BusinessWeek reports on role of patents in Dolan-demise
Further to the demise of BMS CEO Dolan, BusinessWeek is showing new-found sensitivity to patent issues.
The first lines of a September 13 article:
The test of a drug company isn't just how good it is at developing new medicines, it's also how well its executives fight the patent wars.
BusinessWeek continued:
Patents ensure that successful drugs reap monopoly profits, but those monopolies are often fragile and open to challenge. That plunges pharmaceutical companies into an enormously high-stakes game of chicken. Right choices can bring extra billions in revenues. Wrong decisions can send stocks plunging—and cost CEOs their jobs. That's what just happened to Bristol-Myers Squibb's Peter Dolan, who was ousted from his post on Sept. 12.
Dolan's sin was to botch a patent fight with Canadian generic drugmaker Apotex over BMS's (BMY) blockbuster anticlotting drug Plavix. Worried that he might lose the fight, Dolan tried to buy off Apotex to prevent the generic maker from coming to market. But the move backfired: Apotex flooded the market with millions of generic copies of Plavix, slashing BMS's sales by hundreds of millions of dollars. The great irony, though, is that Dolan never had to pay off Apotex in the first place. According to an Aug. 31 ruling in U.S. District Court, the Plavix patent wasn't as vulnerable as Dolan had feared.
BusinessWeek got into the "chiral challenge" but didn't quite understand what was going on patent-law-wise:
When Sanofi tried to develop some of those compounds, it made an interesting discovery. Many chemicals actually come in right- and left-handed forms. Each form is chemically identical and has the same physical properties—but is a mirror image of each other. And each form can have different biological properties. Plavix is the right-handed version of the chemical, which turned out to be more effective and far less toxic than either the left-handed version or a mixture of both. So the company filed a patent on that right-handed version. That patent expires on Nov. 17, 2011.
Now, imagine that you are the leader of a generic company. You could wait until 2011 to market a generic Plavix. But you know that some patents are shakier than others. You could take a big risk and mount a legal challenge, claiming that you have a right to market because the patent is invalid or unenforceable or isn't broad enough. The track record of such challenges is surprisingly good. A study by the FTC shows that, between 1992 and 2000, "generics prevailed in cases involving 73% of challenged drug products." Apotex, for instance, was able to get a generic Paxil (a $2.2 billion-per-year antidepressant) on the market in 2003, even though GlaxoSmithKline (GSK) claimed that it had patent protection until 2017. Clearly, many of the follow-on patents are shaky.
Maybe one day, when the Harvard Business Review isn't telling everyone to "plagiarize with pride".....
The first lines of a September 13 article:
The test of a drug company isn't just how good it is at developing new medicines, it's also how well its executives fight the patent wars.
BusinessWeek continued:
Patents ensure that successful drugs reap monopoly profits, but those monopolies are often fragile and open to challenge. That plunges pharmaceutical companies into an enormously high-stakes game of chicken. Right choices can bring extra billions in revenues. Wrong decisions can send stocks plunging—and cost CEOs their jobs. That's what just happened to Bristol-Myers Squibb's Peter Dolan, who was ousted from his post on Sept. 12.
Dolan's sin was to botch a patent fight with Canadian generic drugmaker Apotex over BMS's (BMY) blockbuster anticlotting drug Plavix. Worried that he might lose the fight, Dolan tried to buy off Apotex to prevent the generic maker from coming to market. But the move backfired: Apotex flooded the market with millions of generic copies of Plavix, slashing BMS's sales by hundreds of millions of dollars. The great irony, though, is that Dolan never had to pay off Apotex in the first place. According to an Aug. 31 ruling in U.S. District Court, the Plavix patent wasn't as vulnerable as Dolan had feared.
BusinessWeek got into the "chiral challenge" but didn't quite understand what was going on patent-law-wise:
When Sanofi tried to develop some of those compounds, it made an interesting discovery. Many chemicals actually come in right- and left-handed forms. Each form is chemically identical and has the same physical properties—but is a mirror image of each other. And each form can have different biological properties. Plavix is the right-handed version of the chemical, which turned out to be more effective and far less toxic than either the left-handed version or a mixture of both. So the company filed a patent on that right-handed version. That patent expires on Nov. 17, 2011.
Now, imagine that you are the leader of a generic company. You could wait until 2011 to market a generic Plavix. But you know that some patents are shakier than others. You could take a big risk and mount a legal challenge, claiming that you have a right to market because the patent is invalid or unenforceable or isn't broad enough. The track record of such challenges is surprisingly good. A study by the FTC shows that, between 1992 and 2000, "generics prevailed in cases involving 73% of challenged drug products." Apotex, for instance, was able to get a generic Paxil (a $2.2 billion-per-year antidepressant) on the market in 2003, even though GlaxoSmithKline (GSK) claimed that it had patent protection until 2017. Clearly, many of the follow-on patents are shaky.
Maybe one day, when the Harvard Business Review isn't telling everyone to "plagiarize with pride".....
posted by Lawrence B. Ebert at 3:12 PM
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