By Jennifer Van Brunt


Bristol-Myers Squibb Co.'s marketing exclusivity for its highly successful cancer drug Taxol expired on Dec. 27, 1997 — yet the pharmaceutical giant still holds an iron grip on the U.S. market. While potential competitors have been taking all the necessary steps to poise their generic versions of the drug — whose active ingredient is paclitaxel — for potential marketing approval, Bristol-Myers has countered with measures that prevent those competitive products from reaching hospital shelves anytime in the near future.

But now the FDA has changed its tune when it comes to granting co-exclusivity in the market for generic products. In light of recent court decisions, the FDA issued new policy guidelines governing the award of 180-day exclusivity for generic drugs, which companies submit for approval under abbreviated new drug applications (ANDAs). According to the agency's new guidance document, issued in June, it has "eliminated the 'successful defense' provision, which required an ANDA applicant to be sued for patent infringement and to prevail in the litigation to receive the 180-day period of marketing exclusivity."

As part of its former policy, the FDA required that an ANDA include one of four statements regarding the patent status of the innovator's drug; of these four, the last (Paragraph IV) must state that the innovator's patent is invalid or will not be infringed by the manufacture, use or sale of the drug product for which the ANDA is submitted. This, of course, will trigger infringement action by the patent owner (the innovator). If, in the end, the court finds the patent to be invalid or not infringed — that is, the company submitting the ANDA successfully defends a patent infringement suit — then the FDA would grant 180-day exclusivity to the generic drug covered under the ANDA.

Recent court actions have, however, challenged FDA's "litigation" and "successful defense" requirements for 180-day exclusivity. In two cases — Mova Pharmaceutical Corp. v. Shalala and Inwood Laboratories Inc. v. Young — the district courts held that 180 days of marketing exclusivity should be granted to the first ANDA applicant who files a Paragraph IV regardless of whether that applicant is then sued for patent infringement. As a result of these and subsequent court actions, the agency will no longer enforce the successful defense provisions of its statutes.

This change in position opens a window of opportunity for companies like Immunex Corp. and IVX BioScience Inc., which have competing drugs pending final approval at the FDA.

According to Scott Hallquist, Immunex's general counsel, the FDA's new stance means that "the first applicant to file an ANDA is entitled to six month's marketing co-exclusivity regardless of whether that applicant prevails in court." And Immunex, of Seattle, firmly believes it was the first to submit an ANDA for a generic version of paclitaxel.

In fact, Immunex and IVX have joined forces in a cross-marketing alliance on their respective products. Announced in early June 1998, this union is intended not only for the U.S. marketplace; the companies are also pooling their resources for the court battle that is brewing with Bristol-Myers.

Under the terms of this agreement, Miami-based IVX BioScience (AMEX:IVX) acquired Immunex's ANDA for paclitaxel for an undisclosed amount of cash. IVX also bought Immunex's inventory of bulk product. If Immunex's ANDA is approved, the company gets royalties on net sales of the drug by IVX. Immunex will also help promote the product through its oncology sales force. As well, Immunex will promote IVX's branded product Paxene, if that drug gets final approval from the FDA.

Both firms have certified in their ANDA applications that the use patents held by Bristol-Myers relating to Taxol are invalid or not infringed by their products. Not surprisingly, Bristol-Myers has challenged these statements and filed countersuits for infringement. Now that IVX owns the Immunex product, it will direct the defense of both lawsuits.

The Competitors

Bristol-Myers (NYSE:BMY) has quite a lucrative franchise to protect, too. In its latest earnings statement, released just last week, the Princeton, N.J., company reported worldwide Taxol sales of $304 million for the quarter ended June 30, 1998 — $200 million of that in the U.S. Domestic sales were up an impressive 41 percent from the same quarter in 1997. In all probability, the drug will garner more than $1 billion in sales for 1998; it already came close to that — $940 million, to be precise — in 1997 for the full year.

