Wall St. Journal on proprietary/generic agreements on drugs
Posted on August 15, 2008 in Generic prescription drugs
In an earlier post on IPBiz, we discussed the action by the FTC against Schering-Plough over a drug agreement with a generic. The Wall Street Journal on January 17, 2006 discusses the general issue. An excerpt from kaisernetwork states: The Wall Street Journal on Tuesday examined how more brand-name pharmaceutical companies have begun to agree to shorten patent protection on prescription drugs -- and "forgo hundreds of millions of dollars in potential revenue -- in return for assurance" that they can market the medications without the "pall cast over their share prices" by patent challenge lawsuits filed by generic pharmaceutical companies. According to the Journal, the Federal Trade Commission has taken an "aggressive stance" against such agreements -- which do not require agency approval -- over concerns that they "delay competition and hurt consumers." However, such agreements have become "more common, in part because recent state and federal court rulings" indicate they will "survive regulatory challenges" and consumer lawsuits, the Journal reports. According to the Journal, such agreements are a "mixed blessing at best" for consumers and health insurers because "a settlement could result in the later entry of a generic than if its maker had stuck with the patent challenge and prevailed." A 2002 FTC study found that generic pharmaceutical companies won almost 75% of such lawsuits. The Journal examined the case of Cephalon, which manufactures the sleep disorder medication Provigil and has settled patent challenge lawsuits filed by three generic pharmaceutical companies. Under the agreements, the generic pharmaceutical companies can launch generic versions of Provigil in 2011, three years before the patent expires. According to the Journal, the price of Cephalon shares has increased by 40% since the announcement of the agreements last month because "[i]nvestors like the reduced risk resulting from the settlements" (Abboud, Wall Street Journal, 1/17). The Provigil case is discussed elsewhere on IPBiz. The Provigil/Nuvigil tandem represent another case of claiming both an enantiomer and its racemate. In the case Schering-Plough v. FTC, 402 F.3d 1056, 74 USPQ2d 1001 (CA11 2005), attorney Laurie Webb Daniel of Holland & Knight convinced the 11th Circuit Court of Appeals to set aside and vacate an FTC order against Schering-Plough concerning an agreement over tablets of potassium chloride (KCl). Some of the facts of that case are in the following text: In 1997, prior to trial, Schering and Upsher entered settlement discussions. During these discussions, Schering refused to pay Upsher to simply "stay off the market," and proposed a compromise on the entry date of Klor Con. Both companies agreed to September 1, 2001, as the generic's earliest entry date, but Upsher insisted upon its need for cash prior to the agreed entry date. Although still opposed to paying Upsher for holding Klor Con's release date, Schering agreed to a separate deal to license other Upsher products. Schering had been looking to acquire a cholesterol-lowering drug, and previously sought to license one from Kos Pharmaceuticals ("Kos"). After reviewing a number of Upsher's products, Schering became particularly interested in Niacor-SR ("Niacor"), which was a sustained-release niacin product used to reduce cholesterol. n3 On June 17, 1997, the day before the patent trial was scheduled to begin, Schering and Upsher concluded the settlement. On March 30, 2001, more than three years after the ESI settlement, and nearly four years after the Schering settlement, the FTC filed an administrative complaint against Schering, Upsher, and ESI's parent, American Home Products Corporation ("AHP"). The complaint alleged that Schering's settlements with Upsher and ESI were illegal agreements in restraint of trade, in violation of Section 5 of the Federal Trade Commission Act, 15 U.S.C.