Why did Corcept’s piecemeal litigation tactics for Korlym finally backfire?
Corcept Therapeutics has been battling for years to halt Teva’s generic for Korlym®. Although Corcept started off with only two patents, it has been adding patents to the Orange Book ever since Teva’s ANDA was filed. By periodically litigating those patents in piecemeal fashion, Corcept has delayed generic Korlym®’s availability to consumers at lower-cost prices. Yet, in a recent order, the court finally called out Corcept’s delay tactics and indicated it would award attorneys’ fees. What happened?
By one account, Corcept has done a tremendous job with its life-cycle management for its drug Korlym®. In 2018, Teva filed an ANDA for Korlym®. At the time, Corcept only had two patents covering the drug. The patents themselves barely read upon Korlym®’s label. Indeed, Corcept’s initial infringement allegations against Teva looked so weak, Teva filed a motion to dismiss on the substance of the infringement allegations, something nearly unheard of within Hatch-Waxman litigation. Yet, five years later, the parties are still litigating, and have yet to even go to trial. Corcept has periodically added more and more patents to its suit against Teva, and it now has 16 patents listed in the Orange Book that purportedly cover Korlym®.
Yet, by another account, Corcept has used piecemeal litigation to deprive lower-cost generic alternatives from patients. For instance, the patents about to go to trial in the case against Teva were not the patents Corcept originally asserted against Teva. Indeed, they did not even exist when Teva filed its ANDA. (Although Teva filed its ANDA in February 2018, U.S. Patent 10,195,214 issued in February 2019, and U.S. Patent No. 10,500,216 issued in December 2019.) That sort of begs the question of how critical these patents were to Corcept’s research-and-development if they did not even exist until generics started coming around. Moreover, five years after Teva filed its original ANDA, Corcept just recently filed a new case against Teva. The new case asserts two more patents that Corcept acquired long after Teva filed its ANDA, yet which cover very similar subject matter to the patents already at-issue in the old case.
For instance, in the old case (Case No. 18-3632), Corcept has asserted U.S. Patent No. 10,195,214, which is directed to a method of reducing the dosage of mifepristone to 600mg if the patient is also taking a strong CYP3A-inhibitor, such as ketoconazole. Yet, in the new case (Case No. 23-1505), Corcept has asserted U.S. Patent No. 10,842,800, which recites a nearly identical method, but reduces the dosage of mifepristone to 900mg. Despite very minor differences between the patents, the infringement issue—namely, the triable issue that the parties are actually litigating—is most likely the same: does the Korlym® label instruct doctors to prescribe patients a strong CYP3A inhibitor who are already taking mifepristone.
Similarly, in the old case, Corcept has asserted U.S. Patent No. 10,500,216, which is directed to a method of administering 1200mg of mifepristone for 7 days within 30 minutes of a meal. Yet, in the new case, Corcept is asserting U.S. Patent No. 10,842,801, which is directed to the same method, but doses 900mg instead of 1200mg. Again, the triable issues between the ‘216 and ‘801 patents are likely to be essentially the same.
In fact, the triable issues among the patents asserted in the old case and the new case are so similar, Teva offered to stipulate that they would rise and fall together. In other words, Teva effectively said, rather than wasting more time going through discovery on the new patents, we will agree that if we go to trial, and we lose on the old patents, then that holding will automatically apply to the new patents too. That’s fairly unheard of.
Corcept, for its part, has claimed that the infringement issues for the patents are not the same. For instance, the ‘214 patent is directed to a patient who has not yet taken a strong CYP3A inhibitor, whereas the ‘800 patent has a subset of claims that are directed to a patient who is already taking a CYP3A inhibitor. Yet, in the next breath, Corcept has also told the court that because Teva previously lost a validity challenge to the ‘214 patent, it should be estopped (precluded) from arguing the validity of the nearly-identical ‘800 patent. Infringement and validity, however, are opposite sides of the same coin. If infringement differences exist, then there are necessarily validity differences. Corcept is essentially arguing, “heads-I-win, tails-you-lose.”
Despite quibbling over whether the new and old patents are substantially the same, there are deeper politics playing out in this case that mirror themes raised in many other Hatch-Waxman cases. Corcept acquired the patents asserted in the new case (the ‘800 and ‘801 patents) over two years ago. Corcept asserted those patents against another generic, Hikma, but held off asserting them against Teva. Then, at the eleventh-hour, right before Teva’s case was finally ready to go to trial, Corcept started a new lawsuit that asserted, for the first time, the ‘800 and ‘801 patents. Then, given that new lawsuit, Corcept put on a show about how much additional work will be required to prep those two new patents for trial. And for that reason, Corcept argued that the trial on all of the patents should delayed even more.
