UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`APOTEX CORP.,
`Petitioner
`
`v.
`
`ALCON RESEARCH, LTD.,
`Patent Owner.
`
`Case IPR2013-00428
`U.S. Patent No. 8,268,299 B2
`
`DECLARATION OF HENRY GRABOWSKI, Ph.D.
`
`1
`
`Exhibit 1037
`ARGENTUM
`
`000001
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`APOTEX CORP.,
`Petitioner
`
`v.
`
`ALCON RESEARCH, LTD.,
`Patent Owner.
`
`Case IPR2013-00428
`U.S. Patent No. 8,268,299 B2
`
`DECLARATION OF HENRY GRABOWSKI, Ph.D.
`
`1
`
`Exhibit 1037
`ARGENTUM
`
`000001
`
`
`
`TABLE OF CONTENTS
`
`I.
`
`II.
`
`III.
`
`Introduction ...................................................................................................... 3
`A. Qualifications ........................................................................................ 3
`B. Assignment ............................................................................................ 5
`C.
`Summary of Opinions ........................................................................... 9
`TRAVATAN Z® Is a Commercial Success ................................................... 11
`
`The Glaucoma Market and Ophthalmic Prostaglandin Analogs ........ 11
`A.
`Indicators of Commercial Success ...................................................... 14
`B.
`Factors Underlying the Commercial Success of TRAVATAN Z® ............... 18
`TRAVATAN Z®’s Patented Features ................................................. 18
`A.
`B. Alcon’s Promotion of TRAVATAN Z® Is Comparable to That of
`Other Branded Ophthalmic Prostaglandin Analogs ...................................... 22
`1.
`Marketing and Promotional Activities in the Pharmaceutical
`Industry ................................................................................................ 22
`The Extent of Promotional Activities for TRAVATAN Z® ..... 23
`2.
`
`2
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`000002
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`I, Henry Grabowski, hereby declare as follows:
`
`Introduction
`
`I am over the age of eighteen (18) and otherwise competent to make this
`
`I.
`
`1.
`
`declaration.
`
`2.
`
`I understand that the Patent Trial and Appeal Board has granted Apotex
`
`Corp.’s (“Apotex”) petition to institute this Inter Partes Review (“IPR”) regarding
`
`claims 1–28 of United States Patent No. 8,268,299 (the “’299 patent”) on
`
`obviousness grounds.
`
`A. Qualifications
`I am currently Professor Emeritus of Economics and the Director of the
`
`3.
`
`Program in Pharmaceuticals and Health Economics at Duke University. I received
`
`my Bachelor of Science degree in engineering physics from Lehigh University in
`
`1962. In 1967, I obtained a doctorate in economics from Princeton University.
`
`My academic and research specialties are in the pharmaceutical industry—health
`
`economics, economics of innovation, and government regulation.
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`4.
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`I have studied the economics of the pharmaceutical industry over much of
`
`my career, and I have published numerous articles and books on this industry. I
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`created a graduate course at Duke on economics and policy issues in the
`
`pharmaceutical industry. Under a series of grants from the National Science
`
`Foundation, I have examined the economics of pharmaceutical research and
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`3
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`
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`development (“R&D”) and the effect of various government policy actions on drug
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`innovation. I have testified several times before Congressional committees in the
`
`United States on pharmaceutical industry issues. For example, since 1994, I have
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`testified on issues involving effective patent life and generic competition in
`
`pharmaceuticals, generic biologics, the Clinton Administration’s health reform
`
`legislation, and the federal government’s policy toward children’s vaccines.
`
`5.
`
`I have been an advisor and consultant to the National Academy of Sciences,
`
`Institute of Medicine, Federal Trade Commission, General Accounting Office, and
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`Office of Technology Assessment. I have also held visiting scholar appointments
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`at the International Institute of Management in Berlin, Germany, Health Care
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`Financing Administration in Washington, D.C., the Office of Health Economics in
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`London, and the Centre for Medicines Research in London. Until its acquisition
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`by Gilead Sciences in 2003, I served on the Board of Directors of Triangle
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`Pharmaceuticals, Inc., a development-stage company that specialized in antiviral
`
`drug therapies.
