Written By: Joanna T. Brougher, Esq., MPH

Boylan, Brown, Code, Vigdor & Wilson, LLP

Rochester, NY

A growing focus in the healthcare industry is the development of combination products.  Combination products, as their name suggests, are products that are composed of more than one component.  They usually include some combination of medical devices, biologics and drugs that are physically or chemically integrated to create one overall product.  By combining multiple components, combination products are able to provide patients with more accurate and efficient treatments while carrying fewer side effects.

Despite their rapid growth and importance in the market, combination products face unique challenges in obtaining patent protection, potentially resulting in market entry delay and revenue loss.  A well-developed and comprehensive patent strategy is therefore necessary to direct the innovative medical products through the patent process and onto the market.

Expanding Market for Combination Products

The market for combination products has nearly doubled in the last five years. With an annual growth rate of about 14 percent, the market for combination products has grown to an estimated $10 billion in 2010. This growth can be primarily attributed to developments in drug-delivery technologies, particularly in the field of cardiology. In cardiology, the treatment of cardiovascular diseases has been revolutionized by the introduction of drug-eluting stents. Drug-eluting stents use a metal stent to deliver a drug specifically to the site of treatment. With a U.S. market estimated to be around $5 billion in 2006, drug-eluting stents represent nearly ninety percent of the overall market value of combination products. While combination products span across a vast number of medical specialties, cardiology continues to be the primary driver of market growth.

Developing a Strong Patent Portfolio

In today’s challenging economic climate, a strong patent portfolio is crucial to a company’s growth and survival by providing numerous business advantages. Among these business advantages are securing venture capital funding and gaining leverage for partnerships with other companies.

Developing a strong portfolio first requires patenting each component of the combination product plus the combination itself.  For drug-eluting stents, for instance, this means patenting the stent, the drug coating, and the stent plus the drug coating combination. By patenting each component plus the combination, a company can protect itself from direct competitors, such as physicians or end users of the combination product, as well as indirect competitors, such as manufacturers of the separate components. In addition to patenting each component and the combination, companies should further expand their patent coverage to cover other aspects of the combination product, such as compounds, diagnostics, therapeutics, methods of treatment, use, and manufacture, to name a few.  Incremental improvements to the technology should also be protected to ensure the broadest possible coverage for the technology. By expanding coverage, companies will not only carve out space in the market, they will also be better able to block competitors from designing around the technology.

While developing a comprehensive patent portfolio is critical to gaining a competitive edge in the market, it is equally important to determine whether a company is free of third-party patents. The existence of a third-party patent could prevent a company from practicing its own invention. Companies dealing with combination products face unique challenges when making this determination because the presence of a third-party patent having patent claims directed to even one component of the combination may constrain a company’s ability to produce the combination product. In the above example, if a third-party patent to a stent is found, then the drug-eluting stent is also found to infringe that third-party patent. To avoid infringing the stent patent, the company may need to either design around the stent, or may need to license the stent from the third-party patent owner. Due to the potential need to change the product, it is important for such a determination to be made early on in the research and development stage and before substantial resources are spent.

For companies entering into partnerships or joint ventures, issues surrounding ownership of the combination product may also emerge.  These issues may arise when the combination product incorporates components that are jointly developed and manufactured by separate companies.  For example, one company may claim ownership of the device and a second company may claim ownership of the drug or biologic. These issues may be problematic because patents bestow certain rights on their co-owners, such as the ability to unilaterally license a patent without any obligation to share royalties and without consulting the other owner.  To minimize the likelihood of disputes arising during the course of a relationship, companies should resolve potential ownership issues early on in the process. Ownership disputes can be resolved by assigning patent rights entirely to one party or jointly between the parties, or alternatively by exclusive or non-exclusive licensing of the patent rights.

Conclusion

With a promise of advancing medical technology and healthcare, the market for combination products will continue to grow and expand.  A careful patent strategy can help address hurdles unique to combination products and ensure success in this growing market.

For more information on Boylan Brown, please visit boylanbrown.com the International Society of Primerus Law Firms.