Patents and Prescription Drugs-Part II of a III Part Series

Please see Part I of the series of articles on Patents and Prescription Drugs-Part I

(11/23/19)-A review of Federal Drug Agency (FDA) reports by the health data firm Iqvia determined that the agency has approved 2,492 generic versions of 617 brand-name drugs since 2016. The approval process was speeded up in 2017.The number of generic approvals has set records in each of the past three fiscal years, according to Trump officials.

But less than two-thirds of the generic drugs approved between 2016 and 2018 have been launched. Of the 443 drugs approved through June of this year, only 30% have gone on sale.

The delay has been caused mainly by the brand name drug company adding slight variations of their patented products as they try to extend the life of their patent, or by bringing patent infringement suits against the generic company in an attempt to delay introduction of the generic drug

(2/28/18)- The U.S. Patent and Appeal Board (PTAB) will rule on Mylan NV’s challenge of patents of the dry-eye drug Restasis, for which Allergen PLC had sold its rights to the St. Regis Mohawk Tribe. The tribe had brought a motion to dismiss Mylan’s appeal of the ruling that since the tribe was a sovereign government; it would not be subject to the patent office review.

Restasis garnered $1.47 billion in sales for Allergan last year. The agreement with Allergan entitled the tribe to a $13.75 million initial payment and $15 million in royalties annually until the Restasis patent expired or were no longer valid.

The challenges to the deal between the tribe and Allergan were brought by the generic drug companies Akorn Inc., Mylan NV and Teva Pharmaceuticals Industries Ltd, who alleged the agreement was a sham.

(7/22/16) The Food and Drug Administration (FDA) announced that it had approved generic versions of AstraZeneca’s best selling cholesterol lowering drug Crestor, as we discussed in our item dated 7/21/16 below.

Crestor sells for about $260 a month, according to GoodRx.com. The agency rejected the company’s claim that the patent life for the drug for 7 more years after the original patent’s life ends this month. A federal judge had denied AstraZeneca’s request for a temporary restraining order barring the FDA from approving the generic versions of Crestor.

Crestor accounted for $5 billion in sales for the company last year, with about $2.8 billion of it in the U.S., according to IMS Health.

(7/20/16)- AstraZeneca is attempting to extend the patent life for its best-selling cholesterol lowering drug Crestor, by getting it approved to treat a rare disease that affects only a small number of patients. The three-decade-old Orphan Drug Act allows drug companies to 7 more years of patent protection, if one of its drugs can be used to treat a rare disease.

Crestor was prescribed 20.3 million times in 2015, making it the second most used prescription drug after Synthroid, a thyroid medication, according to IMS Health, a health-data consulting firm. Crestor is due to come off patent this month. Crestor was approved by the FDA in May to treat a rare childhood disease called homozygous familial hypercholesterolemia, or HoFH.

(5/23/16)- The Columbian government announced it would override Novartis AG’s patent for ,its drug Gleevac (imatinib), which is used in the battle against leukemia and that it would issue a compulsory license to generic drug companies to make their version of the drug.

Gleevac was Novartis’ best-selling drug last year with revenue of $4.7 billion. Its patent for the medication expires in February 2017. Gleevac costs about $15,000 per patient, per year. Brazil and India have taken this course, but this would be the first time that country has gone that route.

China said it intends to cut prices for three-top selling drugs by more than half because of their expense. The drugs are AstraZeneca PLC’s lung-cancer drug Iressa; Conmana from Zhejiang Beta Pharmaceutical Co. and GlaxoSmithKline’ PLC’s Viread used for treating hepatitis B

(6/1/15)- As a follow-up to our item dated 4/29/15, Teva Pharmaceutical Industries Ltd agreed to pay $1.2 billion to settle government allegations that its Cephalon subsidiary paid generic- drug makers to delay introduction of competing versions of the sleep-disorder drug Provigil.

The settlement was the first time the Federal Trade Commission (FTC) has obtained a monetary amount in settlement of a “pay to delay” case. Teva will get credit for the $512 million settlement paid to the drug companies that purchased Provigil from Cephalon.

The FTC initated the action against Cephalon in 2008, while Teva bought Cephalon in 2011. As part of the settlement, Teva agreed not to enter into “pay-to-delay” agreements in the future.

A trial on the case was due to begin in a Philadelphia federal court on Monday. The “pay-to-delay” terminology is also known as “reverse payments” wherein a brand name drug-company with a soon to expire patent on a drug pays to delay a generic version of the drug from becoming available to the consumer at a lower price.

In the present case the patent on Provigil was due to expire in 2006. Provigil had over a billion dollars in sales in 2011, the last year before the introduction of a generic version of it appeared.

(5/27/15)- An activist legal group in New York, the Initiative for Medicines Access and Knowledge (I-MAK) has filed challenges in Argentina, Brazil, China, Russia and Ukraine seeking to void patents in those countries for the hepatitis-C drug Sovaldi, which is manufactured by Gilead Sciences, but costs about $84,000 for a full treatment. Local activist groups are joining Initiative in the challenges in all those countries with the exception of China.

Sovaldi, when used with another drug, can cure most cases of hepatitis C in 12 weeks, with few side effects. It has been estimated that there are about 150 million people afflicted with the disease on a worldwide basis. The other drugs that are used to make Sovaldi more effective are costly medications also.

Gilead is allowing 11 generic drug manufacturers in India to make sofosbuvir, Sovaldi’s generic name, and sell it in 91 developing countries. Under World Bank standards, those countries where Initiative is acting are not considered low-income nations.

(4/29/15)- Teva Pharmaceuticals agreed to pay $512 million to settle claims brought against it by several drug wholesalers and other companies that buy drugs directly from manufacturers who asserted they were forced to pay inflated prices for Provigil, a narcolepsy medication. Provigil is a medication that allows people with sleep disorders to stay awake.

The settlement must be approved by Judge Mitchell S. Goldberg of the U.S. District Court’s Eastern District of Pennsylvania.

The lawsuit resulted from what is known as a “reverse payment”, wherein Cephalon, a company acquired by Teva in 2011 paid generic manufacturers more than $200 million to agree not to sell their version of the drug until 2012, even though its patent was due to expire in 2006.

For the 6 year period, from 2006 to 2012, Teva amassed $4 billion in sales for Provigil

The plaintiffs in the lawsuit argued that were it not for this “illegal” pact they could have begun selling the generic version of the drug in 2006. The Supreme Court ruled in 2013 that the Federal Trade Commission (FTC) could sue pharmaceutical companies for antitrust violations to prevent this type of agreement.

The FTC was not a party to the settlement, and a trial in that case against Cephalon is scheduled to begin in June. The plaintiffs in this suit have also sued the generic manufacturers Mylan and Ranbaxy, but they were not part of this settlement.

(12/29/14)- The verdict in a recent court case that involved a brand-name drug company paying a generic drug company to delay the introduction of its competing drug did not conclusively decide thepay-to-play issue. The Supreme Court that had ruled last year that this type of deal should face closer antitrust examination was just a generalization, but did not establish clear-cut rules on this matter.

The Justice Department brought a case against AstraZeneca PLC and Ranbaxy Laboratories Ltd in federal court in Boston because of a deal between those two companies whereby Astra agreed not to sell an authorized generic version of its drug Nexium until May 2014 even though its patent for the drug had expired. Ranbaxy, which had the right to begin selling its generic version of the drug would not begin selling it until after May 2014.

The jury in this case ruled that there was no harm done because Ranbaxy had manufacturing problems that prompted the FDA to ban products made by the company at certain of its plants that the agency had found to be unsafe.

(8/20/14)- Here’s another item we can add to the long list of failures on the part of Congress to act on, namely the overhaul of the patent law.

In May, Sen. Patrick Leahy (D.,Vt.) put a halt to legislation that had been passed by a vote of 325-91 in the House, that would have brought to an end a patent reform bill. That bill would have put the onus “plaintiff trolls” who brought patent violations lawsuits, since it might have meant that if the suit was lost, they might have become responsible for all the costs of those who successfully defended those lawsuits.

A more modest bill is still pending in a House committee, but no action is expected to take place on it until next year.

Congress did pass the America Invents Act in 2011, but that law did not deal with the “patent troll” issue.

(3/5/14)- N.Y. Attorney General Eric Schneiderman announced a settlement with the U.S. units of Ranbaxy Laboratories Ltd and Teva Pharmaceutical Industries Ltd over allegations as to the legality of an agreement between the two companies to restrict competition over the sale of a generic version of the cholesterol fighting drug Lipitor. Lipitor was the Pfizer & Co. best-selling drug until it lost its patent protection in 2012.

As part of the agreement the companies will terminate their agreement not to challenge each other’s right to sell a generic version of Lipitor in the U.S. They also agreed to refrain from entering similar agreements in the future, and to pay the state $300,000. As usual, the companies neither admitted nor denied the allegations.

Mr. Schneiderman began his investigation in 2010 when Ranbaxy made contingency plans regarding its planned sale of a generic version of Lipitor. Ranbaxy was concerned, at that time, that it might not receive approval from the Food and Drug Administration (FDA) in time to begin selling the drug in 2011, so it reached an agreement with Teva to allow Teva to sell a generic version, in the event it could not get the approval.

Ranbaxy did get the approval from the FDA, but the agreement still went into effect. A provision in the agreement called for each company not to challenge the other’s exclusivity rights on a range of generic drugs.

When a generic drug company challenges the patent for a drug and succeeds, or when it is the first to file and win approval from the FDA, it has a period of 180-days to be the exclusive seller of that particular generic version of the drug. If another generic drug manufacturer believes the exclusivity rule should not be in play, it can file a challenge with the FDA or in court. The U.S. Supreme Court ruled in June 2013 that regulators can challenge such agreements as being anti-competitive.

(9/7/12)-The Indian government is proposing new rules that would cap the pricing of patented brand name drugs, in addition to extending the number of generic drugs that have price caps.

Most countries follow some form of price control of drugs with the notable exception of the United States. We need to ensure that expensive drugs are available at affordable rate to the poor," said D.S.Kalha, the secretary of India's Pharmaceutical Department.

India sets prices for 74 generic drugs and is considering increasing the number of medicines covered by price caps to348. The average Indian pays about 70% of their health-care expenses out of their own pocket since very few of them have insurance coverage.

As we have previously discussed in this article, India first began to recognize patent protection on drugs in 2005. An interagency government committee was set up in 2007 to set prices for patented drugs.

That committee has completed extensive deliberations and the Pharmaceutical Department is expected to release a report to the public in the coming weeks for feedback. That input will be considered when formal regulations are drafted and brought before the Parliament, probably some time next year.

(7/29/12)- A recent ruling by the Federal Third Circuit Court of Appeals in Philadelphia may mean that the U.S. Supreme Court will decide upon the legality of agreements made between brand name drug companies and generic companies that result in the postponement of the introduction of cheaper generic drugs to the marketplace.

The case involved an agreement between Bayer AG, a brand name manufacturer, who paid $400 million to Barr Laboratories, a generic drug company and other companies, to delay the introduction of the drug Cipro, an antibiotic with annual sales exceeding $1 billion until after Bayer;s patent for the drug expired back in 2003,.

These delay agreements are the result of a 1984 law that made it easier for generic drugs to gain FDA approval and a 2003 amendment, which required branded and generic drug makers that entered into patent settlement pacts to file their agreements for review with the FTC, and the Justice Department.

The pharmaceutical industry contends that these delay agreements are legal, because whenever you have a lawsuit between a brand name drug company and a generic manufacturing company as to the legality of a patent, or exactly when a patent expires, either side can prevail in the case. Because of this uncertainty, it is best to settle the case so that there is no clear-cut loser in the matter

Federal appeals courts for the 11^th Circuit in Atlanta in 2003, 2005 and 2012; the Second Circuit in New York in 2006 and the Court of Appeals for the Federal Circuit in Washington in 2008 have upheld the legality of these agreement. We discuss these decisions in this article below, in the years of their decisions.

There is presently legislation pending in the U.S. Senate that was introduced by Senator Herb Kohl of Wisconsin and Senator Charles E.Grassley of Iowa that would sharply limit this type of agreement.

(5/23/12)- Repercussions continue to rebound from India's decision to restrict drug prices. Senior Indian government officials, led by Agriculture Minister Sharad Pawar met with industry representatives last week to hear their complaints in regards to the new Indian price structure for several drugs.

India now has new proposals that could be implemented as early as this year that will bring about two-thirds of India's medicines under price control compared with only 20% today.

For some specific examples, please see our item dated 5/8/12 below. Several of India's generic drug manufacturers are in agreement with the foreign companies when it comes to opposing the new price controls.

Many pharmaceutical companies are fearful that India will go back on its commitment to adhere to patent rule regulations, as was one the case int hat country.

(5/8/12)- As noted in our item dated 2/15/10: "As we noted in our item dated 3/29/05, highlighted in red below ,and in several of our items in Part I of the article entitled "Patents and Prescription Drugs-Part I India agreed to abide by patent laws in its agreement with the World Trade Organization."

Several weeks ago India's patent authority forced Bayer AG of Germany to grant a license to an Indian generic drug company for its kidney-and liver medication Nexavar.

In the latest development on this subject, Cipla Ltd, one of India's largest generic-drug makers is cutting its cancer medications by as much as 75%. Cipla said it would cut the price of its generic version of Nexavar far below the price that Bayer is selling the drug at.

Cipla also cut the price of AstraZeneca PLC's lung-cancer drug Iressa by almost 60%, and its brain-cancer drug Temozolamide by 75%.

India has previously declined to defend patents, arguing that these medications are essential to saving lives, and are too costly for the average Indian resident to afford.

(4/5/12)- AstraZeneca PLC's suit to delay the introduction of a generic version of its best selling anti-psychotic drug Seroquel, that we discussed in our item dated 3/22/12, was dismissed by a federal judge in Washington, D.C., who ruled that the company had failed to make a clear case that it was entitled to an injunction against the FDA.

The company based its effort to overturn the agency's granting of the right to sell a generic version of the drug on the fact that the generic version does not have to carry the same warnings about possible side effects, including suicidal thoughts and high-blood sugar levels, that were required on its package..

(3/31/12)- One of the problems facing drug companies is the fact that the pricing for medications vary from country to country, with the cheapest pricing taking place in poorer nations. This problem also exists in the European Union, where a drug may be much cheaper in one of the countries, thus making it an attractive product to be resold in another nation in the Union, where it can be done so at a much higher price level.

"Compulsory licensing" is a problem that a brand name drug company may face in a particular country. This takes place when a country licenses a generic drug company to produce and sell its much cheaper priced drug than the one that it is being sold by the patented drug company. The high price is preventing the residents of the country from purchasing drugs that fight life-threatening conditions.

Roche Holding AG is sharply cutting the price of 2 of its very expensive cancer drugs in India, renaming and repackaging them there, and by doing so, hoping it can avoid the problem of the old brand name packaged drug being resold in the world market at a much cheaper price.

The arrangement involves Herceptin and Mabthera, the wholesale cost of which is $3,000 to $4,500 a month per patient.

The drugs will be packaged locally by India-based Emcure Pharmaceuticals Ltd.

(3/22/12)- AstraZeneca PLC, the 2^nd largest British drug company after GlaxoSmithKline PLC is suing drug regulators in the U.S. in an effort to extend its exclusive rights on some forms of its top selling anti-psychotic-drug Seroquel.

The company is seeking an injunction against the FDA from granting final marketing approval of generic forms of the drug until December 2, or at least until a federal court has a chance to review the agency's action.

The FDA granted approval to market generic copies of Seroquel that would not have to carry the same warnings about possible side effects, including the risk of suicide, that were required on the AstraZeneca product

Seroquel had worldwide sales of $5.83 billion last year.

(11/28/11)- Pfizer's best selling drug in the world, Lipitor, the cholesterol lowering medication is due to come off patent on November 30. The company has begun a multi-pronged effort to extract additional sales from the drug once the patent expires.

Once a patent expires, the company that is the "first to file" for a generic drug version of the medication has 6 months of exclusivity to sell its generic version of the drug before other generic drug companies can sell their version of the product.

The price of the drug falls about 10% during this 6-month period of time, and by up to 80% afterwards, according to DRX Inc., a health-care data firm.

On the one front, Pfizer has begun an aggressive campaign to maintain sales of its "branded" generic version of the drug by offering deep discounts to individuals, pharmacies and prescription benefits managers for the first 180 days after Lipitor is no longer covered by its patents. That price undercuts the price that Watson Pharmaceuticals and Ranbaxy Laboratories of India will offer their generic versions of the drug from December through May of 2012, when their exclusivity expires.

The company is also offering $5 discount cards on its website for its generic version of the drug. Ranbaxy has not received final approval from the FDA to market its generic version of the drug because of concern over its manufacturing facility in India.

On another front, Pfizer is partnering with Diplomat Specialty Pharmacy in Flint, Mich., to mail branded generic Lipitor to patients who order the drug directly from Diplomat. Diplomat would bill the patients' health plans. Plans that have contracted with Pfizer would pay a lower generic price for the drug during this 6-month period of time than plans that have not contracted with Pfizer.

Pfizer has continued to spend heavily marketing Lipitor, having spent $659 million over the past 12 months, according to Cegedim Strategic Data.

Once the 180 day exclusivity period of time has elapsed it might not pay for Pfizer to continue to push branded generic version of Lipitor, since the generic companies that would enter the market at that point probably would undercut the price to less than what Pfizer is selling it for.

(9/10/11)- The Senate approved, and sent on to the president a bill that would make sweeping changes in the nation's patent laws. The bill would also provide additional financing for the Patent Office. The bill passed in the Senate by a 89 to 9 vote, approved the same measure as passed by the House in June.

President Obama is expected to sign the bill shortly. It took over 6 years of contentious debate for the law to be finally passed by Congress.

