In 2013, it looked as if AstraZeneca and Ranbaxy could face billions in damages in a lawsuit alleging they struck an illegal deal to block a generic of the blockbuster heartburn remedy Nexium. Now that cloud has lifted, thanks to a U.S. appeals court ruling in the companies’ favor.
The legal battle over generic Nexium is a landmark case, because it was the first to go before a jury after a key U.S. Supreme Court ruling. In 2013, the high court determined that so-called pay-for-delay deals could violate antitrust laws, if only on a case-by-case basis.
The pharma industry has watched this case closely, because a ruling against AstraZeneca and Ranbaxy might have augured trouble for companies in other pay-for-delay lawsuits. Longer-term, it could have changed the way branded and generics drugmakers handle patent challenges.
The trial jury ruled in favor of AstraZeneca and Ranbaxy, however, and on November 21, the 1st U.S. Circuit Court of Appeals in Boston upheld that ruling.
The generic Nexium fight dates back to 2012, when a class action lawsuit claimed that AstraZeneca paid Ranbaxy $700 million to abandon its patent challenge. After the jury found no wrongdoing on the part of the drugmakers, some wholesalers and health plans charged that they had been given inadequate instructions and scant evidence, according to Reuters.
It’s no surprise AstraZeneca has been doing everything it can to shield Nexium from generic competition. It was a $3-billion-a-year blockbuster before it went off patent in 2014. Ranbaxy had hoped to have the first copycat on the market, but the FDA banned the plant it had assigned to produce the drug and cancelled its right to six months of exclusivity. In January 2015, the FDA approved a generic from Teva Pharmaceuticals, and brand sales have gone downhill since then.
On November 10, AstraZeneca’s third-quarter earnings showed that sales of Nexium had dropped 19% year-to-date to $1.5 billion. In the U.S., sales of the product plummeted 42%. The problem wasn’t just generic competition, the company said, but also lower demand. The only good news the company delivered about Nexium was that it received $93 million in milestone payments so far this year from Pfizer, which markets an over-the-counter version of the drug.
What’s worse, AstraZeneca is suffering a loss of patent protection on another huge seller, the statin Crestor. The drug, which hauled in $5 billion in sales in 2015, accounted for one-fifth of the company’s total sales for the year. During the third quarter of this year, sales of Crestor in the U.S. nosedived 82% to $124 million.
The losses of its big-name brands prompted AstraZeneca to embark upon a $1.5 billion restructuring plan earlier this year. The company has taken the ax to its sales and administrative infrastructure, targeting $1.1 billion in annual savings by 2018.
By Arlene Weintraub
Source: Fierce Pharma
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