In an effort to curb brand companies' lawsuits designed to delay generic competitors, bills have been proposed in Europe based on a partial "loser pays" model.
As described in the story below, from London's Finanacial Times, the great majority of such suits (60-80%) are lost. Like paying off potential generic competitors (see our recent story on this), the primary purpose of the suits is to add 2-3 years of protection beyond patent expiration while the suits are being sorted out.
Many have described this as a perversion of Hatch-Waxman. This is an interesting proposal to do something about it.
Drug groups seek cure for 'spurious' patent lawsuits
By Andrew Jack in London
Published: June 12 2009 03:00 Last updated: June 12 2009 03:00
Generic drug companies are demanding that pharmaceutical companies post a financial "bond" that they would forfeit if they lose litigation designed to prevent the loss of patents on their medicines.
In submissions to the European Commission, the European Generic Medicines Association calls for a mechanism to ringfence up to 20 per cent of the sales from any medicine on which a drug company seeks to maintain its exclusivity through legal action once the patents expire.
The aim is to discourage what the low-cost generic manufacturers claim is a growing number of spurious lawsuits designed to delay competition and maintain high prices on drugs beyond their original patent life.
The request is one of a number sought by the association in recent submissions to policymakers, including a formal response to the pharmaceutical sector inquiry launched by the EU's competition directorate.
Its action comes ahead of publication of a final report from Neelie Kroes, the EU competition commissioner, who last autumn issued a scathing preliminary analysis of the practices of the pharmaceutical sector designed to stall generic competition, including settlements between generic and innovator companies to delay generic launches.
Gerard van Odijk, European president and chief executive of Teva, the world's largest generic business, and an advocate of the proposal said of the bond: "This would rebalance the model. Pharmaceutical boards would be more cautious in defending their patents. My bet is it would halve the number of cases they bring."
He estimated that pharmaceutical companies lost 60-80 per cent of the legal actions designed to stall the launch of generic versions of their medicines, but continued to launch a growing number of cases in the courts.
Copyright The Financial Times Limited 2009