The bill, known as the America Invents Act, changes the method for determining the priority of patent applications to a "first to file" system, rather than the "first to invent" under the old system.

(7/14/11)- The FDA has given approval to 20 "new molecular entities" as opposed to the 21 that were granted approval in all of 2010. A "new molecular entity" is a drug that works differently or better than an existing drug.

According to Credit Suisse analyst, Catherine Arnold, there are presently 20 innovative drugs in the pipeline of the pharmaceutical companies with the potential for annual sales of $1 billion or more which have a strong chance of gaining FDA approval over the next 3 years.

Pharmaceutical companies spent $45.8 billion on research and development, or 17% of their revenue in 2006, according to Bernstein Research, a Wall Street research firm.

(2/23/11)- In 2011 and 2012 five blockbuster drugs will be coming off patent. They are:

• Zyprexia from Eli Lilly with $2.5 billion in U.S. sales in October 2011. The drug treats schizophrenia.
• Lipitor from Pfizer with $5.3 billion in U.S. sales in November 2011. The drug treats high cholesterol.
• Lexapro from Forest Laboratories with $2.3 billion in U.S. sales in March 2012. The drug treats depression.
• Plavix from Sanofi-Aventis/Bristol-Myers Squib with $6.2 billion in U.S. sales. The drug treats cardiovascular disease.
• Singular from Merck with $3.2 billion in U.S. sales. The drug treats asthma and allergies.

Source: the companies

One of the proposals contained in President Barack Obama's2012 budget blueprint is one in which the Federal Trade Commission would be empowered to stop the controversial settlement of patent litigation abuse wherein a brand name drug company "pays off" the generic drug company in order to be able to extend the life of its patent.

When the life of a patent is about to expire, the patent holding drug company often will try and prolong the life of its patent by bringing a patent infringement lawsuit against a generic drug challenger to the patent. Please keep in mind that if a patent violation is proven, the offending generic drug company can be liable for up to treble the amount of damages.

With the threat of treble damages overhanging it, the generic drug company will accept a monetary settlement and delay the introduction of its product, since it would be receiving a payment from the patent holder to do so. On the other hand the patent holding drug company benefits since it is able to get the higher price for its product for a longer period of time.

This proposal is trying to remedy a very difficult area of the law. Both the patent holding drug company and the generic drug company seeking to have its product available in the marketplace can always argue that they settled the case since they never could be sure how the patent infringement case would be decided in a court-of-law..

(2/15/10)- As we noted in our item dated 3/29/05 highlighted in red below and in several of our items in Part I of the article entitled "Patents and Prescription Drugs-Part I" India agreed to abide by patent laws in its agreement with the World Trade Organization.

India's courts and patent office have not been adhering to the agreement in the eyes of several of the pharmaceutical companies.

The Drug Controller General of India is the equivalent of the U.S. Food and Drug Administration. There is no law in India, similar to the one in this country that prevents a generic drug company from making and producing a patented drug while a patent infringement lawsuit is pending nor does that county have a "triple damages" provision in case a patent has been adjudicated to have been infringed upon,

In addition to this, the Indian patent office can refuse to grant a patent for a drug if it does not demonstrate improved efficacy from an older patented form of the medication.

This latter exception might be one that we should look into in this country, especially in the matter of medical equipment, where copyrights are granted even if the latter piece of medical equipment does not improve on an earlier version.

(2/9/10)- Boston Scientific, the medical equipment manufacturing company, announced recently that it would pay $1.725 billion to a unit of Johnson & Johnson to settle a long-running patent dispute between the two companies over patents for coronary stents. This would be the largest sum ever paid to settle a patent litigation, surpassing the payment by Medtronic of $1.35 billion to Dr. Gary K. Michelson, the developer of spinal implants in a deal reached in 2005

In that deal, Medtronic paid $550 million to settle a lawsuit and also paid $800 million to acquire Dr. Michelson's patents.

Boston Scientific said it would pay $1 billion to Cordis, the unit of J&J involved in the dispute, with the balance of $750 million to be paid early in January of next year.

The settlement between Boston Scientific and J & J is in addition to a $716 million payment by Boston to J & J under a September settlement on 14 other patent-infringement lawsuits.

Drug coated stents accounted for 20% of Boston Scientific's total revenue of $8.05 billion in 2008.

(1/22/10)- The House version of the health reform legislation includes a provision that would block deals between brand name drug manufacturers and generic drug makers that delays the entry of the generic version of the drug to the market place. The Senate version of the legislation does not contain such a provision.

The Congressional Budget Office estimated that the House version of the bill could save the government $1.8 billion in health costs over the next 10 years. A group of nine Democratic senators, led by Senator Herb Kohl of Wisconsin, sent a letter to Senate majority leader Harry Reid, urging that a ban be included in the final legislation.

The Federal Trade Commission has estimated that such deals currently cost the American consumer about $3.5 billion a year.

Generics account for about 22% of prescription drug spending in this country, even thought they represent about 75% of the prescriptions written by the medical professionals according to IMS Health, a drug-data consulting firm.

Putting it another way, 78% of the nation's drug bill arises from only 25% of the prescriptions written.

Jon Leibowitz, the chairman of the Federal Trade Commission said: "These sweetheart deals are being done on the backs of consumers…From the perspective of the Federal Trade Commission these deals are one of the worst abuses across the board in health care and should be stopped."

(1/10/10)- Generic drug manufacturers and patent holding brand name pharmaceutical companies continue to "settle" patent infringement lawsuits to the detriment of the drug consumers. In the latest example, AstraZeneca PLC and Teva Pharmaceutical Industries Ltd announced that they had settled Astra's lawsuit against Teva for patent infringement in connection with its heartburn medication Nexium.

This will mean there will be no generic version of the drug from Teva, the Israeli based generic manufacturing company, until after May 27^th 2014, which is the date when Astra will allow Teva to have a license to sell the drug in the U.S., subject to regulatory approval.

As part of the settlement Teva conceded that all of AstraZeneca's patents at issue in the litigation were "valid and enforceable". Teva also conceded that 6 of Astra's patents for its generic version of Nexium were infringed by Teva's generic esomeprazole.

Nexium, also known as esomeprazole magnesium, was the third-largest selling drug world-wide in 2008, with annual sales of $5.2 billion.

The companies also announced the settlement of patent litigation relating to Astra's gastrointestinal drug Prilosec. As part of that settlement, Teva will make a one-time payment to Astra relating to past sales of that drug. Teva will however be allowed to market its generic version of omeprazole.

The Nexium settlement will mean that the consumer will have to wait until May 2014 before he/she will be allowed to buy a cheaper version of Nexium. Since Teva will be able to sell the approved generic version of the drug through the license from Astra it gains the added clout of being able to sell its "approved generic version" of the drug.

(12/18/09)- Eli Lilly and Co. will have 4 blockbuster drugs coming off patent in the years 2011-2014. The drugs are Zyprexa for schizophrenia; Cymbalta the antidepressant; Gemzar the cancer drug and Evista for osteoporosis treatment.The lack of a pipeline of blockbuster new drugs coming on stream is probably the major reason why Lilly consumated its recent merger with Wyeth Labs.

Merck & Co. recently effectuated a major merger in the drug industry with Schering Plough, and as competition continues to decrease in the pharmaceutical industry, the consumer will be paying more for prescription drugs.

A drug is considered a blockbuster drug if it attains sales of $1 billion or more in a year.

(12/6/09)- Abbott Laboratories and Teva Pharmaceuticals Ltd announced that they have reached a settlement in their long standing patent violation lawsuit that will postpone the sale of a generic version of Abbott's blockbuster cholesterol drug TriCor until March 28, 2011, at the earliest.

The drug, which is generically known as fenofibrate, was discovered in the 1960s, and its underlying patent had expired by the time Abbott licensed the U.S. rights.

The litigation dates back to 1999, one year after Abbott began selling TriCor in the U.S. under patents for a new way to make it. The FTC has sought to challenge these "pay-for-delay" settlement deals, and several states have filed antitrust lawsuits in connection with TriCor. Abbott has introduced a new, branded version of the drug called TriLipix that was approved last year, but is basically the same drug.

Teva could have begun selling its generic version of TriCor in the third quarter of 2010, if the settlement had not been worked out.

Fenofibrate's founder, Laboratoires Fournier SA of France has also agreed to the settlement.

Abbott has made several modifications to TriCor over the years that the company said improved the drug, but critics contend that these changes were a ruse and designed to thwart generic competition for the drug.

The deal with Teva involves a tablet with a 145-milligram dose, which accounts for the majority of Abbott's TriCor sales.

Abbott agreed last year to pay $184 million to settle litigation alleging that the company modified TriCor to prevent pharmacists from automatically substituting generic equivalents, a practice known as "product switching.".

(10/21/09)- IMS Health, a drug data and consulting firm estimated that about $22 billion in branded drug sales would go off patent this year, with an additional $12 billion coming off patent next year. On the other hand MHS, another drug data and consulting firm estimated that $13.4 billion would come off patent this year and another $8.8 billion would come off patent next year.

(8/3/09)- In the latest example of a country bypassing the patent rights of the drug companies, President Gloria Macapagal, of the Philippines, declared an executive order, under the doctrine of a country's "right to protect its public health" that set the maximum price for 5 drugs that still had patent protection. The drugs involved in the price setting regulation are used to treat high blood pressure, cancer or high cholesterol.

A country has the right to declare a "health emergency", and to see some further examples of this occurring, please go to some of our items in Part I of this series of articles.

Under a 2008 Brazilian law, health officials deemed 21 brand-name drugs "essential" and recommended price controls. India and Brazil's drug industry have been in the forefront of this movement among developing world countries.

(7/13/09)- India's Intellectual Property Appellate Board upheld a 2006 decision by the country's Patent Office to reject a patent for Novartis AG's Gleevac. Gleevac is the company's cancer drug that garnered $3.67 billion is sales worldwide last year. For additional information on this case, please see our item dated 8/12/07 below.

The decision stemmed from a section of the country's patent law, adopted in 2005, that prevents companies from patenting new versions of older drugs unless they offer significantly better efficacy. The law lets companies seek patents for medications invented after 1995, or for new and more efficacious versions of older drugs.

India's Patent office rejected Novartis's Gleevac application in 2006 because it said the application for the drug wasn't that different from a version invented in 1993.

Groups such as Oxfam and Doctors Without Borders said that the Indian law is good for public health because it prevents companies from patenting medicines unless they are truly new.

India adopted its law in 2005 to fulfill its obligations as a member of the World Trade Organization. Prior to this law, Indian law allowed domestic companies to sell copies of drugs patented in the West as long as they changed the process for making the drugs.

There are many health professionals who feel that this country should adopt a similar type law here.

(4/8/09)- The situation has arisen frequently in the past, wherein a patent holding drug company reaches an agreement with a generic drug company that delays the generic version of the drug for many months or even years. These agreements prevent the introduction of the generic version of the drug, and this in turn means the consumer ends up paying more for their drugs.

According to Scott Hemphill, an associate professor at Columbia Law School in New York City, there are presently 10 brand-name drugs with about $17 billion in sales annually in the U.S. that are now protected by such agreements.

Senator Herb Kohl (Dem-Wis.) has introduced legislation in the Senate that would make this type of agreement illegal, and Rep. Bobby L. Rush (Dem-Ill.) introduced a similar bill in the House. President Obama has strongly backed this type of legislation, and he even co-sponsored a similar bill in the Senate last year that never saw daylight.

The FTC has fought these "pay to go away" agreements, but the courts have generally upheld these pacts even though it has been quite costly to the consumer. Since 2001, the FTC has brought six suits to block these deals, but is has been unsuccessful up till now.

(4/7/09)- The U.S. Court of Appeals for the Federal Circuit overturned much of the trial judge's decision in the GlaxoSmithKline PLC case that we discussed in our item dated 11/10/07 below. The case was sent back to the trial judge for further study. Glaxo had sought a temporary restraining order from the court to prevent enforcement of new rules that had been promulgated by the U. S Patent and Trademark Office in 2007.

Glaxo had argued that the Patent Office did not have the authority to make the changes that it promulgated.

One of the changes upheld is a rule that would require an inventor who makes a large number of claims as to what a patent covers, to provide details on why the "continuation" is eligible for patent protection.

The appellate court struck down the provision that would limit to two the number of times an inventor can file a patent "continuation", that we explain in the item dated 11/10/07.

Glaxo said it is reviewing its options in the case since the appeals court said the company has the opportunity to make different legal arguments in the case.

(12/14/08)- The U.S. Court of Appeals for the Federal Circuit, which hears patent appeals, upheld a ruling by the Federal District Court for the Southern District of New York that said Sanofi-Aventis' patent for the active ingredient in Plavix was valid. To find out more about this case in detail, please see our items dated 6/9/07; 9/1/06 and 8/20/06 below.

(8/13/08)- Pfizer Inc. said that it had agreed to settle its pending litigation with the Canadian generic drug manufacturing company Apotex Inc. over its patent violation claim involving its cholesterol-lowering drug Lipitor. In the lawsuit Pfizer's claim for the patent violation pertained to Apotex's sale of a generic cholesterol drug in Canada.

The report of the settlement appeared in the recently filed quarterly report that Pfizer had filed with the Securities and Exchange Commission. The company did not provide the details of the settlement.

As we pointed out in our item dated 6/30/08 below, Pfizer and the Indian generic drug manufacturing company Ranbaxy Laboratories Ltd settled a patent violation lawsuit so that a generic version of Lipitor can not be introduced in this country until November 2011.

Even though we do not know the terms of the settlement, we at therubins are not going too far out on a limb when we predict that the consumer will once again pay more for a longer period of time as a result of this settlement.

(6/30/08)- Pfizer Inc. and Ranbaxy Laboratories Ltd, an Indian generic drug manufacturing company have reached a settlement in their lawsuit over the cholesterol lowering drug Lipitor. The settlement will mean that the cheaper generic version of the drug will not become available in this country for an additional 20 months, or not until November 2011.

Once again the consumer will have to pay more for a medication because of a settlement between a brand drug manufacturer and a generic drug company

Lipitor is the best selling drug in the world with about $12.7 billion in sales last year. The drug accounted for more than a quarter of Pfizer's $48.6 billion in sales last year. Daiichi Sankyo Co. of Japan announced recently that it plans to buy a majority stake in Ranbaxy for $3.4 billion to $4.6 billion.

As part of the settlement agreement, Pfizer granted licenses to Ranbaxy authorizing the company to sell generic Lipitor in seven other important countries, i.e. Australia, Canada, Belgium, Germany, Italy, the Netherlands and Sweden.

The deal will let Ranbaxy sell its generic version of the drug two to four months before the patent expires in those specified countries. Pfizer also agreed to drop its challenge Ranbaxy's current sale of a generic Lipitor in four other countries- Brunei, Malaysia, Peru and Vietnam.

Both companies said that no monetary payments were made in connection with the settlement agreement.

The agreement also will allow Ranbaxy to sell a generic version of Caduet, a pill that combines Lipitor and the blood-pressure medication Norvasc, seven years before its patent expiration in 2018. Pfizer had sued Ranbaxy for patent violation in connection with this drug also. Caduet had $568 million in sales in 2007.

FTC approval is required before the agreement can go into effect. Sales of Lipitor have dropped since a generic version of Merck's Zocor entered the market last year.

(6/12/08)- One of Abbott Laboratories biggest money making drugs is its cholesterol lowering medication TriCor which had $1.2 billion in sales in the United States last year. The drug is the subject of state and federal investigations in regards to anti-trust violations, and also as to the validity of the drug's patent.

The drug was first used in the 1960s,when the drug was known generically as fenofibrate. The drug, at that time was discovered by Laboratories Fournier of France, which began selling the product in Europe in 1975. Abbott licensed the U.S. rights to the drug and won approval from the FDA to market it under the brand name of TriCor. The drug's underlying patent had expired, but Abbott patented a new way to make it.

The generic-drug company Novopharm Ltd, which subsequently has been acquired by the Israeli generic drug company Teva Pharmaceuticals Industries Ltd, applied to the FDA to market its generic version. Abbott brought a patent violation lawsuit against them which triggered the 30-month waiting period under the terms of the 1984 Hatch-Waxman Act.

Abbott altered the product by lowering the dosage of TriCor, and changed it to a tablet form, from a capsule form. After filing a patent claim on this modified form of the drug, Abbott bought back all the remaining supply of the capsules from the pharmacies, and replaced them with the tablet lower-dosage form.

When the 30-month holding period had elapsed, and Teva was ready to begin sales of its generic version of the higher dosage capsule form, TriCor was now in a different lower dosage tablet form. Since Teva's generic capsules were no longer technically bio-equivalent the whole ball game had now changed.

In June 2002, Teva asked the FDA for permission to sell its generic version of the TriCor tablets. Abbott once again used the terms of the Hatch-Waxman Act to gain another 30-month delay from having to deal with the generic version of the drug.

After courts had repeatedly ruled against Abbott in the patent litigation, the company dropped the lawsuits in 2005. Teva has since filed counter suit alleging that Abbott's actions violated antitrust laws. This suit is scheduled for trial in November.

In the past several months two dozen state attorneys general have effectively sided with Teva, and the FTC is also investigating the matter.

(5/28/08)- An analysis of recent settlements between pharmaceutical companies and generic drug companies that was done by the Federal Trade Commission for the 12-month period that ended last September 30^th, concluded that the majority of the settlements delayed the introduction of the generic version of the drug for many months.

In addition to the delay in introduction of a generic version of a drug the vast majority of the settlements called for payments to the generic drug companies for this postponement, much to the detriment of the consumer.

Pharmaceutical companies must report these settlement agreements to the FTC under a law that was passed by Congress in 2003. The agency has sued to block some of these settlement agreements, and there is legislation now pending in Congress to make this type of agreement illegal.