`
`6.
`
`I have done extensive research on the economics of competition in the
`
`pharmaceutical industry, including the role of patents and the importance of R&D.
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`I have also performed several studies on pharmaceutical R&D costs and profits.
`
` The Congressional Budget Office has used my work in this regard to analyze the
`
`effects of the Drug Price Competition and Patent Term Restoration Act (“Hatch-
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`4
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`000004
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`
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`Waxman Act”) on R&D returns and to analyze the proposed changes associated
`
`with the Health Security Act of 1993.
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`7.
`
`Exhibit AL 2008 is a copy of my curriculum vitae, which includes a more
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`detailed description of my education and professional experience, as well as a list
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`of my publications from the last forty years.
`
`B. Assignment
`I have been retained by Williams & Connolly LLP on behalf of Alcon
`
`8.
`
`Research, Ltd. (“Alcon”) to serve as an expert witness in this action.
`
`9.
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`In particular, I have been asked to opine on whether Alcon’s drug,
`
`TRAVATAN Z®, is a commercial success, and if so, to address the factors
`
`underlying its commercial success, including whether there is a nexus between its
`
`commercial success and the features of the claimed invention. I have also been
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`asked to opine on whether Alcon’s promotional expenditures on TRAVATAN Z®
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`are in line with that of other competing products.
`
`10.
`
`In connection with the opinions and conclusions contained within this
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`declaration, listed below are the documents that I have reviewed and considered or
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`created (based on data from IMS Health and Encuity Research, which I understand
`
`are being provided to Apotex) in connection with the opinions and conclusions
`
`contained within this declaration. I have also relied on my training, my years of
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`
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`5
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`experience as an economist, my regular review and knowledge of the economic
`
`literature, and presentations at academic and industry conferences.
`
`Paper or
`Exhibit No. Description
`Apotex’s Petitions for Inter Partes Review in IPR2013-00428,
`2
`-00429, and -00430
`
`7 (in 00428
`and 00429);
`8 (in 00430)
`
`8 (in 00428
`and 00429);
`9 (in 00430)
`2009
`
`2021
`
`2022
`
`2023
`
`2024
`
`2025
`
`2026
`
`2027
`
`
`
`Alcon’s Preliminary Responses to Apotex’s Petitions for Inter
`Partes Review in IPR2013-00428, -00429, and -00430
`
`Institution Decisions in IPR2013-00428, -00429, and -00430
`
`
`
`Declaration of Richard K. Parrish, II, M.D.
`Azoulay, P., 2002, “Do Pharmaceutical Sales Respond to Scientific
`Evidence?” Journal of Economics & Management Strategy, Vol.
`11, No. 4, pp. 551–594
`Berndt, E. R., et al., 1995, “Information, Marketing, and Pricing in
`the U.S. Antiulcer Drug Market,” The American Economic Review,
`Vol. 85, No. 2, pp. 100–105
`Berndt, E. R., 2001, “The U.S. Pharmaceutical Industry: Why
`Major Growth in Times of Cost Containment?” Health Affairs,
`Vol. 20, No. 2, pp. 100–114
`Berndt, E. R., 2002, “Pharmaceuticals in U.S. Health Care:
`Determinants of Quantity and Price,” Journal of Economic
`Perspectives, Vol. 16, No. 4, pp. 45–66
`Berndt, E. R., et al., 2002, “An Analysis of the Diffusion of New
`Antidepressants: Variety, Quality, and Marketing Efforts,” The
`Journal of Mental Health Policy and Economics, Vol. 5, pp. 3–19
`Coscelli, A. and M. Shum, 2004, “An Empirical Model of Learning
`and Patient Spillovers in New Drug Entry,” Journal of
`Econometrics, Vol. 122, pp. 213–246
`Iizuka, T., 2004, “What Explains the Use of Direct-to-Consumer
`Advertising of Prescription Drugs?” The Journal of Industrial
`6
`
`000006
`
`
`
`Economics, Vol. 52, No. 3, pp. 349–379
`Leffler, K. B., 1981, “Persuasion or Information? The Economics
`of Prescription Drug Advertising,” Journal of Law and Economics,
`Vol. 24, No. 1, pp. 45–74
`Schmalensee, R., 1982, “Product Differentiation Advantages of
`Pioneering Brands,” The American Economic Review, Vol. 72, No.
