united states district court district of...

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

) AMGEN INC., ) ) Plaintiff, ) ) Civil Action No.: 05-12237 WGY v. ) ) ) F. HOFFMANN-LA ROCHE ) LTD., a Swiss Company, ROCHE ) DIAGNOSTICS GmbH, a German ) Company and HOFFMANN-LA ROCHE ) INC., a New Jersey Corporation, ) ) Defendants. ) __________________________________________)

AMGEN’S POST-TRIAL BRIEF FOR THE REMEDY PHASE AND RESPONSE TO DEFENDANTS’ JANUARY 28, 2008 PROPOSAL

901658_4

Case 1:05-cv-12237-WGY Document 1656 Filed 02/19/2008 of 63

TABLE OF CONTENTS

Page No.

I. INTRODUCTION .............................................................................................................. 1

II. AMGEN PROVED AT TRIAL THAT A PERMANENT INJUNCTION SHOULD BE ENTERED BECAUSE THE FOUR FACTORS WEIGH HEAVILY IN FAVOR OF AN INJUNCTION. ................................................................ 8

A. Overview of the evidence and legal standard. ........................................................ 8

B. Amgen will suffer from irreparable injury unless a permanent injunction is granted.............................................................................................. 12

C. Remedies available at law are inadequate to compensate for Amgen’s irreparable injury................................................................................................... 15

D. The balance of hardships weighs in Amgen’s favor............................................. 17

E. The public interest would not be disserved by an injunction................................ 19

1. The public interest is best served by a result that honors a robust and predictable patent system that rewards innovation. ........................... 19

2. There is no assurance that permitting the infringement of Amgen’s patents under terms compelled by the Court will reduce public health care spending. .......................................................... 24

3. The public interest would not be disserved by an injunction where peg-EPO does not address an unmet medical need and is not clinically superior to currently available ESAs. ................................. 28

a. The public interest is in gaining access to therapies that address unmet medical needs and peg-EPO does not. .................. 29

b. There is no evidence that Roche’s product is clinically superior to established ESAs. ....................................................... 35

F. A permanent injunction is not precluded by Roche’s unclean hands or patent misuse defenses.......................................................................................... 36

1. Amgen’s agreement with Fresenius — voluntarily negotiated and entered into without coercion — is lawful and does not support Roche’s unclean hands defense. .................................................. 38

2. Amgen does not and cannot incentivize overuse of ESAs. ...................... 40

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3. Amgen’s pro-competitive, multi-product rebates in oncology do not constitute unclean hands or patent misuse. ......................................... 41

4. Amgen is entitled to enforce Dr. Lin’s Patents and is not obligated to guarantee discounts in perpetuity.......................................... 42

5. Amgen does not withhold products from dialysis providers .................... 44

III. RESPONSE TO ROCHE’S JANUARY 28, 2008 PROPOSAL...................................... 45

A. Roche’s Proposal would exact a higher reimbursement from Medicare. ............. 46

B. Roche’s proposed 20% royalty will not adequately compensate Amgen for even its economic losses. ................................................................................ 49

C. Roche is asking the Court to take the profits of Amgen, the proven innovator, and award them to Roche for its infringement — all in the name of the public interest. ................................................................................... 53

IV. CONCLUSION................................................................................................................. 53

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TABLE OF AUTHORITIES

Page No. CASES

Abbott Lab. v. Sandoz, Inc., 500 F. Supp. 2d 807 (N.D. Ill. 2007) .................................................................................. 20, 22

AG v. SciMed Life Sys., Inc., 852 F. Supp. 813 (D. Minn. 1994)............................................................................................ 28

Allan Block Corp. v. E. Dillon & Co., No. 04-3511, 2005 U.S. Dist. LEXIS 13566 (D. Minn. July 1, 2005)............................................................................................................. 40

ALM Surgical Equip., Inc. v. Kirschner Med. Corp., No. 6:89-1622-3, 1990 U.S. Dist. LEXIS 14584 (D.S.C. Apr. 23, 1990) .............. 11, 28, 33, 34

Aptix Corp. v. Quickturn Design Sys., Inc., 269 F.3d 1369 (Fed. Cir. 2001) ................................................................................................ 37

Bell & Howell Document Mgmt. Prods. Co. v. Altek Sys. 132 F.3d 701 (Fed. Cir. 1997) .................................................................................................. 16

Bio-Tech. Gen. Corp. v. Genentech, Inc., 80 F.3d 1553 (Fed. Cir. 1996) ............................................................................................ 39, 41

Boehringer Ingelheim Vetmedica, Inc. v. Schering-Plough Corp., 106 F. Supp. 2d 696 (D.N.J. 2000) ........................................................................................... 17

C.R. Bard, Inc. v. M3 Sys., Inc., 157 F.3d 1340 (Fed. Cir. 1998) ................................................................................................ 41

Carl Schenek, A.G. v. Nortron Corp., 713 F.2d 782 (Fed. Cir. 1983) .................................................................................................... 2

Commonwealth Sci. & Indus. Research Org. v. Buffalo Tech, Inc., 492 F. Supp. 2d 600 (E.D. Tex. 2007).................................................................... 10, 17, 18, 28

Cordis Corp. v. Boston Scientific Corp., No. 03-238, 2003 U.S. Dist. LEXIS 21338 (D. Del. Nov. 21, 2003)....................................... 11

Cordis Corp. v. Boston Scientific Corp., No. 04-1098, 2004 U.S. App. LEXIS 11557 (Fed. Cir. May 28, 2004)................................... 16

Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., No. 93-108-JJF, 1993 U.S. Dist. LEXIS 19959 (D. Del. July 16, 1993) ........................... 11, 28

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Deweese v. Reinhard, 165 U.S. 386 (1897).................................................................................................................. 36

Dr. José S. Belaval, Inc. v. Perez-Perdomo, 488 F.3d 11 (1st Cir. 2007)................................................................................................. 39, 41

E.I. duPont deNemours & Co. v. Polaroid Graphics Imaging, Inc.. 706 F. Supp. 1135 (D. Del. 1989)............................................................................................. 21

eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837 (2006).................................................................................................... 8, 10, 16

Eli Lilly & Co. v. Premo Pharm. Labs., Inc., 630 F.2d 120 (3d Cir. 1980) ......................................................................................... 10, 18, 21

Gaudiosi v. Mellon, 269 F.2d 873 (3d. Cir. 1959) .................................................................................................... 37

Hybritech Inc. v. Abbott Labs., 4 U.S.P.Q. 2d (BNA) 1001, 1987 WL 123997 (C.D. Cal. 1987), aff’d, 849 F.2d 1446 (Fed. Cir. 1988)................................................................................................................ 11

Hybritech Inc. v. Abbott Labs., 849 F.2d 1446 (Fed. Cir. 1988) .......................................................................................... 10, 22

ICU Med. Inc. v. Alaris Med. Sys., Inc., 2004 U.S. Dist. LEXIS 19949 (C.D. Cal. July 30, 2004) .......................................................................................................... 11

In re New Valley Corp., 181 F.3d 517 (3d Cir. 1999) ..................................................................................................... 37

Johns Hopkins Univ. v. Datascope Corp., 513 F.Supp. 2d 578 (D. Md. 2007) ........................... 22

Johns Hopkins Univ. v. Datascope Corp., Nos. WDQ-05-0759, WDQ-06-2711, 2007 U.S. Dist. LEXIS 68972 (D. Md. Aug. 9, 2007) ...................................................................................................................... 10, 28

Keystone Driller Co. v. General Excavator Co., 290 U.S. 240 (1933)................................................................................................ 36, 37, 39, 41

MercExchange, L.L.C. v. eBay, Inc., 500 F. Supp. 2d 556 (E.D. Va. 2007) ................................................................................... 9, 17

Novozymes A/S v. Genencor Int’l, Inc., 474 F. Supp. 2d 592 (D. Del. 2007)............................................................................................ 8

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Ortho Pharm. Corp. v. Smith, No. 90-0242, 1990 U.S. Dist. LEXIS 1951 (E.D. Pa. Feb. 23, 1990) ...................................... 21

Patlex Corp. v. Mossinghoff, 758 F.2d 594 (Fed. Cir. 1985) .................................................................................................. 21

Payless Shoesource, Inc. v. Reebok Int’l Ltd., 998 F.2d 985 (Fed. Cir. 1993) .................................................................................................. 10

Pfaff v. Wells Elecs., Inc., 525 U.S. 55 (1998).......................................................................................................... 4, 18, 19

Pfizer, Inc. v. Teva Pharms. USA, Inc., 429 F.3d 1364 (Fed. Cir. 2005) .......................................................................................... 10, 21

Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806 (1945)...................................................................................................... 37, 39, 41

Proveris Sci. Corp. v. InnovaSystems, Inc., No. 05-12424-WGY, 2007 U.S. Dist. LEXIS 48475 (D. Mass. May 11, 2007)................ 10, 28

Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368 (Fed. Cir. 2006) .............................................................................. 12, 13, 18, 20

Sanofi-Synthelabo v. Apotex, Inc., 488 F. Supp. 2d 317 (S.D.N.Y. 2006) .......................................................................... 10, 20, 21

Sanofi-Synthelabo v. Apotex, Inc., 492 F. Supp. 2d 353 (S.D.N.Y. 2007) ........................................................................................ 9

Schneider (Eur.) AG v. SciMed Life Sys., Inc., 852 F. Supp. 813 (D. Minn. 1994).......................................................................... 10, 11, 28, 34

Seymour v. Osborne, 78 U.S. (II Wall.) 516 (1870).................................................................................................... 19

Shiley, Inc. v. Bentley Labs., Inc., 601 F. Supp. 964 (C.D. Cal. 1985) ............................................................................... 11, 28, 34

Smith & Nephew, Inc. v. Synthes (U.S.A.), 466 F. Supp. 2d 978 (W.D. Tenn. 2006) .................................................................. 9, 10, 19, 28

Smith Int’l, Inc. v. Hughes Tool Co., 718 F.2d 1573 (Fed. Cir. 1983) ................................................................................................ 21

Southwire Co. v. Essex Group, Inc., No. 81 C 3313, 1983 U.S. Dist. LEXIS 16724 (N.D. Ill. May 24, 1983) ................................ 37

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Transocean Offshore Deepwater Drilling, Inc. v. GlobalSantaFe Corp., No. H-03-2910, 2006 U.S. Dist. LEXIS 93408 (S.D. Tex. Dec. 27, 2006) ............................... 8

United States v. Dubilier Condenser Corp., 289 U.S. 178 (1933).................................................................................................................... 4

Verizon Servs. Corp. v. Vonage Holdings Corp., 503 F.3d 1295 (Fed. Cir. 2007) ................................................................................................ 14

Virginia Panel Corp. v. MAC Panel Co., 133 F.3d 860 (Fed. Cir. 1997) .................................................................................................. 42

Vitamin Technologists, Inc. v. Wis. Alumni Res. Found., 146 F.2d 941 (9th Cir. 1945) .................................................................................................... 44

Windsurfing Int’l Inc. v. AMF, Inc., 782 F.2d 995 (Fed. Cir. 1986) ............................................................................................ 17, 18

STATUTES

35 U.S.C. § 271(d)(3) (2007)........................................................................................................ 44

35 U.S.C. § 284 (2007) ................................................................................................................. 50

OTHER AUTHORITIES

U.S. Const. art. I, § 8, cl. 8............................................................................................................ 19

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I. INTRODUCTION

The evidence introduced at trial in the remedy phase convincingly established that

Amgen is entitled to an injunction to prevent Roche from importing, using, and selling any peg-

EPO product in the United States for the term of the four patents Roche was held to infringe.

There can be no doubt that Amgen will suffer irreparable injury for which monetary damages are

inadequate to compensate and that the balance of hardships weighs in Amgen’s favor. Whatever

hardship Roche bears it brought on itself, for it knew about Amgen’s proven patent rights before

it began development of peg-EPO. Entry of an injunction will serve the public interest in

upholding the basic premise of the patent system — to give the patent owner the right to exclude

others from using the claimed inventions during the term of the patent. In fact, denial of an

injunction in this case would greatly disserve that public interest.

Although Roche talks of the great economic and public health benefits that its “new and

different medicine” could bring, in an attempt to conjure up some countervailing public interest,

the evidence at trial disproved any basis for these assertions. Roche’s product is not some new

and different molecule that meets some unmet medical need. Rather, Roche’s product is EPO —

the same EPO that Dr. Lin invented and Amgen brought to patients around the world to treat

their anemia — with the addition of a peg to it. As demonstrated in the results of Roche’s

clinical trials, peg-EPO has no clinical benefit over Amgen’s products and is associated with a

higher incidence of serious side effects.

Likewise, Roche’s bold assertions of saving billions of dollars for the government and

taxpayers are false as the evidence showed that Roche’s peg-EPO will actually increase the cost

to Medicare for treating anemia in patients with chronic renal failure. From Roche’s own

marketing plans it was clear that peg-EPO’s initial price as well as its price three years after it

enters will be significantly higher than what Medicare pays today for Amgen’s EPOGEN®.

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Roche’s recent proposal that would slightly lower peg-EPO’s initial price does nothing to change

this result as the peg-EPO launch price (which would be the basis for its reimbursed price as a

new entrant in the ASP system) would still be significantly higher than EPOGEN’s reimbursed

price.

On Amgen’s side, the facts could not be more compelling in favor of an injunction. As

the evidence demonstrated, Dr. Lin invented and patented breakthrough recombinant human

EPO products and processes for making them. Amgen conducted the clinical trials that

supported FDA approval for EPOGEN and made this novel medicine available to anemic

patients desperately in need of a treatment. Dr. Lin’s inventions have dramatically improved and

continue to improve the lives of hundreds of thousands of patients throughout the world. Amgen

built a company around these inventions and created thousands of new jobs in manufacturing,

quality control and assurance, development, distribution, sales, and research — all much to the

benefit of the U.S. economy. In recognition of his inventive contributions, the Patent Office

awarded Dr. Lin seven patents. Time and again, courts, and now a jury, have agreed that Dr.

Lin’s patents are valid and enforceable. These inventions and the legal protection afforded them

under the patent system largely made possible Amgen’s success as an innovator in a highly

valuable but risky industry.

By every measure, the creation, validation, and enforcement of the legal rights protecting

Dr. Lin’s pioneering inventions exemplify the patent system working at its best.1 As provided in

the Constitution, the principle underlying the Patent Act is to promote the progress of science

1 Carl Schenek, A.G. v. Nortron Corp., 713 F.2d 782, 784 (Fed. Cir. 1983) (“Disclosure of an invention found to have revolutionized an industry is but a classic example of the ideal working of the patent system. If a patentee or licensee enjoys widespread sales, that too is but an example of the incentive-useful arts promoting element in the patent system.” (emphasis added)).

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and the useful arts by securing for limited times to inventors the exclusive right to their

discoveries. Enforcing that exclusivity in the instant case serves to insure that the incentives as

originally intended continue to remain in place so as to encourage individuals to make

extraordinary sacrifices and brilliant advances — like those of Dr. Lin’s — as well as make

available the significant risk and human capital required to make miracle products — like

EPOGEN — available to the public.