Two appeals courts ruled in 2005 that similar agreements reached by Schering Plough Corp,, and AstraZeneca PLC with generic drug companies were legal.

The analysis showed that these restrictive settlements increased from three in the fiscal year2005 to 14 in 2005 and 14 in 2007.

"Pay-for-delay settlements continue to proliferate, " said FTC Commissioner Jon Leibowitz, which "is good news for the pharmaceutical industry, which will make windfall profits from these deals. But it's bad news for the consumers, who will be left to foot the bill."

In 11 of the 14 settlements that occurred last year, the brand name drug company agreed not to introduce its generic version of the drug once the generic drug company was able to introduce its version of the drug.

(4/24/08)- AstraZeneca PLC, the British brand name drug manufacturing company, and Ranbaxy Laboratories Ltd. the Indian generic drug manufacturer announced that they had settled their patent litigation, and once again it will be the consumer who gets hurt by the pact. Astra had sued Ganbaxy for patent violation of its blockbuster heartburn drug Nexium.

Nexium had U.S. sales of $5.5 billion last year according to IMS Health data, which made it the second-biggest selling drug in this country, trailing only Pfizer's cholesterol lowering drug Lipitor.

Astra announced at the same time that it was awarding some valuable contracts to Ranbaxy, saying that they were separate from the litigation settlement. The U.S. Federal Trade Commission has to give its stamp of approval to these agreements, but once again it seems to us that the side agreements are intended to keep a generic version of a profitable brand name drug off the market for a lengthy period of time.

Astra had sued Ranbaxy in federal court in New Jersey after the generic drug company had requested approval from the FDA to begin to sell its generic version of Nexium. Once a suit is instituted a generic drug company must wait 30-months before being able to sell its generic version of the drug. That 30-day holding period ended this month.

Under the terms of the settlement, Astra will drop its lawsuit for patent infringement and allow Ranbaxy to start selling generic copies of Nexium on May 27, 2014, which is the date on which the earliest patents for the drug expire. Ranbaxy will have exclusive rights to sell its generic version of the drug for the next 6 months therafter.

Under the terms of the separate contract Ranbxy will be allowed to start making a portion of Nexium's supply in 2010. Ranbaxy will also start supplying Astra with the active pharmaceutical ingredients it used to make Nexium in May 2009. Astra will also give Ranbaxy the right to distribute generic versions of two older Astra drugs-Plendil for hypertension and Prilosec (the prior generation heartburn medication to Nexium), in the U.S. Incidentally there are many medical experts who assert that Nexium and Prilosec are one and the same.

Astra still faces battles with other generic manufacturers of Nexium as well as the company's drug to treat schizophenia, Seroquel in the U.S. If Ranbaxy began to sell its generic version of Nexium at the end of the 30-day holding period, it might have been held liable for treble damages if Astra prevailed with its patent claim.

(3/20/08)- The issue of compulsory licensing in connection with prescription drug patents continues to be in the news these days in many third world countries because of the high costs for some drugs. Several of these countries feel that the public interest and health of its residents outweighs the rights of patent holders. This matter has come into the news once again as Thailand's new health minister urged the government to ignore the patents on several cancer drugs being used in that country.

For some additional information on this topic please see our items dated 5/7/07; 4/24/07; 3/21/07; 3/16/07 and 2/12/07 below. In these items we discuss Abbott Laboratories battle with the Thai government on this issue, and also some of the drug companies that we mention below.

A spokesman for the minister, Chaiya Sasomsup said that he would advise the government to seek compulsory licensing for several cancer fighting drugs that were just too expensive for the Thai people. Under the doctrine of compulsory licensing, the government can force a patent holding company to award a licensing agreement to the government, which in turn could pass the right to make that drug at a much cheaper price to a generic drug company.

Thailand's previous health minister, Mongkol na Songkhla decided in January to issue compulsory licenses for four drugs: Novartis' imatinib, also known as Gleevec; Novartis' breast-cancer drug letrozole, whose brand name is Femara; Sanofi-Aventis docetaxel, marketed as Taxotere, and used to fight lung and breast cancer; and Roche's erlotinib, which is marketed under the trade name of Tarceva.

Novartis has offered the Thai government to sell the drug to the poorest of the Thai people at no profit but the government felt that even at cost level the drug was too expensive for the residents of that country.

(12/10/07)- The number of blockbuster drugs (sales over $1 billion) coming off patent protection continue to be a major concern for the drug companies. Seven of the top 10 drug launches in 2006 were for generic drugs. Drugs with a combined annual sales of about $60 billion will be coming off of patent protection in the next five years. Here is a list of some of the blockbuster drugs that will be coming off patent from 2008 through 2012:

2008
Johnson & Johnson's Risperdal which had $2.5 billion in peak U.S. sales
Merck's Fosamax which had $2.0 billion in peak U.S. sales

2009
Abbott/Takeda's Prevacid which had $3.2 billion in peak U.S. sales
Johnson & Johnson's Topamax which had $2.1 billion in peak U.S. sales

2010
Pfizer's Lipitor, which is presently the best selling drug in the world with close to $12 billion in sales.
Wyeth's Effexor/XR which had $2.7 billion in peak U.S. sales.

2011
Bristol Myers/Sanofi's Plavix which had $5 billion in peak U.S. sales
Lilly/Takeda/Watson's Actos which had $4.4 billion in peak U.S. sales
Lilly's Zyprexis which had $2.6 billion in peak U.S. sales

2012
AstraZeneca's Seroquel which had $4.4 billion in peak U.S. sales
Merck's Singular/AR which had $3.4 billion in peak U.S. sales.

(11/10/07)- A federal court in Virginia granted GlaxoSmithKline PLC's request for a preliminary injunction blocking the U.S. Patent and Trademark Office from implementing new rules that were scheduled to go into effect that would have reduced the number of times a patent applicant could contest or amend rejected or pending patent claims.

Previously, applicants could file an unlimited number of amendments or challenges, known in the industry as continuations. Under the new rules, applicants would have the right to file two continuations, but anything above that would have to be accompanied by an explanation justifying the request.

In the pharmaceutical industry, new information about a drug becomes known after the initial patent application has been filed. By filing a continuation to the application a pharmaceutical company still would retain the original filing date.

Continuation requests accounted for nearly 30% of all patent applications in 2006, and the patent application backlog is over 750,000.

Legal experts feel that the case won't be decided until next year at the earliest.

Please keep in mind that Congress is expected to act on a patent-reform bill shortly after it reconvenes in November. The new bill is designed to curtail the power of patent holders by reducing damage awards for infringement,, limit venue choice in patent litigation and create a new way to challenging a patent's validity after the patent has been approved.

(8/19/07)- The U.S. Patent and Trademark Office has preliminarily rejected Pfizer Inc.'s request for the reissue of a patent for its Lipitor cholesterol drug that would have preserved its U.S. market exclusivity until 2011. For additional information on this matter please see our item dated 10/26/06.

The patent was invalidated in 2006 by a federal appeals court after it was challenged by Ranbaxy Laboratories Ltd, while a second patent was upheld by the court, thus preserving Pfizer's Lipitor patent until March 2010.

Lipitor is the largest selling drug in the world with almost $14 billion in sales in 2006.

(8/12/07)- Indian drug companies provide 84% of the drugs to fight HIV and AIDs that Doctors Without Borders supplies to patients worldwide. They also provide more than 25 % of the other essential drugs used by that organization.

In a case brought in January 2006 before the High Court in Madras (Chennai), Novartis the Swiss drug company sought to seek a patent for its AIDs and leukemia drug Gleevec which had previously been denied for the modified form of the drug. The application for the patent had been denied on the grounds that the new drug was insufficiently different from the previous version.

The court ruled against Novartis. Dr. Ranjit Shaani, a vice-president of Novartis said in a statement: " We disagree with this ruling, however we likely will not appeal to the Supreme Court."

Indian law says a drug qualifies for a patent when it is a new invention or a significant improvement to an existing one. The law denies patent protection to new versions of drugs invented before 1995.

Novartis argued that the section of the law prohibiting patents for any drug that is not an "incremental innovation" violates the World Trade Organization's agreement on trade-related aspects of intellectual property rights. Novartis charges about $2,600 for a month's supply of the drug.

The court ruled that it was not the proper forum for deciding whether the laws were compliant with WTO rules, and that the WTO was the proper forum for this matter to be decided in. The WTO rules on matters involving countries not companies, so in affect this prevents Novartis from going that route.

In 2005 India adopted a new patent law to fulfill its obligations as a member of the WTO. That law lets drug companies seek patents on medicines invented after 1995 or for new and more efficacious versions of older drugs. When India rejected Novartis's Gleevec patent filing it said that the version that the company was seeking a patent for was not significantly different from the version that was patented in 1993.

Novartis is awaiting a ruling in a separate case before the intellectual property rights appellate board in Delhi, appealing the earlier decision not to grant a patent for the modified form of Gleevec.

(7/13/07)- The European Commission, which is responsible for negotiating trade agreements for the 27- nation European Union announced that it would exclude pharmaceutical patent protections from any future trade deals with third world countries. The move came after the European Parliament called for such a move in order to help poorer countries overcome the high costs for medications.

It is estimated that almost 12 million deaths occurred in these countries because their governments could not afford the cost of some life threatening prevention drugs.

The European Parliament said a 1994-global trade agreement on intellectual property rights has restricted the development of affordable generic drugs in these third world countries.

(6/18/07)- Lawmakers in both the House and Senate have introduced similar legislation that would effectuate changes in the U.S. Patent Act of 1952 Under the legislation patents would still be granted by the government for as long as 20 years.

There would be several changes to the patent law if the new legislation is passed by Congress and signed by the president. One of the changes would be to create a "first to file" system for granting patents, which is the system that is used throughout much of Europe. Under this system a patent would to to the first individual or entity that filed a claim with the government.

Another proposal would make it easier to challenge a patent already approved by the U.S. Patent and Trademark Office. Patents today can be challenged in one of two ways: through a special administrative proceeding with the agency or through litigation. The proposed legislation would create a third methodology by having a three-judge tribunal what would consider the validity of patents.

(6/9/07)- Bristol-Myers Squibb Co., has agreed to plead guilty to misleading the FTC, and to pay a $1 million fine in connection with the deal it had struck with Apotex Inc., the Canadian generic drug company. The deal attempted to delay the introduction of Apotex's generic version of its $5.8 billion blood-thinning drug Plavix. To learn about this case, please see our items dated 9/1/06, 8/20/06 and 8/10/06 below.

Sanofi-Aventis, Bristol's marketing partner for the drug said that it is not likely that it would face prosecution in connection with the matter.

Bristol's plea remains subject to a judge's approval, and authorities continue to investigate the deal.

(6/3/07)- AstraZeneca PLC, the British drug company announced that a judge in the U.S. District Court for the Southern District of N.Y. found that two of its formulation patents were valid, and that Impax Laboratories Inc., and Apotex Corp., the Canadian generic drug company infringed those patents.

Teva Pharmaceutical Ltd of Israel markets the infringing Impax product in this country. The AstraZeneca patents have been under attack since 2002

The court also found however that the generic omeprazole products sold by Lek Pharmaceutical and Mylan/Esteve did not infringe on AstraZeneca's patents.

(5/15/07)- The financial-services and business-software industries are squaring off against the pharmaceutical industry in connection with pending changes by Congress to the patent law. If enacted, this would be the first change in the patent law in this country in 50 years.

Rep. Lamar Smith (R.-Tex) who is the highest ranking Republican on the Judiciary Committee, and Rep. Howard Berman (D.-Ca.) who is chairman of the Judiciary's subcommittee on Court, Internet and Intellectual Property, are sponsoring the new legislation.

The bill would require patent holders be given a "reasonable royalty" for patent infringements, but would limit that to the economic value of the patent's "specific contribution over prior art", or the value of the new "thing' the patent reflects rather than the value of the entire product of which it is a part.

The bill also would create a third way for someone to challenge a new patent. Up to now, patents can be challenged only through a re-examination of the U.S.Patent Office's proceeding or through litigation.

(5/7/07)- Negotiations have broken off between Merck & Co. and the Brazilian government over the cost of the company's anti-AIDS drug Efavirenz. The government declared the drug a "public interest" medicine and therefore under World Trade Organization rules, Merck has 7 days to negotiate the price of the drug.

If the parties can not agree on the price of the drug within that 7-day timeframe, the Brazilian government can import generic versions of the drug while sidestepping patent violations. Brazil had wanted the company to cut the price to 65 cents a pill as opposed to the $1.57 the company now charges the government.

(4/24/07)- The U.S. Supreme Court has upheld the decision of the U.S. Court of Appeals, which affirmed a lower court ruling that Pfizer's patent for Lipitor, was still valid. For more on this case see our article of 10/25/06 below.

Abbott Laboratories of Abbot Park Ill. is now offering to sell one of the 7 medications that we discuss in our item dated 3/16/07 below at a discounted rate. That drug is the new form of their AIDS drug Kaletra, which is also known as Aluvia in some countries.

Jennifer Smoter, a spokeswoman for Abbott, said Thailand's health ministry has expressed interest in the offer, but a resolution has not been reached on the matter. In changing course on this one drug, the company hopes that Thailand would not exercise its right of compulsory licensing of the drug to a generic manufacturer because of a national health emergency.

Under the doctrine of compulsory licensing, the licensee is compelled to license its patent to a government. Once the government holds the license, it is free to import copies of the patented product or make the product itself. The Thai government has a drug-manufacturing arm that is capable of copying foreign drugs, although it typically turns first to generic-drug makers in places like India.

In backing down, Abbott is joining Merck & Co. and Sanofi-Aventis SA which previously cut the prices of their AIDS and heart disease drugs in the hope of stopping the Thai government from allowing generic versions of their drugs to be made and sold in that country.

(3/21/07)- Daniel Christman, an executive with the U.S. Chamber of Commerce said that the Thai government would continue to meet with executive of the pharmaceutical industry in order to try and resolve the rift with the companies and their patent rights.

A meeting with the cabinet officials produced hope that the government and the pharmaceutical companies could resolve their dispute. "What we found here was a willingness of Thai government officials to continue a dialogue which, in their view, has been uninterrupted."

The U.S. Chamber of Commerce said a survey of 234 foreign business executive this month showed Thailand's new economic policies and poor intellectual property safe guards could disrupt foreign investment.

As our item of 3/16/07 below stated the threats and bluster is part of the negotiating process that has now evolved in connection with drug price negotiations throughout the world.

(3/16/07)- Abbott Laboratories, based in Abbott Park, Ill., announced that it had withdrawn its application for 7 new medications in Thailand in order to protest the government's refusal to abide by the company's patent rights for its AIDS drug treatment Kaletra. In addition to Kaletra, the Thai government also will allow a generic version of Sanofi-Aventis SA of France to be produced even though patents protect the drug from being made by generic drug companies.

Abbott will continue to sell all drugs in Thailand that it had previously been selling in that country. The company feels that this is the only way that it can protect its newly patented drugs.

Abbott sells a yearlong supply of Kaletra to Thai patients for $2,200, less than half the $7,000 that the drug costs patients in the U.S. The company sells the drug at an even deeper discount, $500 a person a year, in certain countries in Africa, including Malawi and Kenya.

In reality this is a method that the drug companies will be using more and more as they try to negotiate drug prices with third world countries. Stay tuned because the bargaining will continue, and we will keep you posted as to how things turn out.

(2/27/07)- In our item dated 1/18/07 we wrote " The Supreme Court of the United States ruled in an 8 to 1 decision that the holder of a patent's license can sue to challenge the patent's validity without first refusing to pay royalties and putting itself in breach of the license agreement."

In a follow up development the U.S. Patent and Trademark Office has decided to revoke a fundamental patent held by Genentech that covers techniques for making monoclonal antibodies that is known as the Cabilly II patent. In revoking the patent, the patent office said that it was similar to the patent for Cabilly I, which expired last year.

This was therefore a matter of double patenting the same invention, and would inappropriately extend Genentech's patent by 12 years.

Both Genentech and Celltech, a British company that is a unit of UCB were awarded patents covering similar antibody technology in 1989. Genentech then added some claims from the Celltech patent to a second patent application that it had previously filed on the same work. That forced the patent office to decide whether Genentech or Celltech was the first inventor.

In 1998 the patent office ruled in favor of Celltech. Genentech then brought a suit in the Federal District Court in Northern California. In 2001 the two parities reached a settlement agreeing that Genentech was the rightful inventor. The court ordered the patent office to grant a new patent to Genentech, which is the Cabilly II patent that does not expire until 2018 even though the original Cabilly and the Celltech patents would have expired in 2006.

The terms of the settlement between Genentech and Celltech have never been revealed, but Celltech has shared in some of the royalties from Cabilly II.

(2/12/07)- Thailand may become the next trouble spot for the pharmaceutical industry, as it tries to protect drug patent rights. Thailand's new, military installed government announced that it had approved the sale and production of generic versions of Plavix (Sanofi-Aventis and Bristol-Myers), the blood thinning medication and Kaletra, the HIV cocktail made by Abbott Laboratories of Abbott Park, Ill.

Two Indian generic drug companies will manufacture the generic versions of the drugs. According to Thawat Suntrajarn, director general of the Ministry of Health's department of disease control the move is necessary because the government does not have sufficient funds to pay for these drugs from their present patent holding drug companies.

The Indian generic drug companies with whom the government is negotiating are Hetero Ltd, and Cipla Ltd.

Thailand's government has already suspended a foreign company's drug patent when it announced late last year that it would allow domestic production of Merck & Co.'s AIDS drug Efavirenz.

This is just the beginning of the bargaining process between the Thai government and the patent holding drug companies, since the officials are hoping to drive down the price of the drugs in question to levels that the government thinks it can afford.

