NEW YORK (AP) - Emboldened by favorable court rulings and the need to gain
an early foothold in the market, generic drug developers are increasingly
challenging lucrative drug patents.
In many cases those challenges have been coming in the form of at-risk
launches, where a generic version of a patented drug is sold before the patent
expires.
Heavyweights including Teva Pharmaceutical Industries Ltd., Barr
Pharmaceuticals Inc. and Mylan Pharmaceuticals Inc. have been growing bolder
when it comes to this strategy, as the risk-reward equation seems to have
shifted to their favor.
"I think they've just gotten a lot smarter as an industry," said WR
Hambrecht analyst Andrew S. Forman. "Generics have the sympathy, pricing
advantage and generally have facts on their side; there's been settlements, but
no losses."
Often, he said, pharmaceutical companies will try to gain patent extensions
to stave off generic competition. With more insurers and Medicare pushing
members to generic options because of the price difference, the market seems to
have swayed. Generic drug developers now claim more than two-thirds of all
prescriptions, up from less than half 10 years ago.
The most recent salvo came from Teva, the largest generic drug developer in
the world. The Israel-based company had challenged Wyeth's patent on the
blockbuster heartburn drug Protonix. That patent isn't due to expire for three
more years, but in December, Teva launched its generic version over the course
of several days, before ceasing shipments as part of a deal.
Protonix sales reached $1.9 billion in 2007. Drugstore.com currently lists
generic Protonix at a 7.7 percent discount to the branded version. A similar
discount currently exists for Lotrel, a blood pressure drug made by Novartis,
for which Teva enjoys market exclusivity with a generic.
Other disputes involve Forest Laboratories Inc. and generic drug developers
Teva and Barr over the Alzheimer's disease treatment Namenda. Endo
Pharmaceuticals Holdings Inc. and Penwest Pharmaceuticals Co. are suing Impax
Laboratories over plans to make a version of the pain reliever Opana ER.
Several pharmaceuticals companies, including Forest and Wyeth, declined
comment on the ongoing patent challenges.
"There are just more Paragraph IV (patent dispute) challengers than years
ago," said Mike Dzwonczyk, a patent attorney at Sughrue Mion PLLC. "The
likelihood of sharing market space is much higher now than it ever used to be."
While generic companies run the risk of paying triple-damages if they
conduct an at-risk launch and then lose the patent dispute, several recent court
cases have gone in favor of generics, he said. It has become harder for pharma
to prove a company willfully infringed a patent, for example, lessening the risk
of triple damages.
Also, the downside risk to losing a case has become smaller for large
companies like Teva, which can often offset any future losses with big sales
gains early on.
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