Supreme Court Studies Generic Drug Question: How Will Patients Fare?
Perhaps not as attention-grabbing as the health care industry’s struggle to adapt to the changes brought by the Affordable Care Act, its efforts to deal with what is known as the patent cliff is nevertheless a hugely important narrative for pharmaceutical companies. While Teva Pharmaceuticals (NYSE:TEVA) has grabbed numerous headlines in recent years with its efforts to undercut brand-name drugmakers with generic versions of their own high-priced medicines, the Israel-based company is now worried about the financial viability of its own blockbuster multiple sclerosis treatment, Copaxone.
Teva Pharmaceutical Industries — the world’s largest manufacturer of generic drugs — has criticized other brand-name drugmakers from trying to block its generic versions. It has gone so far as to take those companies to court. Take for example Teva’s battle with Pfizer (NYSE:PFE).
Patent expirations continue to be a problem for the United States’ largest pharmaceutical manufacturers. Since Pfizer’s patent for its blockbuster cholesterol medicine Lipitor — which for nearly a decade was the world’s top-selling drug — expired in 2011, earnings and revenue have struggled to grow. Like many large drug manufacturers, cheaper generic versions of its once-top-selling pharmaceuticals are eroding sales for drugs no longer protected by patents, that once earned Pfizer billions annually. It is for that reason that the company has pursued a so-called method of use patent for its arthritis-pill Celebrex. The drug belongs to a class of drugs called COX-2 that helps lower pain for arthritis patients by blocking a chemical reaction in the body that causes inflammation. A method of use patent covers the use of a product to treat certain health problems or diseases, and Pfizer argued in the United States District Court for the Eastern District of Virginia recently that the company should be able to retain marketing exclusivity and an additional eighteen months of a market monopoly because the reissued patent covers methods of treating osteoarthritis and other approved conditions with celecoxib, the active ingredient in Celebrex.
The issue reached the courts after Pfizer sued generic companies — including Teva Pharmaceuticals and Mylan Pharmaceuticals (NASDAQ:MYL) — for infringement of the reissued patent. Those competitors filed abbreviated new drug applications with the U.S. Food and Drug Administration for approval to market a generic form of celecoxib in the United States beginning on May 30, 2014. However, the generic drug makers successfully argued that the patent Pfizer accused them of infringing upon was not significantly different from the one nearing expiration, and the Virginia District Court ruled that the reissued patent was invalid.
Like Pfizer, Teva is now mounting a campaign to protect its blockbuster drug. Copaxone, which is scheduled to lose patent protection in late May, brought in $4.3 billion in global sales last, with $4.2 billion alone stemming from the United States. The 17-year-old drug accounts for approximately 20 percent of the company’s revenue and nearly half its profit.
Already, the pharmaceutical company has surpassed a major hurdle in its quest to secure a delay generic competition; the Supreme Court agreed on Monday to hear an appeal of a lower-court decision that invalidated a patent that would have protected Copaxone until September of next year. A 2013 ruling made by the U.S. Court of Appeals for the Federal Circuit uphead four Teva patents that expire this coming May, while nullifying a fifth patent that would have blocked generic competition for more than another year. In ruling to overturn the decision of a trial judge, the appeals court said the invalidated patent did not clearly outline the particulars of the treatment’s innovative characteristics. According to the court opinion, obtained by Bloomberg, the patent contains ambiguities regarding which molecular weights were used to develop the treatment.
As the future of its multiple sclerosis treatment has remained uncertain, Teva has been encouraging patients to convert their treatment to a new and more concentrated form of Copaxone, which requires three weekly injections rather than once-daily doses. For the drugmaker, this is a contingency plan in case the Supreme Court denies the appeal; when patients convert to the concentrated formula, it will be more difficult for insurers to force them to take the generic version of the drug instead.
In pursuit of a Food and Drug Administration-imposed block of a generic version, the pharmaceutical company has submitted numerous petitions claiming that chemical makeup of Copaxone is far too complex for a generic company to replicate effectively, The New York Times reported. Teva has also argued that even subtle differences could make generic less effective or even dangerous to the patient. That is an argument that has been made before; ten years ago, Aventis, which is now part of Sanofi (NYSE:SNY), also claimed its blood thinner Lovenox was far too complex to have a generic version. At that time, Teva argued against Aventis, claiming the company was using “blatant and unjustified efforts” to deny consumers “the the cost savings associated with robust and fair generic competition,” noted the publication. For clarity, Teva’s generic version of that drug has yet to be approved.
Now Teva is arguing that Copaxone is more complex than Lovenox, and it is rejecting suggestions that its stance is hypocritical. “I think it would be hypocritical if there would not be quality and efficacy and safety issues for patients here,” Dr. Robert Koremans, president of Teva’s specialty medicines division, told the Times in an interview.
But, as in the case of Lovenox, the opposition is arguing that a generic version of the multiple sclerosis treatment will relieve a tremendous burden on patients and the health care system. The list price of Copaxone is now four times as expensive as it was ten years ago, average approximately $60,000 a year, according to the publication. “The prices would go up 10, 20, 30 percent at a time for no apparent reason,” Dr. John R. Corboy, co-director of the Rocky Mountain Multiple Sclerosis Center at the University of Colorado, told the Times. “We spend a quarter, some days half our time talking to patients about insurance and figuring out how we are going to get them medications.”
Sandoz, the generic arm of Novartis (NYSE:NVS), and Momenta Pharmaceuticals (NASDAQ:MNTA), along with Mylan and Natco Pharma are the two teams arguing against Teva in the Supreme Court. Both teams are confident the FDA will approve their drugs as early as May, but so far, the agency has not, perhaps because of Copaxone complexity.
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