Pfizer Inc. (PFE:US), the world's biggest drugmaker, won a court ruling that may help it persuade a judge to order generic versions of the epilepsy drug Neurontin off the U.S. market and to require compensation for three years of lost profit.
A federal judge ruled in 2005 that generic Neurontin made by companies including Israel's Teva Pharmaceutical Industries Ltd. (TEVA) wouldn't infringe the patent. A court of appeals in Washington disagreed today, returning the case to the lower court for a trial.
The decision may allow Pfizer, if it wins, to ask the court in Newark, New Jersey, to take the generic medications off the market. The company might also seek compensation for billions of dollars in profit lost to the low-cost rivals. Neurontin, once a $2 billion a year drug for Pfizer, had $496 million in sales in 2006.
``We'll seek all remedies to which we're entitled,'' said Jack Cox, spokesman for New York-based Pfizer.
The generic-drug companies can again argue that their versions aren't covered by the patent. Teva will pursue its contentions that the patent is invalid and not infringed, it said in a statement.
``This is a potential negative for Teva,'' Marc Goodman, an analyst at Credit Suisse in New York, said in a note to clients. There is ``potential onetime payment for damages that it could owe Pfizer and the potential that Teva will choose to take less risk with `at risk' launches going forward.''
Teva, the world's biggest generic-drug maker, has been selling a version of Neurontin since 2004, before the judge issued his ruling. Other companies followed suit beginning in 2005, including Novartis AG (NOVN)'s Sandoz unit, the second-biggest generic-drug company.
The patent, to expire in 2017, is for a process to make gabapentin, the active ingredient in the drug, with fewer contaminants. Warner-Lambert Co., which Pfizer bought in 2000, originally obtained the patent.
The two sides offered conflicting expert opinions on whether Teva used the patented process. The U.S. Court of Appeals for the Federal Circuit said today the trial judge was too hasty in siding with Teva without holding a trial.
``We agree with Warner-Lambert that genuine issues of material fact exist in the record, and thus that the court erred'' in ruling for the generic-drug companies, the three-judge panel said.
Lauren Carhart, a spokeswoman for Basel, Switzerland-based Novartis, said Sandoz officials are reviewing the opinion. Calls to Patty Eisenhaur, a spokeswoman for Watson Pharmaceuticals Inc., and David Myers Jr., a spokesman for Actavis Group HF, weren't immediately returned. Those companies also make generic Neurontin.
The generic competition caused sales of Neurontin to plunge to $91 million in the first half of 2005 from $1.2 billion in the first six months of 2004. Pfizer was able to recoup some of the lost sales by selling its own generic version of Neurontin.
The medicine is used by patients for approved and unapproved uses like seizures, migraines, nerve pain from diabetes, and other nervous system disorders. Pfizer is now moving patients to a newer variation of the drug called Lyrica, which had $1.2 billion in sales in 2006 and is more effective with fewer side effects, the company said.
Pfizer pleaded guilty to criminal charges in 2004 and paid more than $430 million to settle claims that it illegally promoted Neurontin for unapproved uses.
Warner-Lambert paid doctors to attend conferences in Hawaii, Florida and the 1996 Atlanta Olympics, where Neurontin was promoted for ailments including migraine and bipolar disorders.
Pfizer shares rose 7 cents to $24.59 in New York Stock Exchange composite trading. Teva American depositary receipts, each representing one ordinary share, fell 38 cents to $43.26 in Nasdaq Stock Market trading.
The case is In Re Gabapentin Patent Litigation, 06-1572, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Warner-Lambert Co. v. Purepac Pharmaceutical, 00cv2931, U.S. District Court, District of New Jersey (Newark).
To review the disputed patent through the U.S. Patent and Trademark Office's Web site, search for patent number 6,054,482 at http://www.uspto.gov/patft/index.html.
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