Failing to enforce such exclusivity here would seriously undermine the incentive

structure of the patent system. The evidence presented at trial showed that Amgen’s core

business of pursuing high risk research and innovation that propel the discovery and

development of new therapeutic products, Amgen’s product revenues that sustain this discovery

and development, and Amgen’s customer relationships would be irretrievably damaged if a

permanent injunction against Roche’s continued infringement were denied. Amgen’s very

existence as an independent company could be threatened. The jobs built on these patented

inventions could be lost. And, the impact would not just be on Amgen, but all similarly situated

companies that invest heavily in research and development and rely on the patent system to

protect that investment would have their business models threatened by the denial of an

injunction in this case. If not in this case, then what patent owner would feel confident that its

rights would be enforced?

Roche can point to nothing to counter the great harm that will be caused to Amgen. And

Roche brought on its own problems. Long before the jury’s verdict and this Court’s judgment,

Roche was well aware of its infringement and made a business decision to take the risk of

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pursuing the U.S. market anyway.2 Indeed, as it expressly stated, it was developing and would

launch its infringing product “at risk.”3 Desperate to deflect attention from its theft, Roche went

so far as to impugn Dr. Lin’s integrity and accomplishments by asserting he did not invent

anything at all and that his patents served to give rise to an illegal “monopoly.” And, Roche

went on to spin a tale of fanciful benefits that would befall the public if only it would close an

eye to its theft. With all the sincerity of a snake-oil salesman, Roche hyped its infringing product

as a purportedly “new” medicine conferring a different medical benefit, whose market entry

would increase choice, drive down prices, and save the government and taxpayers billions of

dollars.

But Roche’s own documents show that the needs of patients, and their doctors, suffering

from anemia associated with chronic renal failure are already satisfied by currently available

ESAs and that its infringing product delivers at best “non-inferior” or “comparable” results.

Moreover, its internal forecasts reveal a truth starkly different from its tale of lowering prices and

reducing taxes — namely a scheme in which Roche will maintain a high price to the government

in order to fund discounts and rebates which it intends to use in order to take share from

Amgen.4

Hardly the champion of public interest that it purports to be, Roche’s true interest was

2 See, e.g., TX 67 (May 2001 Research and Development Committee Development Plan) at R10-004305819 (providing that the risk of entering the U.S. market in light of Amgen’s patents was “justifiable”). 3 3/22/07 Abercrombie Dep. Tr. at 32:24-33:2 (the Abercrombie deposition testimony cited herein was submitted to the Court by Amgen as remedy-related deposition designations on 12/14/07). 4 United States v. Dubilier Condenser Corp., 289 U.S. 178, 186 (1933) (“Though often so characterized, a patent is not, accurately speaking, a monopoly, for it is not created by the executive authority at the expense and to the prejudice of all the community except the grantee of the patent.”); Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 63-64 (1998).

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laid bare at trial. As Roche’s Vice President of Marketing and Sales, Barbara Senich, candidly

conceded, despite its yarn about making available to patients a “new” medicine and saving

billions in tax dollars, Roche is only interested in entering the U.S. marketplace if it can be

assured that it can enjoy the financial benefits of Dr. Lin’s exclusivity rights:

I don’t believe [Roche] would enter the market at all if the value were only after generics came into the marketplace.5

And, lest there be any doubt, the Court’s questioning made Roche’s true intent ever so clear:

THE COURT: You’re telling me that if I enjoin and I’m upheld, that’s sort of an end of it in the United States, we’re not going to see Mircera in the United States, generics will be on the field in 2013.

But you’re also telling me that if I let you into the market but make it so uneconomic, you won’t come in anyway because the, the market share you want is the market share from the entry of my order, we’ll assume my orders are all upheld, to 2013.

Have I got that right?

THE WITNESS: Pretty much.6

The only thing more astonishing than Roche’s false assertions of its public interests is its

chutzpah now in proposing that the Court order a license at a royalty rate of 20%. But Roche’s

recent proposal adds nothing new and cannot be considered a serious proposal because the

royalty is grossly inadequate to compensate Amgen for Roche’s infringement and it still results

in peg-EPO having a higher price to the government by up to 45% than Amgen’s EPOGEN.

5 12/7/07 Remedy Hr’g Tr. at 597:18-20 (Senich); see also 12/7/07 Remedy Hr’g Tr. at 598:6-12 (Young, J.; Senich). 6 12/7/07 Remedy Hr’g Tr. at 598:6-12 (Young, J.; Senich); see also 12/7/07 Remedy Hr’g Tr. at 562:9 (Senich) (admitting that all of Roche’s public interest arguments are subject to whether peg-EPO would “ultimately provide a return to the company.”); 12/7/07 Remedy Hr’g Tr. at 567:17-18 (Senich); 12/7/07 Remedy Hr’g Tr. at 683:19-24 (Young, J.) (“But here’s what I heard [Senich] say. Well, in order for us to enter into these negotiations, they have to be economically viable for Roche. Because we’re not particularly interested in the after-patent generics market. We want to get into the market which is protected by valid and upheld Amgen patents. We want a piece of that market, and it has to be economically worthwhile to us.”).

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Indeed, the proposal seems more intended to deliver the message that despite the jury verdict and

the Court’s decisions that Roche intends to launch peg-EPO in the U.S. next month. Besides

exposing themselves to willful infringement and treble damages, Roche’s disdain for the jury

verdict and the decisions of this Court only serve to reinforce the need for an injunction to stop

Roche’s attempts to irreparably harm Amgen.

Roche’s recent proposal would compensate Amgen only about 20 cents for every dollar

of Amgen lost sales. If Roche’s economic incentives produce a precipitous shift for EPOGEN to

peg-EPO, Amgen faces both the risk of market share and price erosion resulting in further injury

to Amgen not compensated for by the payment of royalties on Roche’s sales. Even if the Court

assumes that Roche’s future infringement of Amgen’s patents would reduce the total cost of EPO

therapy (an assumption that Roche’s own evidence disproves), ironically it would be the price

reductions (and lower profit) of Amgen, the patent innovator, not Roche, which would account

for any savings. Roche still would enjoy the profits Ms. Senich testified Roche insists upon for it

to come into the marketplace. Roche’s profits and Amgen’s loss, would result from what

amounts to an unfair and inappropriate taking of property rightfully belonging to the party who

took all the risk and devoted all the resources needed to create the market opportunity in the first

place.

The legal precedent fully supports the entry of an injunction in this case. There is no

court decision post eBay that would support the denial of an injunction. The factual paradigm

presented the Court in the instant case is not one in which the patentee, in lieu of practicing the

inventions or selling a patented product in the market, merely collects a royalty. Rather, this is a

case in which the patentee not only invented and commercially developed the pioneering

inventions into a blockbuster product but also literally created the market by means of its

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inventions. The paradigm here involves a demand by an infringer that its infringing product be

allowed to take sales away from the patentee’s product in return for a royalty rate that will not

fully compensate the patentee for the profits it would have received from the sales of its own

patented product, much less compensate it for all of the other irreparable harm it would suffer as

a result of the government reneging on the promise of exclusivity it made in granting the patents

in the first place.

Indeed, failing to grant injunctive relief here would broadcast a signal to all would-be

infringers to flat out copy the few patented products that are proven successes, and then have the

courts revise the patentees’ rights. But the point of patents is exclusivity and the point of

injunctive relief is deterrence. In one fell swoop, Roche asks this Court to legislate an end to all

of that. There is no precedent for such relief, and certainly none fitting the facts of this case.

As Dr. Bernheim’s declaration (submitted herewith) details, Roche’s recent proposal

changes nothing from his analysis and conclusions presented at trial. The evidence fully

confirms the need for an injunction in this case. Thus, Amgen respectfully submits that the

Court should permanently enjoin Roche against any future infringement of Amgen’s patents in

accordance with the jury’s verdict and this Court’s prior rulings.

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II.

AMGEN PROVED AT TRIAL THAT A PERMANENT INJUNCTION SHOULD BE ENTERED BECAUSE THE FOUR FACTORS WEIGH HEAVILY IN FAVOR OF AN INJUNCTION.7

A. OVERVIEW OF THE EVIDENCE AND LEGAL STANDARD.

At the remedy trial, Amgen submitted evidence, both through its own witnesses as well

as from Roche witnesses, which demonstrated that the four-factor test set forth by the Supreme

Court in eBay Inc. v. MercExchange, L.L.C., weighs decidedly in favor of an injunction.

Specifically, Amgen has demonstrated:

(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the [parties], a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.8

As the innovator of a product that has proven to be hugely beneficial to patients, Amgen has

developed a market that Roche now seeks to misappropriate for itself while offering only a

nominal royalty. Because Amgen markets EPOGEN for use in dialysis patients — one of the

main indications for which Roche’s peg-EPO product was approved — every sale by Roche is a

lost sale to Amgen. The evidence of record leaves little doubt that Roche’s infringement will

cause irreparable injury to Amgen, that monetary damages are inadequate to compensate for the

injury, and that the balance of harm tips heavily in Amgen’s direction.

Applying the eBay standard, a vast majority of courts have confirmed that a permanent

injunction is the appropriate relief for a patent holder against a patent infringer in the

7 Amgen refers the Court to its 11/21/07 Mem. in Supp. of Amgen’s Req. for a Permanent Inj. (D.N. 1578) (hereinafter Amgen’s Inj. Mem.), setting forth the evidence presented through the November 15, 2007 Remedy Hearing as it applies to the four injunction factors. This Brief summarizes the facts set forth therein and adds additional evidence adduced during the remainder of the Remedy Hearing on December 5-7, 2007 and any exhibits admitted thereafter by the Court.

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circumstances presented here. Courts routinely find that the traditional four-factor test is met

and grant injunctive relief where the patent-holder practices its invention, the infringer’s product

would directly compete for sales with the patentee’s own products, the infringer usurps the core

functionality and commercial appeal of the patented invention, and the patented invention is not

an inconsequential component of the infringing product.9 These principles apply with equal

force in the context of medical and pharmaceutical patents, and take on added weight where the

patented inventions are pioneering breakthroughs.10

In its briefing and at trial, Roche focused on the public interest factor as the justification

for avoiding an injunction citing purported public health and economic benefits of its infringing

product. But the evidence at trial disproved a claim of such benefits. As demonstrated, Roche’s

peg-EPO provides no clinical or medical benefit and will actually cost more than Amgen’s

EPOGEN. Roche’s assertions that peg-EPO meets the market need for an extended dosing

product ignores the evidence that both Amgen’s Aranesp and Ortho’s Procrit are routinely used

at dosing intervals up to once a month.

Although wrong in its positions, Roche acts as if the only public interests were treatment

costs and patient convenience, but in fact, neither of those reasons has been recognized as a

justification for denying an injunction and allowing an infringer on the market. Rather, Roche

ignores the most significant public interest factor: the strong public interest in enforcing patent

8 eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837, 1839 (2006). 9 See, e.g., Novozymes A/S v. Genencor Int’l, Inc., 474 F. Supp. 2d 592, 612 (D. Del. 2007); Transocean Offshore Deepwater Drilling, Inc. v. GlobalSantaFe Corp., No. H-03-2910, 2006 U.S. Dist. LEXIS 93408, at *12 (S.D. Tex. Dec. 27, 2006). 10 See, e.g., Sanofi-Synthelabo v. Apotex, Inc., 492 F. Supp. 2d 353, 397-98 (S.D.N.Y. 2007) (pharmaceutical); Smith & Nephew, Inc. v. Synthes (U.S.A.), 466 F. Supp. 2d 978 (W.D. Tenn. 2006) (medical).

9


rights.11 This interest resulted in courts routinely issuing injunctions in patent cases for over 200

years. As Justice Roberts noted in his concurring opinion in eBay: “This ‘long tradition of

equity practice’” in the “vast majority of patent cases” is “not surprising,” in that the

fundamental right of a patent holder is “a right to exclude . . . an infringer” from practicing the

patent “against the patentee’s wishes.”12 Further, Justice Kennedy cautioned that damages may

be a sufficient remedy without an injunction only in limited situations, such as where: (1) a

patentee is primarily concerned with licensing; (2) a patent covers only a small component of the

infringing product; (3) the patentee uses the threat of an injunction for negotiation leverage; or

(4) a business method patent of suspect validity is asserted.13 None of these factors are present

in this case.

Only under “rare and limited circumstances”14 has an injunction been denied on public

interest grounds — such as where there is some “critical public interest that would be injured” by

the grant of an injunction.15 Allegedly promoting competition and lowering prices at the cost of

destroying the property of another is not such a critical public interest.16 Likewise, the fact that

11 Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1383-84 (Fed. Cir. 2006); MercExchange, L.L.C. v. eBay, Inc., 500 F. Supp. 2d 556, 586 (E.D. Va. 2007). 12 eBay, 126 S. Ct. at 1841 (Roberts, J., concurring, joined by Scalia and Ginsburg, JJ.). 13 Id. at 1842 (Kennedy, J., concurring, joined by Stevens, Souter, and Bryer, JJ.). 14 Commonwealth Sci. & Indus. Research Org. v. Buffalo Tech, Inc., 492 F. Supp. 2d 600, 607 (E.D. Tex. 2007). 15 Hybritech Inc. v. Abbott Labs., 849 F.2d 1446, 1458 (Fed. Cir. 1988). 16 See Pfizer, Inc. v. Teva Pharms. USA, Inc., 429 F.3d 1364, 1382 (Fed. Cir. 2005); Payless Shoesource, Inc. v. Reebok Int’l Ltd., 998 F.2d 985, 991 (Fed. Cir. 1993) (“Selling a lower priced product does not justify infringing a patent.”); see also Eli Lilly & Co. v. Premo Pharm. Labs., Inc., 630 F.2d 120, 138 (3d Cir. 1980) (“Congress has determined that it is better for the nation in the long-run to afford the inventors of novel, useful, and nonobvious products short-term monopolies on such products than it is to permit free competition in such goods.”); Sanofi-Synthelabo, 488 F. Supp. 2d 317, 345 (S.D.N.Y. 2006) (“[T]he public interest in lower-priced drugs is balanced by a significant public interest in encouraging the massive investment in

10


an injunction might affect medical treatments or tests or denied medicines to patients, as argued

by Roche, have not been recognized as reasons to deny injunctions.17 In a few cases, courts have

denied an injunction for a limited set of public health reasons — but none are analogous to the

facts of this case. Those limited circumstances include where: (1) the patentee cannot ensure

adequate supply to the public;18 (2) there is lag-time in training of medical staff or other

interruption of medical care;19 (3) no treatment alternatives are available;20 or (4) there are

research and development that is required before a new drug can be developed and brought to market.”). 17 Proveris Sci. Corp. v. InnovaSystems, Inc., No. 05-12424-WGY, 2007 U.S. Dist. LEXIS 48475 (D. Mass. May 11, 2007) (permanently enjoining solutions that increased the accuracy of the testing of pharmaceutical spray drug products); Johns Hopkins Univ. v. Datascope Corp., Nos. WDQ-05-0759, WDQ-06-2711, 2007 U.S. Dist. LEXIS 68972 (D. Md. Aug. 9, 2007) (permanently enjoining treatments for fragmenting clots within hemodialysis grafts); Sanofi-Synthelabo v. Apotex, Inc., 492 F. Supp. 2d 353 (S.D.N.Y. 2007) (permanently enjoining generic platelet aggregation-inhibiting agent); Smith & Nephew, Inc. v. Synthes (U.S.A.), 466 F. Supp. 2d 978 (W.D. Tenn. 2006) (permanently enjoining use of intramedullary nails and methods to treat femoral fractures); Schneider (Eur.) AG v. SciMed Life Sys., Inc., 852 F. Supp. 813 (D. Minn. 1994) (permanently enjoining balloon dilation catheter for treating coronary heart disease); Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., No. 93-108-JJF, 1993 U.S. Dist. LEXIS 19959 (D. Del. July 16, 1993) (preliminarily enjoining safety catheters designed to eliminate risk to healthcare professionals of accidental exposure to AIDS); ALM Surgical Equip., Inc. v. Kirschner Med. Corp., No. 6:89-1622-3, 1990 U.S. Dist. LEXIS 14584 (D.S.C. Apr. 23, 1990) (permanently enjoining use of prismatic surgical light system); Shiley, Inc. v. Bentley Labs., Inc., 601 F. Supp. 964 (C.D. Cal. 1985) (permanently enjoining bubble blood oxygenator for use in open heart surgery). 18 See, e.g., Cordis Corp. v. Boston Scientific Corp., No. 03-238, 2003 U.S. Dist. LEXIS 21338 (D. Del. Nov. 21, 2003) (finding patentee could not ensure an adequate supply of drug-eluting stents); Shiley, 601 F. Supp. at 964 (finding short-term supply problems). In contrast, injunctions have been granted where there the public will have an adequate supply of the patented medical device or therapy. See, e.g., ALM, 1990 U.S. Dist. LEXIS 14584, at *52 (finding there would be “no delay in supplying prismatic surgical lights to the public”). 19 Shiley, 601 F. Supp. 964 (staying injunction to provide efficient and non-disruptive changeover for practitioners due to lag time in training staff). 20 Hybritech Inc. v. Abbott Labs., 4 U.S.P.Q. 2d (BNA) 1001, 1015, 1987 WL 123997 (C.D. Cal. 1987), aff’d, 849 F.2d 1446 (Fed. Cir. 1988) (excluding cancer patients from the effects of a preliminary injunction because the court “will not cut off the supply of monoclonal test kits for

11


significant safety issues associated with the patented invention not present in the infringing

product.21 Even if Roche’s claimed product benefits were true, which they are not, the purported

medical and economic benefits are simply not the type of sufficient public interests to justify

denial of an injunction.