(2/5/07)- A judge in the Canadian Federal Court in Toronto ruled that a Pfizer patent covering a key ingredient in Lipitor could not be used to block a generic version of the drug from being brought to market. Pfizer said it would appeal the ruling. That patent protects Lipitor until 2010, according to the Pfizer argument in the case.

The patent would have protected Lipitor in Canada until July 2010. Ranbaxy Laboratories Ltd of India is the generic drug company involved in the patent protection suit. Please keep in mind that there is already a generic version of Merck Inc.'s cholesterol lowering statin medication Zocor that is already on the market.

Many of the governmental and private employer drug formularies already require members to use generic Zocor, or impose higher co-payments for the member to continue to use Lipitor.

The Canadian market represents more than $800 million in annual sales last year for Lipitor. Lipitor is the best selling drug in the world with over $12 billion in sales in 2006 worldwide.

(1/18/07)- The Supreme Court of the United States ruled in an 8 to 1 decision that the holder of a patent's license can sue to challenge the patent's validity without first refusing to pay royalties and putting itself in breach of the license agreement. Even though this ruling seems like a minor technical matter it has substantial implications for patent law.

If the license holder had to withhold payments to the patent holder before bringing a lawsuit, the licensee would expose himself to the possible remedy of treble damages, and the loss of the right to continue selling its product.

The case in question involved two biotechnology companies, MedImmune and Genentech. The companies had reached an agreement in 1997 when MedImmune was working on a genetically engineered drug Synagis, used to prevent a respiratory disease in infants. That product has accounted for over 80% of MedImmune sales since 1999, even though the oral flu vaccine FluMist is the product most consumers associate the company with today.

This Supreme Court ruling overturned a ruling by the U.S Court of Appeals for the Federal Circuit, the specialized court that hears all patent appeals. That court relied on a previous case that required a party to breach its license agreement before suing to declare a patent invalid.

MedImmune brought its lawsuit to declare Genentech's patent invalid in the federal District Court in Los Angeles. The company brought its action under the Declaratory Judgment Act, the federal law that requires the existence of an "actual controversy" before a court can act.

Justice Antonin Scalia wrote for the majority in overturning the Federal Circuit's dismissal of the case, MedImmune Inc. v. Genentech Inc., No.05-608.that the plaintiff in seeking a declaration of its actively contested legal rights did not violate Article III of the Constitution. That article of the Constitution limits the jurisdiction of the federal courts to resolving actual "cases" or "controversies". Otherwise, Justice Scalia went on to write you would be requiring the plaintiffs in these types of cases to "bet the farm".

(12/8/06)- The Bill Clinton Foundation in conjunction with France, Brazil, Britain, Norway and Chile announced that they had negotiated deeply discounted prices for 19 AIDS drugs to treat children in third world countries. Three AIDS drugs would be combined into one pill, that would not require refrigeration, and would cost less than $60 a year for each boy and girl.

Each of the countries is putting up $35 million to buy the anti-retroviral drugs and diagnostic tests to treat 100,000 more children in 40 nations next year. The UN AIDS agency estimated that only about 80,000 of the 660,000 children with AIDS who need treatment now get it, and half the children who do not get the drugs die by the time they turn 2 years old.

Cipla and Ranbaxy Laboratories, the Indian generic drug companies will be providing the pills. The price for the 19 pediatric AIDS drugs are on average 45% less than the lowest rated offered to poor countries in Doctors Without Borders listing of AIDS drug prices, and were more than 60% lower than the prices the World Health Organization reported were actually paid by developing countries.

Most of the money was raised by the countries through taxes on airline tickets, a dedicated revenue source suited to ensuring the lifelong treatment of children with AIDS. The Clinton Foundation raised $15 million to train doctors, upgrade pediatric wards and provide other assistance that the countries in Africa, Asia, and the Caribbean will need to treat the additional children next year.

(10/25/06)- Although consumers are able to purchase a generic version of Merck &Co.'s cholesterol lowering drug Zocor, a recent ruling by an appeals court will mean that Pfizer's cholesterol lowering drug Lipitor is safe until March 2010 from having a generic version of their drug. Lipitor was the world's best selling drug last year garnering over $12 billion in sales in 2005. Both Zocor and Lipitor are in a category of drugs known as statins.

Even though a generic version of the cholesterol-lowering drug became available in the 3^rd quarter of 2006, it could not prevent Pfizer's marketing machine from continuing to increase sales of Lipitor. Lipitor had over $3 billion in sales in the 3^rd quarter of 2005, compared to $2.2 billion for the same quarter in 2005.

The U.S. Court of Appeals for the Federal Circuit refused to reconsider an August 2 decision that upheld one of Pfizer's Lipitor patent's, while invalidating a 2^nd patent that was due to expire in 2011.

(9/5/06)- It is interesting to look at the line of reasoning behind the FTC's decision to reject the settlement agreement that was arrived at between Sanofii-Aventis SASY PA and Bristol-Myers Squibb Co on the one hand, and Apotex on the other side in the Plavix patent litigation.

In 2004 there were 14 drug patent validity lawsuits that were settled by agreements among the parties to the legal action. There were no payments made by the patent holders to the party claiming that the patent was unenforceable.

In 2006, at least 6 of the 10 drug patent violation cases have resulted in the patent holding drug company making a "settlement" payment to the generic drug company. In return for the payment, the generic drug company would delay its introduction of its generic version of the drug.

Some FTC officials say that this type of agreement is a restraint of trade, and results in higher costs to the consumers. Deborah Platt Majors, chairwoman of the commission said that she was concerned that payments by brand-name drug companies to the generic drug companies in this type of case may be nothing more than a hidden bribe to the generic company to keep their version of the drug off the market.

As a practical matter agree with this approach by the FTC, and are happy to see that these cases be determined in a court of law. Realistically however we acknowledge the fact of law that parties to a lawsuit have every right to settle a case before it goes to a final determination in the court system.

To show you how fast the sales of branded Plavix have dropped all you have to do is look at the sales figures for the week ended August 25^th. Branded Plavix sales dropped that week to $14.4 million from $62.7 million the week ended August 4. Plavix garnered $3.8 billion in sales in this country in 2005.

(9/01/06)- U.S. District Court for the Southern District in Manhattan Judge Sidney H. Stein granted the motion for a temporary injunction that was sought by Sanofii-Aventis SASY PA and Bristol-Myers Squibb Co. that restrains Apotex from further sales of its generic version of Plavix.

Although the judge granted the motion for the temporary injunction, he did not require Apotex to recall all dosages of the medication that it had been selling since August 8. Judge Stein in his ruling stated that it was likely that Sanofi and Bristol would prevail on the merits of its patent infringement suit.

He went on to say that Sanofi and Bristol would "suffer irreparable harm" if the injunction were not granted. The brand name drug companies will be required to put up a $400 million bond before the case can proceed. The judge set the trial date for the patent infringement suit to begin on January 22, 2007

(8/20/06)- U.S. District Court for the Southern District in Manhattan Judge Sidney H. Stein will hold the second day of hearings on the motion seeking a preliminary injunction against the generic drug manufacturer Apotex to stop the manufacture and sale of generic Plavix.

Sanofii-Aventis SASY PA and Bristol-Myers Squibb Co. are hoping that the judge will also order the recall all of the medication that has been shipped since Apotex introduced the generic version of the drug on August 8.

On Friday, August 19^th the petitioners Sanofi and Bristol presented its side of the case.

Judge Stein said that he would decide on the motion for the injunction based on whether he believed that Apotex could prove that the patent was invalid, whether either side would suffer irreparable harm, and also based on the effect on the public.

It is unlikely that the judge will order a recall of all of the Plavix that Apotex shipped, but as far as Sanofi and Bristol are concerned they have already lost the case. Even if Judge Stein issues the injunction, Apotex has already sold millions of the pills.

The benefit to the public will be small. Apotex cut the price on Plavix by only 10% to 20%. It is likely that Bristol will cut its branded version of the drug by only 10% to 20% to match the pricing of Apotex. It is unlikely that Bristol could continue to sell Plavix at the same price it was selling it at before Apotex came out with its generic version of the drug.

Normally when a drug comes off patent, and a generic version of the drug is introduced, the price goes down about 70%. To find out more about this case see the following item dated 8/10/06

(8/10/06)- The Canadian generic drug company Apotex Inc. announced that it was starting to ship its generic version of the anticlotting drug Plavix, immediately. The news sent shock waves through Wall St. since Bristol-Myers Squibb Co. in the U.S., and Sanofi-Aventis had claimed that the patent on the drug was safe until 2011.

Pfizer’s cholesterol lowering drug Lipitor was the best selling drug in the world last year with over $12 billion in sales for 2005. Plavix was the second best selling drug in the world last year with sales of $6.2 billion worldwide. As we discussed in our item dated 7/29/06, below, Apotex had received approval from the FDA to market its generic version of the Plavix in January 2006.

Bristol and Sanofi brought a patent violation suit against Apotex to prevent the generic version of the drug from being marketed several years ago. The companies announced in March that they had agreed to settle the case, with Bristol and Sanofi agreeing to pay Apotex at least $40 million. As part of the settlement agreement Apotex would be allowed to market its generic version of the drug, on an exclusive basis, 6-months before the patent expired in 2011.

The agreement had to be approved by both the FTC and state attorney generals because of a previous settlement that Bristol had made with the federal government in connection with its drug pipeline stuffing violation.

Both the FTC and the state attorney generals rejected the settlement saying it was harmful to the consumers and violated the law.

Under the terms of the agreement certain provisions would remain valid even if the agreement were ruled illegal by the FTC and the state attorney generals.

Among the terms that are therefore still valid, Bristol and Sanofi agreed not to seek an injunction to halt Apotex from selling its generic version of Plavix for 5 business days after the generic version was introduced. Thus the brand drug companies must wait 5 business days before seeking injunctive relief from the court.

Apotex had manufactured large quantities of the drug, and has begun to sell it to the wholesalers, HMOs and PBMs immediately. It is estimated that hundreds of millions of dollars of the drug will be sold in this short period of time.

It will take the court some time to rule on the motion for the injunction, so Apotex can continue to sell the drug during this period of time. In seeking the injunctive relief Bristol and Sanofi will have to post a substantial bond to protect Apotix in case it wins the case. The cost of the bond may be prohibitive, even though Bristol and Sanofi are two of the largest drug companies in the world.

The brand name drug companies also negotiated away their rights under federal law to seek treble financial damages if they eventually win the patent case. They agreed to limit damages to 50% of Apotex’s net sales of generic Plavix.

A criminal investigation of the settlement between the three parties is being conducted by the Justice Department. The corporate offices of both Bristol and Sanofi were searched by agents of the FBI in connection with the settlement, to see if any side deals were given to Apotex to delay the introduction of its generic version of the drug.

Dr. Andrew Bodnar, a close advisor to Peter R. Dolan, the chief executive of Bristol made several visits to Barry Sherman’s office in Canada. He is the chief executive of Apotex.

The generic version of the drug is called clopidogrel, and is available immediately at what is expected to be priced at 30%-40% lower than Plavix’s price of $4-a-day retail price.

(7/29/06)- The Federal Bureau of Investigation raided two of the offices of executives of Bristol-Myers Squibb Co. in New York, including the office of its chief executive Peter R. Dolan. Agents were seen removing boxes of material from both the offices.

The Justice Department announced that the raids were part of a criminal investigation of Bristol and Sanofi-Aventis, the French drug company of the agreement between these two companies and Apotex Inc. of Canada. That agreement would keep a generic version of the best selling heart-attack prevention medication Plavix off the market for an extended period of time.

Plavix is the 2^nd best selling drug in the world with over $6.2 billion in sales last year. Pfizer's Lipitor, the cholesterol lowering medication is the number one seller in the world with over $12 billion in sales last year.

For earlier facts in connection with the Plavix matter please see our item dated 3/24/06. We had highlighted in "red" some of the key rulings in this case in some of the items below.

Please also see our items dated 7/16/06, wherein the Supreme Court of the U.S. rejected the appeal by the FTC as to the legality of the "settlement" between Schering-Plough and Upsher-Smith Laboratories.

It is not clear as to what the government is investigating in this case. The criminal probe arose from a referral from the FTC to the Justice Department. The FTC and several state attorneys general have been conducting a civil review of the Plavix settlement. Please keep in mind that the Indian generic drug company Dr. Reddy was also planning on introducing its generic version of the drug also.

The FDA had approved Apotex's generic version of the drug in January of this year. Bristol and Sanofi had previously won a patent challenge lawsuit that was brought by Apotex in Canada, but this ruling has no standing in a case brought in the U.S.

Bristol markets the drug in the U.S., and Sanofi markets it throughout the rest of the world. Under the terms of a settlement of a "pipeline drug stuffing" case brought by the government against Bristol, the FTC must approve any settlement that the company makes with a generic drug company.

(7/16/06)- In our item dated 5/7/06, and highlighted in red below, we discuss the issue of the brand name drug companies making "settlement" payments to the generic drug companies who gained the 6-month right of exclusivety after the expiration of a patent.

The Supreme Court of the United States has rejected the appeal by the FTC to the ruling as to the legality of the "settlement" payment by Schering-Plough to Upsher-Smith Laboratories concerning the introduction of a generic version of the drug K-Dur 20, which is a potassium-chloride supplement for the heart.

The effect of the settlement was that the generic version of the drug was kept off the market for 6-months, while Schering continued to have the exclusive right to sell the drug. The administration had asked the Supreme Court to reject the commission's appeal.

The FTC had argued in its appeal that the settlement had violated Section 1 of the Sherman Act and the Hatch-Waxman Act of 1984. The U.S. Court of Appeals for the 11^th Circuit, in Atlanta, found that the settlement did not violate either of the laws, and was simply aimed at resolving a disputed matter.

Senator Charles E. Schumer, Democrat of N.Y., and Senator Charles E. Grassley, Republican of Iowa, said that they would introduce legislation to restrict agreements that block generic drugs from coming to market during the 6-month exclusivety period of time. Two other Democratics, Senator Patrick J. Leahy of Vermont, and Senator Herb Kohl of Wisconsin, said that they would be willing to co-sponsor the legislation.

(6/8/06)- In the continuing conflict between the patent rights of the drug companies, and the obligation of a nation to provide for the health of its residents, President Mwai Kibake of Kenya announced that the government would provide free AIDS drugs in government hospitals and health centers.

The cost had been about $1.40 for some anti-retroviral drugs, but the average Kenyan earns less than $1 per day. The drug companies holding the patent rights for these drugs have continued to negotiate for lower prices with the third world countries that have been faced with the AIDS epidemic, but many of these countries are so poor, that the residents of these countries can't afford to pay for even the sharply lower costing life saving drugs.

(5/23/06)- Lawyers for two patient rights groups in India, the Delhi Network of Positive People and the Indian Network for People Living with HIV/AIDS have asked Indian authorities to stop Gilead Sciences, a California biopharmacy company from patenting the antiretroviral drug Viread in that country. The drug is manufactured in India under its generic name of tenofovir.

The attorneys for the rights group claim that the drug is but a modified version of an earlier drug and therefore not eligible for the new patent drug law in that country. They sat the recent rejection of a patent application by Novartis for the cancer drug Gleevac was rejected on similar grounds.

Gilead's drug sells in the developed world for $5,718 per patient per year, whereas Cipla, the Indian generic drug company sells it version of Tenovir for $700 per person per year in India. Gilead said that it was "pursuing a broad policy of nonexclusive voluntary licensing under the patent to generic manufacturers in India for the local Indian market as well as provision for manufacturers to export product to the 97 developing-world countries included in Gilead's access program."

Over the next five years the brand name drug companies will lose over $47 billion in revenues as a result of patent expirations.

(5/11/06)- The U.S. District Court for the District of Columbia ruled that Teva Pharmaceutical Industries Ltd., of Israel, and Ranbaxy Laboratories Ltd. of India, could market their generic version of Merck's cholesterol drug Zocor free from competition for 6 months. This ruling contradicted a FDA ruling last year that granted as many approvals for generic Zocor manufacturers as successfully petitioned the agency. At least dozen generic drug companies had petitioned the agency for approval to sell their generic version of the drug, which comes off patent in June of this year.

Merck is expected to market a branded generic version of the drug with a generic partner Dr. Reddy's Laboratories Ltd., of India. Teva will market the 10-, 20- and 40 milligram versions of the drug, while Ransbaxy will market the 80-mg version of the drug. The court in affect upheld the right of the first applicants for generic versions of a drug that is coming off patent, to have exclusive right to market it for 6 months.

In having a "branded generic" version of the drug, Merck can at least gain some additional sales for the drug for 6 months, before it is opened to the rest of the generic drug companies.

(5/7/06)- The FTC has brought an appeal to the Supreme Court of the U.S. in connection with payments made by Schering-Plough to Upsher-Smith Labs, wherein Upsher delayed the introduction of its generic version of Schering's potassium-chloride supplement for the heart, K-Dur 20. By delaying the introduction of the generic version of the drug, Schering was able to charge the full price for the drug for an additional 6 months without having to compete with a generic version of the drug.

The FTC claims that these kinds of agreements between brand name patent holding drug companies and generic drug companies violate both Section I of the Sherman Act and the Hatch-Waxman Act of 1984. So far the Justice Department has failed to sign the Supreme Court brief filed by the FTC last year. The justices have asked the administration to provide its opinion of the case, and many legal experts are fearful that the Justice Department will oppose the FTC in this matter.

The results of a recent study released by the FTC showed that in 2005, of the 16 settlements between brand name and generic drug manufacturers over patent issues, 3 involved payments to the generics who in turn would delay the entry of their drug to the market. In the latest fiscal year that began on October 1, 2005, 7 out of 10 deals between brand name drug companies and generics, there was a payment made in return for which there was a delay in the introduction of the generic version of the drug.

