Global Insight Perspective | |
Significance | BMS and Sanofi-Aventis have started their legal fight to halt the flood of cheap copies of their blockbuster blood-thinner Plavix, which generated US$5.9 billion in sales in 2005, that is hitting the U.S. market, and to force the recall of any copycat versions of the drug that have already been distributed. |
Implications | BMS and Sanofi-Aventis claimed that their businesses were being "irreparably injured" by the launch of generic Plavix, and that without a preliminary injunction to curb competition to Plavix, the injury to their operations would become worse with each passing week. |
Outlook | It is anticipated that the court will reach a decision on whether to grant an injunction in the next few days. However the key questions remains whether the injunction—if granted by the court—will leave BMS and Sanofi-Aventis’ pricing structure for Plavix intact, and whether it will allow them to maintain their market share for the product. |
Pharma Heavyweights Press for Injunction on Generic Production
Lawyers for pharma giants Bristol-Myer Squibb (BMS, U.S.) and Sanofi-Aventis (France) were in federal court on Friday (18 August), for the first day of a two-day hearing to allow the companies to plead their case for a preliminary injunction to be issued to halt the flow of generic versions of their blockbuster blood-thinner Plavix, and to recall any generic versions of the product that have already been distributed, according to the Wall Street Journal (WSJ). Lawyers representing the pharma giants reportedly told the presiding judge, Judge Sidney Stein, that BMS and Sanofi-Aventis "are being irreparably injured" by Canadian drug-maker Apotex's attempts to "flood the market" with low-cost generic versions of Plavix. According to a Bloomberg report, the Canadian company's facilities are churning out copycat versions of Plavix pills at a rate of six million every 14 hours. The lawyers went on to argue that this injury to the business of BMS and Sanofi-Aventis "will get worse with each passing week", claiming that the companies had already lost a staggering US$10 billion in market capitalisation since Apotex began to sell its generic version on 8 August. According to the WSJ, Apotex has already shipped generic Plavix valued at US$500 million, and a lawyer representing the Canadian pharma claimed that the company has orders for the drug worth a further US$1.3 billion.
While observers note that BMS and Sanofi-Aventis are expected to concentrate their legal efforts on proving the strength of their patent position, it is thought that Apotex will take a slightly different tack by focusing more strongly on BMS and Sanofi-Aventis' alleged inequitable conduct. In a court filing that Apotex lodged on Thursday (17 August), the Canadian drug-maker alleged that BMS had entered into secret side-deals during negotiations to forge a settlement between the companies, and that this should prevent BMS from being able to enforce its patents. Apotex is scheduled to make its case in front of the court today, and the WSJ reports that the company is likely to demand that even if BMS and Sanofi-Aventis do obtain a preliminary injunction, the two companies should put up a US$4 billion bond to allow compensation for Apotex for the loss of revenues, in case the companies fail to enforce their patents at a later date.
While it is not immediately clear when Judge Stein intends to make his decision about issuing an injunction, it is generally believed that the judge is likely to take several days, rather than weeks, to come to a conclusion.
Outlook and Implications
The judgment over whether BMS and Sanofi-Aventis will be successful in their attempts to curb the influx of generic Plavix hangs in the balance. Even if the companies are successful, it remains uncertain whether they will obtain sufficient relief to preserve their market share for Plavix or retain its pricing structure. According to the WSJ, lawyers representing the pharma giants have claimed that Plavix has already suffered considerable price erosion since the launch of Apotex's version of the drug.
BMS and Sanofi-Aventis' lawyer has reportedly noted that the companies have offered rebates on the drug to help preserve market share, However, according to a recent Reuters report, uncertainty over the outcome of patent litigation left the companies unable to agree terms with U.S. health insurer UnitedHealth Group. As a result, the health insurer—one of the largest in the United States—announced on Friday that it would provide its clients with better coverage for generic Plavix than for the branded version of the drug. According to the report, UnitedHealth confirmed on Friday that it would demand a US$50 co-payment for the branded version of the drug, but would seek only a US$10 co-payment from patients for Apotex's generic version. This will evidently provide a significant incentive—contingent on Apotex remaining free to market its generic version in the United States—for patients to make a switch to the generic version. This is a clear demonstration of the likely pressure for market share that BMS and Sanofi-Aventis will face should they fail to stem the influx of generic Plavix onto the market, and the likely contraction of their revenues from the product.
Related Articles:
- United States: 18 August 2006: U.S. FDA Approves Expanded Use for Blood Thinner Plavix
- United States: 18 August 2006: Patent Dispute between Apotex and BMS Gets Personal
- World: 16 August 2006: Sanofi-Aventis, BMS Propose Lower Plavix Prices to U.S. Buyers in Bid to Ward Off Apotex Threat
- France: 15 August 2006: Sanofi-Aventis Files for Injunction Blocking Generic Apotex, while FDA Approves Actonel in New Indication