B. AMGEN WILL SUFFER FROM IRREPARABLE INJURY UNLESS A PERMANENT INJUNCTION IS GRANTED.

At its core, Amgen’s business is based on innovation and the development, marketing,

and selling of medicines based on the company’s innovations.22 Research and development of

these medicines are extremely risky and expensive, with few products ever successfully

developed and marketed.23 To successfully innovate and compete, Amgen has consistently

taken the revenues from its successful products and reinvested them into discovery and clinical

research.24 To continue with this model, and as a corollary, to attract investors to continue to

invest in Amgen, there must be sufficient protection for those products that succeed.25 Thus, as

cancer patients”); ICU Med. Inc. v. Alaris Med. Sys., Inc., 2004 U.S. Dist. LEXIS 19949 (C.D. Cal. July 30, 2004) (denying preliminary injunction where needleless valves would be suddenly absent from the marketplace). 21 Hybritech, 4 U.S.P.Q. 2d (BNA) at 1015 (denying preliminary injunction against hepatitis test kits because “the public interest is served by the availability of safe, sure reliable tests kits for hepatitis”). Injunctions, however, are granted where the infringing product is not superior or has similar safety issues associated with the patented invention. See, e.g., Schneider, 852 F. Supp. at 851 (granting injunction where infringing catheter was not “significantly objectively superior to other catheters in performance or that all other catheters are defective, unsafe, or incapable of performing as intended”); Shiley, 601 F. Supp. at 970 (granting injunction where infringing catheter was not “objectively superior in performance or that either is defective or unsafe in any way or does not properly perform as intended and required in the operating room”). 22 11/15/07 Remedy Hr’g Tr. at 26:11-21 (Sharer). As Mr. Sharer also noted, Amgen is not in the business of licensing its inventions to its competitors. Id. at 34:12-19. 23 Amgen’s Inj. Mem. (D.N. 1578) at 13-14; 11/15/07 Remedy Hr’g Tr. at 28:9-19, 35:11-20 (Sharer). 24 11/15/07 Remedy Hr’g Tr. at 76:3-77:12 (Sharer). 25 Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1383 (Fed. Cir. 2006).

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Amgen’s Chief Executive Officer testified, if a party found to infringe a patent was allowed to

enter the market for some fee, investors would be reluctant to invest in Amgen due to fear that

the patent system would fail to protect their investments and Amgen’s way of doing business

would be irreparably harmed.26

In addition to inexorably changing Amgen’s business model, if Roche were allowed to

commercialize pre-EPO in the United States, Amgen would suffer an immediate drop in revenue

because every Roche sale in dialysis is a lost sale to Amgen. Amgen’s business operations

would be dramatically altered, likely requiring a reduction in its workforce,27 as well as a shift in

how resources (in terms of personnel and money) are applied to research and product

development.28 Similarly, Amgen will suffer irreparable injuries to its customer relationships,

including dialysis providers, since Roche has frequently stated its goal of disrupting customer

satisfaction with current ESAs to sell its pegylated EPO product, MIRCERA.29 As its

documents show, Roche repeatedly has attempted to harm the reputation of Amgen’s products.30

In addition to impairing Amgen’s research and development on a broader scale, Roche’s

potential market entry will also have the effect of stifling Amgen’s further innovation in the

26 Amgen’s Inj. Mem. (D.N. 1578) at 9; 11/15/07 Remedy Hr’g Tr. at 29:7-30:11, 32:16-33:10 (Sharer) (testifying that if the security provided by the patent system is removed, the risk of investing will no longer be worthwhile). 27 Amgen’s Inj. Mem. (D.N. 1578) at 8; 11/15/07 Remedy Hr’g Tr. at 30:23-24 (Sharer). See Sanofi-Synthelabo, 470 F.3d at 1382-83 (noting potential reduction in workforce as a factor in establishing irreparable harm). 28 Amgen’s Inj. Mem. (D.N. 1578) at 8-9; 11/15/07 Remedy Hr’g Tr. at 38:9-39:3 (Sharer); 2/15/08 Bernheim Decl. ¶ 19. 29 See, e.g., RTX 100 (MIRCERA Business Plan 2007) at R003905826; RTX 119 (MIRCERA Pricing and Contracting Recommendation) at R003907912. 30 See, e.g., RTX 100 (MIRCERA Business Plan 2007) at R003905826; RTX 119 (MIRCERA Pricing and Contracting Recommendation) at R003907912.

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treatment of kidney patients with anemia.31 For example, Amgen’s agreement with Fresenius

affords Amgen access to important medical and market information and data32 and lays out plans

to develop new products and engage in joint research for better inventory management.33 Such

information and opportunities spur innovation. But if Amgen loses the customer relationships

built on the basis of its patented product to Roche’s infringing product, such opportunities will

also be lost and Amgen’s ability to innovate stifled.

Finally, in addition to market share loses, Roche’s entry may also result in some price

erosion, and would represent further irreparable harm to Amgen to the extent that it does occur.34

In the short-term, the evidence shows that because of economic considerations (to increase

profits), Roche expects that some dialysis providers immediately will begin switching to peg-

EPO and this will necessarily result in a lowering of Amgen’s ASP over time (even if Amgen

does not change its pricing) because of rebate and discount overhang.35 The long-term effect of

this price erosion is especially harmful since, not only will Amgen lose revenue now, but when

its patents expire it will be in a worse position than it would have been had Roche not

infringed.36 On the other hand, when Amgen’s patents expire, Roche will be in a better position

than it would have been had it not marketed peg-EPO as an infringer, placing Roche in a position

to take even more sales away from Amgen.37 To the extent that such erosion occurs, Amgen will

31 11/15/07 Remedy Hr’g Tr. at 191:10-192:3 (Bernheim). 32 RTX 20 (Sourcing and Supply Agreement between Amgen and Fresenius) at FMCNA000010, 25, 28, 32. 33 Id. at FMCNA000010-11. 34 2/15/08 Bernheim Decl. ¶¶ 18-19. See Verizon Servs. Corp. v. Vonage Holdings Corp., 503 F.3d 1295, 1310 (Fed. Cir. 2007) (finding price erosion to be an area of irreparable harm). 35 11/15/07 Remedy Hr’g Tr. at 178:21-188:6 (Bernheim). 36 Id. at 196:24-197:5 (Bernheim). 37 Id. at 196:24-197:5 (Bernheim).

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be irreparably harmed.

C. REMEDIES AVAILABLE AT LAW ARE INADEQUATE TO COMPENSATE FOR AMGEN’S IRREPARABLE INJURY.

The evidence shows that no prospective damages award would be adequate

compensation for Roche’s infringement. Even if Roche were ordered to pay Amgen all of

Amgen’s lost profits on the sales made by Roche, the award would be inadequate. A simple

transfer of profits would not make up for Roche displacing Amgen in the marketplace.

No amount of money damages can repay Amgen for the damage to its reputation, the loss

of investor confidence, or the loss of further research opportunities.38 Thus, as even Dr. Steven

Schwartz, Roche’s own economics expert, acknowledges, a patent holder cannot be made whole

for the effects of infringement by a royalty.39

This is in part because it is impossible to know prospectively the extent that Amgen will

be damaged. For example, it is impossible to know how much share Roche may capture —

Roche’s own estimations vary by more than 100% among its different scenarios.40 Likewise,

there is no way to know how Roche’s entry will affect the price for ESAs.41 While Roche argues

that prices may decrease as the parties compete for share, as evidenced by Roche’s own internal

38 Amgen’s Inj. Mem. (D.N. 1578) at 10. 39 6/7/07 Schwartz Dep. Tr. at 127:5-24 (“[A]s a practical matter in patent damages cases, when a reasonable royalty is awarded, that royalty may not fully compensate the patent holder for the effects of infringement. . . . In a royalty situation, I think that’s almost a given. It’s almost a tautology that the patent holder may not be made whole for the effects of infringement.”) (the Schwartz deposition testimony cited herein was submitted to the Court by Amgen as remedy-related deposition designations on 12/14/07). 40 See id. at 237:17-238:2 (noting Roche’s net sales projections for 2007 vary from $49 million to $113 million). 41 See id. at 102:22-103:4.

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documents, prices could just as easily rise upon Roche’s entry.42 In either event, Amgen’s

damages cannot be quantified with any reasonable certainty because actual price (including dose

conversion, discounts and rebates) and market share cannot be accurately predicted, and in turn,

the effect of an eroding price (and the rebate overhang) on Amgen’s ASP cannot be calculated.43

Finally, future events such as the entry of new competitive products44 or changes in the Centers

for Medicare and Medicaid Services’ (CMS) regulations45 cannot be predicted with any

reasonable certainty and thus any impact Roche’s entry could have on such events is

incalculable.

As Justice Kennedy noted in eBay, damages may be sufficient remedy for infringement in

place of an injunction in only such cases as where the patentee is not in the market itself but has

licensed the invention to multiple parties or the invention is but a small part of a larger product.46

In such cases, the patentee is made whole by the grant of a reasonable royalty in place of an

injunction. As demonstrated above, those are not the circumstances here.

42 Roche’s 2007 Business Plan lays out an expected 1.5% increase in price every six months. RTX 131 (2007 MIRCERA Business Plan) at R11-000638012. 43 See, e.g., 11/5/07 Remedy Hr’g Tr. at 181:18-182:22, 188:8-18 (Bernheim); RTX 5 (4/6/07 Bernheim Report) ¶ 66; 6/7/07 Schwartz Dep. Tr. at 102:22-103:21, 187:12-190:7. 44 See RTX 130 (2007 MIRCERA Business Plan) at R10-001303069 (Roche expects new non-infringing product on the market in 2010). 45 12/07/07 Remedy Hr’g. Tr. at 585:14-22 (Senich) (testifying that Roche anticipates changes to the regulatory framework in 2010). 46 eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837, 1842 (2006) (Kennedy, J., concurring).

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D. THE BALANCE OF HARDSHIPS WEIGHS IN AMGEN’S FAVOR.

The third prong of the four-factor test considers the balance of the relative hardships.47

When Amgen’s and Roche’s hardships are compared, the balance clearly weighs in Amgen’s

favor.

First, in balancing the hardships, the parties’ relative market effects should be

considered.48 Amgen has a large share of sales for the treatment of anemia associated with

chronic renal failure. Additionally, almost half of Amgen’s total pharmaceutical sales come

from EPOGEN and Aranesp49 and these sales will be at risk if Roche is permitted to

commercialize peg-EPO in the U.S. Unlike Amgen, Roche does not stand to lose any market

share and its current sales will be unaffected because it does not sell peg-EPO in the United

States.

Second, because Roche elected to “build a business on a product found to infringe,” any

purported harm to Roche is self-inflicted and should not serve as a basis for denying Amgen an

injunction.50 Roche knowingly sought to enter the market despite Dr. Lin’s Patents. After

litigation ensued, Roche’s CEO George Abercrombie said that Roche would continue to proceed

47 Id. at 1839 (majority opinion). 48 See, e.g., Bell & Howell Document Mgmt. Prods. Co. v. Altek Sys. 132 F.3d 701, 708 (Fed. Cir. 1997) (considering the relative impact on both parties in balancing the relative hardships); Cordis Corp. v. Boston Scientific Corp., No. 04-1098, 2004 U.S. App. LEXIS 11557, at *12 (Fed. Cir. May 28, 2004) (unpublished) (“[R]elative market effects may factor into balancing the relative hardships.”). 49 See RTX 67 (Amgen 10-Q filing) at 26. 50 MercExchange, L.L.C. v. eBay, Inc., 500 F. Supp 2d 556, 584 (E.D. Va. 2007) (citing Windsurfing Int’l Inc. v. AMF, Inc., 782 F.2d 995, 1003 (Fed. Cir. 1986)). Through its designations, Roche attempts to introduce testimony regarding the “harms” that Roche will suffer if an injunction is granted. See generally 3/15/07 Kokino Dep. Tr. (the Kokino deposition testimony cited herein was submitted to the Court by Roche as remedy-related deposition designations on 12/14/07).

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to the market.51 After having made the business decision to seek U.S. regulatory approval and

undertake steps needed to sell peg-EPO in the U.S. “at risk,” any harm incurred now that it must

cease its activities does not outweigh Amgen’s harm.52 Furthermore, Roche’s clinical trials

supported both U.S. and overseas registrations, thus mitigating Roche’s alleged harm.

Moreover, any attempt by Roche to “better” its situation, as it threatens to do in its January 28

Proposal by launching peg-EPO in the United States despite the jury’s verdict, should not serve

to shift the balance.

Finally, damage to Roche’s reputation if it is not allowed to infringe Amgen’s products is

not a cognizable hardship.53 Since Roche is not yet selling ESAs in the U.S., it is unlikely that it

will suffer any damage to its reputation except the loss of face suffered by an infringer who

sought to launch by its own admission “at risk.” Roche has previously claimed that it will suffer

harm to its reputation because it has promised to launch peg-EPO and failure to do so will cause

skepticism towards Roche and any new Roche product entry.54 Roche’s argument that it should

be allowed to infringe because it has promised that it will infringe fails to hold water. If every

infringer could use this argument, the patent laws would be meaningless.