The following paragraphs have been extracted from earlier items in this article that discussed the Schering payment to Upsher. The items were also put in red in the article:

"The FTC reversed the administrative law judge's decision that Schering-Plough and Upsher-Smith Laboratories had the right to settle the patent infringement lawsuit brought by Schering, and that an agreement between the companies was illegal. The commission therefore ruled that the agreement illegally kept a generic version of a heart medicine off the market in 1997 and 1998. The key issue in this matter involved the 6-month exclusivity period that a generic drug company has, if it was the first to file an application to produce a drug once the patent expires.

The courts however ruled that the agreement between the two companies was a legal one since it settled the pending litigation. The FTC felt that the settlement was an illegal one, and has appealed the case to the Supreme Court.

Schering had paid Upsher $60 million to keep the generic alternative to its K-Dur 20 potassium-chloride supplement off the market for a 6-month period of time. The companies contended that the $60 million was intended to settle the patent-infringement suit, and that there was no proof that the agreement delayed introduction of the generic version of the drug. The full commission voted 5-0 for reversing the administrative law judge's ruling, and thus determined that the payment was an illegal one under the law.

It has been shown time and time again that the brand name drug company will pay a generic drug company a sum of money to keep the generic drug off the market even though the patent has expired for the drug. Congress is presently working on changing the law in regard to this 6-month exclusivity period for the first applicant to gain generic rights to make the drug."

"The brand name drug companies have found another way to get around the 6-month exclusive period that a generic drug company has to market a drug once it comes off patent protection and stay within the confines of the Hatch-Waxman Act of 1984. The brand name drug company selects another generic drug company to market an "authorized copy" of the drug, and thus be able to compete with the generic company that has the 6-month exclusive period of time to sell the drug.

Very often the brand name drug company will manufacture the "authorized copy" of the drug, even though it is being sold by a generic drug company. Thus the generic drug company that had spent a great deal of money to obtain the legal right to exclusively sell the generic version of the drug for 6-months has competition right off the crack of the bat.

This is exactly what happened when Johnson & Johnson allowed Watson Pharmaceutical Inc to market an "authorized copy" of Otho-Tricyclen, an oral contraceptive that Barr Laboratories had spent 5 years and millions of dollars in challenging Johnson's patent rights for the drug. Authorized generics come about in one of two ways:

• As settlement of a case in which a generic company challenged a branded drug's patents
• As a corporate deal between the branded name company whose drug patent is about to expire and the generic drug company so that the two may share the revenue for the "authorized copy" of the drug.

Recent patent-suit settlements that have resulted in "authorized copies" include 2 Pfizer drugs, Paxil and Glucotrol XL, and Wellbutrin, which is made by GlaxoSmithKline. Bristol-Myers Squibb has a deal pending with Par Pharmaceuticals for the diabetes drug Glucophage XR. It is one of those situations where the consumer may benefit from this arrangement, since the price of the generic drug should be cheaper because of the competition."

(3/29/06)- On April 20th Bristol-Myers statin drug Pravachol comes off patent, and on June 23rd Merck's statin drug Zocor comes off patent. Pfizer's number one selling drug in the world is the statin drug Lipitor with over $12 billion in sales last year. Will this mean that the statin-cholesterol drugs will be coming down in price as more formularies require their members to use the generic version of the drug?

(3/24/06)- Sanofi-Aventis, the French drug company that developed the blood-thinning drug Plavix, and Bristol-Myers Squibb announced that they had tentatively settled the patent lawsuit over the drug with the generic drug company Apotex of Canada. Plaviix is the second largest selling drug in the world,garnering over $6.2 billion in sales worldwide last year.

Sadly we at therubins say, that it is settlements like this that hurts the consumer, while in effect helping the brand drug companies and the generic drug companies enhance their profits.

First lets look at the terms of the settlement. Sanofi and Bristol claimed that the patent for Plavix was valid through November 2011. Sanofi and Bristol sued both Apotex and Dr. Reddy, another generic drug company, in 2002 immediately after both those generic drug companies filed applications with the FDA to market generic versions of Plavix in the U.S. Plavix is also known as clopidogrel bisulfate.

Sanofi and Bristol suit meant that the FDA could not act on the application to market a generic version of the drug for 30 months. That stay in action on the part of the FDA expired in May 2005. Both Apotex and Dr. Reddy delayed introducing a generic version of the drug because if they lost the lawsuit brought by the brand name drug companies, they would have been liable for treble damages.

The lawsuit was set for trial on June 12 in U.S. District Court in New York. Under the terms of the tentative settlement, which must be approved by the Federal Trade Commission, Sanofit and Bristol will make undisclosed yearly payments to Apotex to keep the generic version of the drug off the market. Each of the brand name drug companies will share the payments to the Apotex equally. In other words, the generic drug company is being paid to keep its version of the drug off the market.

Apotex will then be allowed to make and sell its generic version of the drug 8 months before the patent is due to expire in 2011. Apotex will have the exclusive right to sell the drug without competition from Sanofi-Bristol. Normally, when a generic drug company starts to market its version of a drug the price of the drug drops sharply. This will not happen in this case, since Apotex will have to make royalty payments to Sanofi-Bristol during this 8-month period of exclusivity.

Sanofi and Bristol are attempting to negotiate a settlement with Dr.Reddy also, which would be along the same terms as is the Apotex settlement. Two other generic drug companies, Teva Pharmaceuticals of Israel and Cobalt Pharmaceuticals of Canada, both of whom had been seeking to market generic versions of Plavix are also involved in the settlement negotiations.

The FTC has previously tried to challenge these agreements between branded drug companies and generic drug companies since it is the consumer who is hurt by these tactics. Recent court decisions however have sided with the branded drug companies in stating that these type settlements are not anti-competitive in and of themselves.

(2/22/06)- Bristol-Myers Squibb Company announced that it had licensed, without charge, two generic drug manufacturers to make its second-line protease inhibitor atanazavir. Atanazavir is sold under the brand name of Reyataz, and the drug was just introduced in the battle against AIDs last year. Patients who have developed resistance to their first line anti-retroviral cocktails use second-line drug treatments.

Under the terms of the deal the two generic drug companies, Emcure Pharmaceuticals Ltd. of India, and Aspen Pharmaceuticals Ltd. of India will set the pricing for the drug in India and South Africa. Second-line drug treatments cost anywhere from $3,000 to $6,000 a year for each patient in Africa.

Guidelines set by the World Health Organization require that protease inhibitors be administered along with what is called a booster drug. The most commonly used booster drug is the brand name drug Norvir (ritonavir). Abbott Laboratories makes ritonavir, but it is a drug that must be refrigerated, especially in hot climates. Abbott is working on making a heat stable version of Norvir.

Thus we have, in this case, another example of the patent holding drug company realizing that the patent law must bend in the case of a drug that is essential for saving lives of people who live in third world countries.

(1/20/06)- The FDA approved only 20 New Drug Applications (NDAs) in 2005. This number is down from the 36 NDAs that were approved last year. One of the surprising things about that number is the fact that spending on research by the pharmaceutical companies reached a new high last year of over $38 billion.

According to a December 2005 report from Merrill Lynch, the number of potential new drugs in Phase I and II testing has nearly doubled in the last 10 years to 1.971 in 2004 from 1,010 in 1995. Unfortunately the number or drugs in Phase III testing has stayed flat over this same period of time at fewer than 400.

(12/19/05)-Judge Joseph J. Farnan Jr. of the Federal District Court in Delaware ruled that two critical patents protecting atorvastatin, the active ingredient n Lipitor, are valid. As a result of this ruling Pfizer's patent on Lipitor will hold until June 2011. Ranbaxy Laboratories, the Indian drug company will appeal the ruling. For further information on this case please see our item dated 10/06/05.

Please also keep in mind that Merck's statin drug Zocor will come off patent in June 2006, so a generic statin will be available then.

(10/18/05)- Do you remember when the U.S. government was threatening to break the patent protection for the drug Cipro, which was urgently needed at that time because of the anthrax fear. The argument being used at that time revolved around the fact that when a nation's health was being endangered by the outbreak of a life threatening disease, the patent for that drug could be voided because of the particular situation.

Now let us fast forward to the present. As we discuss in this article, AIDS has become a worldwide life threatening issue for many countries. For many of these countries the cost of the drug is prohibitive. The issue therefore is whether or not these countries should be allowed to produce generic versions of AIDS drugs, since the lives of the country's inhabitants are being threatened.

In another situation where we find lives of residents of certain countries being threatened by a disease we have the avian flu possible pandemic spread evolving throughout the world. Tamiflu, the only approved drug that is available in fighting the disease is manufactured by Roche, the Swiss drug company. The company claims it takes an intricate long process to produce the drug. The drug is expensive. The U.S. government's Department of Health and Human Services has recently ordered 12.3 million doses of Tamiflu. The drug sells for about $60 per treatment in this country.

Roche claims that it takes 10 steps to produce the drug and that it would take another company "two to three years, starting from scratch" to produce it.

Dr. Yusaf K. Hamied, chairman of Cipla, the third largest Indian drug company, announced that his company would start making a generic version of Tamiflu and thus violate Roche's patent on the drug. Under the rules that were recently passed by the WTO governments are allowed to cancel patents during health emergencies and either buy generics or force patent holders to license their formulas to generic drug companies.

Dr. Hamied said that it took scientists at his company about two weeks to reverse-engineer the drug in their labs, and that the company could have a small commercial quantity of the drug available in early January. Over 400,000 people worldwide use its inexpensive H.I.V. drugs, which is approved by the World Health Organization.

Under Indian patent law, which were tightened to conform with the WTO rules in March, generic drugs can be sold in India and 49 other countries rated" least developed" by the United Nations, when a life threatening health situation exists in those countries. Scientists in Taiwan and other countries have said they, too, can produce generic versions of Tamiflu.

(10/6/05)- Karla Mendes, a spokeswoman for Health Minister Jose Sariva Felipe of Brazil said that the country and Abbott Laboratories had reached an agreement in connection with the pricing of its AIDS drug Kaletra. Under the new pricing agreement the company would sell the drug to the government for a price of 63 cents a pill from $1.17 after months of negotiations. Please see our item dated 8/23/05 on this matter.

Abbott also agreed to give the country $3million worth of other pharmaceuticals which would mean that Brazil would be saving over $339 million for its free AIDS program from 2006 to 2111. Brazil had threatened to produce a generic version of Kaletra in contravention of Abbott's patent on the drug.

The agreement is expected to go into effect in March 2006. Kaletra is one of 17 medications that doctors use to treat 170,000 Brazilians covered under the country's free AIDS program, and the drug accounts for about one third of the spending for the entire program.

Ranbaxy's patent lawsuit that was brought against Pfizer's Lipitor before Judge Joseph Farnan of the U.S. District Court of Delaware may be decided shortly. The case involved two of Pfizer's patents in connection with the drug, and the trial ended in December 2004. If Ranbaxy wins, Pfizer could face generic competition on Lipitor in 2007, instead of in 2011 if the patents are upheld.

Lipitor sales are expected to reach $12 billion this year, making by far and away the best selling prescription drug in the world. The company is spending at least $800 million on trials of a new medicine that combines Lipitor, which lowers bad cholesterol, with a new drug called torcetrapib that raises so-called good cholesterol. This combined pill is the one that Pfizer will use to try and hold its own once Lipitor's patents expire.

(8/23/05)- Brazil's health ministry sent a letter to Abbott Laboratories requesting that the company make further concession as to the price of its AIDS drug Kaletra. Several Brazilian laboratories have notified the ministry that they can manufacturer generic versions of the drug at a cost o 41 cents a pill versus the $1.17 that the company now charges the government.

The cost of Kaletra makes up nearly a third of the more than $300 million that the country now spends a year on medicines for its free AIDS program. According to Brazilian government figures there are about 170,000 people in the country that are infected with H.I.V.

The Brazilian government further asserts that because of the large number of people who have the disease, it can declare a national health emergency, which under World Trade Organization rules would allow it to break patents on medicines and pay a 3% royalty to manufacturers for the right to produce generic versions of the drug.

(8/4/05)- Gregory Gilbert, a financial analyst at Merrill Lynch estimated that about $21.4 billion worth of branded drugs will come off patent in 2006, and another $17.7 billion will come off patent in 2007. This is a significant increase because from 2003 through 2005 a total of only $10 billion to $13 billion came off patent.

Among those blockbuster drugs that will be no longer be covered by their patent in the next two years are Pfizer Inc.'s antidepressant Zoloft; Sanofi-Aventis SA's sleep drug Ambien and allergy pill Allegra, and two cholesterol-lowering drugs, Merck & Co.'s Zocor and Bristol-Myers Squibb's Provachol.

(7/28/05)- Updating our article dated 7/13/05 below, the Brazilian Health Minister Jose Saraiva Felipe in an interview in the Brazilian newspaper Correio Braziliense stated that the agreement with Abbott Labs has not been signed and that the government was still negotiating to get further reductions in the price of the AIDS drug Kaletra. A spokesman for Abbott said that the company was still in the process of negotiating with the government concerning the drug Kaletra.

In the newspaper interview, Mr. Felipe cast doubt on whether the government would endorse the agreement, calling Abbott's offer inadequate. The government is still in the process of negotiating with Gilead Sciences (Tenofovir) and Merck (Efavirenz) re the pricing of their AIDS drugs.

(7/13/05)- The Brazilian government and Abbott Laboratories announced that they had come to an agreement in regards to the cost of the AIDs drug Kaletra for the next 6 years. Under the agreement the country's expense for the drug will remain constant even the numbers of patients who will be given the drug is expected to increase from 23,400 patients to 60,000 patients in the next 6 years.

The agreement also guarantees that Brazilian AIDS patients will have access to Meltrex, a new version of Kaletra from Abbott once it gains approval from the FDA. Brazil provides free AIDS treatment to all who need it, which right now is estimated to be 170,000 patients. The government estimated that it would save about $18 million annually under the terms of the agreement. Brazil now spends about $107 million annually on Kaletra, which is nearly a third of its annual budget for anti-retroviral medicines.

Abbott also agreed to transfer its technology for Kaletra to the Brazilian government so that it could start to produce the drug from its own facility in Rio de Janeiro once its patent expires in 2015. At the same time the Brazilian government agreed to refrain from breaking Abbott's patent for the drug. The government is continuing to negotiate with Gilead Sciences (Tenofovir) and Merck (Efavirenz) re the pricing of their AIDS drugs.

(6/29/05)- The U.S. Supreme Court has ruled that pharmaceutical companies have wide latitude to study and experiment with drugs that are covered by other companies' patents. In effect this ruling means that drug companies can perform experiments in the labs to develop a drug even if the drug will violate another company's patent. The new drug could not be sold however until the patent on the older drug expires.

The lawsuit began in 1996 when Integra LifeSciences Corp. of Planisboro, N.J. sued Merck KgaA of Germany for violating its patent of a class of drugs known as peptides. A U.S. District Court jury in San Diego awarded Integra $15 million in damages in 2000, which amount was reduced by the judge hearing the case to $6.4 million.

Merck appealed the decision to the Appellate Court for the federal circuit of Washington, which hears most patent cases. That court upheld the lower court verdict in June 2000. The case revolves around the Drug Price Competition and Patent Term Restoration Act of 1984, sometimes more popularly known as the Hatch-Waxman Act of 1984.

There is a provision in the act that generic drug companies had used to conduct experiments on patented medications so that they could develop their generic versions of different drugs before the patent expired. The generic drug company would then submit its information and data to the FDA so that it could be ready to start producing a drug as soon as the patent expired.

The exemption in the act allows research activities "reasonably related to the development and submission" of information to the FDA. In its ruling the Supreme Court said the exemption did not cover only generic drugs, but innovative drugs as well. The Supreme Court did not rule on the specific facts of the case, but remanded it back to the lower court for trial.

Integra, did not do the work leading to its patents, which in fact came from scientist at the Burnham Institute a research facility in La Jolla, CA. The patents cover novel methods of using sequences of amino acids, called peptides, to manipulate cells. Integra bought the rights to the patents from Burnham.

Merck hired scientists at Scripps Research Institute of La Jolla to build on the Burnham findings to demonstrate a method for blocking the growth of blood vessels in tumors.

Several of the large pharmaceutical companies submitted papers defending the defendants position in the case as did the Justice Department and such consumer groups as AARP.

The Supreme Court ruled that the exemption applied to more than clinical trials.

(6/27/05)- Brazil's Minister of Health Humberto Costa announced that the country would break Abbott Laboratories patent for its antiretroviral drug Kaletra, and start producing a generic version of the pill. Mr. Costa also announced that Brazil would pay Abbott a 3% royalty on the generic version of the drug, as required by the World Trade Organization.

Brazil thus becomes the first country to break a patent on an antiretroviral drug. Abbott now has 10 days to present a counteroffer to the country before Brazil can start to make the generic version of the pill. The government contends that its generic version of Kaletra can be made for 68 cents a pill, versus the $1.17 that it is now paying Abbott for the medication.

Brazil provides free AIDS treatment to all that need it in the country. Mr. Costa said that the country can save about 130 million reals a year, or about $55 million by making the generic version of Kaletra. The country is presently negotiating with Gilead Sciences and Merck, to get them to lower the price on two widely used antiretroviral drugs, Tenofovir and Efanvirenz.

(6/20/05)- For the first time in its existence the European Commission found AstraZeneca guilty of abusing the patent protection granted to its best-selling anti-ulcer drug Losec. After an investigation that has lasted several years the commission's antitrust division decided that Astra had prevented generic drug makers from marketing their version of Losec, even though its patent protection had expired.

The commission is headed by Neelie Kroes and consists of 25 members. A vote by simple majority of the 25 members is all that is required to reach a decision.

