January 18, 2006
Branded drug firms settling more patent suits: WSJ
Emboldened by fewer antitrust challenges, branded pharmaceutical companies are more often choosing to settle patent litigation with generic drug makers, The Wall Street Journal reports.
The settlements pose an alternative to long and risky court proceedings, which can harm share price, but they don’t come cheap. Branded firms must agree to shorten the patent life of the drug, foregoing millions in potential revenue.
Cephalon recently settled with three of the four generic makers challenging the patent on its sleep-disorder drug Provigil, giving up three years of patent exclusivity in the deal. Other firms, such as Wyeth and Johnson & Johnson, have settled patent disputes over important drugs. Analysts expect more, including settlements involving Forest Labs’ antidepressant Lexapro and J&J’s ADHD drug Adderall XR.
Though the Federal Trade Commission (FTC) aggressively pursues such cases because they could delay competition and hurt consumers, recent state- and federal-court judges have ruled that settlements are not by definition anticompetitive. This has made industry executives more confident of surviving regulatory challenges, according to the Journal report.
The settlements are a mixed blessing for consumers and insurers but may be a boon for pharma companies. An FTC study found generic makers won almost 75% of patent litigation suits.