`3, pp. 349–365
`Venkataraman, S. and S. Stremersch, 2007, “The Debate on
`Influencing Doctors’ Decisions: Are Drug Characteristics the
`Missing Link?” Management Science, Vol. 53, No. 11, pp. 1688–
`1701
`Prostaglandin Analogs Drug Information
`TRAVATAN Z® Wholesale Dollar Sales
`TRAVATAN Z® and Other Prostaglandin Analog Drugs Wholesale
`Dollar Sales Market Share
`TRAVATAN Z® Total Prescriptions
`TRAVATAN® Total Prescriptions
`TRAVATAN Z® and Other Prostaglandin Analog Drugs Total
`Prescriptions Market Share
`TRAVATAN Z® New Prescriptions
`TRAVATAN Z® and Other Prostaglandin Analog Drugs New
`Prescriptions Market Share
`TRAVATAN Z® and Other Prostaglandin Analog Drugs Share of
`Voice Including Retail Value of Samples
`TRAVATAN Z® and Other Prostaglandin Analog Drugs Share of
`Voice Excluding Retail Value of Samples
`TRAVATAN Z®, TRAVATAN®, and LUMIGAN® Promotional
`Spending to Wholesale Dollar Sales Ratio Excluding Retail Value
`of Samples
`TRAVATAN Z®, TRAVATAN®, and LUMIGAN® Promotional
`Spending Excluding Retail Value of Samples
`IMS Bibliography
`
`7
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`2028
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`2029
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`2030
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`2031
`2032
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`2033
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`2034
`2035
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`2036
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`2037
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`2038
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`2039
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`2040
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`2041
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`2042
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`2043
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`000007
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`Sucampo Pharmaceuticals Inc., Form 10-K, 2012
`Data from IMS Health (being produced to Apotex)
`Data from Encuity Research (being produced to Apotex)
`
`“Encuity Research” available at www.encuity.com
`
`“Home – IMS Health” available at www.imshealth.com
`
`2044
`N/A
`N/A
`N/A
`
`N/A
`
`
`11. Exhibits AL 2032 through AL 2038 contain summaries of voluminous data
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`concerning sales, units, and prescriptions from IMS Health.1 I understand that the
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`data underlying these exhibits will be produced to Apotex. IMS Health is a leading
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`provider of information on the pharmaceutical and healthcare industry. IMS
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`Health data are relied upon extensively by pharmaceutical industry professionals,
`
`government agencies, and researchers to determine drug sales, prescriptions, and
`
`promotional expenditures.2
`
`12. Exhibits AL 2039 through AL 2042 contain a summary of voluminous data
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`from Encuity Research (and, with respect to Exhibit AL 2041, IMS Health). I
`
`understand that the data underlying these exhibits will be produced to Apotex.
`
`1 See www.imshealth.com.
`
`2 See Exhibit AL 2043.
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`(http://www.imshealth.com/deployedfiles/ims/Global/Content/Insights/Researchers
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`/IMS_bibliography.pdf).
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`
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`8
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`Pharmaceutical industry professionals and researchers routinely rely on Encuity
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`Research data to determine promotional activity.3
`
`13.
`
`I am being compensated for my time and services at my regular hourly rate
`
`of $800. I will also be reimbursed for my expenses. I also receive periodic
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`compensation from Cornerstone Research, the firm that has assisted me on this
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`matter and with which I have a longstanding relationship. Neither my
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`compensation in this matter nor my compensation from Cornerstone Research is in
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`any way contingent or based on the content of my opinion or the outcome of this or
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`any other matter.
`
`C.
`Summary of Opinions
`14. Based on my research and analyses summarized in this declaration, I
`
`conclude that TRAVATAN Z® has achieved commercial success in the United
`
`States. I also conclude that there is a nexus between the commercial success of
`
`TRAVATAN Z® and its characteristics that embody inventions claimed by the
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`patent at issue.
