Pernicious Effect of Similar Medicinal Product’s Orphan Exclusivity: CJEU Dismisses Teva’s Appeal (C-138/15 P)
By Mayank Dixit
In a significant, yet unusual judgment the Court of Justice of the European Union (CJEU) upheld the General Court’s decision (T-140/12; Teva Pharma v. EMA) that had affirmed the European Medicines Agency’s (EMA) rejection of Teva’s generic drug application for Glivec® (active substance-imatinib), not due to the reference product’s own orphan drug exclusivity but in view of orphan drug exclusivity of a similar medicinal product – Tasigna® (active substance-nilotinib).
The judgment is bizarre not only because it interprets the underlying orphan drug regulation in a manner incongruous with the spirit and substance of the legislation, but also for its potential to provide an unfair leg-up to the brand drug companies for extending their market monopolies indefinitely. It simply fails to fathom the underlying welfare rationale of the Regulation, which is meant to ensure the same quality of treatment for patients of rare conditions as those suffering from other diseases. The Court’s decision provides a skewed playing field where the interest of patients and generic pharmaceutical companies will be impacted by the unjustified extension of monopoly periods of brand drug products thus ensuring exploitative pricing of life-saving drugs.
Before entering into the details of the case at hand, it seems appropriate to first explain what orphan drug legislation is about. Orphan drug legislation aims to incentivize the research aimed at developing treatment or a cure for rare medical conditions or disorders. Without such legislation pharmaceutical companies would be quite reluctant to develop and market orphan products as the returns would rarely justify the necessary investments. As a particular incentive, such legislation entails a market exclusivity period. This market exclusivity protects the orphan medicinal product from market competition with similar products with same indication for a certain period of time from the date of first marketing authorization.
In the EU, orphan exclusivity is granted to a drug or medicinal product if it is approved by the EMA for the treatment, prevention or diagnosis of a rare but life threatening medical condition that afflicts not more than 5 in 10, 000 people in the EU (Article 3 (1) of the Orphan Drug Regulation). Article 8 of Orphan Regulation provides for a ten-year period of marketing exclusivity for an orphan medicinal product. During this exclusivity period no other “similar medicinal product” will be accepted for approval for the same indication unless one of the three derogations of Article 8(3) applies, viz. the consent from the first marketing authorization holder, insufficient supply of the medicinal product or clinical superiority.
Commission Regulation (EC) 847/2000, which lays down implementing provisions of the criteria for designation of a medicinal product as an orphan medicinal product, defines the term “similar medicinal product” under Article 3(3)(b) as follows:
”similar medicinal product’ means a medicinal product containing a similar active substance or substances as contained in a currently authorised orphan medicinal product, and which is intended for the same therapeutic indication.””Similar active substance means an identical active substance, or an active substance with the same principal molecular structural features (but not necessarily all of the same molecular features) and which acts via the same mechanism.”
In other words, similar drugs are those which contain the very same active substance or the same basic chemical structural attributes, and which exert their pharmacological action via the same mechanism as the orphan product. The assessment of similarity, however, does not take into consideration factors such as the mode of administration or pharmacokinetic properties of the medicinal product.
Facts of the case and the General Court’s decision
The dispute before the CJEU revolved precisely around the applicability of Article 8 of the Orphan Drug Regulation to generic drug approvals when the ten-year period of the orphan drug exclusivity of the reference product has already expired, while that of a ‘similar medicinal product’ for the same indication is still in force.
In the case at hand, Novartis had filed a marketing authorizing application with the EMA) for Glivec® (Imatinib), which was approved in November 2001 as an orphan medicinal product for the treatment of chronic myeloid leukaemia in adults (CML). In November 2007 another Novartis drug, Tasigna® (nilotinib), was submitted for marketing authorization for CML, but since it was found to be structurally similar to imatinib by the EMA, Novartis was obligated to obtain consent from the first marketing authorization holder under Article 8(3)(a) of the Orphan Drugs Regulation due to the existing orphan exclusivity of imatinib. In this particular case, it was of course not very hard to obtain the consent of the first marketing authorization holder, as Novartis was the sponsor for both drugs.
In 2012, Teva, another pharmaceutical company, applied for marketing approval of a generic version of Glivec® for CML. The application was, however, rejected by the EMA because of the orphan drug exclusivity of nilotinb.
Thereupon, Teva brought an action before the General Court requesting a review of the EMA’s rejection, as well as the interpretation of Articles 3 and 8 of the Orphan Drug Regulation.
However, the General Court upheld the EMA’s decision refusing Teva’s generic application for imatinib in view of nilotinib’s orphan drug exclusivity pertaining to CML. The Court declared that a second or subsequent, similar orphan product that has been granted orphan exclusivity for the same indication as the first medicinal product is entitled to its standalone term of ten year orphan drug exclusivity when it has been approved independently from the first approved orphan product. Thus, in view of the similarity of Teva’s generic product to that of nilotinib and its orphan exclusivity the General Court validated the EMA’s rejection of Teva’s generic drug application.
