Saturday, June 13, 2009


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


  1. Who is speaking up for consumers who are paying more for their drugs while pharma plays court shenanigans?

  2. It's not just about money. Personally, I was unable to get a medication when it was stopped being distributed in the U.S. in favor of a me-too version, but which had much less efficacy. In the meantime, court tricks kept a generic of the original off the market for two years post patent expiration.

    It very nearly cost me my life. Literally.

  3. The more I hear about the tactics of pharmaceutical companies the more discouraging it gets.

    I'm beginning to think that the free market system just doesn't work for this industry.

    If free market means to them - free to commit fraud, deception, free to bribe, coerce, bully, falsely promote, falsely advertise, freedom to exercise control over their governing body (FDA), the freedom to have special civil liberties (ie preemption), the list can go on – maybe we should reconsider the whole ball game, how it is played, what the rules are and who makes and enforces the rules.

    If we can’t trust an industry that we yearly grant privilege to take billions of our hard earned dollars to support our very life, we need to get very serious about the failings of the system we allow it to flourish in.

    A full scale re-evaluation of how the pharmaceutical industry does business is the only way to bring it back to the level of dignity and performance that we should expect of it and that it can achieve.

    Chipping away at small aspects of its function will not work. This problem is too big and getting bigger every day.

  4. All: Are you suggesting that it is not Ok for pharma to seek compensation in court for attacks from the generic industry? There are (many) legitimate reasons why exclusivity may extent beyond the patent lifetime: Orphan drug extensions, regulatory extensions due to FDA concerns during approval, pediatric testing extensions, and more. Consumers can seek redress within the court system (the Supreme Court just held up this right, remember?). Why should pharma companies not have the same rights? We've seen generic companies come in and launch generic products long before the patents have expired on products.

    Don't get me wrong: I'm not necessarily opposed to a "looser pays" philosophy -- but I sure hope that it is equitable. For it to be equitable, generic companies should also have to pay pharma legal fees when they unsuccessfully challenge patents owned by big-pharma. This isn't a one-way street. Lawsuits are flying to and from all directions and all parties.

  5. Nice to hear from you again Nathan! It's been kind of... I don't want to say boring but at least not as interesting around here without you.

    My concern is this quote - "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."
    And in the mean time the patient has to pay the higher price.

    I agree with your comment about the Generics taking advantage, if this is so, they too should be held accountable.

    Secondly, if the practice of using law suits is meant to delay Generic production so the originator company can line their pockets, it certainly shoots holes in the argument that pharma uses against preemption, that being the idea that – greedy trial lawyers use frivolous law suits to line their pockets. And as Justice says, shouldn’t they use that suit money to “introduce new and innovative drug and devices to the public”?

    All and all, it’s just disturbing that the dishonesty is so obvious and onerous.

  6. I agree that brand companies have a right to defend themselves against patent infringement. The issue comes when lawsuits are (pretty clearly) means to extend exclusivity beyond patent life, and nothing else. Yes, that will be in the eye of the beholder. But, assuming the percentages are correct, it does appear that a good deal is not "on the merits."

    In the meantime, preemption is not over. It still holds in the arena of devices. And, in Michigan, it is still total for drugs as well, as it has been for fourteen years. The Levine case had no impact on Michigan's statute.


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