`
`15. The success of TRAVATAN Z® is demonstrated by its levels of and growth
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`in dollar sales, prescriptions, and market share in the United States. Since its
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`launch in 2006 through 2013, TRAVATAN Z® has been prescribed over 17
`
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`3 See www.encuity.com.
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`
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`million times in the United States. Over this same time period, the cumulative
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`dollar sales of TRAVATAN Z® were over $2 billion. The success of TRAVATAN
`
`Z® is further evidenced by the fact that it is one of the best-selling and most-
`
`prescribed drugs in its therapeutic category despite having to compete with
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`alternative treatment options, including generics.
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`16.
`
`I understand that the claims of the aforementioned ’299 patent at issue here
`
`describe self-preserved aqueous compositions, and in particular, cover
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`compositions with a preservative system that is used by TRAVATAN Z® but not
`
`by any competing drugs. The commercial success of TRAVATAN Z® is explained
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`by what I understand to be the benefits of the claimed compositions with this
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`preservative system as compared with other drug formulations that use
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`conventional preservatives and are thus more likely to lead to ocular surface
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`damage. This is demonstrated by the fact that TRAVATAN Z® has outperformed
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`its predecessor drug, TRAVATAN®, which I understand was not self-preserved
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`and did not use the claimed invention. This is further demonstrated by the fact that
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`TRAVATAN Z® has continued to be a commercial success despite the availability
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`of other therapeutic alternatives, which I understand are similarly efficacious and
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`at least some of which are at lower cost, but are also not self-preserved and do not
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`use the claimed invention. Based on this and other evidence, it is my opinion that
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`there is a nexus between the commercial success of TRAVATAN Z® and the
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`claimed invention.
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`17.
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`In determining that there is a nexus between TRAVATAN Z®’s commercial
`
`success and the claimed invention, I have also evaluated whether the drug’s
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`commercial success could be attributed to other factors, such as excessive
`
`promotion. In my opinion, TRAVATAN Z®’s commercial success has not been
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`the result of excessive promotion. The extent of marketing expenditures for
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`TRAVATAN Z® is consistent with that of other competing products, especially
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`considering that TRAVATAN Z® was launched in a crowded market where other
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`available treatment options had been promoted for many years prior to
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`TRAVATAN Z®’s launch.
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`II.
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`18.
`
`TRAVATAN Z® Is a Commercial Success
`A. The Glaucoma Market and Ophthalmic Prostaglandin Analogs
`I have reviewed the declaration of Dr. Richard Parrish and rely on his
`
`opinions herein. Based on my review of his declaration, I understand that open-
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`angle glaucoma is a disease characterized by chronic, progressive damage to the
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`optic nerve, usually associated with elevated intra-ocular pressure (“IOP”). I
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`further understand that the most common type of medication used to treat
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`glaucoma patients with elevated IOP are a class of drugs known as prostaglandin
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`analogs (“PGAs”). My understanding from Dr. Parrish is that although other, non-
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`PGA treatments are available for the long-term treatment of glaucoma, they are not
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`comparable to PGAs.
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`19. According to Dr. Parrish, the PGAs available in 2006 in the United States
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`included TRAVATAN® (travoprost), XALATAN® (latanoprost), and LUMIGAN®
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`0.01% (bimatoprost). Today, XALATAN® and LUMIGAN® are available in the
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`United States, along with TRAVATAN Z®, ZIOPTAN™ (tafluprost), and a generic
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`version of XALATAN® (latanoprost). In addition, I understand from counsel that
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`a generic version of TRAVATAN® became available in 2013. Exhibit AL 2031
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`summarizes the various prostaglandin analogs on the market.4
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`20. Based on my review of Dr. Parrish’s declaration, I understand that
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`TRAVATAN Z®’s predecessor, TRAVATAN®, and the other prostaglandin
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`analogs currently on the market—specifically XALATAN®, LUMIGAN®, and
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`4 Based on Dr. Parrish’s declaration, it is my understanding that ZIOPTAN™ is
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`not a comparable drug to the other prostaglandin analogs. I further understand that
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`RESCULA is a prostanoid, and while it has some characteristics which are similar
`
`to prostaglandin analogs, it is not technically a prostaglandin analog. In this
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`declaration, I have considered all the drugs listed in Exhibit AL 2031, including
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`ZIOPTAN™ and RESCULA. However, excluding these two drugs from my
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`analysis would not affect my conclusions.
