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Teva Pharm on verge of losing patent challenge over launched drug, Famvir By Yoram Gabison
Teva Pharmaceutical Industries may be about to lose its first patent challenge on a drug it has already launched.
The U.S. District Court of New Jersey rejected Teva's motion to dismiss two suits alleging patent violations over Famvir, an anti-viral drug developed by Novartis Pharmaceuticals to treat genital herpes. Advertisement
Teva applied for a permit to sell its generic version of Famvir under Paragraph 4 of the Hatch-Waxman Act, which grants six months of exclusivity to the first company that produces a generic version and successfully challenges the validity of a patent protecting a drug. Teva launched its generic version of Famvir in September 2007, even though it did not win the patent challenge filed against it by Novartis.
In the 12 months before Teva launched the generic drug, Famvir sales totaled $190 million.
Teva's strategy involves launching generic versions of drugs before it wins patent challenges, therefore taking on the risk of losing. This strategy has netted Teva millions in profits on blockbuster drugs, but also exposes it to the risk of losing a patent challenge and thus having to pay damages to the company that developed the original drug.
Damages can be as much as three times the profits lost by the original company, if it can prove a deliberate violation of a valid patent.
So far, all of Teva's bets have been good ones, though - it is yet to lose a patent challenge on a drug it is selling.
Teva may make good on its Famvir bet as well, as Teva won its previous legal faceoffs against Novartis. The former acquittals could boost Teva's defense against claims of deliberate patent violation.
Even so, Natalie Gottleib, an analyst at the investments firm IBI, predicts Teva will lose the patent challenge on Famvir, contrary to assessments by foreign analysts. Gottleib says Teva will take little direct damage, but a first loss in a patent challenge over a drug on the market will affect how investors perceive the risk of losing future challenges in cases of risky launches.
Teva could potentially lose patent challenges on much bigger sellers than Famvir, and thus incur much greater losses than Famvir would cause it. In December 2007, for example, Teva launched a generic version of Protonix, a drug developed by Wyeth for treating acidity in the stomach and esophageal inflammation. In the 12 months prior to that launch, Protonix sales were about $2.5 billion.
Teva also took on significant risk when it launched Lotrel, a high blood-pressure treatment. Teva began marketing a generic version of this drug, which has billions of dollars in sales annually, in May 2007. Since then, Teva has made $500 million on the drug.
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