The commission members determined that Astra gave a wrong date for market authorization for Losec to patent authorities in order to gain a longer supplementary protection certificate. Extensions of patents may be granted to allow a company a longer period free from competition from generic competitors when there is a delay in getting market authorization for a drug.

The length of the extension is calculated from the date the drug was cleared to go on sale, not the date of the original patent. The officials also determined that Astra had withdrawn a capsule version of Losec in order to stop companies that make generics from copying it. Generic drugs are only approved if the original form of the drug is still on the market.

(5/2/05)- It is unusual, to say the least, to have AARP, a Ralph Nader group and the pharmaceutical giants Eli Lilly, Pfizer and Wyeth on the same side as the government in a patent lawsuit, but that is exactly what has happened in an appealt that is now pending before the U.S. Supreme Court. The case involves a small New Jersey medical device company named Interga LifeSciences (Plainsboro, N.J.) against the German drug maker Merck KgaA. The alleged patent infringement involves a handful of patents covering chemical compounds and ways of using them to manipulate cells.

Merck's defense to the patent lawsuit claim involves being shielded by a well-established "FDA exemption", because all its experiments were aimed at getting FDA approval for various drugs that it would market after the patent expired.

Integra's patents derived from the work of Erki Ruoslahti, a cell biologist who at the time was working at the Burnham Institute of La Jolla, CA., who formed a company, Telios Pharmaceutical, which in turn licensed its patents to Integra. The patents covered novel methods of using sequences of amino acids, called peptides, to manipulate cells.

Dr. Ruoslahti and Michael Perschbacher had discovered in the late 1980s when they were working at the Burnham Institute that certain peptides play an essential role in how cells in the body stick to their supporting structure. David A. Cheresh, working at the Scripps Research Institute discovered in 1994 that a particular protein in the body was involved in building blood vessels, such as the ones tumors need to nourish themselves. If you could block that protein you might be able to starve the tumor.

The Hatch-Waxman Act of 1984 allows a generic drug company to test a drug while the original patent was still in force. The law specifically exempts the activity when it is "solely for uses related to the development and submission of information" to the FDA. The law's language does not specifically state that it is intended only for generic drug companies usage only.

Integra sued Merck in 1996 for patent infringement. Merck used the exemption under the Hatch-Waxman law as one of its defenses. A federal jury in San Diego ruled in favor of Integra and ordered Merck to pay $15 million, which has since been reduced to $6.4 million The Court of Appeals in Washington upheld the decision by a 2-1 majority.

One of the peptides tested by Dr. Cheresh and Merck is now an experimental dancer drug called cilengitide that is in clinical trials right now. If it gets to market it would occur sometime after 2006 when the patent expires.

(3/29/05)- In compliance with its agreement to become a member of the World Trade Organization the Indian government passed legislation that would require the country's generic drug manufacturers to conform to the patent laws that exist in most of the Western world countries. Prior to the enactment of this law the generic drug industry in India operated under their 1970 Patent act.

India is among the wold's top five generic drug producers in terms of volume, even though it only produces about $7 billion in terms of value. Under the new law all generic drugs can still be sold in India, though the sellers would now have to pay a "reasonable" royalty to the patent holder, but only after the drug has been marketed for three years.

Under the Indian Patent Law of 1970, India has granted "process patents" that allows generic drug manufacturers to patent the same drug for which another company has a "product patent" even if the change is only a minor one from the first patent. Thus a minor change in the synthesis of a drug molecule could result in a new patent being granted.

The new law does allow the government to declare a health emergency, and obviate a patent if the situation become a critical one. This situation almost occurred in the U.S. in 2001 during the anthrax scare, when the cost of Cipro was so high.

(3/22/05)- There is one other blockbuster drug in which the patent is due to expire in 2005, namely TAP's Prevacaid ($3.8 billion in sales in 2004), but supplementary patents on the drug may extend the life of the patent till September 3, 2008. GlaxoSmithKline's Zofran($1.35 billion sales in 2004) has supplemental patents on the drug which may extend its life till December 24, 2006, and the same may be true for Sanofi-Aventis's Plavix ($2.97 billion in sales in 2004) on which supplemental patents may extend the life of this drug till November 11, 2011.

There are 5 blockbuster drugs whose patents are due to expire in 2006 unless supplemental patents extend their patent lives. The 5 are Pravochol ($2 billionin sales in 2004); Zocor ($4.57sales in 2004); Zoloft ($3.1 billionin sales in 2004); Ambien ($1.88 billion in sales in 2004) and Zofran ($1.35 billionin sales in 2004).

The number of out-of-court settlements of patent litigation has been increasing sharply in the last few years. In the 7 years between 1992 and 1999, there were 14 settlements between brand and generic drug companies. Since January 2004 there have been at least 8 settlements arrived at between the generic drug and brand name drug companies.

 The Public Health Service Act regulates most biotech drugs. A few drugs, including human growth hormone, were approved and under the Food, Drug and Cosmetic Act, which contains provisions that allow for abbreviated applications for copycat versions of new drugs.

(11/30/04)- A dispute has arisen between the U.S. and Australia in connection with the trade agreement that was negotiated about 10 months ago, and that won unusually broad support in Congress. The dispute involves both brand name and generic drugs, and is threatening to cause a delay in the effective date of the pact which is due to go into effect on January 1.

Under Australian law, drug companies face fines of up to $7.6 million if they make "vexatious" patent claims to delay the entry of generic drugs to the Australian market. Before bringing a patent violation lawsuit in Australia, the manufacturer must certify that the proceedings are "commenced in good faith and have reasonable prospects of success." If the court finds no reasonable basis for the lawsuit, the court can fine the brand-name manufacturer up to $7.6 million plus court costs.

American drug companies are thus contending that the law that was passed by the Australian Parliament should not bind the trade agreement. Prices for new drugs in Australia are among the cheapest in the developed world.

(9/6/04)-Ivax Corp., a generic drug company, has launched its version of Pfizer's Inc.'s anti-seizure drug Neurontin before the courts have settled the patent suit in this matter. The patent litigation was started before Judge John C. Lifland in the U.S. District Court in New Jersey by 8 generic drug companies against Pfizer. Judge Lifland has declined to stop Ivax from introducing its version of the drug when he denied Pfizer's request for an injunction against Ivax.

Ivax's version of the drug is in tablet form, whereas Pfizer's Neurontin comes in capsule form. The generic version of the drug is known as gabapentin. If Pfizer prevails in the suit, Ivax is liable for up to three times sales of its generic version of the drug as a patent infringement penalty in the matter. Pharmacists will not be allowed to directly substitute gabapentin for Neurotin since it is a different dosage form from the original. Pfizer is introducing Lyrica as a next generation version of Neurontin, which accounted for over $2.2 billion in sales for the company last year. Most of the sales that have taken place for Neurontin have been for off-label purposes.

U.S. trade negotiators, prodded by the drug industry, are seeking a provision in new agreements that would restrict trading partners from approving for five years a generic-drug application if it relies on test data compiled by the original drug's manufacturer. As part of the General Agreement on Tariffs and Trade negotiated several years ago, a major trade agreement known as TRIPS was negotiated covering intellectual property such as trademarks and copyrights.

One part of the agreement on Trade-Related Aspects of Intellectual Property Rights required signatories to grant a 20-year period of market exclusivity to patented drugs. This provision is currently being phased in around the world.

Chinese regulators have revoked Pfizer Inc'.s "use patent" for Viagra, even though China had agreed in 2001 to enforce intellectual property laws as a condition for it being able to join the World Trade Organization. Pfizer had received the use patent in China in 2001. China's State Intellectual Property Office ruled however in favor of the generic manufacturers of the drug. The company said it would appeal the ruling.

There is a clear-cut distinction between a "use patent", and a patent on an actual compound. When the drug was first discovered Pfizer had hoped that Viagra would work as a heart drug, and patented it for that. Even though the drug did not have the anticipated results on the heart patients, the researchers noticed its effect on men, and so the company patented this secondary use in the U.S. and Europe. Not all countries recognize use patents" and international law does not require them to do so.

The Canadian Parliament voted to allow the export of inexpensive copies of some patented drugs to third world countries facing serious life threatening health crisis. The law allows generic drug makers in Canada to override patents and produce 56 brand name drugs for use in places like Africa, where the country's AID sufferers are too poor to afford them. The majority of the drugs approved under the law are to treat H.I.V and AIDS, malaria and tuberculosis.

The Global Fund, the World Bank and UNICEF have joined the Clinton Foundation in making arrangements with several of the generic AIDS drug manufacturers to buy their products in the fight against AIDS. At the same time they are therefore not buying the products from the patent holding brand name drug companies, who have not granted any permission to the generic companies to make these drugs. So far the Bush administration has not decided what it will do in this situation.

It is a classic case where the rights of the patent holders come in conflict with the needs of a population threatened by a disease that is on a deadly rampage. The agreements cover individual drugs and combination AIDS treatments made by Cipla Ltd., Ranbaxy Laboratories Ltd., Hetero Drugs Ltd.,, and Matrix Laboratories, all of India and South-African based Aspen Pharmacare Holdings.

Agreements were also made to buy AIDS diagnostic tests for as much as 80% less than there market prices from Beckman Coutler Inc., Becton Dickinson & Co., Bayer AG's Bayer Diagnositcs, bioMerieuzx SA and Roche Diagnostics, a unit of Roche Holding AG.

A federal appeals court has reversed the decision of the lower court and thus Dr. Reddy's Laboratories Ltd. will be barred from selling its version of Pfizer's Inc. hypertension drug Novarsc. Novarsc had sales of over $4 billion in 2003. The lower court had ruled that Dr. Reddy's version of the drug violated Pfizer's patent that covered all aspects of the chemical amlodipine. Dr. Reddy had hoped that the patent did not cover all molecules of the chemical, and at the same time it argued that it could use the research data that Pfizer used to get the FDA to approve Novarsc.

Pfizer's original patent on Novarsc expired last year but was extended for several years because of the long delay at the FDA over the safety issue in allowing the drug to come to market. At issue in the case was whether the patent protected both the chemical structure of Novarsc and a host of sister compounds, or salts. Dr. Reddy applied to the FDA for a so-called 505(b) (2) approval to market its version of the drug.

The FDA has announced that it is re-evaluating its decision to allow Dr. Reddy's Laboratories Ltd. to market its version of Pfizer's blood pressure medication Novarsc. The agency has acted after Pfizer sued them to prevent the enforcement of their decision in November 2003 to allow the sale of the generic version of the drug. The question in the case revolves around the issue of the "source of data" that the agency relied on to approve the generic version of the drug.

Instead of applying for a true generic of the Pfizer drug, which must be biologically equivalent to the original, Dr. Reddy's version of the drug, relied on a slightly different molecule. This allowed Dr. Reddy's to skirt Pfizer's patents and submit different data than required for a true generic. Pfizer claimed, in its suit brought against the approval by the FDA, that the agency used Pfizer's own data to evaluate the Dr. Reddy's drug. This would be an improper use of Pfizer's intellectual property right.

The issue in the case seems to boil down to two issues. The first issue is whether or not the FDA can use data developed by the patent holding drug company to approve a generic drug that involves a slightly different molecule, and secondly whether or not the generic drug company has to develop its own data in this matter.

Much has been written about the fact that generic drugs can help reduce the cost of prescription drugs by as much as 80%. A new category of generic drug has arisen however that does not help the consumer as much as is the usual case. This new category of generic drug is called a "branded" generic drug.

A drug does not have to be a virtual copy of the branded original drug for it to be approved by the FDA. Under the law, which is known as the 505(b)(2) pathway, a generic drug's chemistry can be slightly different from that of the branded patented drug, and yet the FDA can approve the drug for consumption and sale to the public.

This route for approval from the FDA does not require the original proof of safety and effectiveness mandatory for approving new brand-name drugs. It also does not require the kinds of data necessary for the approval of regular generic drugs. The formulation of the generic drug is slightly different from that of the branded drug. It is intended to act in the same manner, as is the branded drug.

Because it differs slightly from the branded drug the pharmacist can't substitute the "generic branded drug" for the brand name drug. The FDA has interpreted the law over the years to mean that applicants using this rule can rely on research done by the original drug maker, even if it is confidential. In a controversial decision in connection with the 505(b)(2) approval process, the FDA approved Dr. Reddy's copycat version of Pfizer's best selling blood-pressure Novarsc, three years before the patent was due to expire. Pfizer announce that it would sue the FDA over the approval that it granted to Dr. Reddy for its medication, charging the agency overstepped its authority in allowing the drug onto the market before the expiration of the patent.

Dr. Reddy's copycat version of Norvarsc called AmVaz has not been launched yet, since the company has not decided whether or not to bring the drug before an the appellate court has ruled on the matter. Norvarsc had over $3.8 billion in sales last year.

Brand name prescription drugs with $20 billion in annual sales are losing their patent protection in the next few years, according to Daniel Vasella, chief executive of the Swiss drug company Novartis AG. The trend of sales growth by the generic drugs continues to increase and has already surpassed the yearly total number of prescription written. With medical costs continuing to be a prime concern these costs have become both an economic and a political matter for all of us. Even if your employer and yourself cover your health care costs, you have seen a substantial increase in your premium rates over the last 3 years.

The brand name drug companies have found another way to get around the 6-month exclusive period that a generic drug company has to market a drug once it comes off patent protection and stay within the confines of the Hatch-Waxman Act of 1984. The brand name drug company selects another generic drug company to market an "authorized copy" of the drug, and thus be able to compete with the generic company that has the 6-month exclusive period of time to sell the drug.

Very often the brand name drug company will manufacture the "authorized copy" of the drug, even though it is being sold by a generic drug company. Thus the generic drug company that had spent a great deal of money to obtain the legal right to exclusively sell the generic version of the drug for 6-months has competition right off the crack of the bat.

This is exactly what happened when Johnson & Johnson allowed Watson Pharmaceutical Inc to market an "authorized copy" of Otho-Tricyclen, an oral contraceptive that Barr Laboratories had spent 5 years and millions of dollars in challenging Johnson's patent rights for the drug. Authorized generics come about in one of two ways:

• As settlement of a case in which a generic company challenged a branded drug's patents
• As a corporate deal between the branded name company whose drug patent is about to expire and the generic drug company so that the two may share the revenue for the "authorized copy" of the drug.

Recent patent-suit settlements that have resulted in "authorized copies" include 2 Pfizer drugs, Paxil and Glucotrol XL, and Wellbutrin, which is made by GlaxoSmithKline. Bristol-Myers Squibb has a deal pending with Par Pharmaceuticals for the diabetes drug Glucophage XR. It is one of those situations where the consumer may benefit from this arrangement, since the price of the generic drug should be cheaper because of the competition.

In an interesting new development, the drug companies are trying to combine medications and thereby attempting to prolong the life of medications whose patents are due to expire. Pfizer Inc. is attempting to do this in its combination blood pressure and cholesterol drug that goes under the name of Caduet. According to Pfizer this would be the first time these two different disorders would be fought by one medication. The FDA has approved Caduet for sale and Pfizer expects to market the drug in April 2004.

The most common side effects with Caduet were mild to moderate and included fluid retention, headache, dizziness, abdominal pain and weakness. Pfizer estimated that some 30 million Americans suffer from both high cholesterol and elevated blood pressure, the two leading risks for heart disease.

Pfizer's main patent for Norvarsc, its $4.34 billion in revenue blood-pressure medication is due to expire in 2007. Its biggest revenue drug Lipitor, with $9.23 billion in worldwide revenues last year, is due to expire in 2011. Caduet's patent protection would extend till 2018. These so-called double duty pills are a double-edged sword according to many medical professionals.

A potential benefit for those who would be taking Caduet is that the cost for the single tablet would be less than the cost for the medications taken individually. Doctors however, avoid prescribing combination drugs because they come in a limited number of dosage choices, and it also complicates the problem of determining what is causing an adverse reaction if one does take place.

Eli Lilly & Co. has a duel pill on the front burner also. Its drug Symbyax combines the anti-psychotic medicine Zyprexa with Prozac, the Lilly anti-depressant that went generic in 2001. Merck has a medication in the works also for its combination drug of its Zocor and Schering Plough's Zetia, both of which are cholesterol-lowering drugs. In creating these combinations the drug companies hope that they can extend the revenue stream of their drugs that have patents that do expire.

The FTC reversed the administrative law judge's decision that Schering-Plough and Upsher-Smith Laboratories had the right to settle the patent infringement lawsuit brought by Schering, and that an agreement between the companies was illegal. The commission therefore ruled that the agreementillegally kept a generic version of a heart medicine off the market in 1997 and 1998. The key issue in this matter involved the 6-month exclusivity period that a generic drug company has, if it was the first to file an application to produce a drug once the patent expires.

The courts however ruled that the agreement between the two companies was a legal one since it settled the pending litigation. The FTC felt that the settlement was an illegal one, and has appealed the case to the Supreme Court.

Schering had paid Upsher $60 million to keep the generic alternative to its K-Dur 20 potassium-chloride supplement off the market for a 6-month period of time. The companies contended that the $60 million was intended to settle the patent-infringement suit, and that there was no proof that the agreement delayed introduction of the generic version of the drug. The full commission voted 5-0 for reversing the administrative law judge's ruling, and thus determined that the payment was an illegal one under the law.

It has been shown time and time again that the brand name drug company will pay a generic drug company a sum of money to keep the generic drug off the market even though the patent has expired for the drug. Congress is presently working on changing the law in regard to this 6-month exclusivity period for the first applicant to gain generic rights to make the drug.

The European Union is about to expand from its present 15-member nation organization to a 25-member organization, since 10 relatively poor new members are about to join the union. There is a fear among the European pharmaceutical companies that these new countries will become conduits for a sharp cut in the price that drugs are sold for in the union. The 10 additional countries are due to join the union in May 2004 with 8 of the countries coming from Eastern and Central Europe along with Malta and Cyprus.