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`generic latanoprost—are similar in efficacy at treating IOP as compared to
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`TRAVATAN Z®. I further understand that except for TRAVATAN Z®, all of
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`these drugs contain benzalkonium chloride (BAK) as a preservative.5
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`21. According to Dr. Parrish, the long-term use of BAK exacerbates the
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`symptoms associated with various forms of ocular surface disease (OSD). I
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`understand that OSD is a significant concern among clinicians, and that for patients
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`with OSD symptoms, the use of ophthalmic formulations without BAK is
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`preferred. I understand that because TRAVATAN Z® does not contain BAK, it has
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`a less toxic effect on the ocular surface, leading to decreased incidence of
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`symptoms of OSD among patients taking TRAVATAN Z® in comparison to other
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`prostaglandin analogs. Per Dr. Parrish, I understand that even though
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`TRAVATAN Z® is more expensive than some other medical treatment options, it
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`is a first-line treatment for glaucoma patients with symptoms of OSD because it
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`has reduced potential for exacerbation of those symptoms.
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`5 I understand from counsel that the absence of BAK from TRAVATAN Z®’s
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`formulation is a result of its use of the claimed invention.
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`B.
`Indicators of Commercial Success
`22. There are several indicators that can be used to determine whether a product
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`has achieved commercial success. The indicators for the success of a patented
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`drug product include levels of, and growth trends in, dollar sales and prescriptions
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`of the product, as well as its performance relative to other competing products
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`(typically measured in terms of share of sales or prescriptions). A product does not
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`have to satisfy all of these indicators to be considered commercially successful.
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`Rather, each indicator can demonstrate the commercial success of the product,
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`either alone or in conjunction with other indicators.
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`23. My analyses below demonstrate that TRAVATAN Z® is a commercially
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`successful drug. Since its launch in 2006 through 2013, TRAVATAN Z® has been
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`prescribed over 17 million times in the United States. Over this same time period,
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`the cumulative dollar sales of TRAVATAN Z® were over $2 billion.
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`24. Exhibit AL 2032 graphs annual U.S. wholesale dollar sales for TRAVATAN
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`Z®. TRAVATAN Z® achieved sales of over $3 million from its launch in October
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`2006 through the end of that calendar year, and reached sales of almost $65 million
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`in 2007, its first full calendar year on the market. TRAVATAN Z®’s sales
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`generally increased over the following years, achieving peak sales of over $495
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`million in 2011. Sales in 2013 were over $440 million, representing an
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`approximately 6.8 fold increase over the sales in 2007. This strong sales
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`performance has occurred even while TRAVATAN Z® was a late entrant, and in
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`light of competition from XALATAN®, LUMIGAN®, TRAVATAN®, and later
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`generic latanoprost (a generic version of XALATAN®).
`
`25. As shown in Exhibit AL 2031, XALATAN® was the first prostaglandin
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`analog that launched in 1996. Subsequently, TRAVATAN® and LUMIGAN®
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`were launched in 2001. Thus, even as a late entrant, TRAVATAN Z® achieved
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`strong sales performance following its launch in 2006.
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`26. Academic literature suggests that products can often enjoy first-mover
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`advantages. First-mover advantage is a phenomenon whereby the company that
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`first enters a market has an advantage over competition that enters subsequently.6
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`Several factors are responsible for creating first-mover advantages for
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`pharmaceutical products, including their nature as so-called “experience goods”
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`and brand loyalty. With “experience goods,” the quality of the consumer
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`experience on an individual level cannot be determined until the individual has
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`tried the product. In the case of pharmaceuticals, the experiences of both the
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`physicians and the patients are important. For experience goods (including
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`pharmaceuticals), consumers incur search costs to acquire information about the
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`quality of a product and will incur additional costs if they switch to other products.