51 3/22/07 Abercrombie Dep. Tr. at 32:24-33:2. 52 See Commonwealth Sci. & Indus. Research Org. v. Buffalo Tech, Inc., 492 F. Supp. 2d 600, 606 (E.D. Tex. 2007) (“Mere hardship incurred in the process of ceasing operations is not sufficient.”). See also TX 67 (May 2001 Research and Development Committee Development Plan) at R10-004305819 (providing that the risk of entering the U.S. market in light of Amgen’s patents was “justifiable”). 53 See Boehringer Ingelheim Vetmedica, Inc. v. Schering-Plough Corp., 106 F. Supp. 2d 696, 707 (D.N.J. 2000) (finding that despite any harm to the infringer’s reputation as a result of an injunction, “one who elects to build a business on a product found to infringe cannot be heard to complain if an injunction against continuing infringement destroys the business so elected” (quoting Windsurfing, 782 F.2d at 1003, n.12 (Fed. Cir. 1986))). 54 See Defs.’ Mem. in Opp’n to Amgen’s Req. for a Permanent Inj. (D.N. 1589) at 42 [hereinafter Roche’s Opp’n to Amgen’s Inj. Mem.].

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E. THE PUBLIC INTEREST WOULD NOT BE DISSERVED BY AN INJUNCTION.

1. The public interest is best served by a result that honors a robust and predictable patent system that rewards innovation.

At the core of the Patent Act is the public interest in promoting innovation and the

progress of science and the useful arts.55 The patent system represents a carefully crafted

bargain that advocates both the creation and the public disclosure of new and useful advances in

technology, in exchange for an exclusive monopoly for a limited period of time.56

[Patents are to be regarded] as public franchises granted to the inventors of new and useful improvements for the purpose of securing to them, as such inventors, for the limited term therein mentioned, the exclusive right and liberty to make and use and vend to others to be used their own inventions, as tending to promote the progress of science and the useful arts, and as matter of compensation to the inventors for their labor, toil, and expense in making the inventions, and reducing the same to practice for the public benefit, as contemplated by the Constitution and sanctioned by the laws of Congress.57

Thus, courts consistently grant injunctive relief in medical product cases because the public’s

short-term interest in choice is outweighed by its long-term interest in promoting the

development of new and potentially life-saving products.58

This bargain is at the core of the modern biotechnological and pharmaceutical arts.

Amgen is an innovation company and it operates on the riskiest and most costly edge of

55 Buffalo Tech., 492 F. Supp. 2d at 607. 56 Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 63 (1998); see also U.S. Const. art. I, § 8, cl. 8 (directing Congress to “promote the Progress of Science” by granting inventors exclusivity); Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1383 (Fed. Cir. 2006) (“[T]he patent system provides incentive to the innovative drug companies to continue costly development efforts.”); Eli Lilly & Co. v. Premo Pharm. Lab., Inc., 630 F.2d 120, 138 (3d Cir. 1980). 57 Pfaff, 525 U.S. at 63-64 (quoting Seymour v. Osborne, 78 U.S. (11 Wall.) 516, 533-534 (1870). 58 See, e.g., Sanofi-Synthelabo, 470 F. 3d at 1383.

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innovation. As such, “[p]atents are central to Amgen’s business.”59 Kevin Sharer, Amgen’s

Chairman and CEO, testified that Amgen’s success depends in part on its ability to obtain and

defend intellectual property rights crucial to the commercialization of Amgen’s products and

product candidates:

Patents make the investment we make in research and development and innovation justified. Patents allow us to have confidence that if we bring an innovation to market that we’ll be able to practice that. Patents allow us to go to investors and say your investment dollars, here, if we’re able to make the advances we hope to, will be protected and rewarded. Without patents, our business model just falls apart.60

Nowhere is the public interest in protecting the rights of patent holders and enforcing

adequate remedies for patent infringement more critical than in the development of biological

pharmaceuticals.

[T]he development and perfection of new drugs frequently requires the devotion of years of research time and the expenditure of millions of dollars. . . . Unless this type of an investment of human and capital resources is rewarded by some form of patent protection, companies such as Eli Lilly might well choose not to undertake such large expenditures and instead devote themselves to other endeavors. To the extent this occurs, resources would be diverted from activity that is socially beneficial — the development of new drugs. 61

Courts continue to acknowledge the immense cost involved in this process.62 Today, it takes

approximately $1 billion and 15 years to develop a single drug.63 Not surprisingly, Amgen

increased its research and development budget in 2006 by 45% to $3.36 billion; in 2007, it

59 11/15/07 Remedy Hr’g Tr. at 30:4 (Sharer). 60 Id. at 30:4-11 (Sharer); see also id. at 29:11-15 (Sharer); RTX 55 (Amgen 10-K filing at 29; RTX 10 (Amgen 10-Q filing) at 56. 61 Premo Pharm., 630 F.2d at 137 (emphasis added). 62 Abbott Lab. v. Sandoz, Inc., 500 F. Supp. 2d 807, 846 (N.D. Ill. 2007); Sanofi-Synthelabo, 470 F.3d at 1383 (noting that the “average cost of developing a blockbuster drug is $800 million”).

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invested 24% of its annual revenues in research and development.64 Since 2000, Amgen has

invested $15 billion in research and development.65 But sustained long-term development of

drugs requires more than resources. It requires an incentive for these resources to be

systematically reinvested.66 Patents, therefore, anchor the entire business model.67

Nor is it guaranteed that an investment of $1 billion and 15 years will produce a

commercial medicine. In fact, the likelihood of any single product making it from research to

market is very small.68 For example, since 2000, Amgen has had over 100 products close to or

actually in human testing, but only six have successfully made it to market.69 That these

therapies appeared promising and progressed successfully through preclinical and earlier clinical

trials speaks to the inherently unpredictable nature of modern drug discovery.70

63 11/15/07 Remedy Hr’g Tr. at 27:4-11 (Sharer); RTX 68 (Tr. of Sharer and Dolan of Forbes Magazine) at 9. 64 RTX 1 (Amgen 2006 Annual Report) at 28. Amgen’s research and development costs have tripled since 2002. 11/15/07 Remedy Hr’g Tr. at 35:4-7 (Sharer). 65 11/15/07 Remedy Hr’g Tr. at 35:8-10 (Sharer). 66 See id. at 77:10-12 (Sharer) (“So it’s the winners have to pay for the losers. And most of the things, unfortunately, we invest in don’t reach market.”). 67 See id. at 30:11 (Sharer) (“Without patents, our business model just falls apart.”). 68 See id. at 27:1-28:19, 35:4-20 (Sharer); Sanofi-Synthelabo, 488 F. Supp. 2d at 346 (noting that despite the average cost of $800 million to bring a drug to market, “for every drug that does make it to market many others do not”), aff’d, 470 F.3d 1368 (Fed. Cir. 2006). 69 11/15/07 Remedy Hr’g Tr. at 35:11-20 (Sharer). See id. at 77:6-10 (Sharer) (“Most of the things we invest in do not work. . . . So it’s the winners have to pay for the losers.”). 70 See 11/15/07 Remedy Hr’g Tr. at 27:19-28:8 (Sharer); RTX 55 (Amgen 10-K filing) at 37 (“Product candidates that appear promising the early phases of development . . . may fail to reach the market for a number of reasons. . . .”).

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The promise of a secure financial reward is essential if any project is to be pursued.71

“The encouragement of investment-based risk is the fundamental purpose of the patent grant, and

is based directly on the right to exclude.”72 The premise on which Amgen and others make the

enormous investments to search for and develop new, path-breaking therapeutics rests on the

promise that future competitors will be excluded from practicing those inventions without the

patentee’s permission. If patent infringers, such as Roche, are allowed to copy and appropriate

such path-breaking therapeutic inventions notwithstanding the inventor’s patents, there would be

no reason or incentive for companies such as Amgen to continue to fund the huge investment and

incur the enormous risk required to discover and develop new, breakthrough therapies. And

patients with unmet medical needs and no alternatives will be ignored in favor of offering

patients choice between two or more products that already meet their medical needs.

In the face of this extreme risk and long-term competition, Roche argues that Amgen

“already has made profits” in excess of the amount it originally invested in EPOGEN.73

However, Roche’s myopic argument ignores, and undermines virtually every role that the patent

system plays in encouraging modern drug discovery. A denial of a permanent injunction would

promote the exact opposite incentives by undermining “the public interest in creating beneficial

71 Pfizer, Inc. v. Teva Pharms. USA, Inc., 429 F.3d 1364, 1382 (Fed. Cir. 2005); Smith Int’l, Inc. v. Hughes Tool Co., 718 F.2d 1573, 1578 (Fed. Cir. 1983); Eli Lilly & Co. v. Premo Pharm. Lab., Inc., 630 F.2d 120, 137 (3d Cir. 1980); Sanofi-Synthelabo, 488 F. Supp. 2d at 346; Ortho Pharm. Corp. v. Smith, No. 90-0242, 1990 U.S. Dist. LEXIS 1951, at *28 (E.D. Pa. Feb. 23, 1990) (“If a patent holder cannot rely on its patent to exclude others then ‘research and development budgets in the science and technology based industries would shrink, resulting in the public no longer benefiting from the labors of these talented people.’”) (quoting E.I. duPont deNemours & Co. v. Polaroid Graphics Imaging, Inc., 706 F. Supp. 1135, 1146 (D. Del. 1989)). 72 Patlex Corp. v. Mossinghoff, 758 F.2d 594, 599 (Fed. Cir. 1985). 73 Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 4-5.

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and useful products and the cost involved in that process.”74 First, innovators would have no

hope or certainty that even their investments could be recovered because competitors could copy

and sell the patented inventions of true pioneers, thereby reducing if not eliminating the incentive

to discover and develop new, life-saving therapies.75 Additionally, external investors would lack

confidence in Amgen’s intellectual property.76 Besides, the prize is not simply recouping the

original investment, but doing so many times over to allow for investment and risk in hundreds

of other product opportunities most of which will fail.

Denial of an injunction against Roche puts Amgen’s entire product portfolio at risk. It

would create a powerful incentive to copy a successful product and simply pay a tax to get onto

the market.77 As Amgen’s Chief Executive Officer testified at trial, such denial would

tell others in the world the only thing you have to worry about when you come on the market, even if you infringe Amgen’s patents, . . . you don’t have to invest all the money and research and development, you don’t have to take all of the risks, you can infringe and just kind of pay a tax to come on the market[.]78

A free-loader could significantly reduce its own risk by waiting and seeing which drugs —

researched and developed by Amgen — are the most lucrative to usurp.79 Instead of having the

74 Abbott Lab. v. Sandoz, Inc., 500 F. Supp. 2d 807, 846 (N.D. Ill. 2007). 75 See Premo Pharm., 630 F.2d. at 137; see also 11/15/07 Remedy Hr’g Tr. at 32:2-33:10, 37:15-39:3 (Sharer), 189:21-190:18 (Bernheim). 76 See 11/15/07 Remedy Hr’g Tr. at 190:6-18 (Bernheim). 77 Id. at 30:12-25, 37:15-21 (Sharer); see also Hybritech Inc. v. Abbott Labs., 849 F.2d 1446, 1456 (Fed. Cir. 1988) (noting that “in the absence of the injunction, other potential infringers will be encouraged to infringe”); Johns Hopkins Univ. v. Datascope Corp., 513 F. Supp. 2d 578, 586 (D. Md. 2007) (“[O]thers may be encouraged to infringe their patents and risk litigation, thus devaluing the Plaintiffs’ property.”). 78 11/15/07 Remedy Hr’g Tr. at 32:19-33:1 (Sharer). 79 In fact, a lack of adequate patent enforcement has affected Amgen’s business in the past. For example, Amgen attempted to introduce its products in China. The government, however, chose

23


incentive to take on the tough medical problems we face, such as cancer, Alzheimer’s, heart

disease, etc., pharmaceutical companies would have greater incentive to simply copy the

successful products of others at little risk. Innovation would be replaced by copying.

2. There is no assurance that permitting the infringement of Amgen’s patents under terms compelled by the Court will reduce public health care spending.

Contrary to Roche’s unsubstantiated promises, permitting the continued infringement of

Amgen’s patent rights provides no assurance that health care spending on anemia treatment will

be reduced — let alone result in taxpayer savings so significant that they justify usurping the

innovation incentives embodied in the patent system. The evidence demonstrates that Roche is

not truly interested in reducing health care spending or offering the choice of a novel biologic.

Instead, as even its recent proposal shows, Roche’s driving interest is to take advantage of

incentives created for new entrants in the ASP-based reimbursement system to attract providers

with higher prices (not an innovative new medicine) — to the detriment of Amgen and Medicare,

and for the benefit of Roche and its chosen providers.

Roche’s February 2007 WAC Pricing and Contracting Strategies Review Meeting

presentation80 makes it plain that Roche’s entry will drive Medicare’s costs up — not down. In

that presentation, Roche compares its intended ASP for Mircera with the ASP for an equivalent

dose of EPOGEN.81 Assuming its peg-EPO product would enter the U.S. marketplace in third

quarter 2007, Roche planned to launch with a reimbursement rate over $16. By contrast

Medicare’s cost for an equivalent dose of EPOGEN was $9.10 at that time (EPOGEN’s ASP for

not to enforce Amgen’s patents and a number of copyists immediately entered the market, forcing Amgen to withdraw. 11/15/07 Remedy Hr’g Tr. at 29:16-30:1 (Sharer). 80 RTX 6 (MIRCERA WAC Pricing). 81 Id. at R10-004975195; 11/15/07 Remedy Hr’g Tr. at 205:11-206:21 (Bernheim).

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the current quarter is $8.46).82 Medicare would pay nearly double the current reimbursement

rate for the same therapeutic response. As business shifts from Amgen to Roche, Medicare

reimbursement rates will increase; the public will pay more.83

Surprisingly, even after three years of Roche’s forecasted competitive response,

Medicare will pay more for Roche’s infringing product than it currently pays for an equivalent

dose of EPOGEN today. Factoring in a competitive response, Roche anticipated that Mircera’s

ASP would be approximately $11 in the third quarter of 2010. And without a competitive

response — and it has been shown that a price-cutting competitive response may be disfavored

by businesses with a longer term competitive view — Roche forecasts that its infringing product

will have an ASP of almost $13.84 Under either circumstance, Medicare will pay significantly

more for an equivalent therapeutic response with Roche’s infringing product than for EPOGEN.

Roche recognizes the tension between payers and providers and is reliant on both for

success.85 Roche’s analysis of ASP’s dynamics observed that a “price increase can be good for

both providers and manufacturers in the long run.”86 It was also Roche’s view that excessive

price competition would result in an undesirable downward price spiral.87 From Roche’s point

of view, an advantageous pricing and contracting strategy “[a]voids downward pricing spiral in

ESRD from Epogen contracting wars that would then effect [sic] the value of the ESA

82 For Medicare Part B reimbursement rates, see Medicare’s ASP Pricing Files, organized by year and by quarter at http://www.cms.hhs.gov/McrPartBDrugAvgSalesPrice/. The J-code for EPOGEN (Epoetin-alfa) is J0886; Aranesp (Darbepoetin) is J0881. 83 11/15/07 Remedy Hr’g Tr. at 205:11-206:21 (Bernheim). 84 RTX 6 (MIRCERA WAC Pricing) at R10-004975195. 85 Id. at R10-004974846. 86 RTX 115 (CERA update regarding ASP Reimbursement) at R001619971. 87 Id. at R001619973-974.

