Biotech Values

[DewDiligence]

Court Backs Teva, Ranbaxy in Generic Zocor Dispute

[This important case concerns the Hatch-Waxman statutory 180-day exclusivity for a first-to-file generic. The FDA had originally ruled that TEVA and Ranbaxy (the first filers for different doses of generic Zocor) were not entitled to 180-day exclusivity because of a technicality, but the Court overruled the FDA and granted the exclusivity. Had the Court agreed with the FDA, branded companies could have effectively made an end run around the Hatch-Waxman statutes and eliminated the incentive for patent challenges from generics.]

http://online.wsj.com/article/SB116353022630922909.html

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By PETER LOFTUS
November 14, 2006

A federal appeals court sided Tuesday with two generic-drug companies in a dispute with the Food and Drug Administration, preserving their six-month period of U.S. market exclusivity for a copycat version of Merck & Co.'s Zocor cholesterol-lowering drug.

The upshot of the ruling is that Teva Pharmaceutical Industries Ltd. of Israel and Ranbaxy Laboratories Ltd. of India will continue to avoid significant competition for generic Zocor in the U.S. through late December, barring further court action. At that time, other generic companies may begin selling generic Zocor, which is expected to further reduce prices for the product.

A key U.S. patent for Zocor expired in June, clearing the way for generic competition. Zocor had been Merck's best-selling drug, but sales have declined since the patent expired.

Under federal law, Teva and Ranbaxy had expected to be granted a six-month period of exclusivity because they were the first to apply for FDA approval to sell generic Zocor, known as simvastatin. Teva applied to sell most dose levels of simvastatin, with Ranbaxy applying to market the highest dose.

Both companies began marketing simvastatin in June. Merck, Whitehouse Station, N.J., continues to sell branded Zocor, albeit at a lower price, and also has contracted with Dr. Reddy's Laboratories Ltd. of India to sell a so-called authorized generic version of the drug.

But before the patent expired, the FDA had attempted to prohibit any company from having a six-month period of exclusivity for generic Zocor, citing a complex set of rules. The FDA argued that because Merck hadn't sued Teva and Ranbaxy for patent infringement, the companies weren't entitled to 180-day exclusivity periods. Instead of suing, Merck had requested that certain patents for Zocor be "delisted" from an FDA database, and the FDA granted Merck's request.

Teva and Ranbaxy took the FDA to federal court and in April won a ruling that they should get 180-day periods of exclusivity. FDA appealed that ruling, resulting in Tuesday's ruling from the U.S. Court of Appeals for the District of Columbia Circuit.

The appeals court wrote that FDA improperly denied Teva and Ranbaxy a period of marketing exclusivity by delisting Merck's patents. The court said FDA's policy of requiring that a generic-drug maker be sued for patent infringement in order to obtain marketing exclusivity is inconsistent with federal law. The court said such a policy would diminish the incentives Congress gave generic-drug companies when it wrote the relevant law.

Spokespeople with FDA and the companies couldn't immediately be reached.
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