Are these merely improper delay tactics that ultimately deprive consumers of lower-cost medications? Or is Corcept shrewdly threading a needle and gaining a windfall from fortuitous delays?
Corcept claimed that Teva is, in fact, the party responsible for any delay. Corcept claimed that Teva could have filed a declaratory judgment action years ago that would have forced Corcept to litigate the newer patents much sooner. That’s not only a bit rich, it also creates perverse incentives that could clog up the courts even further. The most efficient way to allocate judicial resources is to rely upon patent holders—i.e., the plaintiffs in cases who claim a grievance—to bring those grievances to court as expeditiously as possible. It should not be up to defendants to have to file scores of actions against scores of patents that the plaintiff may never otherwise choose to file.
Corcept also claims that nothing is stopping Teva from launching its generic, and so there is really no delay or prejudice to speak of. Teva’s ANDA has received final approval. The 30-month stay has expired. Thus, according to Corcept, Teva is free to launch any day. That’s also a bit rich. The financial downside for a generic to launch at-risk is often too high. If a generic launches at risk, but is subsequently found to infringe a patent, its liability is likely to eclipse any profits earned from launching at-risk. That is because the brand pharmaceutical company can collect its lost profits. And those lost profits will be assessed at the monopoly price, not at the discounted price sold by the generic.
After reviewing both sides arguments, the court agreed with Teva. The court found that “Corcept’s decision to belatedly file [the new case] was of its own making and at its own peril.” Indeed, the court went further and indicated that pursuing piecemeal litigation was a tactical decision with consequences. The court stated, “[a] party that makes a tactical decision to delay proceedings must deal with the consequences. This Court cannot function properly if all parties before it were permitted to litigate their claims in piecemeal fashion, as has happened here. (The Court rejects Corcept`s attempt to pass the blame onto Teva because it failed to file a declaratory judgment action.).” See Corcept Therapeutics, Inc. v. Teva Pharmaceuticals USA, Inc. et al , 1-18-cv-03632 (DNJ), 4/24/2023 (Dkt. 239).
These are strong words from the court, and they are an indictment of brand pharmaceutical company’s litigation delay tactics. In fact, the court went so far as to indicate that Corcept is likely going to have to pay Teva’s attorneys’ fees for the extra discovery required by the two new patents. The Court stated, “The Court further anticipates that, to the extent appropriate, it will issue an order requiring attorney`s fees associated with this discovery, as approved by Judge Wettre, to be borne by Corcept.” See id.
This case exemplifies that, although lower-cost generic alternatives may be available and ready to enter the market, consumers are often stifled by piecemeal litigation tactics. Taken to its logical extreme, can Corcept extend its litigation against Teva indefinitely? Given that it acquired the large majority of its patents covering Korlym® only after Teva filed its ANDA, what would stop Corcept from repeatedly adding more and more patents to its litigation against Teva, thus indefinitely delaying lower-cost entry? In this case, the court finally stepped in after five years.
Behind this dispute over who caused the delay looms the question whether there is any law, regulation, rule or doctrine that is violated by what Corcept did here—namely, hold a patent in your pocket that you suspect to be infringed, but wait several years before asserting it. Technically, the answer is no. A laches doctrine used to apply to patent cases, but the Supreme Court did away with it a few years ago. In a garden-variety patent case where the primary relief sought is past monetary damages, the plaintiff is typically motivated to file sooner rather than later because the six-year statute of limitation cuts off all damages before the beginning of the limitations period.
But in a Hatch-Waxman case, there are no damages. The plaintiff is only seeking an injunction. And the generic is often reluctant to enter the market while the litigation is pending, otherwise known as launching at-risk. A generic who is reluctant to enter at-risk amounts to essentially the same relief as an injunction. As a result, the brand pharmaceutical company is incentivized to delay bringing more patents into the case. Indeed, that appears to be exactly what Corcept did in this instance.
In this case, it fell upon the court to call out delay tactics for what they were. Yet, without an established regulation or doctrine in place, generics have much less certainty that a similarly situated court would make the same call. That alone is fodder for regulators to consider more firmly establishing such a precedent.