Brand name drugs cost a lot more than generic versions of the same (or bioequivalent) chemical compounds. At retail pharmacies alone, consumers save over $8 billion annually by purchasing generics. Hospital buys add billions more to the savings.
But brand name drugs benefit from patent protection. A generic manufacturer thus can’t safely get its product to market unless it beats the patentee’s infringement claims.
A case that the Federal Circuit decided yesterday illustrates the process. Warner Lambert, Pfizer, and Godecke hold a patent for gabapentin, the active ingredient in Neurontin(R), which treats cerebral disorders such as epilepsy. The drug companies sued several generic outfits after they filed Abbreviated New Drug Applications with the Food and Drug Administration, seeking permission to market generic gabapentin. The Judicial Panel for Multidistrict Litigation centralized the cases in the District of New Jersey. The district court issued several rulings, including construction of claim terms in the gabapentin patent and an order granting summary judgment of noninfringement.
The Federal Circuit upheld the claim constructions but reversed the summary judgment. The court concluded that the patentees’ expert evidence raised a fact issue as to whether samples of the generic product satisfied a limitation on the parts per million of chloride in the generic drug. The question of fact precluded summary judgment on noninfringement. In re Gabapentin Patent Litig., No. 06-1572 (Fed. Cir. Sept. 21, 2007).
The upshot? As a press release tells it:
Pfizer said the ruling will allow the company to seek a judgment of infringement and, if successful, pursue full compensation for the damages it suffered due to the 2004 at-risk launch of generic versions of Neurontin. Prior to such launch, Pfizer’s sales of Neurontin were more than $2 billion a year, and the patent does not expire until 2017.
Blawgletter guesses that Pfizer, et al., hope to recoup profits they lost as a result of generic competition. With a gabapentin market now totaling $2.8 billion a year, their recovery could run into the hundreds of millions if not billions.
How you feel about the Big Pharma victory in Gabapentin probably turns on whether you favor strong enforcement of patent rights or, instead, put more weight on the losses to consumers from suppression of generic competition. But you may also want to consider that, before 2004, as much as 90 percent of Neurontin sales went to "off-label" uses. And that in 2004 Warner Lambert pleaded guilty to charges that it marketed Neurontin for such uses and paid more than $430 million in fines.