Patent Law Practice Center

Litigation is the Life of a Generic Drug Manufacturer

Generic drug companies are those that sell versions of a brand name drug that are similar enough so that they can rely on the research and trials of the brand name company. They either have to wait until the patent on the brand name drug expires, or they can proceed through a process at the FDA where they certify that the generic that they want to sell is either not infringing and/or the patent claims obtained by the brand name company are invalid. If they say that they are not infringing and/or that the patent claims are invalid, that allows the brand name drug company to immediately file a patent infringement action, as authorized by Hatch-Waxman.

The way generics make money and the marketplace can sometimes seem byzantine, but there is no doubt that generics can be quite profitable. For example, generic drug maker Actavis plc (NYSE: ACT) recently reported its financial information from the first quarter of 2014. In the announcement, Actavis stated that their net revenue increased 40% to $2.66 billion for the first quarter ended March 31, 2014, compared to $1.90 billion in the first quarter 2013. Cash flow from operations for the first quarter of 2014 was $440 million and cash and marketable securities were $340 million as of March 31, 2014.

But the announcement of exceptional Q1 financial data came at the end of a week that showed just how much of a roller coaster ride it can be for generic drug companies, and just how much of their business model is dominated by litigation, litigation and more litigation.

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Top 5 Patent Law Blog Posts of the Week

Today we are debuting a weekly installment highlighting the best of the patent blogosphere from the past week. Highlights include USPTO updates and announcements, as well as the expiration of the patent for the world’s best selling prescription drug – ever.

1. IP Watchdog: USPTO Announces More PPH Agreements, China and Iceland – Several announcements came out of the USPTO this week regarding launches for Patent Prosecution Highway (PPH) pilot programs with China’s State Intellectual Property Office, the Icelandic Patent Office, as well as the start of the Paris Route PPH program. This post details how the PPH programs facilitate work-sharing benefits worldwide.

2. Patents Post-Grant: USPTO to Implement New Ex Parte Appeal Rules for 2012 – At the beginning of the week, the USPTO released the final rule package regarding the Rules of Practice Before the Board of Patent Appeals & Interferences in Ex Parte Appeals. This post explains the application of the new rules and how they will impact ex parte proceedings and ex parte reexamination. *PLI will be hosting a One Hour Briefing on the USPTO’s new rules on Jan. 9, 2012. Stay tuned for more information. Also check out information regarding PLI’s  Post-Grant USPTO Proceedings 2012 – The New Patent Litigation Seminar on Feb. 3, 2012.

3. Reexamination Alert: Judge Randa Refuses to Lift Reexamination Stay Despite Patentee’s Success (So Far) with Examiner – This post from Westerman, Hattori, Daniels & Adrian, LLP shares an interesting twist to the use of the 35 U.S.C. Section 316(a) standard for “complete” reexamination. In Generac Power Systems v. Kohler, the twist came when an accused infringer invoked Section 316(a) to maintain a reexamination stay rather than the more common practice of the patentee using the section.

4. TIME: Lipitor Already Cheaper After Patent Expiration – Pfizer’s patent for their best selling prescription drug, Lipitor, expired this week. According to this article, Pfizer’s sales from Lipitor averaged at about $11 billion dollars per year, which ends up being roughly one-sixth of Pfizer’s total sales. Because of the patent’s expiration, Pfizer is now doing what it can in order to preserve whatever claim it has to Lipitor, including selling the drug at a steep discount (to counter-act the sale of the generic drug at an estimated 80% discount), as well as paying pharmacies to spread the news to its customers about the discount. How Pfizer reacts to losing the patent for the best selling prescription drug of all time will have an impact on how the rest of the pharmaceutical market handles patent expiration.

5. Patently-O: Holiday Gift List for Patent Attorneys and the Like – Although this blog post is from last week, I thought it would be good to share right before the weekend, considering the holiday season is upon us and all types of holiday parties (whether they be office or social) are popping up each week. Patent attorneys deserve cool presents too, and this list is full of great and very different gift ideas. Enjoy!