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Fifty Ways to Keep Your Patent


In the next few years, blockbuster drugs generating $35 billion in U.S. sales will lose patent protection or other forms of exclusivity. That means generic drugmakers can quickly launch cheaper knockoffs, yielding potentially huge savings for insurers and big employers.

But will that really happen? Drugmakers have developed elaborate strategies for extending the lives of their aging blockbusters. For every case like the recent launch of a generic Prozac that saves payers millions, there are many more where delaying tactics keep generics at bay for months if not years. In two flagrant cases, big drugmakers paid millions to generic operators who agreed not to rush in with cheaper drugs.

In those cases, the Federal Trade Commission cracked down. But often, Big Pharma has the law on its side. In March, 1998, for instance, drugmaker Apotex Inc. filed to market a generic version of Paxil, a GlaxoSmithKline antidepressant with annual worldwide sales of $2.8 billion. SmithKline (GSK)--which had not yet merged with GlaxoWellcome--sued, arguing that the new version would infringe on one of the company's patents. Under current law, the Food & Drug Administration has to put a hold on the generic version for 30 months after a patent suit is filed, or until the matter is decided in court. SmithKline has since flagged the FDA on nine additional patents it says are related to Paxil, and it has sued Apotex over four of those. That starts the 30-month clock all over again. Bernard Sherman, chairman of Apotex laments: "They can keep us off the market for a hundred years." GlaxoSmithKline contends that the Paxil patents filed with the FDA reflect the innovation of the company's scientists and that generic Paxil would infringe on its patents.

The courts aren't the only weapon in this brand-vs.-generic battle. Bristol-Myers Squibb's $2 billion diabetes drug, Glucophage, was expected to face generic competition in the second half of this year. But in December, 2000, Bristol got the FDA's sole approval to market Glucophage for use in children for another three years. Generic companies can't include that information on children on their label, so they may not win FDA approval for their products.

In response, language dubbed the "Glucophage amendment" has been added to an FDA-related bill that would clear the way for an immediate rollout of the generics. But sources on the Hill say Bristol is now pushing for a change to that bill that would stall a generic Glucophage for at least several months. A Bristol spokesman declined to comment on the legislation but said that the company "is committed as always to protecting our intellectual property."

PATENT PROLIFERATION. If Bristol can hold off the generic onslaught for a few more months, it'll help the company in another tactic that's popular among patent-holders: enticing users to a new drug. Bristol wants to switch Glucophage users to either Glucophage XR, an extended-release version of the drug, or Glucovance, a pill that combines Glucophage and another diabetes medication. The goal: get lots of patients on a new patent-protected medicine by the time the original Glucophage gets hit with generic competition. AstraZeneca PLC (AZN) is trying the same tactic with its $5.8 billion stomach drug, Prilosec. It wants people to switch to a newer version, Nexium. And Schering-Plough Corp. (SGP) is expected to try something similar with its allergy drug, Claritin.

While drugmakers will argue that these new products are superior, big payers say that in many cases the improvement isn't significant enough to justify the price premium over the generic version of the old medicine. "Some drugs are coming out with just marginal improvements," says Cynthia Kirman, director of pharmacy at General Motors Corp. (GM) With the right marketing, though, that may be all a drug company needs to cash in all over again. By Amy Barrett in Philadelphia


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