Drug Makers Delay Generics Hitting Market

Wendell Young, president of the United Food and Commerical Workers Union 1776, says his members should not be denied access generic drugs Wednesday, May 24, 2006 in the Union headquarters in Plymouth Meeting, Pa. The marketers of the world's second-largest selling drug appeared to dodge a major threat to their revenues two months ago by reaching a deal to keep a generic competitor at bay until at least 2011. (AP Photo/Rusty Kennedy) (Rusty Kennedy - AP)

While not commenting on the case directly, Ken Johnson, spokesman for the Pharmaceutical Research and Manufacturers of America, said in a statement that resolving litigation allows companies to focus on developing new medicines.

When the Apotex deal was announced, Sanofi and Bristol-Myers said they believed the Plavix patent was valid but didn't want to risk the trial, slated to start in June. Both companies said there is a possibility the deal won't obtain FTC clearance.

Plavix's revenues totaled $5.9 billion last year. It is Bristol-Myers' biggest seller, and Sanofi-Aventis' second largest-selling drug.

Consumers will have access to generic Plavix eight months before the patent's expires in 2011. But an Apotex victory could have resulted in a generic version years earlier.

In a speech last month, FTC Commissioner Jon Leibowitz said his staff would examine the deal closely and expressed concern about the mushrooming number of Plavix-like arrangements.

Leibowitz said that in fiscal 2004, none of the 14 reported agreements between brand and generic companies contained a payment to the generic company accompanied by it deferring its product's market entry. So far, for fiscal 2006, at least seven out of 10 agreements include a payment to the generic company from the brand company and a delay in the generic's debut.

Two appellate court decisions in 2005 upholding those types of deals appear to be affecting the market adversely, Leibowitz said. He added that the rising number of authorized generics may also temper generic firms' incentive to challenge patents.

Under federal law, the first generic company to file an application to market a drug that states that either it doesn't infringe on a patent, or that the patent is invalid, is eligible for a 180-day marketing exclusivity period. That's when generic companies recoup most of their investment because they only have to offer a slight discount to the brand.

However, the pharmaceutical company that owns the patent can either launch its own generic or give a license to another drug maker during that six month period, depriving the first filer its exclusivity.

An authorized generic can cut the profit of the first filer by 59 percent, said Gregory Gilbert, an analyst with Merrill Lynch.

"They (authorized generics) undermine the incentives for generic companies to try to enter early," said lawyer David Balto, an antitrust expert. "If a generic company knows a brand company can steal their market, they'd be more willing to settle."

Citizen petitions are another way to block generic entry into the market, Balto said. Anyone can file a citizen petition to express concern or comment about any issue facing the FDA, which can't approve a generic drug if there's an outstanding petition.