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`6 See, for example, AL 2022, 104; AL 2025, 4; AL 2029, 360.
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`Consumers may also develop brand loyalty to the first mover’s products and
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`become less accepting of alternatives. Moreover, the first mover has the
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`opportunity to obtain high market share levels, and for experience goods the first
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`mover can gain and keep consumer preference. If the consumer experiences the
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`first mover’s product, then the consumer often grows comfortable with that
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`product, which may become the product of choice and give the first mover a strong
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`presence in the market. This garners good will with consumers, leading to
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`economic and psychological circumstances that make it difficult for a subsequent
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`mover to gain market share. As a result, later entrants usually are disadvantaged
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`relative to the first entrant.
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`27.
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`In addition, one would expect that managed care organizations and
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`pharmacy benefit managers have strong incentives to use generics, as they will
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`typically be much less expensive alternatives. As such, it is notable that
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`TRAVATAN Z®’s strong sales performance continued even after generic
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`latanoprost (a generic version of first mover XALATAN®) launched in 2011.
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`28. Exhibit AL 2033 illustrates the market share of prostaglandin analog drugs
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`by wholesale dollar sales. TRAVATAN Z® realized a market share of over 6% in
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`2007, the first full calendar year it was on the market. TRAVATAN Z®’s market
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`share has since substantially grown to over 12% in 2008, and to almost 24% in
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`2010. TRAVATAN Z® has maintained over a 40% share in each of the past three
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`years, following the introduction of generic latanoprost in 2011.
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`29. The commercial success of TRAVATAN Z® is further evident from an
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`analysis of the number of prescriptions dispensed, shown in Exhibit AL 2034.
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`Over 630,000 total prescriptions of TRAVATAN Z® were dispensed in 2007, the
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`first full calendar year that TRAVATAN Z® was on the market. The total number
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`of prescriptions of TRAVATAN Z® increased to almost 1.4 million in 2008, and to
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`over 3.8 million in 2011. Over 3 million total prescriptions continued to be
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`dispensed in each of the years 2012 and 2013.
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`30. Exhibit AL 2036 illustrates the market share of prostaglandin analog drugs
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`by total prescriptions dispensed. In 2007, the first full calendar year TRAVATAN
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`Z® was on the market, TRAVATAN Z® accounted for a share of almost 5% of total
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`prescriptions of prostaglandin analog drugs. TRAVATAN Z®’s share then grew to
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`over 10% in 2008, to almost 27% in 2011, and has maintained a share of almost
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`22% in 2012 and almost 19% in 2013. Between 2011 and 2013 cumulatively,
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`TRAVATAN Z® was the most-prescribed branded drug of all PGAs, and was the
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`second-most prescribed drug of all PGAs overall, behind only generic latanoprost.
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`31. Exhibits AL 2037 and AL 2038 analogously show the number of new
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`prescriptions dispensed of TRAVATAN Z® and the market share of prostaglandin
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`analog drugs by new prescriptions dispensed. A similar story emerges here too,
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`17
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`providing further evidence of the commercial success of TRAVATAN Z®. Over
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`326,000 new prescriptions of TRAVATAN Z® were dispensed in 2007, increasing
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`to almost 562,000 new prescriptions in 2008, and to over 787,000 new
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`prescriptions in 2009. The number of new prescriptions dispensed from 2010 to
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`2013 has exceeded over 1 million in each of these years. As a result, TRAVATAN
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`Z® accounted for approximately 8% of new prescriptions of prostaglandin analog
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`drugs in 2007, increasing to about 13% in 2008, to over 25% in 2011, and has
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`maintained a share of over 22% in 2012 and almost 20% in 2013.
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`32. The above evidence describing TRAVATAN Z®’s sales and prescriptions
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`since its launch, and its performance relative to other competing products, supports
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`the conclusion that TRAVATAN Z® has been a commercially successful drug.
`
`III. Factors Underlying the Commercial Success of TRAVATAN Z®
`A. TRAVATAN Z®’s Patented Features
`I understand that a patent can be found invalid if the invention described in
`
`33.
