On December 19th, the European Patent Office decided to
revoke European Patent EP 0 652 872, owned by AstraZeneca for its blockbuster
drug Nexium® ("the little purple pill").  This action was undertaken by German generic
drug manufacturer, Ratiopharm International
GmbH, and was unexpected in light of Ratiopharm's earlier failure to invalidate
the patent under European opposition rules.  The decision, by the EPO's Technical Board of Appeals, cannot be
appealed either in the EPO or in the European Union's Court of Justice, which
lacks jurisdiction over the EPO's
decisions.

This decision by the European Patent Office raises
questions about the validity of so-called enantiomer patents, which are
directed to the "active" ingredient in drug formulations comprising a
racemic mixture of stereoisomers.  Since
most biological molecules are stereo-specific (i.e., one of the pair of
"left-handed" or "right-handed" stereoisomers is active and
the other is not), patents specifically claiming the active form have provided a means for extending effective
patent protection on popular (and lucrative) drugs.  Typically, and most successfully for Nexium®,
the initial patent is directed to the racemic mixture of both the biologically
active and inactive forms.  Later, claims
are presented for the purified active form, which is chemically-distinct and
thus (the argument goes) independently patentable.  Additional arguments in favor of
patentability are that there is (usually) no reliable way to predict which
enantiomer will be the "active" one, and the inventors do not know
the identity of the active species when the earlier application on the racemic
mixture is filed.

The EPO's surprising decision upsets the conventional
rationale on separately patenting enantiomeric species.  Although the EPO will not publish its formal
opinion containing the reasoning behind their decision until some time next
year, Ratiopharm had argued that Nexium® was not novel and failed to satisfy the
European inventive step requirement, analogous to obviousness in the U.S.  While these arguments were not persuasive
during the earlier opposition proceedings, they carried the day before the
Technical Board of Appeal.

Similar arguments were specifically rejected by the U.S.
Patent and Trademark Office, which was apprised during prosecution of the U.S.
counterpart (now U.S. Patent No. 6,875,872) of the earlier opposition
proceedings and the arguments presented therein.  The U.S. Examiner found that the earlier disclosure
of omeprazole (by AstraZeneca) did not anticipate nor render obvious the U.S.
claims to the specific chemical compound comprising Nexium® (S-omeprazole
magnesium).

Unlike in Europe, there are no administrative procedures
before the Patent Office in the U.S. for challenging an issued patent.  However,
at a minimum, it can be expected that the arguments raised by Ratiopharm will
arise in AstraZeneca's patent infringement lawsuit in the U.S. against the
Indian generic drug manufacturer Ranbaxy, and separately against Teva and its
subsidiary, IVAX, who filed an ANDA for Nexium® with the Food and Drug
Administration.

The case has relevance not only for Nexium® but for a host
of other drugs, including Plavix (Sanofi-Aventis) and Lexapro (Lundbeck/Forest Labs, the purified stereoisomer of Celexa), that have used this strategy to extend
effective patent protection for drugs having active and inactive
stereoisomers.

This adverse decision is not the end of troubles for
AstraZeneca over its Nexium® patent portfolio.  A process patent for Nexium® (EP 0 773 940) is under opposition with an
oral hearing scheduled in the EPO on March 7, 2007.  In the U.S., a number of pharmacies,
including Walgreen Co., Eckerd Corp.,
Maxi Drug Inc., the Kroger Co., New Albertson's Inc., Safeway Inc., Hy-Vee
Inc., and American Sales Co. Inc., have asserted antitrust claims against
AstraZeneca, the most recent of which threatens to become a class action
initiated by Meijer Inc.  In addition to
merely obtaining patents on Nexium®, these suits allege additional
anticompetitive behavior, including the company's making sales-related
representations on the effectiveness of Nexium® that the plaintiffs allege
AstraZeneca specifically disavowed to the FDA.

Pharmaceutical companies are always in the cross-hairs of
a variety of groups whose sole goal is lowering drug prices and for whom pharma
companies are obvious targets.  There is
nothing nefarious or illegal about obtaining enantiomer patents per se, and the
arguments in opposition ignore the fact that omeprazole, the racemic mixture
sold for years by AstraZeneca as Prilosec®, is not only off-patent but is
available over-the-counter, at significantly reduced costs.  The fight here is not (or should not be)
about patents, because under U.S. law (and, until the other day, in Europe) AstraZeneca
fulfilled the requirements for patenting Nexium®.  Policymakers should beware of upsetting the
patent applecart for short-term political goals, or instead addressing
behavior, if any, proscripted by more relevant provisions of the antitrust laws.