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market.”88 To this end, Roche concluded, “we will not discount competitively in order to gain

share in the ESRD business.”89

By pricing its infringing EPO product at a premium to established ESAs, Roche intends

to take advantage of the unique incentives offered to new entrants under the ASP system and

exploit the uncertainties of dose conversion to give providers a compelling economic

justification to switch ESAs all the while promote “on label” monthly dosing as a differentiator

over existing ESAs (which also happens to be the dosing interval with the least dose efficiency).

And by avoiding heavy discounting, Roche has come up with a plan to avoid a “race to the

bottom” and prolong the economic advantage conferred to new entrants — a strategy it calls the

“Glide Path.”90 The Glide Path will preserve Roche’s new entrant advantage providing Roche

with substantial net revenues and providers will receive superior cost recovery. But all of this

occurs at Medicare’s expense.91

Recognizing that “the Glide Path does not initially address the issue of Budget

Minimization for the payers,”92 Roche explored ways to obscure the increased cost to Medicare

that will result from the entry of its infringing product. First, Roche planned to launch at a 12%

premium to Aranesp.93 But, by the time of trial, Roche planned to launch at a 12% “discount” to

Aranesp.94 Importantly, however, that “discount,” was based on a comparison of WAC prices,

88 RTX 112 (CERA 5 Year Business Plan) at R000228589. 89 Id. at R000228626 (emphasis added); R000228616 (“Roche will not discount to gain share with these chains.”). 90 RTX 6 (MIRCERA WAC Pricing) at R10-004974887. 91 Id. at R10-004974960-963. 92 Id. at R10-004974963. 93 RTX 99 (CERA NAOC Update) at R003917523. 94 RTX 6 (MIRCERA WAC Pricing) at R10-004975031; 12/7/07 Remedy Hr’g Tr. at 584:2-7 (Senich).

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which of course masks the true cost to Medicare. Established ESAs, such as Aranesp and

EPOGEN, are not reimbursed based on WAC. WAC prices, therefore, are inappropriate for

comparison — a fact Roche admits in its documents: “With the introduction of ASP, the

Aranesp WAC becomes a less meaningful comparator . . . .”95

Roche’s various “discount” pricing schemes to preserve new entrant advantages all

translate to substantial increases in reimbursement costs for Medicare. Aranesp is reimbursed

ASP+6%, which is considerably lower than its list price (WAC). Since Roche’s infringing

product would be reimbursed based on its WAC at launch, it pricing scheme at trial of 12%

“discount” relative to Aranesp actually provides a basis for reimbursement that is higher than

Aranesp’s ASP. Indeed, Roche conceded such was the case in its own planning documents, “[a]t

launch, MIRCERA will be priced higher than Aranesp ASP.”96 According to Roche’s

calculations, a “12% discount off WAC” translates to a 38% premium over Medicare’s

reimbursement rate for Aranesp.97 Although Roche’s January 28 Proposal purports to abandon

efforts to peg the price of its infringing product relative Aranesp’s WAC, as Dr. Bernheim

explains in his declaration accompanying this brief, the cost of Roche’s infringing product would

still be significantly greater than that of EPOGEN — the product primarily used to treat dialysis

patients.98 If Roche is allowed to launch its infringing product, Medicare (and patients) will pay

substantially more for an infringing product than is currently paid for Amgen’s established

ESAs. Under every scenario uttered by Roche to date, the entry of Roche’s infringing product

will increase — not decrease — Medicare’s costs.

95 RTX 6 (MIRCERA WAC Pricing) at R10-004975055 (emphasis added). 96 Id. at R10-004975033. 97 Id. 98 2/15/08 Bernheim Decl. ¶¶ 10-17.

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When the government shifted to ASP-based reimbursement, Roche viewed the change as

a tremendous profit-making opportunity for it as a new entrant. Roche’s entry in the U.S. market

is premised on its ability to extract an immediate and significant premium. Roche seeks to offer

sufficient cash recoveries to providers so as to drown out the attraction of EPOGEN — namely

its well-proven efficacy and safety. Roche’s documents show that with such new entrant

economics, it can convince DaVita to choose Mircera at the formulary level. Roche bragged that

given a compelling economic incentive, DaVita would choose its product and that it had

previously shifted 95% of its patients to a new therapeutic in a 90 day window.99 In the final

analysis, it is highly revealing that if the opportunity for a large windfall is removed, Roche will

choose to withhold its product from the U.S. market.100

3. The public interest would not be disserved by an injunction where peg-EPO does not address an unmet medical need and is not clinically superior to currently available ESAs.

There are two questions properly at the center of whether the public interest would be

disserved by the issuance of an injunction in this case:

(1) Does peg-EPO serve a significant medical need unmet by currently available medicines and medical practices; and

(2) Is peg-EPO so medically superior to currently available medicines, so that the medical benefits to the public outweigh the public’s other (non-medical) interests, as well as the other injunction prongs set forth in eBay?

As discussed above, this calculus must be considered against the background that

injunctions have only been denied in “rare and limited” circumstances for public health and

99 RTX 17 (Hickman Voicemail) at R001587133. 100 12/7/07 Remedy Hr’g Tr. at 597:18-24 (Senich); RTX 115 (CERA Update ASP Reimbursement) at R001619985, R001620039 (Roche will walk away from LDO contract if price war ensues).

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safety concerns.101 Thus, courts have held that the impact on public health interests alone has

been insufficient to warrant a denial of an injunction.102

a. The public interest is in gaining access to therapies that address unmet medical needs and peg-EPO does not.

Patients with chronic renal failure, and especially those on dialysis, suffer from a wide

range of ailments for which there are inadequate treatments.103 For example, currently unmet

medical needs include the need for improved arteriovenous access devices to reduce infection,

and the need to develop therapies to reduce mortality in these patients.104 In contrast, the one

medical need that most patients and doctors agree has been addressed is the treatment of anemia

associated with chronic renal failure with currently available ESAs.105

101 Commonwealth Sci. & Indus. Research Org. v. Buffalo Tech., Inc., 492 F. Supp 2d 600, 607 (E.D. Tex. 2007). 102 Proveris Sci. Corp. v. InnovaSystems, Inc., No. 05-12424-WGY, 2007 U.S. Dist. LEXIS 48475 (D. Mass. May 11, 2007) (permanently enjoining solutions that increased the accuracy of the testing of pharmaceutical spray drug products); Johns Hopkins Univ. v. Datascope Corp., Nos. WDQ-05-0759, WDQ-06-2711, 2007 U.S. Dist. LEXIS 68972 (D. Md. Aug. 9, 2007) (permanently enjoining treatments for fragmenting clots within hemodialysis grafts); Sanofi-Synthelabo v. Apotex, Inc., 492 F. Supp. 2d 353 (S.D.N.Y. 2007) (permanently enjoining generic platelet aggregation-inhibiting agent); Smith & Nephew, Inc. v. Synthes (U.S.A.), 466 F. Supp. 2d 978 (W.D. Tenn. 2006) (permanently enjoining use of intramedullary nails and methods to treat femoral fractures); Schneider (Eur.) AG v. SciMed Life Sys., Inc., 852 F. Supp. 813 (D. Minn. 1994) (permanently enjoining balloon dilation catheter for treating coronary heart disease); Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., No. 93-108-JJF, 1993 U.S. Dist. LEXIS 19959 (D. Del. July 16, 1993) (preliminarily enjoining safety catheters designed to eliminate risk to healthcare professionals of accidental exposure to AIDS); ALM Surgical Equip., Inc. v. Kirschner Med. Corp., No. 6:89-1622-3, 1990 U.S. Dist. LEXIS 14584 (D.S.C. Apr. 23, 1990) (permanently enjoining use of prismatic surgical light system); Shiley, Inc. v. Bentley Labs., Inc., 601 F. Supp. 964 (C.D. Cal. 1985) (permanently enjoining bubble blood oxygenator for use in open heart surgery). 103 12/6/07 Remedy Hr’g Tr. at 422:7-24 (Chertow). 104 See RTX 23 (4/6/07 Chertow Report) ¶ 25; 12/6/07 Remedy Hr’g Tr. at 422:7-16 (Chertow). 105 12/6/07 Remedy Hr’g Tr. at 421:23-422:6, 422:21-24 (Chertow) (“So, in general there are immense unmet [medical] needs in this population, but the need of anemia correction has been fully met in my opinion.”).

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As its own documents and filings with the FDA acknowledge, Roche’s pegylated EPO

product does not treat any medical need other than the correction of anemia associated with

chronic renal failure.106 As the label approved by the FDA plainly states, peg-EPO is an

“erythropoiesis-stimulating agent (ESA) indicated for the treatment of anemia associated with

chronic renal failure, including patients on dialysis and patients not on dialysis[.]”107 It is

particularly telling that Roche has neither asserted nor identified in its regulatory documents any

medical need addressed by peg-EPO that currently available ESAs do not.108 Thus, as Dr.

Chertow testified, peg-EPO does not address or satisfy any unmet medical need.109 Rather,

Roche’s ESA product is merely a me-too product and its availability to the public is not

necessary to satisfy any unmet medical need.

In stark contrast, acting as if the jury has not already determined that its product infringes

Dr. Lin’s patents, Roche asserts that its pegylated EPO product must provide “substantial health

and medical benefits” because it is a “new and different medicine” that has a “significantly

longer half-life.”110 As a result, Roche argues to this Court that its “new” medicine allows for

less frequent dosing and shots, fewer doctor visits, greater patient compliance, and a slower rate

106 See RTX 4 (FDA Approval Letter for MIRCERA) at R008892352. 107 Id. 108 Roche has asserted that there is a benefit to “fewer shots.” Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 15. The “convenience” of fewer injections is founded on a number of false premises, including that the number of administrations is relevant to dialysis patients, that EPO and Aranesp cannot be administered according to the same dosing scheduled as peg-EPO, and that the so-called convenience of fewer administrations should be considered in isolation, without regard for its effect. 109 12/6/07 Remedy Hr’g Tr. at 421:10-424:22 (Chertow). 110 Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 1.

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of hemoglobin rise in patients, characterizing each of these differences as “unmet medical needs”

or matters of “patient choice.”111 The evidence does not support Roche’s claims.

As an initial matter, none of the so-called differences between peg-EPO and the currently

available ESAs address an unmet medical need. Rather, they are, at best, matters of

convenience. And, as matters of convenience, their significance is grossly overstated.

First, Roche’s arguments that its pegylated EPO product would be more convenient to

use because fewer injections would be required ignores the realities of the vast majority of the

lives of chronic renal failure patients. Most patients on dialysis (who are usually dosed three

times per week) receive medications through an IV line, delivered through the dialysis

machine.112 They therefore do not receive “shots” at all. And, patients with ESRD are required

to undergo dialysis to have their blood cleaned, whether or not they receive epoetin therapy.

Extended dosing does not reduce the need to visit a dialysis center.113 EPOGEN’s recommended

dosing regimen aligns with patients’ visits to dialysis centers, and allows for dosing adjustments

as needed. EPOGEN is administered to nearly all dialysis patients via the IV tubing, and IV

administration is recommended in the FDA-approved label.114

Second, Roche’s “convenience” arguments fail to recognize that Amgen’s second ESA

product, Aranesp, is also available to CKD patients (those patients who are not dialyzed). For

doctors, patients, or providers who prefer less-frequent dosing, Aranesp delivers anemia

management with extended dosing intervals, and is FDA approved for dosing intervals up to

111 See id. at 13-20. 112 12/6/07 Remedy Hr’g Tr. at 449:16-450:7 (Chertow); 12/5/07 Remedy Hr’g Tr. at 227:8-24 (Bernheim). 113 12/7/07 Remedy Hr’g Tr. at 655:22-656:3 (Fishbane). 114 RTX 53 (EPOGEN Label) at 26 (“In patients on hemodialysis, the IV route is recommended.”).

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once-every-three-weeks.115 Aranesp is used in some dialysis centers, but is more commonly

used for the treatment of patients with CKD who do not receive dialysis, and in oncology

patients.116 Patients are not even required to visit doctors in order to receive an injection, as

patients may self-inject Aranesp at home.117 Moreover, there are multiple publications that teach

that EPO and Aranesp may be used as infrequently as every two weeks to once a month to

achieve stable hemoglobin levels within an appropriate target range.118 Indeed, Dr. Schmidt, the

doctor Roche presented at trial in support of its convenience argument, acknowledged that she

had used either EPO or Aranesp according to a once-monthly dosing protocol.119 Dr. Fishbane,

another doctor who testified for Roche, was a member of an editorial board that published an

article teaching physicians that Epoetin alfa and Aranesp can be effectively used to treat CKD

patients once every four weeks.120 This testimony stands in stark contrast to Roche’s attorney

arguments regarding patient compliance. If, according to such evidence, currently available

115 The FDA-approved label for Aranesp includes once-weekly and once-every-three-week dosing intervals for the treatment of cancer patients receiving chemotherapy, and once-weekly or once-every-two-weeks for patients with anemia due to CKD or ESRD. RTX 50 (Aranesp Label) at 16, 18. 116 Note that peg-EPO is not FDA approved for the treatment of oncology-related anemia, as its clinical trials were terminated due to safety concerns. RTX 4 (MIRCERA Label) at R008892352. 117 RTX 50 (Aranesp Label) at 1, 18-21. Aranesp is available in prefilled SureClick™ autoinjectors for patient convenience. 118 RTX 105 (Spinowitz poster) (“Initiation of epoetin alfa using extended dosing regimens of 10,000 U QW, 20,000 U Q2W, 20,000 U Q4W, or 40,000 U Q4W was effective for the treatment of anemia in patients with CKD not receiving dialysis. . . . Q4W dosing of epoetin alfa may provide added flexibility and convenience for patients and providers.”). See also RTX 34 (Benz publication) at 215 (“In this study, results demonstrated that epoetin alfa can be initiated safely and effectively at an extended dosing interval of 20,000 IU every 2 [weeks] in patients with [chronic kidney disease who are not on dialysis].”); id at 219 (“Extended [epoetin alfa] dosing intervals of every 2 wk to once every 4 wk have shown to be effective in maintaining Hb levels. . . .”). 119 12/7/07 Remedy Hr’g Tr. at 626:9-18 (Schmidt).

