The Importance of Freedom to Operate for Specialty Biopharmaceuticals

The exploration of the freedom to operate in the specialty biopharmaceutical market, which requires specific steps and processes.

Biopharma companies developing specialty pharmaceuticals rise and fall by the strength of their intellectual property (IP). IP rights have evolved over the last 150 years, with one intention in mind: to offer protection of someone’s ideas from imitation, by conferring a period of exclusivity.

There are 2 main themes of creativity of the human mind. These are its artistic or commercial ideas. The first may come in the form of poetry, literature, music, painting, sculpture, or software. The second may come in the form of a new device, an industrial process, a tool, a chemical reaction, etc. Either of these forms may be protected by various forms of IP rights, for example, patents, trademarks, or copyrights.

In today’s biopharmaceutical domain a myriad of specialized R&D professionals are focused on creating and preserving IP that can be profitably commercialized. An important aspect of this effort is getting the “freedom to operate.” As an introduction, let’s think of the following scenario. An aspiring pharmacist enjoys mixing and matching reagents in his home garage during the weekends. He has previously stocked various sophisticated reagents, some still under patent, from a well-known laboratory supplier. During a holiday he comes up with a mixture recipe that when tried on home-lab-grown bacteria makes them secrete a brownish excretion, proven to be a powerful new antibiotic. Should he rush to the patent office on Monday morning? He had better not.

The same example applies to most specialty biopharmaceutical upstarts. They have a core team of bright scientists who continuously labor for the next “best thing.” In the process, they come up will all kinds of inventions, potentially useful in human therapeutics. Are they free to patent them as their own? Only if they have not used any other patented products, processes, or tools in the process. If all this applies, then we can declare that they possess freedom to operate.

WHAT IS FREEDOM TO OPERATE?

Freedom to operate is the ability to capitalize on an invention without challenges from any other parties, either private or corporate. It also means that throughout an invention’s creation period, the inventor took extra care in ensuring that she/ he did not use any products or processes that had been previously patented by others. Freedom to operate is therefore a right to commercially capitalize on your biotechnological invention. It is not interchangeable with the patent, that is, you may hold a patent but not the freedom to operate. In order to avoid such a serious obstacle, you need to ensure freedom to operate, preferably in advance of acquiring the patent.

ENSURING YOUR FREEDOM TO OPERATE

In the case of specialty biopharmaceutical inventions, it usually takes more than a decade to bring a new invention to the marketplace. Over this time- and resource-consuming process, a plethora of raw materials, tools, chemical reactions, techniques, and processes are used by countless R&D professionals. In order for any biopharma to ensure that it eventually has the freedom to operate, it will take 2 complementary steps: First, collect and record every single material, tool, process, etc required for coming up with the invention, and second, identify and study any potentially existing exclusivity claims on each and every ingredient used along the way to the invention. Let’s review these steps in more detail.

Biopharmaceutical research and development is a sequential process, comprising of 7 major steps, namely 1) discovery and technology; 2) identification of candidate molecules; 3) manufacturing; 4) selection of indications and dosages; 5) validation of target product profile; 6) compilation of the regulatory dossier; and 7) regulatory submission. Step 1 entails the use of in vitro and in vivo disease models, and the application of dedicated process, discovery, and manufacturing technologies. Step 2 includes the lead identification and preclinical development. Step 3 includes the selection of a host system, isolation and purification of the active substance, improving the production yield, scaling up, and full-scale production.

Every single process during these 3 significant R&D steps needs to be fully described. In other words, every biopharma needs to record who did what, how, with the help of what, and where.

This process will reveal thousands of steps, each with respective inputs, processes, and outputs. All the inputs, processes, and outputs are then taken through an IP screening, for example, who has patent claims, what do these include, where are they valid, and for how long? The search is conducted by experienced IP professionals, over free or proprietary databases. When this step is completed, patent attorneys undertake the task of ascertaining which one of the biopharma thousand R&D steps infringes on someone’s patents. Finally, getting the freedom to operate is the decisive step before the biopharma may proceed with its own commercial applications of the patent.