In December 1992, the FDA approved Bristol-Myers' Taxol for the treatment of refractory ovarian cancer — its first indication. With that approval, the pharmaceutical giant garnered five years' marketing exclusivity under the provisions of the Waxman-Hatch Act. The drug, which was discovered by researchers at the National Cancer Institute, is not itself patentable, but the means of delivering it is. And Bristol-Myers won patent protection for that use — infusion of the drug over a three-hour period — in June, 1997, only six months before its marketing exclusivity was set to expire. As well, Bristol-Myers filed for orphan drug designation for the use of Taxol as a second-line therapy for Kaposi's sarcoma in AIDS patients. In early August 1997, the FDA approved this indication as well, giving Bristol-Myers a seven-year lock on that market niche.

In March 1998, an FDA advisory committee recommended approval of Taxol (when combined with the standard chemotherapeutic drug cisplatin) as a first-line treatment for advanced ovarian cancer and as a treatment for non-small cell lung cancer in patients who are not candidates for radiation therapy.

Meanwhile, Ivax Corp., which now goes by the name of IVX BioScience, together with its partner NaPro BioTherapeutics Inc., of Boulder, Colo., developed a branded paclitaxel product, Paxene. The companies terminated their marketing and development agreement on this product in March 1998. NaPro (NASDAQ:NPRO) has since started its own clinical development program, and earlier this month initiated the first clinical study of its own patented formulation of the product. NaPro's patent, which issued in January 1998, covers a method of administration that involves smaller, more frequent doses of the drug over a shorter infusion time compared with Bristol-Myers' FDA-approved (and patented) administration schedule.

In September 1997, an FDA advisory committee unanimously recommended approval of Paxene, too, for treating AIDS-related Kaposi's sarcoma. And in December 1997, the agency tentatively approved Paxene, but stated that it might not get full approval until August 2004, when Bristol-Myers' orphan drug-based marketing exclusivity expires.

Likewise, Immunex (NASDAQ:IMNX) has developed a generic version of paclitaxel, which it is already marketing in Canada through its big pharma partner Boehringer Ingelheim Canada. Paclitaxel Injection was approved for sale as a therapy for refractory breast and ovarian cancer in Canada in July 1997. Immunex also submitted an abbreviated new drug application (ANDA) with the FDA for its paclitaxel — for use as a second-line therapy for metastatic breast and ovarian cancer — in August 1997. The agency accepted Immunex's ANDA for review in October 1997.

The Future

While the outcome of the court battle brewing between Bristol-Myers and IVX/Immunex is far from certain, the pharmaceutical heavyweight is continuing to put significant resources into contingency plans of a different sort. For years now, Bristol-Myers has been investigating alternative ways to produce paclitaxel, which was first extracted from the bark of the endangered Pacific yew tree. The company stopped harvesting tree bark in 1993 and turned to semi-synthetic processes for making the active ingredient. But it's still a complicated process — one that involves about two dozen individual steps — and it's expensive.

Since 1992, Bristol-Myers has been supporting research at Phyton Inc., a private company located in Ithaca, N.Y., to devise a plant cell culture-based production method for paclitaxel. This approach appears to have met with some success, for Phyton has constructed a commercial-scale plant cell fermentation facility in Germany that has a 75,000 liter capacity. The parties are confident enough in the ability of plant cell cultures to spew out commercial-scale quantities of paclitaxel that they signed a formal commercialization agreement in June 1998.

At the same time, Bristol-Myers struck a deal with Cytoclonal Pharmaceutics Inc., of Dallas, to explore the commercial potential of microbial fermentation methods for making paclitaxel. Cytoclonal (NASDAQ:CYPH) has a strong patent position in this arena; it has exclusive rights to a particular paclitaxel-producing fungus as well as the rights to a gene involved in Taxol synthesis — isolated from the yew tree. By the end of 1997, Cytoclonal had achieved broad patent protection, which covers the use of any microbes — bacteria or fungi — for making paclitaxel by fermentation, according to Arthur Bollon, chairman and CEO. Although Cytoclonal was in discussions with a number of companies regarding the use of its technology, it chose to hitch its fortunes with those of the market leader. Even though companies like Immunex and IVX are trying to enter the market, he said, "Bristol-Myers will still be the primary, if not the only, company that has the rights to market Taxol in the U.S. for several more years." *