Stakes are high in case against generic Prilosec
The heartburn drug's maker will lose billions if its patents expire - but consumer prices would be slashed in half.
_________________________________________________________
philly.com
Posted on Tue, May. 28, 2002
Stakes are high in case against generic Prilosec
The heartburn drug's maker will lose billions if its patents expire - but consumer prices would be slashed in half.
By Linda Loyd
Inquirer Staff Writer
Marion Wolff, 76, spends more than $1,100 each year, mostly from her own savings, for a little purple pill called Prilosec, one of the world's top-selling medicines.
Like many other people who take the popular heartburn and ulcer drug, Wolff says her insurance pays for only a three-month supply. The retired mathematics teacher from Bethesda, Md., is closely watching a New York trial involving AstraZeneca P.L.C., the maker of Prilosec, which is battling four generic-drug companies to keep low-cost versions of Prilosec off the market in the United States.
Today, in a federal courtroom in Manhattan, the final phase of the nonjury case is scheduled to begin. The trial, which began more than five months ago, is anticipated to wrap up in another a week. The judge may rule as soon as July or August.
The stakes are high not only for consumers, who could buy cheaper generic Prilosec for about half of what they pay now, but also for state governments, insurers and employers, which foot much of the bill for prescription medicines.
London-based AstraZeneca, with U.S. headquarters in Wilmington, stands to lose billions in sales if the generic companies, led by Andrx Corp., of Fort Lauderdale, Fla., get their way.
AstraZeneca, the world's fourth-largest drugmaker, had $16.5 billion in worldwide sales last year - more than a third came from Prilosec. U.S. sales of Prilosec last year were $4.6 billion.
"Wall Street loves this because of the numbers," said Cynthia L. Glass, an analyst at ThinkEquity Partners in Minneapolis. "It could be the first $1 billion-plus generic drug."
"Beyond Wall Street, you've got senior-citizen groups, Congress, big pharmaceutical companies, the FDA, all watching this trial," Glass said. "There is a huge public-policy implication if you are trying to get seniors better access to drugs, and the one most of them take costs four bucks a day."
The patent on Prilosec's main chemical, omeprazole, expired Oct. 5. The court battle is over other patents that AstraZeneca has contended are still valid on the way Prilosec is formulated - how its coatings render omeprazole stable to ingest, how the drug interacts with antibiotics, how the drug is manufactured, and how it dissolves in the body.
U.S. District Judge Barbara Jones, appointed to the bench in 1995 by President Bill Clinton, dismissed three of AstraZeneca's patent claims earlier in the case, leaving three remaining.
A key issue when the trial resumes today is an allegation by Andrx, the first drugmaker to win FDA approval for generic Prilosec. Andrx contends that when AstraZeneca applied for a patent on a new process for making omeprazole in the mid-1990s, the company did not disclose that a similar, earlier patent on the process had been obtained in Korea. In 1993, a Korean company called CKD began selling its drug. Astra sued and lost in the Korean courts.
In 1996, Astra filed its patent on the product in the United States, but it did not tell patent officials about the Korean drug, or the earlier lawsuits, according to Andrx's court papers.
Andrx said in court papers that AstraZeneca committed fraud by failing to tell the U.S. Patent and Trademark Office about the Korean product, the prior litigation and the patent. Andrx contends that AstraZeneca's current patent claim is "invalid because of inequitable conduct."
AstraZeneca spokesman Steve Lambert said the "issue of a Korean patent came up" only in recent weeks. "We totally dismiss those allegations. They are not true. We have produced hundreds of thousands of pages on that particular issue alone."
Andrx, which has built a $100 million plant in Fort Lauderdale to make generic Prilosec and other drugs, may have at least six months without competition from other generic manufacturers, by virtue of being first to win FDA approval.
"The common wisdom is that AstraZeneca will lose," said Brad Cameron, a spokesman for Business for Affordable Medicine. A Washington-based group of 11 governors and corporations wrote to Health and Human Services Secretary Tommy Thompson in October, urging FDA approval of generic Prilosec. A month later, Andrx's drug was approved.
"I can't think of a case in which a brand manufacturer has won any of these trials," Cameron said. "The intent is not to win, but to delay a final court resolution." Each day that generic versions are not on the market, AstraZeneca makes more than $10 million on Prilosec, Cameron said.
Consumers will see "very steep price cuts - 50 percent, probably more," when generic Prilosec is finally available, Cameron said. "If you look at Prozac" - Eli Lilly's blockbuster drug to treat depression - "the price dropped about 90 percent. Prilosec is even bigger, in terms of number of prescriptions. This is the single most important drug in terms of the potential for cost-saving."
Glass, the Wall Street analyst, said that when Prozac went off patent, sales of the drug "went 70 percent generic within a few weeks. If Prilosec goes 50 percent generic, you get a $1 billion generic drug."
In a different patent case, a federal judge last week declared three U.S. patents invalid for the antibiotic Augmentin, with $2 billion in annual sales. That means GlaxoSmithKline may face generic competition on that drug later this year. The company, with major offices in the Philadelphia region, said it would lower its profit forecasts for 2002 and 2003 if a generic version of Augmentin entered the market.
Tim Fuller, executive director of the Gray Panthers in Washington, an activist senior-citizen and consumer group, calls the Prilosec case "the trial of the century. It means a lot to us consumers.
"This is a blockbuster drug, one of the most lucrative on the market today," he said. "The longer AstraZeneca can keep it from generic development, the more they make. The generics should have been on the market Oct. 5. The reason they are not is because AstraZeneca sued."
Consumer advocates such as Gray Panthers and Stop Patient Abuse Now, a coalition of 21 groups representing seniors and other consumers, complain that AstraZeneca's legal defense of the Prilosec patents is part of a delay strategy to give the company more time to switch patients to its new ulcer drug, Nexium. The National Institute for Health Care Management said AstraZeneca had spent $126 million on advertising for Nexium.
At its peak, Prilosec had worldwide sales of $6 billion in 2000, according to Lambert. Last year, AstraZeneca introduced Nexium, and worldwide sales of that drug approached $1 billion. "A lot of Prilosec sales have gone over to Nexium," he said.
AstraZeneca's chief executive officer, Tom McKillop, said the company would appeal any court decision against its patents. Meanwhile, AstraZeneca is preparing to introduce several drugs to help make up for falling revenue from Prilosec: The cholesterol treatment Crestor and cancer medicine Iressa are being reviewed by U.S. regulators.
"We have built into our estimates that there will be generic Prilosec at some stage," Lambert said. "We have been planning for a long time. We are in good shape. We have a robust [research-and-development] pipeline that we are quite proud of."
© 2001 philly and wire service sources. All Rights Reserved.
philly.com |