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ESAs already can be administered once every two- or four-weeks, if a doctor is truly worried

about patient compliance, they already have the ability to prescribe products with an extended

dosing interval. Simply put, the “convenience” that peg-EPO’s Q2W or Q4W dosing may offer

is not an unmet need in the marketplace, nor is it sufficient to override our patent laws.121

Third, Roche’s advocacy also ignores that an extended regimen carries with it additional

complications. As evidenced by the testimony of the person charged with monitoring what the

drug does to the body (a pharmacologist), the person charged with treating the kidney patient (a

nephrologist), and the person charged with providing the drug (the head administrator in a

dialysis center), peg-EPO’s purported extended dosing regimen results in higher degrees of

hemoglobin variability and less control over hemoglobin levels.122 Roche’s public statements,

however, obscure this fact.123 Importantly, Roche’s own expert witness has published his

findings that higher degrees of hemoglobin variability are associated with negative

consequences.124 Roche attempts to direct the Court’s attention away from these facts, however,

120 Id. at 659:17-660:14 (Fishbane). 121 Note that many patients will be required to use Q2W dosing regimens, and Roche’s forecasts suggest that almost all ESRD patients may be converted back to Q2W dosing if bundling is implemented — making peg-EPO no more convenient than other FDA-approved dosing regimens. See RTX 131 (2007 MIRCERA Business Plan) at R11-000637998. 122 10/15/07 Trial Tr. at 2641:13-2643:23 (Benet); 12/6/07 Remedy Hr’g Tr. at 425:22-426:7, 433:2-439:15 (Chertow); 12/5/07 Remedy Hr’g Tr. at 344:9-345:13 (Lipps). 123 Compare RTX 26 (Levin publication) at fig.3 (presenting mean monthly hemoglobin values for MAXIMA, one of Roche’s Phase III clinical trials), with RTX 31 (presenting mean weekly hemoglobin values for the same study). The data show much more variability when the weekly hemoglobin values are plotted. See also 12/6/07 Remedy Hr’g Tr. at 439:7-442:12, 443:17-445:12 (Chertow). 124 RTX 39 (Yang publication) at 3164 (analyzing data from a large national cohort of hemodialysis patients, the authors, including Roche’s Dr. Fishbane, concluded “that greater hemoglobin variability is independently associated with higher mortality”). See also 12/6/07 Remedy Hr’g Tr. at 511:5-16 (Lubina).

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by relying on a purported “slower rate of rise” in hemoglobin levels.125 Taken as true, this

phenomenon does not speak to the medically acceptable hemoglobin rate of rise of currently

available ESAs126 and certainly does not address the real world issue confronted by dialysis

providers, like Fresenius, who want the better hemoglobin control that comes with a shorter

acting agent.127

But even assuming that peg-EPO provides some marginal convenience or some

ephemeral value in the form of choice despite only a demonstration of non-inferiority in clinical

trials, its availability does not outweigh our nation’s patent laws and the innovation they

encourage. There is no precedent supporting Roche’s request that the rights of a practicing

patentee be trampled in the name of convenience. In fact, several courts have held otherwise,

even regarding medical devices. In Schneider (Europe) AG v. Scimed Life Systems, Inc., the

court observed: “It is undoubtedly true that some physicians strongly prefer the [infringing

device] . . . and it may be the catheter of choice among physicians, but mere personal preference

alone does not justify denying an injunction.”128 A similar conclusion was reached in ALM

Surgical Equipment, Inc. v. Kirschner Medical Corp., where the court held that the “incentive to

engage in the toils of scientific and technological research” outweighed “inconvenience to

customers.”129

125 Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 16-17. 126 RTX 50 (Aranesp Label); RTX 53 (EPOGEN Label). 127 12/5/07 Remedy Hr’g Tr. at 344:9-18 (Lipps). 128 Schneider (Eur.) AG v. Scimed Life Sys., Inc., 852 F. Supp. 813, 851 (D. Minn. 1994). 129 ALM Surgical Equip., Inc. v. Kirschner Med. Corp., No. 6:89-1622-3, 1990 U.S. Dist. LEXIS 14584, at *49, *52-53 (D.S.C. Apr. 23, 1990); see also Shiley, Inc. v. Bentley Labs., Inc., 601 F. Supp. 964, 970 (C.D. Cal. 1985) (“[N]o credible evidence in the trial record supports any finding that either is objectively superior in performance or that either is defective or unsafe. . . . The evidence amounts to no more than a mere expression of preference.”).

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In truth, Roche asks this Court at Amgen’s and Medicare’s expense to allow Roche onto

the market so that it can increase its profits and those of select providers who are interested in

increased cost recovery.

b. There is no evidence that Roche’s product is clinically superior to established ESAs.

Roche’s peg-EPO, by its own representations to the FDA, is at best non-inferior in

efficacy to the currently available ESAs.130 For example, in its Integrated Summary of Efficacy,

Roche specifically reported to FDA that in its Phase III clinical trials, the data showed only that

Roche’s peg-EPO product was “non-inferior” and “comparable.”131 Indeed Roche admitted as

much in its 2005 negotiations with LDOs. As Roche’s former Vice-President of Anemia

Products noted in an email following her discussions with DaVita, “CERA would need to appeal

to the LDOs on economic factors” because “CERA’s phase III clinical trials are not powered to

demonstrate . . . significant clinical differentiation.”132

Similarly, Roche simply has no evidence that its product is safer.133 Rather, as set forth

in FDA’s approval letter and the European regulatory agency’s scientific discussion of the Roche

clinical trials,134 more studies are needed to understand the full spectrum of health and safety

issues presented by peg-EPO. This is because patients receiving peg-EPO are statistically more

likely to suffer from sudden death throughout the study, death during the titration phase of the

study, gastrointestinal bleeding, and thrombocytopenia than patients receiving currently available

130 12/6/07 Remedy Hr’g Tr. at 426:23-427:5, 431:18-432:11 (Chertow); 512:2-8 (Lubina). 131 RTX 103 (Integrated Summary of Efficacy) at ITC-R-BLA-00040110. 132 RTX 108 (E-mail regarding economic considerations) at R001593762. 133 12/6/07 Remedy Hr’g Tr. at 512:2-8, 514:22-515:3 (Lubina). 134 See, e.g., RTX 4 (Mircera Label) at R008892361 (noting the increased likelihood of gastrointestinal bleeding in patients treated with peg-EPO); RTX 25 (11/13/07 Chertow Report) ¶¶ 12-15 (discussing the findings of the European Medical Association (EMEA)).

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ESAs.135

And, in stark contrast to Roche’s claim that peg-EPO provides a slower and steadier rate

of hemoglobin rise and control,136 as discussed above, even in the well-controlled environment

of clinical trials, the hemoglobin levels of patients receiving peg-EPO are more variable and

more likely to fall outside safe target ranges than patients receiving established ESAs.137 These

differences are significant. Roche’s expert has directly tied increased hemoglobin variability to

an increased likelihood of death.138 As Roche’s own clinical trials show, patients having one or

more excursions outside the target hemoglobin range were significantly more likely to suffer

from serious adverse events.139

F. A PERMANENT INJUNCTION IS NOT PRECLUDED BY ROCHE’S UNCLEAN HANDS OR PATENT MISUSE DEFENSES.

In its brief, Roche argues that Amgen is not entitled to an injunction because “Amgen has

committed misconduct in the ESA market which bears an ‘immediate and necessary relation to

the equity that [Amgen] seeks’ and amounts to unclean hands.’”140 While Roche did nothing to

develop these points at trial, Roche casts aspersions at Amgen regarding the following alleged

misconduct: (1) Amgen has entered into a long term agreement with Fresenius; (2) Amgen

promotes overdosing of ESAs; (3) Amgen offers multi-product rebates for Aranesp in oncology;

135 12/6/07 Remedy Hr’g Tr. at 451:23-460:4 (Chertow); 515:15-516:4 (Lubina); see also RTX 33 (Incidence of Specific Events). 136 Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 2, 16. 137 12/6/07 Remedy Hr’g Tr. at 433:2-439:15, 443:17-446:3, 451:3-22 (Chertow); 508:15-509:16, 510:13-511:16, 515:15-516:4 (Lubina); see also RTX 31 (Mean Dose and Mean Hemoglobin BA16739 Maintenance Study); RTX 33 (Incidence of Specific Events). 138 RTX 39 (Yang publication) at 3167, tbl.2 (showing that hemoglobin variability of greater than 0.5 g/dL results in a 15% increased likelihood of death, and that variability of greater than 1.5 g/dL results in a 53% increased likelihood of death). 139 12/6/07 Remedy Hr’g Tr. at 424:10-13, 433:2-439:15 (Chertow); 508:15-511:16 (Lubina).

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(4) Amgen has refused to guarantee discounts to customers and has notified them of their

potential infringement liability; and (5) Amgen withholds Aranesp discounts and products from

dialysis centers.141 But Roche failed to prove that Amgen has engaged in any actions that are

either unlawful or otherwise rise to the level of unclean hands or patent misuse.142 No evidence

has been submitted and no argument advanced that justifies denying Amgen’s request for an

injunction based on any actions Amgen has taken in the ESA marketplace.

The doctrine of unclean hands provides a defense to an otherwise valid legal claim only if

Roche first proves that Amgen has performed “some unconscionable act,” which is an act that is

“offensive to the dictates of natural justice.”143 Courts have applied the doctrine of unclean

hands in patent cases involving fraud during the procurement or enforcement of a patent-in-suit

or where litigation misconduct was involved.144 Roche must next demonstrate that the alleged

unconscionable act bears an “immediate and necessary relation to the equity that [Amgen] seeks

in respect of the matter in litigation,” that is, the act must “affect the equitable relations between

140 Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 30. 141 Id. at 30-33; Roche’s Opp’n to Amgen’s Bench Mem. to Prevent Roche from Introducing Alleged Antitrust Evidence to Supp. an Unclean Hands or Patent Misuse Defense (D.N. 1586) at 1-5. See infra Part II.F.3 (discussing Roche’s abandonment of its tying allegations in response to Amgen’s Bench Mem. Regarding the Inapplicability of Patent Misuse to the Facts of this Case (D.N. 1632) [hereinafter Amgen’s Patent Misuse Mem.]. 142 See Amgen’s Patent Misuse Mem. for a recitation of the law of patent misuse and the reasons why such defense should not preclude the issuance of an injunction. This brief primarily focuses on Roche’s unclean hands theory. Amgen also respectfully refers the Court to Amgen’s Mem. of Law in Supp. of Amgen’s Mot. for Summ. J. on Roche’s Antitrust and State Law Countercl. (D.N. 519). 143 Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245 (1933) (quoting Deweese v. Reinhard, 165 U.S. 386, 390 (1897)). 144 See, e.g., Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 819 (1945); Aptix Corp. v. Quickturn Design Sys., Inc., 269 F.3d 1369, 1374-75 (Fed. Cir. 2001).

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the parties in respect of something brought before the court for adjudication.”145 Prior cases

have held that in the context of a patent infringement suit, the “immediate and necessary

relation” limitation means that a plaintiff must “have engaged in misconduct which bears upon

the validity of the patent or defendant’s infringement of the patent for the unclean hands defense

to be available.”146 Roche cites to no case law in support of its position that marketplace

activities of the type alleged can justify denying an injunction. But more importantly, as

described in further detail below, any actions that Amgen has taken have been completely lawful

and within its rights as a patent owner. Amgen has committed no misconduct and certainly

nothing that approaches an unconscionable act regarding the marketplace for ESAs.

1. Amgen’s agreement with Fresenius — voluntarily negotiated and entered into without coercion — is lawful and does not support Roche’s unclean hands defense.

Roche alleges that it is inequitable for Amgen to receive injunctive relief because Amgen

“artificially maintains high prices,” and defers competition and price decreases through its five-

year Fresenius agreement.147 At bottom, Roche complains that Amgen’s agreement with

Fresenius constitutes an unconscionable act sufficient to prohibit issuance of an injunction.

145 Keystone, 290 U.S. at 245. In contrast, Roche suggests that unclean hands “has nothing to do with the rights or liabilities of the parties” and that the defendant “need not be damaged” to assert unclean hands. See Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 31 n.101; Roche’s Opp’n to Amgen’s Bench Mem. to Prevent Roche From Introducing Alleged Antitrust Evidence to Supp. an Unclean Hands or Patent Misuse Defense (D.N. 1586) at 2. Roche relies extensively on non-binding precedent in Gaudiosi v. Mellon, 269 F.2d 873, 882 (3d. Cir. 1959), for this proposition, but fails to disclose that the Third Circuit has limited its own holding in Gaudiosi: “In Gaudiosi, this court applied the doctrine of unclean hands in a proxy contest context. . . . [w]hile we explicitly stated that no injury needed to be shown, it is crystal clear from the facts of the case that Gaudiosi’s misconduct—the intimidation of shareholders—was directly related to the case before the court, which concerned the validity of a corporate election.” In re New Valley Corp., 181 F.3d 517, 526 (3d Cir. 1999) (emphasis added). 146 Southwire Co. v. Essex Group, Inc., No. 81 C 3313, 1983 U.S. Dist. LEXIS 16724, at *3 (N.D. Ill. May 24, 1983). 147 Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 32-33.

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As more fully set forth in Amgen’s Patent Misuse Memo,148 however, there can be no

dispute that Fresenius entered into its agreement with Amgen because it preferred EPOGEN.149

Based on this fact alone, Roche cannot prove that Amgen’s agreement with Fresenius can legally

be considered an unconscionable act. Roche therefore focuses on the agreement’s “sole source”

provision, arguing that “there is no reason to require Fresenius to make a sole source

commitment.”150 This argument ignores that Fresenius desired a long-term contract with Amgen

because it preferred EPOGEN over peg-EPO for its dialysis patients,151 not because Amgen

required it or otherwise coerced Fresenius into an agreement. As set forth in Amgen’s Patent

Misuse Memo, Roche’s assertion that Amgen’s conduct artificially maintains high price fares no

better because all of the evidence shows that EPOGEN’s ASP has actually decreased over

time.152 In contrast, the evidence shows that Roche intends to enter the marketplace at a price

higher than the EPOGEN’s ASP to maximize cost-recovery for ESA providers and profits for

itself.153

Nor can Roche demonstrate how Amgen’s voluntarily negotiated contract with a willing

third party bears any “immediate and necessary relation” to the claim at issue or otherwise

148 Amgen’s Patent Misuse Mem. (D.N. 1632). 149 See 12/5/07 Remedy Hr’g Tr. at 318:4-320:9, 323:10-16, 344:4-346:15 (Lipps); 3/30/07 McGorty Dep. Tr. at 52:13-21 (the McGorty deposition testimony cited herein was submitted to the Court by Roche as remedy-related deposition designations on 12/14/07). Mr. McGorty is Fresenius Medical Services’ Vice President of Finance and Administration. 150 Roche’s Resp. to Amgen’s Bench Mem. Regarding the Inapplicability of Patent Misuse to the Facts of This Case (D.N. 1642) at 7 [hereinafter Roche’s Resp. to Amgen’s Patent Misuse Mem.]. 151 12/5/07 Remedy Hr’g Tr. at 319:8-320:9, 323:10-16, 344:4-346:15 (Lipps). 152 See Amgen Patent Misuse Mem. (D.N. 1632) at 2, 9-10. 153 See infra Part III.A.