One of the problems that the European Union faces is that the life of a patent in its member countries varies from 6 years to 01 years, which is of course much shorter than the life of a patent in this country. Each country in the union has its own mechanism for price controls so that the price of pharmaceuticals can vary greatly from country to country.

This system has in turn produced what is known as a parallel pricing system. If a drug is cheaper in one of the countries, it can be exported to another one of the countries in the union, and therefore be sold at a cheaper price therein. Faced with the fact that the new members are poorer countries than are the already existing members of the union, there may be even further price cutting evolving in the European Union for both brand name and generic drugs.

The European Parliament is to vote by December 15^th on a proposal to even out the duration of patents, which vary from 6 to 10 years. In addition to this legislation the Parliament has pending legislation to protect research data so that brand name drugs can be shielded from competition for up to 11 years. At the same time, generic drug manufacturers would be permitted to start clinical work on their versions of drugs two years before patents are due to expire.

Generic drug manufacturers argue that this falls short of the U.S., Canadian and Indian systems wherein generic drugs can be marketed as soon as patents expire. This is called the Bolar system, and it is the one that the generic drug manufacturers seek to have adopted in Europe.

House and Senate negotiators seem to have reached an agreement on a proposal favored by the generic drug industry that would help speed generic drugs to market. The House and Senate both passed legislation aimed at easing the path for generic drugs to be marketed, but their provisions differed in the details as to how to bring it about.

The purported agreement essentially adopts a provision passed by the Senate that was opposed by the brand-name drug industry. It would allow the generic-drug companies to go to court instead of having to wait up to 30 months to press the resolution of any patent infringement lawsuits brought by the brand-name drug industry. Brand-name manufacturers would be allowed only a single30-month stay, while the court tries to resolve patent disputes. In the absence of a law suit by the brand name company, the maker of the generic drug could ask the court to clarify its right to market the drug.

In another change to the existing practice, the generic drug company that has the exclusive 180-day period to market the drug would lose that right if it did not begin marketing the drug within 75 days. This particular provision is aimed at ending the practice of having the brand name drug company pay the generic drug company to keep the generic version of the drug off the market for the 180-day exclusivity period.

The Justice Department had said that the declaratory-judgment provision, as it is known, was unconstitutional, but it wrote in a letter to Senator Judd Gregg (Rep.-N.H.) a sponsor of the provision, that the recent technical changes in the Senate language addressed its concern. PhRMA has stated that it would "evaluate the language as it becomes available".

Paul Martin, Canada's prime minister endorsed a plan to alter the country's patent law to enable Canadian generic drug companies to export certain patent protected drugs to help third world countries in dealing with certain diseases that threaten the lives of their residents.

"'I hope Canada's initiative may stimulate other G-7 countries to do likewise" said Stephen Lewis, the UN Special Envoy for HIV/AIDs in Africa. The Canadian move is likely to include the drawing up of a list of patented medicines that can be manufactured by the generic drug companies for a set group of countries.

Up until the WTO agreement in August of 2003, developing nations were allowed to override patents to manufacture their own generic versions of patented drugs but they were not allowed to import the drugs. Under the change in the agreement they will be allowed to import the life saving drugs even if it means that patent protections will not be upheld.

At the same time Brazil has announced that it will authorize the importation of generic versions of patented AIDs drugs that it says it can no longer afford to buy from the patent holding drug companies. Under the Brazilian AIDs program, the country provides the drugs to its residents for free. Presently there are 135,000 people in the Brazilian AIDs program.

Brazil has been negotiating with Abbott Labs ( Lopinavir-Kaletra), Merck & Co.( Efavirenz-Sustiva) and Roche Holding AG (Nelfinavir-Viracept) in connection with certain AIDs drugs in order to get further price cuts from these companies. Brazil produces seven of the 14 drugs it distributes in connection with it AIDs program. The three patented drugs which it does not produce, accounts for 63% of its $200 million annual budget for the disease.

Under the agreement India and China do not have to abide by the patent protection laws until 2005.

It costs Brazil about $2,000 a year for each patient to provide antiretrovials as opposed to the $12,000 cost incurred for the typical AIDs patient in the U.S. It is estimated that there are about 500,000 Brazilians with the disease.

The U.S. unit of Apotex Inc.which is based in Weston, Fla., has decided that it will take an "at risk approach" in selling the generic version of GlaxoSmith Kline's antidepressant drug Paxil even as an appeal is pending before the court in this matter. In the "at risk approach" a generic company manufactures its version of the drug, even though it may be subjected to a treble damage award against it if the appeal reverses the original ruling.

Apotex, a Canadian company, said that enough of the drug has been produced or is capable of being made to serve the U.S., Canada and the European markets. The FDA gave approval for generic paroxetine last month. When the FDA gives approval for a generic drug it does not concern itself with the legality of the patent issue, it role is to ensure that the generic version of the drug is biologically the same as the branded version thereof.

GlaxoSmith Kline, PLC had settled a patent suit with Pentech Pharmaceuticals involving Paxil earlier in the year. Under the terms of the settlement Par Pharmaceuticals, a subsidiary of Pentech will be allowed to distribute the generic version of Paxil in Puerto Rico provided a royalty is paid to Glaxo. Under this type of arrangement the consumer will see very little benefit from the arrival of the generic drug on the market. Under the terms of the settlement Pentech and Par acknowledged that Glaxo's patent for Paxil remained valid and enforceable, and would be infringed by the distribution of the Pentech generic version of the drug.

The settlement did provide however that Par could sell a generic version of the drug in the U.S. as soon as another generic version of the drug became available in the U.S. market. Originally Apotex said in March of 2003 that it planned to sell a generic version of Paxil no later than 2005, after receiving the favorable patent ruling in a Chicago court, but it has now decided to escalate that time frame since the company feels very strongly about its case.

Federal Judge Richard A. Posner, of the U.S. District Court for the Northern District of Illinois in Chicago had ruled that Apotex Inc., a closely held Canadian company did not infringe on GlaxoSmithKline, PLC's patent for its antidepressant drug Paxil. His decision focused on whether Apotex's version of the drug is sold in a hemihydrate form-the stablest form of the drug's main chemical ingredient. Judge Posner said that while it was likely that Apotex's version did contain some hemihydrate, Glaxo did not show that it contained enough hemihydrate to infringe on its patent.

A trial date has yet to be set for the second case against Apotex which will be held in the U.S. District Court for the Eastern District of Pennsylvania. An initial summary ruling in December from the judge in the pretrial stage of the Philadelphia case was mixed, with some judgments in favor of Glaxo and others in favor of the generic companies in the case. Glaxo has stated that it would appeal the ruling in the Chicago case.

Glaxo first introduced Paxil in 1993, and it still has the exclusive right to manufacture the drug for now. Paxil had sales of about $3.2 billion in 2002 which roughly accounted for a tenth of Glaxo's revenue in 2002, and was expected to account for about 13% of its revenues in 2003. The earliest that Apotex could introduce its generic version of Paxil would be September of 2003. Glaxo claims that its Paxil patents run until 2006. There are 5 other generic drug companies that are also looking to bring their generic versions of Paxil to the market. British regulators have warned that children under 18 should not take the drug, because it increased suicide risks. The FDA is also sounding a similar warning, so it must still decide how to handle this issue.

Glaxo has introduced a newer version of the drug called Paxil CR, and the new drug has already taken about one-third share of new Paxil prescriptions. The newer version of the drug has a controlled-release mechanism that Glaxo claims make it an improved version of the drug. Over the next 5 years Glaxo faces either expiration or potential competition from generic makers of five of its blockbuster drugs.

The World Trade Organization has approved an agreement that would allow the poorer nations in the world to be exempt from patent laws in connection with life saving drugs for their residents. The negotiating committee meeting in Geneva recommended that the full 146-member council accept the pact, and the full council convened immediately to do so. The fear exists among several of the large pharmaceutical companies that these types of pacts will unduly restrict the life and quality of their patents for drugs for which they spent hundreds of millions of dollars to discover and develop.

Several countries had requested a delay so as to clarify some of the issues raised by possible interpretation of the resolutions. Representative of Argentina and the Philippines said that they were worried by some of the possible interpretations of the resolutions. The U.S. had reversed its earlier opposition to the pact covering patented medicines. Currently only about 3% of the 325 drugs considered essential medicines by the World Health Organization are protected by patents in many developing countries.

The proposed agreement would allow countries to export generic drugs to other poor countries under certain conditions. Many of the poorer countries of the world, especially in Africa, do not have the production facilities in their countries to even produce these life saving generic drugs. The organization was close to coming to an agreement on this issue in December of 2002 when the U.S. reversed itself and opposed certain provisions in the agreement. In order to show good faith however, the Bush administration pledged that it would not pursue unfair-trade complaints against countries that broke the existing rules to export generic drugs or patented drugs to the poorer countries until a new pact was accepted.

The U.S. had demanded that the pact cover drugs for only four diseases and limited shipments to only a few of the poorer countries. On the other hand many of the pharmaceutical companies are selling some of the drugs, especially those that involve the treatment for AIDS at sharply discounted prices to third world countries. The draft states that patents would be waived only "In good faith to protect public health" and that waivers would "not be an instrument to pursue industrial or commercial policy objectives."

The pact would require the producers of these drugs to use special packaging or different colored tablets for their products. Developed countries could not use the provisions of the pact, while some of the richer developing countries like Israel, Mexico, South Korea and Taiwan, would only use the measure in "situations of national emergency."

In 2000 the Argentinean government passed patent legislation that is continuing to have ramifications round the world today. Under that law doctors must list the generic name of medicines on patients' prescriptions, and may also list the brand name too. Thus it became a matter for the pharmacists to a large extent to make the recommendations to the customers. The generic market in Argentina has grown so that it is now represents about 12% of the market there.

In terms of number of prescriptions written generic drugs are now exceeding brand name drugs in this country. A concerted effort is being made by health insurers to convince their members that generics have the same bioequivalency as do the brand drugs. This was shown to a large extent when Claritin went off of patent protection.

One of the problem that the big drug companies continue to face in the coming years is the loss of patent protection on many of their blockbuster drugs. Pfizer Inc. typifies this problem since it now has 10 drugs with more than $1 billion in sales, and it owns the rights to sell 8 of the 25 largest selling drugs.

In 2004 it may lose sole control of the epilepsy drug Neurontin with $2.5 billion in sales, with most of those sales being done for off-label usages. In 2005, the basic patent on Zithromax, a $2-billion-a-year antibiotic will expire. In 2006, the patent on Zoloft, an antidepressant with almost $3 billion in sales will expire. In 2007 the patents on Norvasc, a blood-pressure pill with $4 billion in sales, and Zyrtec, an antihistamine with more than $1 billion in sales will run out. The big hit however would take place in 2009 when the patent on Lipitor the cholesterol lowering drug agent is due to expire. Lipitor is the top selling drug in the world. Pfizer has about 11,000 sales reps compared to Merck , Pfizer's largest U.S. competitor which has about 7,000 sales reps. The company plans to spend about $7.1 billion on research this year.

The FDA approved the over-the-counter sales of Prilosec, the ulcer and heartburn prescription drug medication that at one time was the top selling drug in the U.S. An FDA advisory panel had voted in June to recommend that Prilosec could be sold as an over-the-counter medication provided it made the label less confusing. Prilosec registered over $4 billion in sales for AstraZeneca in 2002.

Astra has a large advertising campaign going to try and get Prilosec users to switch to Nexium, its next generation drug to Prilosec. Thomas A. Scully, the federal administrator of the Centers for Medicare and Medicaid, said in a speech March 5, 2003, that doctors should not prescribe Nexium since Prilosec is functionally identical to Claritin. Claritin can be purchased in Canada without a prescription. FDA rules do not allow both a prescription and an OTC product to be sold at the same time.

Prilosec is expected to sell for less that $1 a pill when it becomes available without a prescription this fall, compared to the $4 a pill that it costs now. Once it becomes available as an over-the-counter medication however it will not be covered by most prescription drug insurance plans. Thus patients who take medications such as Nexium, Prevacid, Protonix and Aciphex might not have these drugs covered under their prescription drug health plans.

Under an agreement that Astra has with Proctor & Gamble, Astra will manufacture the over-the-counter version of Prilosec and Proctor will distribute and market the drug. Since Prilosec was first introduced in 1988 it has generated nearly $30 billion in sales for Astra. Last year, more than three billion prescriptions were written for proton-pump inhibitors in the U.S., according to data from NDC Health, a health information company.

Proctor has attempted to sell Prilosec as an over-the-counter medication twice in the last 6 years. At first the company tested a 10-milligram version of the pill, which was half the usual prescription strength. Studies showed that the drug was not effective at that strength so an FDA advisory panel rejected the application in 2000.

When the FDA advisory panel voted in June to approve the generic version of the drug it proposed that Proctor make the label less confusing. Most consumers who read the label assumed that the drug would cure their heartburn immediately. It does not. It takes about 2 days before the medication works properly. Antacid tablets like Tums and Rolaids, which neutralize stomach acid, do relieve symptoms almost immediately. Pepcid and Zantac take about an hour to work, but they help only about 70% of the sufferers.

President George W. Bush and the FDA announced new rules that would hopefully put an end to the inordinate and frivolous delays that occur when brand name drug companies try to extend the patent life for some of their drugs. The new rules took effect August 18, 2003. Under the old rules, a brand-name drug company was automatically entitled to a 30-month stay each time it filed a lawsuit against a generic drug company that challenged its patent. The brand-name drug company had multiple patents in connection with the same drug, even when there was only a slight variation in a minor area from one patent to the other patent.

The process of getting these multiple stays is called "stacking". In obtaining these multiple stays, the generic drug company would be delayed for many months, or even for many years before it could come out with the generic version of the drug. The new FDA rule allows only one 30-month stay. The new regulations also limited the kind of patents that the brand name drug company could list with the government. The new regulations also would impose criminal penalties if false statements were used in order to obtain drug patents.

Senator Charles E. Scheumer (Dem.-NY), co-sponsor of a bill in the Senate aimed at eliminating the delays to the introduction of generic drugs caused by frivolous patent lawsuits by the brand name drug companies said that his pending legislation dealt with the problem in a more judicious manner. He stated that: "The FDA rule is a well-intentioned first step, and it includes some important provisions, but it doesn't go far enough".

The Senate voted 94-1 to approve a measure aimed at speeding access to cheaper generic medications. Republican Senator Orin Hatch of Utah who was one of the sponsors of the landmark 1984 patent legislation was the one vote against the new bill. A provision in the bill would penalize any generic drug company that accepted payment from the brand name drug company to keep the generic version of the drug off the market during the 180-day exclusivity period. If such a payment took place the generic drug company would lose its 180-day exclusive period to make and sell the drug.

The White House measures would also; add $13 million to the FDA's budget so it can hire more employees and approve generic drug applications more quickly through its Office of Generic Drugs. The money would be used to hire 40 new generic-drug reviewers and improve efficiency in that office starting in 2004. It now takes on average 20 months for a generic drug to be approved versus the 15 months that it takes on average for a standard drug review. We must keep in mind that the brand name drug companies paid $161.8 milion in extra user fees to the FDA for the privilege of having their drugs handled more expeditiously.

The Office of New Drugs has 576 staffers working on applications: the Office of Generic Drugs has 90. The 2002 budget for new drug reviews was $347.6 million versus the $39.3 budget for the generic office. The average cost of a month's supply of a brand-name drug is $72 compared with $17 for a generic drug.

A bipartisan group of senators is also attempting to change the 1984 law that governs how generic and brand name drug companies compete. One of the abuses that the group hopes to deal with involves the brand name drug company paying the generic drug company that has gotten the 180-day exclusivity period for a particular drug a sum of money to keep the generic drug off the market for the 180 day period of time. Another practice that is under review involves the generic drug company and the brand name drug company settling a patent lawsuit, with a payment to the generic drug company to discontinue the suit in return for payments to keep the generic drug off the market for a number of years.

Last year, drugs with $8.2 billion in sales lost their patent protection. According to NDC Health, a health care information company, drugs with about $19 billion in sales will lose their patent protection by 2005. By law, there can not be both a generic prescription product and an OTC product on the market that are the same dosage and formulation.

In a surprise move, Senator Judd Gregg (Rep.-N.H.) said that he would help to push the McCain-Schumer generic drug bill that the house had rejected last year. Senator Gregg is presently chairman of the Committee on Health, Education, Labor and Pensions. He had opposed the legislation last year because it contained a provision that he called "a lawyers relief act". The proposed legislation has a much greater chance of being passed in both the Senate and the House because of Senator Gregg's approval.

The provision that he objected to has been changed under the new bill. That provision would have allowed generic drug companies to file lawsuits challenging the way brand-name companies use some patents to get an automatic delay from generic competition. Senator Gregg called the removal of the right-to-sue provision a "very positive step forward".

The new bill allows generic drug companies to file a counterclaim against any brand-name drug company that sues them for patent violation. The proposed legislation would also eliminate some of the "loopholes" in the present law that allows brand-name drug companies to frivolously extend the life of their patents. The bill could become a stand-alone provision to be acted on by Congress or it could be added on to the Medicare overhaul legislation that Congress will be considering shortly.

Senator John McCain (R.-Ariz.) and Senator Charles Schumer (D.-N.Y.) along with 17 other senators have reintroduced their bill which died in Congress last year. The Senate had passed the bill last year by a vote of 78 to 21. The McCain-Schumer bill restricts the automatic extension of a drug patent's life to one 30-month period of time on the original patent only. Senators Susan Collins (Rep.-Me.) and John Edwards (Dem.-N.C.) were instrumental in having the bill passed in the Senate with the more than 60-votes needed for passage. The CBO has estimated that the bill could cut the nation's overall drug spending by $60 billion or 1.3 %, over the next ten years. Twenty-eight Republicans, 49 Democrats and the one Independent, James Jeffords of Vermont voted for the bill's passage. The House however failed to pass this legislation.

