By Marta Falconi
Swiss drug maker Novartis AG has managed to push back generic
competition in the U.S. to its blockbuster leukemia drug Gleevec by
about seven months, a deal that some critics say will deprive the
public of the benefits of lower drug prices.
Novartis declined to disclose the terms of the patent litigation
settlement agreement it reached with generic drug maker Sun
Pharmaceuticals Industries Ltd. But the company said that Sun
Pharma's subsidiary won't be allowed to launch its own version of
Gleevec in the U.S. until February 2016--months after Gleevec's
main U.S. patent, known as a basic compound patent, is scheduled to
expire on July 4, 2015. The subsidiary of Mumbai-based Sun Pharma
has tentative approval from the U.S. Food and Drug Administration
for its generic version.
Gleevec, which treats chronic myeloid leukemia and other rare
cancers, costs $7,661 a month in the U.S. at wholesale level and is
Novartis's top-selling product, with global sales of $4.68 billion
last year.
Drug companies selling patented drugs often try to prevent
cheaper generic competition to their products from entering the
market by extending their exclusivity. In "pay-for-delay"
settlements, a branded drug company pays a generic company to drop
patent litigation that could have cleared the way for earlier
competition.
Last year, the Supreme Court ruled that federal regulators can
scrutinize such deals on antitrust grounds. Novartis declined to
say whether it had paid or compensated Sun Pharma, reiterating that
the terms of the settlement are confidential.
"A seven-month delay of generic forms of Gleevec will probably
cost U.S. consumers and our health system half a billion dollars or
more," said Wells Wilkinson, a staff attorney with Community
Catalyst, a national nonprofit consumer-advocacy organization. Mr.
Wilkinson said he hoped the Federal Trade Commission scrutinizes
the arrangement closely to protect consumer interests. A spokesman
said the FTC didn't have any comment on the deal but that it
monitors these settlements.
Basel-based Novartis said in a statement to The Wall Street
Journal that the settlement was "pro-competitive" and allows Sun
Pharma to launch a generic Gleevec, or imatinib mesylate, before
the expiration of certain Gleevec patents that Novartis said expire
in 2019. In a lawsuit filed in 2013, Sun Pharma had argued that its
generic drug didn't violate those patents, according to a Jefferies
research report.
Sun Pharma confirmed the settlement agreement in a brief
statement but wasn't available for further comment Thursday.
Novartis has already been battling cheaper generic competition
to some of its best-selling products. The company is weathering
declining sales of its anti-hypertension treatment Diovan, a drug
that has powered revenue at the company for years but is now
exposed to some generic competition in the key U.S. market.
In addition, Novartis will also lose patent protection on its
hypertension medicine Exforge in the European Union in 2017, as
well as some patents on the firm's oncology product Sandostatin
LAR. Both treatments were among Novartis's top 10 products in
2012.
Gleevec is also expected to lose patent protection in the EU by
mid-2016.
Novartis has developed a product designed as a follow-on to
Gleevec, called Tasigna, which generated $1.27 billion in sales in
2013.
Sanford C. Bernstein analyst Tim Anderson said in a note that
the delay in Gleevec generics should boost Novartis's 2015 earnings
per share by about 6%, though there will be no positive effect
beyond 2016.
He called it a "small positive" for Novartis. "It would have
been a bigger had generics been pushed out further, like to 2018,"
he said.
Write to Marta Falconi at marta.falconi@wsj.com
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