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affects the equities between the parties before this Court.154 Roche attempts to satisfy its burden

by pointing to overlapping subject matter, arguing that Amgen’s alleged misconduct involves

“the ESA market” and that Amgen’s patents also relate to ESA products.155 The First Circuit,

however, has held that this argument fails as a matter of law: “The mere fact that the

‘misconduct’ arises from some overlapping facts is not enough.”156

2. Amgen does not and cannot incentivize overuse of ESAs.

Roche’s next allegation is that Amgen acted untoward because the Fresenius agreement

did not include a contractual “bounty to encourage lack of over-administration.”157 But Roche’s

conclusion that Fresenius “is more likely to over-administer ESA’s than if those contractual

incentives did not exist”158 is not only unsubstantiated by any evidence, but ignores the

countervailing evidence of disincentives for over-utilization provided by the government’s strict

reimbursement policy. As described by Fresenius’s CEO, Mr. Lipps, the government withholds

reimbursement for ESAs if patients’ hematocrit levels remain too high.159 Under these

circumstances, Amgen’s purported failure to provide another disincentive to the over-utilization

of its products is hardly an unconscionable act offensive to the dictates of natural justice.160

154 See Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245 (1933); see also Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814-15 (1945); Bio-Tech. Gen. Corp. v. Genentech, Inc., 80 F.3d 1553, 1565 (Fed. Cir. 1996). 155 Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 30-33. 156 Dr. José S. Belaval, Inc. v. Perez-Perdomo, 488 F.3d 11, 15-16 (1st Cir. 2007). 157 Roche’s Resp. to Amgen’s Patent Misuse Mem. (D.N. 1642) at 9. 158 Id. 159 12/6/07 Remedy Hr’g Tr. at 413:2-6 (Lipps). 160 Roche’s theory is counter to the public interest in the enforcement of valid contractual agreements. In fact, by taking issue with the contractual terms of a contract (to which it is not a party), Roche presumably asks this Court to take the extraordinary step of reforming a valid contract to include such a bounty. This represents an unprecedented and unwarranted stretch of the doctrine of unclean hands. Allan Block Corp. v. E. Dillon & Co., No. 04-3511, 2005 U.S.

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3. Amgen’s pro-competitive, multi-product rebates in oncology do not constitute unclean hands or patent misuse.

Roche has re-packaged its prior bundling contentions161 by arguing that Amgen “refuses”

to grant rebates on Aranesp to oncology providers unless they also agree to purchase Amgen’s

white-blood cell related products, Neulasta® and NEUPOGEN®.162 Amgen does provide lawful

discounts in oncology, but that fact has no bearing on an unclean hands defense because peg-

EPO is not approved by FDA for use in any oncology indication.163 The law is clear that this

cannot be the basis for unclean hands because the unclean hands doctrine does not apply to

conduct which is not related to the merits of the controversy between the parties.164 Indeed,

Roche’s approved label specifically includes a “black box” warning against use in oncology

since there was a statistically higher incidence of death for oncology patients using peg-EPO

than established ESAs.165

Dist. LEXIS 13566, at *25-26 (D. Minn. July 1, 2005) (“[T]he public interest is served by upholding the parties’ contractual obligations.”), aff’d without op., 170 Fed. Appx. 130 (Fed. Cir. 2006). 161 Until the remedy phase of trial, Roche’s antitrust claims and unclean hands defense focused on allegations that Amgen was impermissibly leveraging its patents covering its white-blood cell products to extract monopoly prices for Aranesp. See, e.g., Roche’s Answer and Countercls. to Pl.’s Compl. (D.N. 140) ¶ 56; Roche’s First Am. Answer and Countercls. to Pl.’s Compl. (D.N. 344) ¶ 75. Roche has belatedly flipped this argument on its head by arguing that Amgen’s practices extend its EPO patents into the white-blood cell-related product market in an attempt to conform its allegations to the elements required to show patent misuse. While Roche should not be allowed to change its allegations at the thirteenth hour, taken either way, Roche cannot meet its burden of showing that Amgen’s acts derive their force from the asserted EPO claims. 162 Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 32-33. 163 Roche’s oncology clinical trials were terminated due to safety concerns. RTX 4 (MIRCERA Label) at R008892352. 164 See Dr. José S. Belaval, Inc. v. Perez-Perdomo, 488 F.3d 11, 16 (1st Cir. 2007). 165 RTX 4 (MIRCERA Label) at R008892353 (“Cancer: Mircera is not intended for the treatment of anemia due to cancer chemotherapy. A dose-ranging study of Mircera was terminated early because of significantly more deaths among patients receiving Mircera than another ESA.”).

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In the context of an unclean hands defense, Roche fails to establish that Amgen’s multi-

product rebates in oncology have in any way dirtied Amgen’s hands. The challenged discounts

are not improper because: (1) they are all above cost; (2) hospitals are not required to purchase

any Aranesp from Amgen; and (3) Amgen does not bar its customers from purchasing competing

products. The contracts complained of presented an option to customers by which they could

qualify for additional rebates on certain products if they meet or exceed a percentage-based

purchase threshold for Aranesp.166 Again, this hardly implicates conduct that is offensive to the

dictates of natural justice. Roche simply transforms the legitimate acts of a patentee “into an

open-ended pitfall for patent-supported commerce.”167

Roche also fails to demonstrate how offering pro-competitive multi-product rebates in

oncology to willing third parties bears any “immediate and necessary relation” to the claim at

issue or affects the equities between the parties before this Court.168 Moreover, Roche ignores

that NEUPOGEN, Neulasta, and Aranesp have been separately patented.169 Amgen’s actions are

all within the legitimate rights of a patent owner to market its various products, and Roche has

made no showing to the contrary.

4. Amgen is entitled to enforce Dr. Lin’s Patents and is not obligated to guarantee discounts in perpetuity.

Roche alleges that Amgen “threatened” customers by explaining their potential

infringement liability and informing them that they would not be guaranteed the same contract

166 3/28/07 Manak Dep. Tr. at 20:2-21:4 (the Manak deposition testimony cited herein was submitted to the Court by Roche as remedy-related deposition designations on 12/14/07). 167 C.R. Bard, Inc. v. M3 Sys., Inc., 157 F.3d 1340, 1373 (Fed. Cir. 1998). 168 See Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245 (1933); see also Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814-15 (1945); Bio-Tech. Gen. Corp. v. Genentech, Inc., 80 F.3d 1553, 1565 (Fed. Cir. 1996).

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price for EPOGEN if, after dropping EPOGEN for peg-EPO, they returned to negotiate a new

contract with Amgen. Specifically, of the hundreds of small dialysis organizations (SDOs) in the

United States, administrators from two, Tracey Mooney and Maureen Michael, testified that

Leslie Mirani, Amgen’s Vice President of Sales, told them that their clinics may not receive the

same contract if they switched to another product and came back, and that they could be subject

to legal liability if they switched to peg-EPO.170

As an initial matter, the fact that purchases of peg-EPO could create infringement liability

was independently confirmed by an attorney with whom Ms. Michael spoke.171 Again, these

actions are entirely lawful as Amgen must be allowed to make its rights known to all potential

infringers.172 Nor has Roche demonstrated how Amgen’s notifying third parties of their

potential liability bears an “immediate and necessary relation” to the equity sought before this

Court. A threat to third-party retailers or competitors (even where a communication did

constitute a threat) is not grounds for an unclean hands defense where the competitive product

was held to infringe valid and enforceable patent claims.

169 See, e.g., U.S. Patent Nos. 5,580,755 (covering NEUPOGEN and Neulasta), 5,824,784 (covering Neulasta) and 7,217,689 (covering Aranesp). 170 3/27/07 Mooney Dep. Tr. at 21:23-22:9; 3/9/07 Michael Dep. Tr. at 43:9-24, 45:16-23 (the Mooney and Michael deposition testimony cited herein was submitted to the Court by Roche as remedy-related deposition designations on 12/14/07). 171 3/9/07 Michael Dep. Tr. at 62:11-15, 62:20-64:3, 65:5-66:6; 3/20/07 Torley Dep. Tr. at 127:12-25; 4/2/07 Mirani Dep. Tr. at 129:20-130:5, 155:19-156:5 (the Torley and Mirani deposition testimony cited herein was submitted to the Court by Roche as remedy-related deposition designations on 12/14/07). 172 See Virginia Panel Corp. v. MAC Panel Co., 133 F.3d 860, 869 (Fed. Cir. 1997) (“[A] patentee must be allowed to make its rights known to a potential infringer so that the latter can determine whether to cease its allegedly infringing activities, negotiate a license if one is offered, or decide to run the risk of liability and/or the imposition of an injunction.”).

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Similarly, Amgen’s good-faith attempt to communicate with its customers about potential

infringement liability does not constitute patent misuse as a matter of law.173 The statements

made by Ms. Mirani were not threats at all, but factually correct statements made in an effort to

address customer concerns.174 Furthermore, Roche presented no evidence that any of Amgen’s

alleged statements adversely affected a single customer or otherwise had any anticompetitive

effect. There is also no basis for Roche’s argument that a failure to guarantee discounts in

perpetuity constitutes an unconscionable act. Amgen’s refusal to guarantee future discounts and

pricing is a matter of contract law based on the great uncertainty about what will happen to

Amgen’s pricing if peg-EPO comes to the U.S. marketplace.175 Still, Amgen has never refused

to sell its patented goods to any customer who also wishes to purchase Roche’s infringing

ESA.176 Roche cannot demonstrate how Amgen’s failure to guarantee discounts bears an

immediate and necessary relation to this case.

5. Amgen does not withhold products from dialysis providers

Roche alleges that Amgen “effectively” withholds Aranesp from dialysis providers and,

therefore, the public cannot be assured access to a longer-lasting ESA.177 Roche’s argument is

173 See 35 U.S.C. § 271(d)(3) (2007) (“No patent owner otherwise entitled to relief from infringement or contributory infringement of a patent should . . . deemed guilty of misuse . . . by reason of his having . . . sought to enforce his patent rights against infringement or contributory infringement.”). 174 4/2/07 Mirani Dep. Tr. at 125:12-126:11, 126:24-127:22, 129:6-130:5, 155:2-7, 155:19-156:8. In Roche’s Resp. to Amgen’s Patent Misuse Mem. (D.N. 1642), Roche characterizes Amgen’s communications as threats to its customers of having to pay “list prices,” without the benefit of rebates or discounts. The evidence does not support this characterization. 175 3/20/07 Torley Dep. Tr. at 180:17-182:7; 11/15/07 Remedy Hr’g Tr. at 38:9-39:7 (Sharer). 176 See 3/20/07 Torley Dep. Tr. at 180:17-182:7; 11/15/07 Remedy Hr’g Tr. at 38:9-39:7 (Sharer). 177 Roche’s Resp. to Amgen’s Patent Misuse Mem. (D.N. 1642) at 13; Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 31.

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factually incorrect. Both of Amgen’s ESAs — EPOGEN and Aranesp — are available to all

dialysis providers.178 Lacking evidence and legal precedent, Roche next argues that Amgen

“effectively” refuses to market Aranesp presumably because its current discounts are not to

Roche’s satisfaction.179 This, however, is easily distinguishable from cases where a patentee

refuses to practice its invention to the detriment of the public.180

In summary, Roche’s assertions of misconduct were not proven at trial and form no basis

for denying an injunction to Amgen to prohibit Roche’s further infringement.

III.

RESPONSE TO ROCHE’S JANUARY 28, 2008 PROPOSAL

More than a month and a half after the injunction trial was completed (and more than two

months after the Court initially requested one), Roche filed a “proposal for economic terms”

under which it believes the Court should allow Roche to market its infringing EPO product in the

United States. This belated submission was not a serious proposal, however, because the terms

were grossly inadequate to compensate Amgen for Roche’s infringement, Roche’s peg-EPO still

does not meet any unmet medical need, and it is remains the case that Roche’s peg-EPO would

be priced such that it will cost Medicare more than it is currently paying for Amgen’s EPOGEN.

Except for a slightly lower launch price than it had previously planned, Roche’s Proposal

178 4/2/07 Kogod Dep. Tr. at 26:18-27:7, 28:10-18 (the Kogod deposition testimony cited herein was submitted to the Court by Roche as remedy-related deposition designations on 12/14/07). Mr. Kogod is the President of DaVita’s Western Operating Group. See also 11/15/07 Remedy Hr’g Tr. at 44:9-45:6 (Sharer). 179 Contrasting Roche’s allegations regarding the Fresenius agreement with its arguments here, it is clear that Roche’s theories are inconsistent and, indeed, nonsensical. Roche simultaneously argues that Amgen’s rebates to Fresenius constitutes a “bribe,” while faulting Amgen for not offering enough “essential rebates” to dialysis customers. Roche’s Resp. to Amgen’s Patent Misuse Mem. (D.N. 1642) at 1, 4. 180 See, e.g., Vitamin Technologists, Inc. v. Wis. Alumni Res. Found., 146 F.2d 941, 943-45 (9th Cir. 1945) (denying permanent injunction where patentee refused altogether to apply a new process of fortifying oleomargarine with vitamin D).

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changes nothing regarding the evidence presented to the Court during the trial; Roche will still

come in at a reimbursement advantage to Amgen’s EPOGEN (and Procrit which shares the same

ASP as EPOGEN) — thus allowing Roche to offer greater economic incentives to attract

customers — and the glide path analogy still describes the likely pricing scenario over time. If it

were otherwise, the Court should disregard Roche’s Proposal as coming too late and should

decide the injunction issue based on the evidence presented at trial rather than some

unsubstantiated and untested post-trial proposal by Roche.

While Roche waved its proposal in front of the press to generate attention, the real reason

for Roche filing it seems to be to alert the Court and Amgen that despite the jury verdict and

Court decisions to date upholding the patent as valid, enforceable, and infringed, Roche intends

to launch peg-EPO in the U.S. next month. Obviously, Roche is attempting to force its way onto

the market and cause immediate and irreparable harm to Amgen. Roche’s display of complete

disdain for the jury’s decision, this Court’s timely efforts, and Amgen’s validated patent rights

only reinforces the need for the issuance of an injunction at the earliest time possible to stop

Roche’s belligerent actions.

A. ROCHE’S PROPOSAL WOULD EXACT A HIGHER REIMBURSEMENT FROM MEDICARE.

Without providing any details of its analysis, Roche asserts that the savings to Medicare

under its Proposal “will be substantial, and easily in the billions of dollars.”181 As demonstrated

at trial, such assertions by Roche are completely without merit. Just as with its marketing plans

in place before trial, its recent “new” plan would still cost the government more than the current

expenditures on Amgen’s EPOGEN because both the price and dose of peg-EPO would be

181 Mem. In Supp. of Roche’s Proposal Pursuant to the Court’s Instruction of December 7, 2007 (D.N. 1651) at 2.

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higher than those for EPOGEN. According to Roche’s own documents and product label, even

under Roche’s new Proposal, peg-EPO’s use in dialysis will cost Medicare about 45% more than

EPOGEN.182 Consequently, Roche’s assertion that Roche’s Proposal will result in billions of

dollars in savings is completely unfounded.

Even though Roche is targeting dialysis providers and would be competing directly

against Amgen’s EPOGEN, Roche’s Proposal ties its launch price to the ASP of Aranesp, not to

EPOGEN.183 In so doing, Roche shows its true colors by obscuring the reality that peg-EPO

would cost Medicare up to 45% more than EPOGEN for the treatment of anemia in dialysis.