GETTING THE FREEDOM TO OPERATE

There are 4 main methods for a biopharma to get the required freedom to operate before it takes a new biopharmaceutical candidate through its rigorous clinical trial process. Let’s briefly review each of them.

Paying for it:

A biopharma in need of an important patent it does not already own can request the patent holder to either sell the patent outright or license it. For the licensee, it’s a go-ahead with its own development plan, which will hopefully repay the costs of acquiring a patent from the outside. For the licensor, it may not be a priority patent; letting someone else also use it for a different product gives them additional revenue over the patent life. The price of such license or sale is commensurate with the rarity of the patent in question, or the anticipated sales potential of the new product based on the licensed patent.

Exchanging a technology:

Two biopharmas holding large patent portfolios on their own may decide to exchange patent rights on some of their portfolio holdings that will give them access to much-needed new expertise and future sales potentials. For example, one company may hold a patent on fast-screening thousands of candidate molecules, each a chemical modification of an archetype, while the other may hold rights on an animal disease model, for example, rat type II collagen arthritis, an animal model useful for the study of rheumatoid arthritis. Once again, terms and conditions are based on future valuations of the technologies involved.

Inventing around:

A biopharma has managed to sequence the gene responsible for interferon alpha, naturally occurring in the body, and later succeeded in inserting the gene into a host system, eventually producing the specialty recombinant molecule with a given yield. Later into development, the use of a patented chromatography column has led to a 50-fold increase in the yield. Before licensing the expensive rights to the proprietary column used, the internal development department comes up with a similar column, using a different absorbent material which not only is patent-free, but may revolutionize interferon biomanufacturing in the future. The discovery eventually leads to their chromatography patent, as well as a means to “invent around” the manufacturing technique.

Patent sharing:

Three academic institutions, active in the fields of gene sequencing, come up with complementary ideas for enhancing and accelerating the process of gene sequencing on the way to sequencing the first ever mammalian species’ complete genome. Instead of laboring individually for years in the race to the genome characterization, they come together by forming a patent-sharing pool, each allowing the others to share, use, and improve upon the respective patents, with all eventual improvements to be shared among them. In the end, their pooled patents attract the interest of a major biopharmaceutical company, which licenses the pool from the 3 academic parties. In retrospect, if it weren’t for the patent pool, no individual parties would have progressed enough in the sequencing, neither would they have access to any significant royalties, nor would the biopharma ever capitalize on the genome knowledge to produce its own therapeutic interventions.

References

1. Dogramatzis D. Healthcare Biotechnology — A Practical Guide. Boca Raton, FL: CRC Press; 2010.

2. Dogramatzis D. Pharmaceutical Marketing: A Practical Guide. Englewood, CO: IHS Health Group; 2010.

3. European Patent Convention. 13th ed. Brussels: EPO; 2007. www.epo.org/about-us/publications/procedure/epc-2000.html. Accessed September 13, 2009.

4. European Patent Office (EPO). Patents on life? European law and practice for patenting biotechnological inventions. Munich: EPO; 2009.

5. Guilford-Blake R, Strickland D, eds. Guide to Biotechnology 2008. Washington, DC: Biotechnology Industry Organization; 2008. http://bio.org/speeches/pubs/er/BiotechGuide2008.pdf. Accessed September 13, 2009.

6. Spruson and Ferguson. Biotechnology Intellectual Property Management Manual. Canberra, Australia: Biotechnology Australia; 2001.

7. US Patent and Trademark Office (USPTO). Patentability. In: The Manual of Patent Examining Procedure. 8th ed. August 2001; revision July 2008. www.uspto.gov/web/offices/pac/mpep/mpep_e8r6_2100.pdf. Accessed September 13, 2009.

About the AuthorDimitris Dogramatzis, RPh, PhD, is a registered pharmacist and pharmacologist whose industry career includes medical affairs marketing, marketing management, country management, and multinational management positions. He has previously served as the regional vice president of Northern Europe for SERONO. He is the author of 2 textbooks, Pharmaceutical Marketing: A Practical Guide (CRC Press, 2001) and Healthcare Biotechnology: A Practical Guide (CRC Press, 2010). He can be contacted at gamma@otenet.gr.