Home > Uncategorized > RBC Capital Markets ANDA Litigation Analysis

RBC Capital Markets ANDA Litigation Analysis

RBC Capital Markets undertook an exhaustive analysis (PDF, h/t AmLaw Litigation Daily) of pharmaceutical litigation related to abbreviated new drug applications (ANDAs). These cases involve challenges by a generic drug company to the market occupied by an innovator (or brand-name) drug company.

Some interesting bits from the report:  

-Over the last decade, the overall success rate for the generic drug industry is 48% for cases that have gone to trial. However, the success rate increases to 76% when settlements are included. Over half of all cases are settled or dropped.

-The top three courts by volume — NJ, DE and SDNY — accounted for 69% of all decisions. Unfortunately, these courts have a combined success rate of just 36% for generics.

-Patent challenges remain on the rise with a record 65 new first-to-file lawsuits in 2009, up from 51 in the prior year and more than double the number just three years ago.

-The top five judges by volume accounted for 31% of the total decisions. These five judges ruled in favor of generics only 33% of the time. The total success rate, however, including settlements is 75%.

I am impressed with the depth of research that went into this report, and recommend it to everyone for a read. However, I have one minor quibble. Although the report concludes that “while patent challenges by generics are extremely common, winning is not,” I’m not sure that is completely accurate. The authors state that “winning is not” common, but also say that the “success rate” is 76% (including settlements). I think that it is quite possible to consider settlement a “win,” depending on the terms.

Suppose, for example, that the ANDA litigation will cost the generic provider $10 million over a couple years.  Suppose, as well, that the generic provider has a quite strong position on patent invalidity and/or noninfringement. As a result, the generic provider has a strong negotiating position relative to a settlement and may easily gain a financial windfall without a clear “win” in the case.

For example, in a recent case (Medicis v. Teva, over a generic version of Solodyn), the parties settled, but not until after Teva made an at-risk launch of its competitive drug. How much do you suppose Teva profited during the few days the product entered the market? Quite possibly more than the money it spent (and would spend) on litigation. In addition, Teva was cleared of all damages liability for those sales as part of the settlement. Finally, Teva gained the right to enter the market no later than November 2011.  All in all, Teva gained profits, security, and a certain entry into the market at a later date.  Sounds like a win, even if not at trial.

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