Senators John McCain (Rep-Az.) and Charles E. Schumer (Dem-N.Y.) originally introduced the legislation in 2000 to address the problem created by the granting of automatic 30-month delays for each and every patent that the brand name drug company claimed subsequent to the original patent. Their proposed law would in most cases eliminate the automatic 30-month extension once the original patent's life expires.

The bill also included legislation aimed at eliminating the practice by the brand name drug companies of paying off the generic drug companies to keep the generic drug off the market for the 180-day exclusivity period that the generic company enjoys once the patent has expired. It would also give the generic-drug companies the right to challenge some patents filed by the brand name drug companies as frivolous filings.

Even though a great deal of publicity has been given to the idea that increased usage of generic drugs will help to hold down the rising cost being born by the public for prescription drug this in and of itself is not the sole answer. As a matter of fact, according to IMS Health, a pharmaceutical information company, the price for generic drugs are increasing almost twice as fast as prices for brand-name drugs.

One of the reasons that this is occurring is due to the fact that the generic drug industry is consolidating, leaving fewer generic drug companies to compete in this area. Another reason why this is occurring is due to the higher prices being charged by the generic drug companies for the 6-month period of time in which a particular generic drug company has marketing exclusivity for the brand- name drug that is just coming off patent. The generic drug company that has this 6-month exclusivity period will charge a higher price for the drug during this period of time

On top of all of these above reasons, drug wholesalers, drug plan managers and pharmacies have found that they can make a higher profit margin on a generic drug than they can on a brand-name drug. The average price of a generic drug rose 15%, to $14.70 from $12.79 in the corresponding period last year according to IMS Health. Price of all brand-name drugs rose 8.8%, on average, to $77.02 from $70.79 in the same corresponding period. Some of the generic drug companies have been raising the price of some of their older drugs for which there has been a high demand.

Consumers spent $19.4 billion on generic drugs for Jan.1 through Nov.1 of 2002 compared with $98.6 billion on brand-name drugs. Almost half of all prescriptions filled in 2002 were for generics. The five largest generic drug companies ( Teva, Geneva, Watson, Mylan and Ivax) accounted for over 50% of generic drug sales in 2002.

The over-the-counter version of Schering-Plough's anti-allergy medication Claritin has been available in most pharmacies now for several months. Wyeth has spent over $60 million to advertise its generic version of Claritin called Alvaret (loratadine) and it it is now available in all pharmacies. According to Hamacher Resources Group, a health care data firm, consumers used more than 5 million packages of nonprescription Claritin in the first 3 months of this year.

Chain stores and independent pharmacies introduced house brand generic loratadine last month. The generic version of Claritin is available in some stores for as cheap as 35 cents a pill versus the $2.75 per pill that Claritin cost. Since the drug is now available as a generic drug, it is no available under the prescription drug coverage of most health plans. Thus unless a patient gets a specific exemption from his health coverage insurer, he will not be reimbursed for the drug.

WellPoint Health Networks (which will be merged with Anthem Health), was the health insurer that had brought the original action to have Claritin switched from a prescription to over-the-counter status. It has mailed coupons to 400,000 members to reduce their cost for Alvaret, since generic drugs are not covered by prescription drug coverage insurance plans. The coupons were sent to members who previously had used Claritin, Allegra or Zyrtec which are also prescription anti-allergy drugs.

Robert C. Seidman, chief pharmacy officer of WellPoint, said that with the coupon, Alavert would cost 35 cents each, or $11 for a 30-day supply. Schering's generic version of Claritin will cost $1 to $1.30 a pill, or $30 and $39 for a month's supply. Prescription Claritin had cost about $2.75 per pill or $82.50 for a month's supply. As a matter of fact this writer saw Claritin being advertised at his local Duane Reade store for $9.99 for a month's supply. Wellpoint used to spend $90 million a year for its members' Claritin prescription and doctor visits. The average OTC antihistamine sells for $.92 while the average prescription antihistamine sells for $2.31.

For those who are on Medicaid the changeover to OTC status for this drug is a negative since Medicaid does not pay for OTC drugs while it does pay for prescription drugs. Insurance companies will also therefore not have to pay for reimbursement for co-payment claims for the usage of Claritin. Most insurance companies are hiking the co-payments for the other anti-allergy drugs in an effort to get the consumer to use the OTC version of Claritin instead of the others, which are available only as prescription drugs.

The FDA first began reviewing over-the-counter drugs for safety and efficacy in 1972. In the case of Claritin, the generic version will have the same amount of active ingredients as the prescription brand contained. No decision has been rendered yet as far as the switching from prescription to generic status for the other anti-allergy drugs Allegra (Aventis SA) and Zyrtec (Pfizer). These other two anti allergy drugs have benefited by the fact that doctors have in many cases switched from their prescribing of Claritin to now prescribing either Allegra or Zyrtec. In looking at the history of the Claritin case Schering had originally opposed allowing the drug to be sold as a generic drug. An FDA advisory committee had recommended that Claritin be approved as an over-the-counter drug to treat chronic hives (chronic idiopathic urticaria).

Schering then filed an application with the FDA to switch all forms of Claritin and Claritin-D from prescription to over-the-counter status. The FDA committee reviewed the application on April 22-23, 2002 and voted to allow the switch. WellPoint Health Network brought the original petition to the FDA to allow Claritin to be sold as an over-the-counter drug and is now asking federal regulators to do the same for Clarinex. Some experts claim that Clarinex, which was introduced in January 2002, is merely a purified version of Claritin.

Schering had sued Impax Laboratories and 14 other companies in federal district court in Newark alleging patent infringement of the Claritin patent. Schering alleged that the 15 companies had submitted applications with the FDA to market generic prescription or over-the-counter versions of Claritin. Impax had applied to the FDA in November 2000 for permission to market tablets combining loratadine and pseudoephedrine sulsion in a formulation that Schering claims matches that of is Claritin-D-24 Hour-Extended Relief tablets.

Schering has introduced its next generation anti-allergy product Clarinex, in the hope of retaining the market that Claritin established as the leading anti-allergy drug. Once a drug company starts selling its patented drug in the generic version it can not continue to sell it in the prescription version. A huge advertising campaign was initiated by Schering to get Claritin users to switch to Clarinex. Johnson & Johnson's McNeil Consumer Healthcare unit and American Home Products Corp.'s Whitehall-Robins unit has dropped its plans to market a generic version of Claritin.

In July 1998 Blue Cross of California/Well Point Health Networks filed a Citizens Petition with the FDA requesting that 3 of the most popular anti-histamines be switched to over-the-counter status from prescription status. The three are Aventis SA's Allegra, Pfizer's Zytec and Schering's Claritin. An advisory panel to the FDA reviewed this petition on May 11, 2001. The advisory panel consisted of 23 members who are experts in the field of pharmacology. The manufacturers of these anti-allergy drugs opposed the change to over-the-counter status since this would sharply reduce the price that the drug is sold for in the U.S.

An advisory panel had previously ruled that the 3 drugs were safe enough to be bought without a prescription. The advisory panel's decision is not binding on the FDA, and so the process required the further collection of research data, hearings and then a ruling on the matter by the FDA itself. The second generation of antihistamines is considered safer than the first generation because among other things they are less drowse inducing.

Health and Human Services Secretary Tommy Thompson, after testifying before Congress regarding the HHS budget, stated that it was his personal opinion that "some" of the 3 above mentioned antihistamines should be made available as over-the-counter medications. He did not mention any timeframe within which he expected this to be done, though he did indicate that he expected a decision on the matter shortly.

The drug industry argued that in allowing the drugs to be bought without a prescription you are thereby eliminating the need to be seen by a competent medical professional. With the rise in asthma cases reaching epidemic proportions you are putting many people at risk that it is asthma which can be deadly rather than an allergy that is causing the problem.

Many legal experts feel that the FDA does not have the power to change a drug from prescription to OTC status if the manufacturer opposes such a switch. The question arises that if the FDA does have the power to change the status how can you deprive the drug companies of their legal right to the full life of their patents?

The only other time that a drug was switched from prescription to over-the-counter status was in October 1982 when Alupent for asthma was switched to OTC status. Shortly thereafter the FDA reversed this switch, and even today Alupent has remained a prescription medication. The FDA had rejected the application of two drug companies in 2000 to change the classification of their statin drugs that lowered cholesterol levels from prescription to generic.

Chief Judge John W. Bissell of the U.S. District Court in Newark N.J. had granted a motion for summary judgment against Schering-Plough Corp. in a patent lawsuit over the patent protection period for Claritin. Schering had claimed that its patents protected the drug until 2004. The respondents had claimed that only the original patent filing, and not any subsequent patent filings should be used in determining when the patent should expire. The judge found that certain claims of U.S. Patent No. 4,569,716 were anticipated by the prior patent and thus were not valid. Thus the patent protection for Claritin expired on December 19, 2002.

A settlement has been filed with the Federal District Court in Washington before Judge Emmett G. Sullivan, which involved the unlawful action by Bristol-Myers Squibb Co. when it illegally prevented the distribution of generic versions of its cancer fighting drug Taxol. In addition to blocking the distribution of the generic version of the drug, the company also admitted overcharging the consumer for Taxol.

Under the terms of the settlement the company agreed to pay $12.5 million to compensate patients who bought Taxol or its generic version from Jan.1, 1999 through February 28, 2003. Thirty seven million will also go to governmental entities and $5.5 million will go towards reimbursement for legal fees and administrative costs involved in the lawsuit.

The company further agreed to injunctive relief that will prevent it form engaging in anti-competitive behavior for 10 years, and to provide for free $7.6 million worth of Taxol free to health-care facilities throughout the country.

In examining the question of generic patent reform legislation it is essential to understand how a generic drug gets to market. The FDA publishes a list of patent expiration dates in its publication, "Approved Drug Products with Therapeutic Equivalence Evaluations" (known as the Orange Book).If a generic drug company wants to sell a generic version of an FDA approved drug prior to the expiration of the patents listed for that drug in the Orange Book, it submits an application to the FDA for a certification (paragraph IV ANDA) of its belief that the patent is either,:unenforceable, invalid.or would not be infringed by the applicant's generic version of the drug.

The patent holding drug company then has 45 days to sue the generic company in federal court to prevent the generic drug company from producing its version of the drug. The suit by the patent holding drug company starts a 30-month clock, during which time the generic drug company can not produce its version of the drug. While the clock is running, the FDA can't give final approval to the generic drug company's product unless the generic drug company wins the lawsuit or all the drug's patents in the Orange Book expire.

The U.S. Senate passed the McCain-Schumer bill that would limit automatic 30-month stays only to patents filed before or within 30 days of the FDA approval of a new drug application (NDA). President Bush has proposed similar legislation to the McCain-Schumer bill. In addition, drug companies would no longer be allowed to list patents in the Orange Book for drug packaging, drug metabolites and intermediate forms of a drug. The only listings permitted would be patents on active ingredients, drug formulations and uses of a drug.

Gilead Sciences Inc., of Foster City, Ca., said that it would begin offering its AIDS drug Viread to 68 of the world's least-developed countries at cost. It will offer Viread to "qualified" AIDS-treatment facilities throughout Africa and 15 other poor countries for $475 a year. The drug costs roughly $4,300 a year in the U.S. Clinics that wish to receive the drug must be accredited AIDS-care facilities, but will not have to work through local governments to participate in the program. AIDS activists said that the program was indeed welcome but that it still falls far short of the steps necessary to ensure that millions of needy AIDS patients receive the needed treatment.

The reason why the matter of reduced costs for AIDS drugs is important in the area of patent protection for prescription drugs relates to the problem as to when a country should be able to invalidate patent protection in case of a medical emergency. AIDS is clearly an illness that can threaten the lives and well being of a country's residents. There are other illnesses where this matter is not that clear cut a situation. At what point should a country be able to abrogate the protection given to the patent holder for the well being of its residents?

The Indian generic drug manufacturing company Dr. Reddys SA has filed an ANDA in the U.S. challenging 7 of Aventis SA's patents for Allegra which are due to expire between 2012 and 2013. If successful in its challenge, Dr. Reddys could launch their generic version of the drug as early as 2006. Barr Labs has previously filed some patent challenges in September 2001 against Aventis for its Allegra anti-allergy medication. Please keep in mind that Schering-Plough's anti-allergy medication Claritin underwent similar challenges before its patent on the drug expired, and it agreed to sell the medication over-the-counter.

The most profitable period of time for a generic drug company is when it has the 6-month exclusive period of time to sell a drug for which the patent has expired. Under the law the first generic drug company to file is the first one to gain the exclusivity period. In an attempt to "push the envelope" and gain this period of exclusivity even before the patent expires, the generic companies are utilizing a "Paragraph IV certification" process to challenge a patent even before it is due to expire.

At least 11 blockbuster drugs have come under attack by the generic drug companies. The generic drug companies have a lot to gain if they can prevail in these suits and very little to lose, namely their legal fees in case they do lose the legal proceedings. Of course it should be kept in mind, that the winner in a patent lawsuit case may be entitled to treble damages as well as compensatory damages.

According to an FTC study published in the summer of 2002, "Paragraph IV certifications" appeared on just 2% of generic drug applications in the 1980s. That number rose to 12% in the 1990s, and was up to 20% in the period 1998 to 2000. Probing for patent weaknesses has become one of the favored methods of the generic industry to become thorns in the sides of the brand name drug companies. The FDA web page presently shows 210 active generic applications that carry Paragraph IV assertions. Some of the drugs that are coming under this challenge are Lilly's Zyprexa, Merck's Fosamax, Pfizer's Zoloft, Norvasc and Neurontin, Schering's Rebetol and GlaxoSmithKline's Paxil.

Judge David G. Larimer of the U.S. District Court in Rochester invalidated a broad patent held by the University of Rochester on the Cox-2 class of pain-inhibitors, and dismissed the school's lawsuit seeking royalties from Pharmacia/Pfizer, Inc. on their best selling drug Celebrex. Celebrex accounted for over $2.4 billion in sales for the company in 2002. As soon as the university received its patent in April 2000 it sued Pharmacia, arguing that Celebrex took advantage of a biochemical pathway the university had discovered years before.

In his opinion the judge wrote the university patent was little more than "a wish, or plan or first step for obtaining a desired result" and doesn’t offer a concrete invention, as required under federal patent law. Judge Larimer ruled that the patent was invalid because it did not contain a detailed enough written description of the invention, nor enough information to enable others to duplicate the work. The university's patent covered a method for treating pain and inflammation by inhibiting the Cox-2 enzyme and a test to screen potential drug candidates. He stated in his 33-page decision that although the university's scientists did make an important discovery it "did not blossom into a full-fledged complete invention." The university said it would appeal the ruling.

Under the leadership of Dr. Donald Young, scientists at the university discovered in the late 1980's and 1990's that the Cox-2 enzyme was involved in inflammation and pain. Cox-1 enzymes protect the stomach linings from acids. Many of the painkillers including aspirin and ibuprofen suppress pain and inflammation, but they also can be quite harmful to anyone who suffers from or even cause stomach ulcers. This is especially true in the case of bleeding ulcers. It was originally hoped that the Cox-2 inhibitors would not increase the risk in connection with ulcers but so far this has not proven to be the case. The Celebrex label does contain an ulcer warning on it.

Bristol-Myers Squibb agreed to a 10-year ban on its right to be given a 30-month delay when one of its new patents is due to expire by filing a lawsuit under the terms of the Hatch-Waxman Act. Legislation is now pending in Congress to ban this practice which many of the drug companies have used to try and extend the life of their patents which cost the consumers many hundreds of millions of dollars.

This action by Bristol will settle an anti-trust investigation of the company by the Federal Trade Commission. The commission's chairman Timothy Muris, told a news conference, "Bristol's illegal conduct protected nearly $2 billion in yearly sales for the three monopolies (BuSpar (antidepressant), Taxol (cancer) and Platinol (cancer), forcing consumers to overpay by hundreds of millions of dollars for important and often life-saving medications." The FTC had charged Bristol with illegally extending the life of its patents on drugs through frivolous actions.

The patent restrictions come on top of a $670 million settlement that Bristol reached in January to resolve similar antitrust charges regarding BuSpar and Taxol, filed by a group of state attorney generals, as well as several generic drug companies and pharmacy chains. The five-member commission voted unanimously to accept the settlement, which will be subject to public comment for 30 days. Bristol will still be able to file suit against a generic drug company for patent infringement. The cases of BuSpar, Taxol and Platinol are three of the eight instances cited by the commission in which brand-name drug manufacturers submitted new listings in the F.D.A.'s Orange Book, after a generic company sought F.D.A. approval of its generic version of the drug.

In case you want to find any patents yourself, they can be viewed on the Web at http://www.uspto.gov The Web site also contains a number of links to sites offering help to inventors interested in applying for patents. It also has a full listing of all patents granted by the Patent and Trademark Office. The phone number for the Patent Office is 800 786 9199.

Please see:
Patents and Prescription Drugs-Part I
Patents and the Possibility of Generic Biologic Drugs-Part III

FOR AN INFORMATIVE AND PERSONAL ARTICLE ON PRACTICAL SUGGESTIONS WHEN SELECTING A NURSING HOME SEE OUR ARTICLE "How to Select a Nursing Home"

By Allan Rubin and Harold Rubin, MS, ABD, CRC, Guest Lecturer
updated November 23, 2019

http://www.therubins.com

To e-mail: hrubin12@nyc.rr or allanrubin4@gmail.com

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