Treading on thin ice

Last weekend, the US court of appeals for the Federal Circuit in Washington reversed a lower court’s ruling on marketing amlodipine maleate, which was earlier given in favour of the Dr Reddy’s Laboratories Ltd. The court determined that the patent extension covering Pfizer’s Norvasc (amlodipine besylate) is applicable to Dr Reddy’s amlodipine maleate.

The US Food and Drug Administration had earlier approved the marketing of AmVaz drug which is indicated for the treatment of hypertension and angina. However, on February 5 this year, the USFDA had decided to re-evaluate the decision on the drug, owing to some of the questions raised about the source of the data relied upon by DRL and stayed its earlier approval.

Section 505 b (2) of the Federal Food, Drug and Cosmetics Act seemingly permits the USFDA to grant marketing approval to a second applicant’s novel drug application if the product involves some innovation just enough to keep it legally outside the scope of innovator’s patent, but would still be therapeutically similar so that the pioneer product’s data can be relied upon by the second applicant. Had this happened, DRL would have had a dream earning – pegged at $200 million — from six months’ marketing exclusivity. Alas! The November approval went for a February toss.

Nothing can hide the disappointment of DRL which made $65 million by selling Lilly’s anti-depressant Prozac’s generic version in the US in 2001-02. But DRL has put up a brave face, as it has before, when Ragaglitazar got the dump from Novo Nordisk.

However hard the company may defend, it cannot hide the harm this verdict has done to the company’s prospects, and any attempt at banking on the product pipeline has to be seen only as a natural reaction in what is now explained as a “legally-driven opportunity”. The incident also serves a reminder to companies and shareholders who lay too much store by the goldmine that the US generics market is – that all dreams do not materialise.

Interestingly, the decision which rewards the multinational Pfizer comes at a time when US Federal Reserve Chairman Allan Greenspan, in his testimony to the budget committee of the House of Representatives on Wednesday February 25, spoke about the remorseless rise in the burden of pensions and the cost of health care. According to some reports, the Indian company could have spent more than US $10 million in defending its case.

One doesn’t know the exact amount spent on patent research and litigation in this respect, but shareholders may wonder whether the dollars that have gone down the drain would have justified exploration of such a small window of opportunity that never opened.

The company’s share is looking southwards. How much it will erode is anybody’s guess. Analysts have already started sounding warning signals.

Leading “research-driven” companies should not be playing with the shareholders by treading on thin ice. Credibility ought to be more important for companies that aspire to move up the value chain.
—narendrannaircn@express2.indexp.co.in