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`the patent would have been considered “obvious” to the person of ordinary skill in
`
`the art based upon what was already known at the time of the invention. I also
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`understand that the commercial success of a patented product is one type of
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`evidence that can support a showing that the patented invention is not “obvious,”
`
`provided there is a “nexus” between the invention and its commercial success.
`
`
`
`18
`
`000018
`
`
`
`34.
`
`In my opinion, TRAVATAN Z®’s commercial success is attributable to its
`
`use of the preservative system in the claimed invention, which allows it to avoid
`
`using the preservative BAK. This is consistent with the trends in the sales and
`
`prescriptions of TRAVATAN Z® in comparison to TRAVATAN®, as well as its
`
`continued performance even in the presence of multiple alternative treatment
`
`options, including generics.
`
`35. TRAVATAN Z® has outperformed TRAVATAN®, both in terms of total
`
`prescriptions and in wholesale dollar market share. TRAVATAN® was introduced
`
`to the market in 2001. Five years later, in 2006 (the year in which TRAVATAN
`
`Z® was introduced), TRAVATAN® was prescribed approximately 2.2 million
`
`times and had roughly an 18% market share of total prescriptions and a 20%
`
`market share of wholesale dollar sales of the PGA market, as shown in Exhibits
`
`AL 2033, AL 2035, and AL 2036. In contrast, total prescriptions of TRAVATAN
`
`Z® reached approximately the same level in only three years and continued to
`
`increase thereafter. In 2011, the year generic latanoprost entered the market,
`
`TRAVATAN Z® was prescribed over 3.8 million times and had achieved nearly a
`
`27% market share of total prescriptions and over a 40% market share of wholesale
`
`dollar sales of the PGA market (as shown in Exhibits AL 2033, AL 2034, and AL
`
`2036). The more rapid adoption by the marketplace of TRAVATAN Z® than
`
`TRAVATAN®, and the significant improvement in prescriptions and market share,
`
`
`
`19
`
`000019
`
`
`
`is indicative both of its commercial success and the perceived advantages of its
`
`formulation relative to competing prostaglandin drugs.
`
`36. Moreover, while many patients undoubtedly switched from TRAVATAN®
`
`to TRAVATAN Z®, TRAVATAN Z®’s commercial success is not solely
`
`attributable to this phenomenon. If the commercial success of TRAVATAN Z®
`
`were attributable merely to switches from TRAVATAN®, one would expect that
`
`the size of increases in TRAVATAN Z® prescriptions would match the size of
`
`decreases in TRAVATAN® prescriptions over the same time period. That is not
`
`the case. For example, although prescriptions of TRAVATAN Z® increased by
`
`over 611,000 from 2006 to 2007, as shown in Exhibit AL 2034, the total number of
`
`prescriptions dispensed for TRAVATAN® decreased by only about 207,000 from
`
`2006 to 2007, as shown in Exhibit AL 2035. Indeed, the total number of
`
`prescriptions of TRAVATAN Z® increased by over 2.9 million from 2006 to 2010,
`
`a number more than twice as large as the decrease in TRAVATAN® prescriptions
`
`over the same period (as shown in Exhibits AL 2034 and AL 2035).7 Accordingly,
`
`
`7 I understand that TRAVATAN® was discontinued in the United States in 2010.
`
`However, a generic version of TRAVATAN® became available in April 2013. If
`
`TRAVATAN Z®’s commercial success were attributable solely to switches from
`
`TRAVATAN®, then one would expect a percentage of TRAVATAN Z® patients to
`
`
`
`
`
`20
`
`000020
`
`
`
`the full extent of TRAVATAN Z®’s commercial success cannot be explained by
`
`switches from TRAVATAN® alone.
`
`37.
`
`In addition, TRAVATAN Z® has continued to be a commercial success in
`
`the face of competition from generics. After the introduction of generic
`
`latanoprost in 2011, TRAVATAN Z® was still prescribed more than 3 million
`
`times, and maintained its over 40% market share of wholesale dollar sales of the
`
`PGA market, in both 2012 and 2013, as shown in Exhibits AL 2033 and AL 2034.
