Evergreening is any of various legal, business, and technological strategies by which producers (often pharmaceutical companies) extend the lifetime of their patents that are about to expire in order to retain revenues from them. Often the practice includes 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. Robin Feldman, a law professor at UC Law SF and a leading researcher in intellectual property and patents, defines evergreening as "artificially extending the life of a patent or other exclusivity by obtaining additional protections to extend the monopoly period."
Overview In the pharmaceutical industry, evergreening may be used by manufacturers of a particular drug to restrict or prevent competition from manufacturers of generic equivalents to that drug. Robin Feldman has documented several types of patent tactics commonly used in the U.S. by pharmaceutical companies, including evergreening, pay-for-delay, gaming the citizen petition process, and the misuse of trade secrets, among others. In one study of the prescription drug market, Feldman found that 78% of new patents associated with prescription drugs were for existing drugs.
In 2002, the US Federal Trade Commission (FTC) found that generic drug manufacturers intending to manufacture new drugs were subjected to legal action by the owner of the original patent up to 75% of the time, resulting in increased drug costs.
Product hopping
Product hopping, or product switching, is an anti-competitive practice in which a patent, and consequent revenue stream, is extended by patenting a minor variation on the original product, thereby further delaying the entry of a generic on to the market. This can prevent competition and harm consumer welfare. Types of product hopping include changes to the form of the drug (capsule, tablet, etc), chemical changes such as adjusting chemical groups (a me-too drug) or a different enantiomeric mixture (a chiral switch), switching from short- to long-acting formulations, introduction of new inactive ingredients, and combinations of drugs that were previously sold separately.
Product hops are distinguished from genuine improvements, such as a new version of a drug with an easier route of administration that leads to meaningful benefits for patients. However, a meaningful improvement may still be considered a product hop if it was introduced as part of an anticompetitive strategy. Withholding the release of new product versions to maximize revenue from an on-market version has also emerged as a way for firms to maximize profit over patient benefit. Litigation against Gilead Sciences addressed product versioning directly, which also highlights the problems inherent in compensating patients impacted by this tactic.
The analysis of product hopping under antitrust laws is complex, in part due to the complexity and unique nature of healthcare markets. , the distinction between encouraging innovation and preventing monopolization is unclear. One proposal is to define product hops as 1) modifying the product to prevent substitution by a generic drug and 2) encouraging prescriptions of the new version instead of the original. The switch to the new version can be encouraged by a marketing strategy or forced by discontinuing the original. Another possible factor is whether the switch would have been an economically sound decision for the company if it did not reduce competition by generics.
In one case, product hopping of the multiple sclerosis drug glatiramer acetate (Copaxone) led to a cost to consumers of $4.3 to 6.5 billion dollars over two and a half years, before the new patent was invalidated by the courts. Another example was the Alzheimer's drug memantine (Namenda). The impact of product hops can be less visible to the public than the cost of new drugs, because of a lack of awareness that the prices would have decreased due to generic competition.
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 (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 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 (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:
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 (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. In 2006, the Supreme Court of Canada ruled against an instance of drug patent evergreening, two days before the Food and Drug Regulations extended data protection on brand-name drugs from 5 to 8.5 years.
India Indian patent Act 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 (KORUSFTA). 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.El-Said M. The Road from TRIPS-Minus, to TRIPS, to TRIPS-Plus Implications of IPRs for the Arab World The Journal of World Intellectual Property 2005; 8 (1): 53-65
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:
Lack of availability of samples to do testing; the CREATES Act was passed on December 20, 2019 to address these issues. Risk Evaluation and Mitigation Strategies (REMS) requirements Reverse payment settlements, which involve payment to delay; these have been required to be reported to the FTC for generics since 2004 and biosimilars since 2018. Citizen petitions and petitions for stay of action subject to Section 505(q) of the Federal Food, Drug, and Cosmetic Act allow the Food and Drug Administration to delay action on a pending generic drug application. By law, the FDA is required to prioritize these petitions. However, the citizens filing concerns are usually not individuals, but corporations. The FDA recently said branded drug manufacturers submitted 92% of all citizen petitions. Many of these petitions are filed near the date of patent expiration, effectively limiting potential competition for another 150 days. "Authorized generics" which are exactly the same as brand name drugs, but marketed without brand names on their labels. By law, the first generic company to market a drug gets an exclusivity period of 180 days. During this time, no other companies can market a generic product. But the company with the expiring patent is not barred from launching an "authorized generic." By selling a drug they are already making under a different name, pharmaceutical firms are effectively extending their monopoly for another six months.
Regulation 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.
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