Settling patent disputes a way out of legal costs

[Metropolitanjury]

Out-of-court settlements are increasingly the order of the day with pharma companies, and yet, Ranbaxy’s settlement with Pfizer on its estimated $13-billion cholesterol drug is a global show stopper.

Over the last couple of years, more innovative drug companies are forging settlements with companies making generic versions of their drugs, observes a pharma analyst. And that is because legal costs are expensive, he added.
A settlement allows the innovator to keep the generic drug maker at bay till a time close to the patent expiry of the particular drug. As a result, the innovator is assured a few more months of life on its drug and the generic company making the similar version also gets a few months of exclusive global sales.

Though the Lipitor settlement is the largest in the global pharmaceutical space, it is not the first from Ranbaxy. In the recent past Ranbaxy has settled with GlaxoSmithKline on herpes-related drug Valtrex, and migraine drug Imitrex, and with Astra Zeneca on ulcer drug Nexium.
In fact, Imitrex is a settlement that was done serially with other drug companies as well, including Dr Reddy’s Ltd (DRL), a pharma analyst points out. DRL, along with Ranbaxy, was at the forefront of domestic drug-makers taking on aggressive patent litigation. In fact, about half of DRL’s patent filings in the US are patent challenges. DRL’s annual litigation cost is about $10 million.

But DRL’s MD and COO, Mr Satish Reddy, has indicated that companies were looking at innovative ways to settle litigation to improve their chances of launching. DRL has in the past also forged a settlement with UCB on epileptic drug Keppra.

Other drug companies like Sun Pharma and Lupin too have seen similar litigation settlements. Sun Pharma has settled with Novartis on Alzheimer drug Exelon, and in another agreement with Wyeth on anti-depressant Effexor. Lupin settled on antibiotic Cefdinir with Abbott and Astellas Inc.

Overseas drug companies too have settled litigation, say pharma analysts, referring to Mylan and Watson. But, they point out, the Lipitor settlement not only brings in savings on litigation, but also nixes speculation on Pfizer being interested in acquiring Ranbaxy, after its promoters recently sold their stake to Japanese company Diiachi Sankyo.

By Ms.Bobby Aanand, Metropolitan Jury.

Just to set the record right : Sun Pharma has no settlement with Wyeth on Effexor XR generic. The covenant "not-to-sue" given by Wyeth, is of its own accord. Wyeth has not given an official reason for giving such a covenant.