This article appeared in the July 2011 edition of INNSight

Jumping off a cliff

There are people who enjoy throwing themselves off high mountains or tall buildings. Apart from the suicidal ones, most of those who participants strap on a parachute or use a suit that incorporates wings to allow them to glide to safety. When they launch themselves into the air, they hope that the safety equipment will function properly and allow them to land gently and in one piece.

Last month Teva (yes, them again) threw themselves off a very high mountain labelled “Pfizer’s Lipitor patent” by carrying out an “At Risk” launch of a generic Atorvastatin in the UK some 5 months before the patent’s SPC expires and hoping for a safe landing. Unfortunately, Pfizer sabotaged their safety mechanism by cutting the strings on their parachute so that Teva hit the ground rather faster than they had presumably hoped. 

Pfizer did two things – it obtained an injunction stopping Teva from selling Atorvastatin and, to make matters worse for Teva, received its Paediatric SPC on the product extending exclusivity in the UK until 6^th May 2012. The Financial Times estimated that Teva had managed to squeeze £14m of stock into the wholesalers before Pfizer stopped them. The injunction remains valid until 11^th July when the court reconvenes to consider the case, so it would probably not be appropriate to comment any further at this stage.

“At Risk” launches have been fairly common in the US with not just Teva but also other generic players taking a chance by launching a generic prior to patent expiry.

One legal firm gave a definition as “When the generic company puts the product on the market before resolving outstanding patent lawsuits against it”. The calculation seems to be that the risk of paying damages is outweighed by the benefits of being the first to market.

With Atorvastatin, the potential payoff is enormous, given that the NHS paid out over £300m on Lipitor in 2010 so being the first into that market has a certain attraction. Of course, the strategy can go wrong as happened to Teva when it launched a generic of Protonix (Pantoprazole) in the US. The courts decided that Teva did, in fact, infringe the Wyeth patent on drug Protonix when it started selling a generic version in 2007 and also that the infringement caused Wyeth (now part of Pfizer) losses of up to $1.5 bn in profits. Amazingly (or perhaps not for the lawyers with a vested interest in dragging things out), the case has not finally been settled yet.

It is therefore not yet possible to estimate the damages that Teva will need to pay to Wyeth / Pfizer but they could be least equal to the US$1.5bn that Wyeth lost and more if Pfzer obtain double or triple damages. Ouch! That will hurt even a company as big as Teva.

Apotex also took a risk when it launched a generic Plavix (Clopidogrel) in the US in 2006, but here the outcome was very different. The company first made a Paragraph IV filing in 2001,which BMS countered with a 30-month stay that lasted until September 2005. The two sides got together to discuss a settlement that was concluded in March 2006.

It consisted of two parts; a “Pay for Delay” arrangement that needed FTC approval and an alternative in case the FTC said “no”. The FTC did, indeed, say “no” and this triggered an amazing development that cost BMS a fortune and the CEO his job.

The alternative included provisions for BMS to pay $60 million to Apotex and to limit any damages in an infringement suit if Apotex launched a generic to 70% of Apotex's sales. Following legal objections to that settlement by regulators, a further revised arrangement brought forward the date when Apotex could launch an authorised generic and limited BMS’s damages to only 50% of Apotex sales!

In July 2006 the FBI started an investigation of the whole affair, even raiding the offices of the BMS CEO Peter Dolan. In August, Apotex launched generic Clopidogrel and sold $500m of the stuff before BMS obtained an injunction three weeks later. As a result of his catastrophically bad handling of the whole affair, Peter Dolan and BMS parted company a few weeks later.

There have been other such risky launches in the US, but none have had such a bizarre outcome. Given the nature of generic companies as risk takers, it seems unlikely that these will ever die out as long as the company does a risk:benefit analysis and concludes that the potential benefits are high enough to outweigh the risks.

Being first to market and grabbing a huge markets share and plenty of headlines and good PR are certainly a huge benefit and even more so if your opponent is a BMS rather than Pfizer.

If you have any questions or comments,

Please feel free to contact me

peter@interpharm-consultancy.co.uk

www.interpharm-consultancy.co.uk