The CJEU’s decision
Undeterred, Teva appealed the General Court’s judgment. Teva mainly argued that the EMA and the General Court had erroneously interpreted Article 8(1) and 8(3) of the Orphan Drugs Regulation, bringing these two articles on a direct collision course with each other. Specifically, Teva contended that a marketing authorization granted pursuant to Article 8(3) cannot confer exclusivity under Article 8(1) of the Orphan Drug Regulation since the provisions under Article 8(3) constitute derogations and must be interpreted narrowly. It further explained that Article 8(3)(a) provides that marketing authorization may be granted with the consent of the marketing authorization holder of the first orphan product. However, if the EMA has already granted authorization to a similar orphan product of a third party which independently enjoys period of exclusivity, then the provisions of Article 8(1) and 8(3) will be in conflict since in such a scenario the marketing authorization holder of the first orphan product would be denied the express statutory authority to grant consent with respect to approval of another similar product while that of third party would be needed for such approval. Teva concluded that since the approval of nilotinib was based upon an exemption granted under Article 8(3) with regard to the first orphan product (imatinib), it should not be entitled to same scope of orphan exclusivity as imatinib and thus should not be considered a hurdle towards the approval of generics referencing imatinib.
Nevertheless, the CJEU, siding with the EMA, held that neither the statutory text nor the underlying goal of the Orphan Drug Regulation aimed at granting exclusivity to all the eligible medicinal products dictate the denial of orphan exclusivity to medicinal products approved under exemptions provided by Article 8(3).
In its second line of argument, Teva stated that the incorrect interpretation of Article 8 has the effect of unjustifiably extending orphan exclusivity of imatinib beyond the ten-year period and consequently denying it the opportunity to submit application and obtain approval for a generic equivalent. Citing a hypothetical scenario, Teva claimed that if marketing authorization for nilotinib was granted in November 2011, then the interpretation adopted by EMA would have prevented imatinib generic filings until November 2021, i.e. for twenty years from its first marketing authorization date.
The CJEU however once again declined to accept Teva’s proposition by observing that as per the objectives pursued by the Orphan Drug Regulation to incentivize the research on therapies for rare life-threatening conditions, there was as such no provision (besides that under Article 8(2) which provides for the reduction of orphan exclusivity to six years if at the end of the fifth year it is established that the criteria pertaining to the rarity of a medical condition or the size of the patient population are no longer applicable) to truncate the orphan exclusivity term of a drug product as a result of the fact that another drug product has already received approval and benefited from exclusivity for those same indications.
In the last prong of its appeal Teva argued that, regardless of the construction adopted for Article 8 of the Orphan Drug Regulation , there should be an exception to allow approval of generic equivalents of first approved product with expired exclusivity even if orphan exclusivity for a second similar product for same indication is still operative.
In rejecting Teva’s arguments the CJEU fully concurred with the General Court, which had held that:
“…it is common ground that, under Article 8(1) of Regulation No 141/2000, marketing authorisation may be refused for a ‘similar’ medicinal product only in respect of the therapeutic indications for which the marketing of an orphan medicinal product has been authorised and in respect of which that orphan product enjoys market exclusivity… Thus, the fact that the therapeutic indications for which both orphan medicinal products received marketing authorisation are similar cannot undermine the market exclusivity enjoyed by each of those medicinal products by virtue of Article 8(1) of that regulation for those therapeutic indications.” (§ 79, T-140/12)
The judgment of the CJEU affirming the General Court’s decision in its entirety forebodes misfortune at best and disaster at worst for generic companies. The decision not only eviscerates the Orphan Drug Regulation of its rationale and intention to promote the development of novel therapies for rare diseases, but also hands the Regulation on a platter to brand drug companies for it to be gamed and manipulated.
The effect of the CJEU ruling is harsh upon generic companies seeking approval of affordable generic equivalents of products with orphan exclusivity as now they would have to worry not only about the orphan exclusivity of the reference product, but also that of any other similar medicinal product with an identical indication. Subject to other intellectual property protections, the expiry of the orphan exclusivity of the reference product will not guarantee a clear path to the market since an orphan exclusivity attached to a similar product can still become a stumbling block.
The situation would be particularly severe when the drug referenced by generics and a second similar drug have a single common indication protected by the orphan exclusivity. In this case, even if the orphan exclusivity for the reference product’s sole indication would have expired, the exclusivity remaining for the second similar product for the same indication would prevent the submission of a generic application for the first product until the expiry of the orphan exclusivity of the second product. Excision of exclusivity protected information from the label would not be possible as it would be the only approved indication. Seeking consent from the innovator under Article 8(1)(a) of Orphan Drug Regulation would be futile in absence of a significant bargaining chip. To invoke the derogation under Article 8(1)(b) would be equally pointless firstly because the drug sponsor would at least ensure compliance with regard to product supply and secondly because generics will generally lack the wherewithal to prove insufficient supply of orphan product, if any. Exemptions under Article 8(1)(c) based on establishing clinical superiority of a second product over an approved orphan product would be wholly in conflict with the basis on which generic products obtain approval, viz. relying on the reference product’s clinical safety and efficacy.
Even for products with more than one approved indication the concerted effect of orphan and patent exclusivity has all the potential to stifle competition. In practice, it is usually the first approved indication that is free of exclusivity protection earlier in time and generics, while submitting drug applications for an early market entry, carve out the subsequent indications from the label to avoid potential infringement of patents which may cover the new approved indications. The CJEU ruling would significantly curtail a generic player’s ability to file applications with excised or skinny labels in situations where the first indication even after enjoying its ten year exclusivity period is nonetheless protected by the orphan exclusivity of a second similar product and the remaining indications are protected by patents. In short, the older indication will be out of bounds because of the pernicious effect of exclusivity of a second similar orphan product, while the newer indications cannot be included due to patent protection or other independent exclusivities or both.