although I’m told it’s in the vicinity of $10 million. None of the four named investors officially took a lead role in the financing, according to Michael Goldberg, a Mohr Davidow partner.
According to the company’s bare-bones release, 23andMe aims to help people “access, explore and better understand” their own genetic profiles via the latest DNA-analysis techniques and Web-based software tools. (The company’s name is a play on the 23 pairs of chromosomes that carry each individual’s DNA.) That service isn’t likely to launch until the end of this year, and in the meantime, 23andMe officials aren’t talking.
Which is not to say that 23andMe’s business is a total mystery. The company’s Web site suggests that it will allow people to analyze their own genomes and then share or compare that information via social networks of some sort (emphasis added):
Even though your body contains trillions of copies of your genome, you’ve likely never read any of it. Our goal is to connect you to the 23 paired volumes of your own genetic blueprint (plus your mitochondrial DNA), bringing you personal insight into ancestry, genealogy, and inherited traits. By connecting you to others, we can also help put your genome into the larger context of human commonality and diversity.
Toward this goal, we are building on recent advances in DNA analysis technologies to enable broad, secure, and private access to trustworthy and accurate individual genetic information. Combined with educational and scientific resources with which to interpret and understand it, your genome will soon become personal in a whole new way.
How this will work in practice isn’t entirely clear, although there are hints scattered here and there. Maverick tech entrepreneur Martin Varsavsky, for instance, wrote on his blog in January that 23andMe will take in saliva samples through the mail, then subject them to a fast and relatively inexpensive genetic analysis. That data, he suggested, would go into a database that people could search for both personal and scientific reasons — a vision that, if true, would also help explain Google’s involvement, given the company’s oft-stated desire to index all of human knowledge. (An individual familiar with 23andMe told me that Varsavsky’s description sounds “well informed.”)
Mohr Davidow’s Goldberg explains that 23andMe hopes to stand at the intersection of “personalized medicine” and consumer-driven healthcare by offering individuals the tools they need to make medical decisions based on their genetic makeup. “Consumers have to become educated,” he says. “They have to understand that genetics isn’t scary science, that it’s all about what makes me who I am.”
Of course, no one knows at this point how people might react to the notion of storing — much less sharing — their genetic information online. Goldberg emphasized that 23andMe is “extraordinarily committed” to maintaining user privacy. It also can’t hurt that Congress appears poised to ban genetic discrimination with respect to employment and health insurance, which could do a lot to alleviate peoples’ anxiety about hanging out their genetic laundry online.
UPDATE: Turns out Martin Varsavsky is also a 23andMe investor. At least, that’s what he says on his blog. No wonder he’s “well informed.”
Noxxon Pharma, a Berlin-based biotech, raised 37 million euros ($50 million) to help push its first aptamer-based drug candidates for kidney and eye disease into clinical trials.
The main new investors included TVM Capital, Sofinnova Partners, and Edmond de Rothschild Investment Partners.
Aptamers are short stretches of DNA or RNA — generally known as oligonucleotides — that are designed specifically via an evolution-style process to latch onto a specific protein or other biological target. Because their drug properties could rival those of antibodies — currently used in hit drugs such as Genentech’s Avastin — while being far easier to make, aptamers have drawn a fair amount of excitement over the years. But the first aptamer-based drug, Eyetech Pharmaceutical’s Macugen for age-related macular degeneration, has been a disappointment in the marketplace — in part because a Genentech antibody-based drug appeared to demonstrate superior results.
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