`
`38. The fact that TRAVATAN Z® has outperformed TRAVATAN®, in the face
`
`of generic competition that TRAVATAN® never faced, suggests that TRAVATAN
`
`Z® has one or more beneficial attributes that other available PGAs do not. Given
`
`that TRAVATAN Z®’s competitors are similarly efficacious, TRAVATAN Z®’s
`
`continued commercial success appears to result from its preservation without
`
`BAK, which I understand is a result of the fact that TRAVATAN Z® uses the
`
`claimed invention. Accordingly, it is my opinion that TRAVATAN Z®’s
`
`
`switch “back” to generic TRAVATAN® once it became available. That did not
`
`take place, however. Rather, generic TRAVATAN® had a miniscule share of the
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`PGA marketplace in 2013, as shown in Exhibit 2036. This further supports the
`
`conclusion that TRAVATAN Z®’s commercial success is not attributable solely to
`
`switches from TRAVATAN®.
`
`
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`21
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`000021
`
`
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`outperformance of TRAVATAN®, and its continued performance in the face of
`
`generic competition, indicates that there is a nexus between the claimed invention
`
`and TRAVATAN Z®’s commercial success.
`
`B. Alcon’s Promotion of TRAVATAN Z® Is Comparable to That of
`Other Branded Ophthalmic Prostaglandin Analogs
`
`1. Marketing and Promotional Activities in the
`Pharmaceutical Industry
`39. Marketing can be an important tool for the dissemination of information on
`
`pharmaceutical products. Without it, pharmaceutical manufacturers would not be
`
`able to make physicians aware of new medicines and their attributes. They would
`
`also find it difficult to prompt patients to ask their doctors about the availability of
`
`treatments as well as the risks and benefits of different medications. If physicians
`
`are unaware of the benefits that a product offers, they will not prescribe it.
`
`Marketing activities are, therefore, often necessary to introduce a drug to the
`
`market. The informational role of pharmaceutical advertising is supported by
`
`academic literature in health economics.8
`
`40. However, continued use of the drug cannot be driven by marketing alone.
`
`As described previously, pharmaceutical products are “experience goods,” i.e.,
`
`
`8 See, for example, AL 2021, 551–594; AL 2025, 3–19; AL 2027, 349–379; AL
`
`2028, 45–74; AL 2030, 1688–1701.
`
`
`
`22
`
`000022
`
`
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`products whose quality is revealed over time.9 Physicians may lack full knowledge
`
`of the drug’s attributes until they (or someone whose professional opinion they
`
`trust) have prescribed it to several patients and observed the drug’s efficacy, side
`
`effects, and convenience. If, over time, patients and physicians do not have
`
`positive outcomes with a drug, sales will not be sustained. Ultimately, whether a
`
`product is successful in the long run is dictated by the attributes of the product.
`
`The Extent of Promotional Activities for TRAVATAN Z®
`2.
`I have analyzed the extent of promotional activities for TRAVATAN Z® and
`
`41.
`
`those of other competing products when relevant. I find that TRAVATAN Z®’s
`
`commercial success has not been the result of excessive promotion.
`
`42. One way to evaluate whether marketing efforts for TRAVATAN Z® are
`
`excessive is to analyze the amount spent on marketing the drug relative to the total
`
`marketing spend for all prostaglandin analogs. This ratio is known as the drug’s
`
`share of voice in the market. In the case of prostaglandin analogs, the data indicate
`
`that very little is spent marketing drugs directly to consumers. Rather, the vast
`
`majority of marketing is directed towards other constituencies, such as prescribers.
`
`9 See, for example, AL 2021, 551–594; AL 2023, 100–114; AL 2024, 45–66; AL
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`2026, 213–246.
`
`23
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`000023
`
`
`
`43. As shown in Exhibit AL 2040, in 2007, the first full year that TRAVATAN
`
`Z® was on the market, TRAVATAN Z®’s share of voice (excluding cost of
`
`samples10) was approximately 34%, while that of XALATAN® was approximately
`
`33% and of LUMIGAN® was approximately 27%. The share of voice for each of
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`TRAVATAN Z®, LUMIGAN®, and XALATAN® was between 24% and 38%
`
`from 2007 through 2010. Thus, the extent of promotional a
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