Dose conversion also drives a higher usage and higher costs for switching to peg-EPO

from EPOGEN. For example, taking the peg-EPO “starting doses” set forth in Roche’s FDA

label 184 and the average weekly EPOGEN dose (19,000 IUs per week), the cost of therapy for

peg-EPO under Roche’s Proposal would be approximately 45% higher than the weekly cost of

therapy for a patient currently receiving an EPOGEN dose of 19,000 IUs per week (the average

weekly EPOGEN dose).185 As further example, taking instead the dose conversion ratios

calculated by Dr. Lubina,186 if peg-EPO were utilized entirely on a once every four weeks

182 2/15/08 Bernheim Decl. ¶ 14; RTX 6 (MIRCERA WAC Pricing) at R10-004975068-69. 183 Roche’s Proposal for Entering the U.S. Market with Mircera, App. A (D.N. 1651-2) [hereafter Roche’s Proposal] (“[MIRCERA’s] per unit WAC would be calculated based on the conversion of monthly MIRCERA dosing to the equivalent monthly Aranesp dosing.”). While the real-world dose conversion ratio remains uncertain, Roche’s forecasts determined the peg-EPO-to-Aranesp relationship to be one-to-one on a weekly equivalent basis. See, e.g., RTX 6 (MIRCERA WAC Pricing) at R10-004975076 (“Selected conversion factor = 1 mcg CERA per 1 mcg Darbepoetin for Q4W.”); id. at R10-004975077 (“The more robust MIRCERA/Epoetin data validates the 1:1 Aranesp conversion ratio.”). 184 RTX 4 (MIRCERA Label) at R008892353-54. 185 2/15/08 Bernheim Decl. ¶ 14. 186 RTX 30 (5/11/07 Lubina Rebuttal Report) Ex. B at 8 (providing DCR estimates of 303 IU/mcg for Q2W dosing and 240 IU/mcg for Q4W dosing).

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(Q4W) dosing regimen, its cost of therapy would still be 28% higher than the cost of therapy

with EPOGEN.187 If peg-EPO were priced based on once every four week utilization, but

assumed to be utilized entirely on a once every two weeks (Q2W) dosing regimen, its cost under

Roche’s Proposal would still be higher than the cost of EPOGEN.188 Based on Dr. Lubina’s

dose conversion ratio estimates, peg-EPO under Roche’s Proposal would be more costly to

Medicare than EPOGEN, regardless of the proportion of Q2W versus Q4W usage.189 To be

sure, the exact premium will depend on how peg-EPO dosing translates from clinical trial to

clinical practice, but given the particular clinical trial exclusion criterion used in Roche’s clinical

trials and FDA’s recognition that its particular exclusion criteria was not representative of the

general patient population,190 the evidence suggests that Roche’s forecasted dose conversion

ratio underestimates the doses that would be required if the population tested in clinical trials

were representative of the patient population at large. Thus, rather than lowering cost to

Medicare, Roche is still seeking to set its price “as high as [it] can that payers will pay for and

then glide down given the regulatory scheme.”191

Evidence confirms that Roche comprehends, appreciates, and intends to exploit the

advantages conferred to new entrants under the current Medicare reimbursement system.192 As

Roche’s Vice President of Sales and Marketing admitted, Roche’s intent is to set its price “as

187 2/15/08 Bernheim Decl. ¶ 13. 188 Id. 189 Id. See supra Part II.E.3 (regarding the dialysis patient’s treatment regimen and the need, or lack thereof, of a product that can be given on an extended dosing regimen). 190 For example, because Roche excluded patients from its clinical trials with high CRP values, the FDA has required Roche to conduct additional post-marketing studies that include problematic CRP patients. RTX 4 (MIRCERA Label) at R008892348. 191 12/7/07 Remedy Hr’g Tr. at 570:6-8 (Senich). 192 See RTX 6 (MIRCERA WAC Pricing) at R10-004974846.

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high as [it] can that payers will pay for and then glide down given the regulatory scheme.”193

Roche’s Proposal does not do anything different.194 By setting its WAC at a price that is up to

45% greater than the ASP for EPO, Roche can still take advantage of the glide path.195

Additionally, Roche’s Proposal does not guarantee lower prices in the long term. Rather,

Roche’s Proposal is couched in language that promises only the possibility of savings.196 But

substantial savings are not likely. From Roche’s point of view, a “price increase can be good for

both providers and manufacturers in the long run,”197 and that excessive price competition would

result in an undesirable downward price spiral.198 To this end, Roche concluded, “we will not

discount competitively in order to gain share in the ESRD business.”199 Roche’s promises of the

possibility of savings to Medicare ring hollow in the face of all the evidence of record including

Roche’s own internal documents.

B. ROCHE’S PROPOSED 20% ROYALTY WILL NOT ADEQUATELY COMPENSATE AMGEN FOR EVEN ITS ECONOMIC LOSSES.

Like its initial WAC pricing offer, Roche proposes a 20% royalty rate on the net sales of

peg-EPO, without any economic support or justification. Clearly, there can be no justification.

Roche’s proposal is grossly inadequate to compensate Amgen for the harms it will face if Roche

is permitted to commercialize peg-EPO in the U.S., and it ignores that the law mandates that

193 12/7/07 Remedy Hr’g Tr. at 570:5-9 (Young, J.; Senich), 570:10-571:9 (Young, J.; Senich). 194 2/15/08 Bernheim Decl. ¶ 9. 195 Id. ¶¶ 10-15. 196 See Roche’s Proposal (“Roche will likely engage in contractual discounting to customers. . . . These discounts and the competition they will engender, coupled with the ASP reimbursement mechanism itself, will likely deliver lower net costs to providers and payers.”) (emphasis added). 197 RTX 115 (CERA update regarding ASP Reimbursement) at R001619971. 198 Id. at R001619973-974. 199 RTX 112 (CERA 5 Year Business Plan) at R000228626 (emphasis added); id. at R000228616 (“Roche will not discount to gain share with these chains.”).

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injunctions should be fashioned on “principles of equity to prevent the violation of any right

secured by patent,” (not make it profitable for the infringer to infringe), and that any damages

award must be “adequate to compensate for the infringement.”200 Roche’s only explanation for

the 20% royalty offer is that the amount is “about double that paid currently by Johnson &

Johnson for its Procrit product.” But as explained below, there are no comparisons between

Roche’s current position as an adjudged infringer and J&J’s position in 1985 when it licensed

non-competing and uncertain medical indications for EPO from Amgen.

Roche’s proposed 20% royalty grossly under compensates Amgen for even the most

immediate lost profits that Amgen will realize when a sale of peg-EPO displaces a sale of

EPOGEN or Aranesp and leaves wholly unanswered the harm to Amgen which is not amenable

to calculation with reasonable certainty. For example, using Roche’s expert’s calculations for

Amgen’s unit costs and profit margin, 201 for every sale of peg-EPO into dialysis Amgen will

lose its 89% profit margin and will receive only a 20% royalty from Roche on its net price

(whatever that may be).202 Assuming that EPOGEN and peg-EPO are priced equivalently on a

cost-of-therapy basis, Amgen will receive only 23% of the profits that it would have earned on

each unit but for Roche’s infringement.203 In contrast, Roche would keep approximately 77% of

the profits associated with each unit.204 Roche cites to no reason why it should be allowed to

infringe Amgen’s patents but capture three times the profit that Amgen would make. Roche has

done nothing to deserve such a windfall.

200 35 U.S.C. §§ 283-284 (2007) (emphasis added). 201 Roche’s expert, Mr. Elhauge, estimates that Amgen’s profit margin on EPOGEN is 89%. See RTX 42 (4/6/07 Elhauge Report) ¶ 41. 202 2/15/08 Bernheim Decl. ¶ 18. 203 Id. 204 Id.

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Roche’s reliance on the royalty provision in Amgen’s agreement with Ortho Biotech

(Johnson & Johnson’s subsidiary) and its offer to “double that paid currently by Johnson &

Johnson”205 is wholly inappropriate.206 The position of the parties and the development risks

associated with the products were radically different in 1985 as compared to today. In addition,

the structure of the relationship between Amgen and Ortho was fundamentally different than the

position of Roche today. At its most fundamental level, the Ortho Agreement is not a patent

license agreement. Rather, it is a product license agreement that grants to Ortho a limited license

to sell a particular product in a limited field of use. Ortho had the obligation to develop the

clinical basis for the use of EPO in non-dialysis settings. This is far different from the

unrestricted access that Roche is requesting to uses already established by both Amgen and

Ortho. Amgen did not license Ortho to compete with it in the dialysis indication but imposed on

Ortho the risk and the costs of developing EPO for non-competing uses. In contrast, years after

ESAs were established as the standard of care through the efforts and commitment of Amgen

and Ortho to prove their value, Roche seeks to compete directly with Amgen across all ESA

usage.

Roche also ignores the other consideration given to Amgen by Ortho. For example,

Ortho agreed to develop and expand indications in which EPO would be sold, share its

improvements with Amgen, and initially fund Amgen’s internal development efforts.207

Importantly, Ortho agreed that Amgen would be Ortho’s sole manufacturer, granting to Amgen

205 Roche’s Proposal (emphasis removed). 206 2/15/08 Bernheim Decl. ¶ 20. 207 RTX 22 (Amgen/Ortho Product License Agreement) at AM-ITC 00508749; RTX 46 (Amgen/Ortho Technology License Agreement) at AM-ITC 00508814-15, 8807-09.

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the benefits afforded by the economies of scale, as well as input in regulatory issues.208

The Amgen/Ortho product license was executed long-before EPOGEN or Procrit were

approved for sale by the FDA.209 When Amgen granted the limited license to Ortho, Amgen

was in its infancy as a corporation, and lacked experience with clinical trials, marketing and

distribution. Amgen was in need of capital in order to fund additional clinical trials; Ortho

agreed to provide capital, and agreed to incur risk for the possibility of a financial reward.210

Indeed, at the time Amgen and Ortho entered into its license, the IND for Epoetin alfa which

allowed testing in humans to begin had not even been filed. In contrast, Roche faces little

comparative risk. Blessed with hindsight and Amgen’s pioneering efforts, Roche knows that Dr.

Lin’s inventions are lucrative. It knows that EPO can be safely manufactured to treat patients

with anemia. It knows that there is a substantial market for treatment of anemia in the United

States. It knows all of these things because Amgen and Ortho took the risk to develop and

market Dr. Lin’s inventions.211

208 11/15/07 Remedy Hr’g Tr. at 34:20-35:3 (Sharer); RTX 22 (Amgen/Ortho Product License Agreement) at AM-ITC 00508764. 209 The license agreement was executed on Sept. 30, 1985. RTX 22 (Amgen/Ortho Product License Agreement) at AM-ITC 00508736. The product license application for Epoetin alfa (EPOGEN) was submitted to FDA on October 30, 1987, and was approved by the FDA on June 1, 1989. See, e.g., 10/1/07 Trial Tr. at 1955:13-22 (Browne). 210 11/15/07 Remedy Hr’g Tr. at 34:1-11 (Sharer); RTX 46 (Amgen/Ortho Technology License Agreement) at AM-ITC 00508806-09, 8814-15. 211 By comparing its Proposal to the Ortho royalty, Roche also ignores the other consideration given to Amgen by Ortho. For example, Ortho agreed to develop and expand upon the potential EPO markets, share its improvements with Amgen, and initially fund Amgen’s internal development efforts. 11/15/07 Remedy Hr’g Tr. at 34:1-11 (Sharer); RTX 46 (Amgen/Ortho Technology License Agreement) at AM-ITC 00508806-09, 8814-15. Importantly, Ortho agreed that Amgen would be Ortho’s sole manufacturer, granting to Amgen the benefits afforded by the economies of scale, as well as input in regulatory issues. 11/15/07 Remedy Hr’g Tr. at 34:20-35:3 (Sharer); RTX 22 (Amgen/Ortho Product License Agreement) at AM-ITC 00508764; 2/15/08 Bernheim Decl. ¶ 20.

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C. ROCHE IS ASKING THE COURT TO TAKE THE PROFITS OF AMGEN, THE PROVEN INNOVATOR, AND AWARD THEM TO ROCHE FOR ITS INFRINGEMENT — ALL IN THE NAME OF THE PUBLIC INTEREST.

Permitting Roche to commercialize peg-EPO in the U.S. before Dr. Lin’s Patents expire

allows Roche to enjoy the benefits of the patents at Amgen’s expense. Roche will not gain share

by significantly expanding the demand for ESAs in the treatment of anemia of chronic renal

failure (the only indication for which peg-EPO is approved); sales gained by Roche will be taken

from Amgen (or Ortho, Amgen’s licensee).212

Roche’s Proposal ignores that what it is asking the Court to do is punish Amgen and

encourage copyists like Roche — a result that is the 180° opposite of the purpose of an

injunction. As Roche’s witness, Mr. Elhauge, testified at trial, for the $500 million in ESRD

savings he says Medicare will receive, Amgen will lose $3 billion, and Roche will gain $2.5

billion.213 Nothing in Roche’s Proposal changes this fundamental dynamic. Any Medicare

savings would be based on losses to Amgen. Such an outcome rewards Roche for infringing

Amgen’s patents, at Amgen’s expense.214 Roche is asking this Court to take Amgen’s rightful

profits and award them to Roche for its infringement — all in the name of the public interest.

That result in no way reflects an appropriate view of the public interest. The hope,

dream, or desire to reduce health care spending while laudable is not an appropriate factor to

consider in weighing the public interest. And even if it were, it cannot possibly outweigh the

public interest in encouraging innovation reflected in our nation’s Constitution and our patent

laws.

IV.

CONCLUSION

212 11/15/07 Remedy Hr’g Tr. at 102:10-103:5 (Bernheim). 213 12/7/07 Remedy Hr’g Tr. at 672:4-673:12 (Elhauge). 214 2/15/08 Bernheim Decl. ¶¶ 18-19.

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Amgen has shown that each of the four factors considered under eBay favor issuance of a

permanent injunction and that Roche’s allegations of unclean hands and patent misuse are

without merit. As such, Roche should be permanently enjoined from commercializing its

infringing peg-EPO product in the United States. Under the facts before the Court, any other

remedy would only encourage infringement rather than deter and would thereby disserve the

principles underlying injunctions.

Respectfully Submitted, AMGEN INC., By its attorneys, _/s/ Michael R. Gottfried _______

Of Counsel: MICHAEL R. GOTTFRIED (BBO#542156) D. DENNIS ALLEGRETTI (BBO#545511) STUART L. WATT PATRICIA R. RICH (BBO#640578) WENDY A. WHITEFORD DUANE MORRIS LLP MONIQUE L. CORDRAY 470 Atlantic Avenue, Suite 500 DARRELL G. DOTSON Boston, MA 02210 KIMBERLIN L. MORLEY Telephone: (857) 488-4200 ERICA S. OLSON Facsimile: (857) 488-4201 AMGEN INC. [email protected] One Amgen Center Drive Thousand Oaks, CA 91320-1789 LLOYD R. DAY, JR. (pro hac vice) (805) 447-5000 DAY CASEBEER MADRID & BATCHELDER LLP 20300 Stevens Creek Boulevard, Suite 400 Cupertino, CA 95014 Telephone: (408) 873-0110 Facsimile: (408) 873-0220

WILLIAM GAEDE III (pro hac vice) McDERMOTT WILL & EMERY 3150 Porter Drive Palo Alto, CA 94304 Telephone: (650) 813-5000 Facsimile: (650) 813-5100 KEVIN M. FLOWERS (pro hac vice) MARSHALL, GERSTEIN & BORUN LLP

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233 South Wacker Drive 6300 Sears Tower Chicago IL 60606 Telephone: (312) 474-6300 Facsimile: (312) 474-0448

February 19, 2008

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CERTIFICATE OF SERVICE

I hereby certify that this document, filed through the ECF system will be sent electronically to the registered participants as identified on the Notice of electronic filing and paper copies will be sent to those indicated as non-registered participants. /s/ Michael R. Gottfried Michael R. Gottfried

[email protected]

901658_4 1


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