Lipitor Settlement: What Lies Beneath?

Historical patent litigation between world’s largest drug manufacturer Pfizer and world’s most aggressive generic company Ranbaxy over biggest ever blockbuster drug Lipitor has finally ended in unexpected climax with both Pfizer and Ranbaxy settling all their patent litigations worldwide. Under the agreement, Pfizer voluntarily licensed Ranbaxy to sell generic versions of Lipitor in the United States effective November 30, 2011. In addition, the agreement provides a license for Ranbaxy to sell generic versions of Lipitor on varying dates in seven additional countries: Canada, Belgium, Netherlands, Germany, Sweden, Italy and Australia. Thought the settlement is win-win for Ranbaxy and Pfizer but gives more strategic value to Ranbaxy. It would be really interesting to revisit and trace some of the facts and carefully look what lies beneath the historical settlement?

Pfizer’s Strategy was Ranbaxy’s Dilemma

It all triggered when Ranbaxy filed an abbreviated new drug application (ANDA) with the United States Food and Drug Administration seeking marketing approval for generic equivalent of Lipitor before the expiration of Orange Book listed patents. Pfizer sued Ranbaxy within statutory timelines (45 days) and filed civil action for alleged infringement in the District Court. During the course of litigation proceedings, Ranbaxy strongly challenged the validity of the US 5,273,995 patent and also questioned patent term extension awarded to the US 4,681,893 (genus patent). Alas Ranbaxy failed to convince the District Judge any of its arguments and lost to Pfizer. Ranbaxy appealed and this time CAFC partially reversed the district court judgment, invalidating the ‘995 patent. CAFC ruling gave Ranbaxy the grandest legal victory by any generic company in the United States and importantly entitlement to 180-days market exclusivity. This mean that Ranbaxy’s precious 180-days market exclusivity will be triggered soon after the expiration of the genus patent. Though most of the business and news analysts predicted that Ranbaxy will be able to bring generic equivalent soon after expiry of the genus patent but it was not that easy for Ranbaxy to breakthrough ‘Lipitor generic space’ even after knocking down the ‘995 patent. Till here, Pfizer strategically avoided Ranbaxy from suing for other orange book and non-orange book listed patents covering different polymorph and amorphous forms. Probably Pfizer (legal team) thought waiting till Ranbaxy launches its generic equivalent and then sue for infringement of polymorph and amorphous patents. This strategy not only would hinder Ranbaxy’s generic equivalent but also may give Pfizer an opportunity to claim treble damages against the willful infringement. Though Patent Circle is not sure whether Ranbaxy used different form other then patented by Pfizer and planned declaratory judgment for non-infringement prior to launch of its generic equivalent or was planning to challenge the validity of Pfizer’s patents for polymorph and amorphous form but what is sure that Pfizer would have hunted down Ranbaxy for polymorph and amorphous patents.

Patent Circle believes that Pfizer strategically litigated Lipitor against Ranbaxy and kept polymorph and amorphous patents out of Para IV litigation so that Pfizer may unfold them in separate litigations. Pfizer not only used patents against Ranbaxy but also in parallel strategically filed a citizen petition with the United States FDA regarding amorphous atorvastatin. In its petition, Pfizer concerned about higher levels of impurities and inferior stability of other polymorphs and amorphous forms that may be used by generic companies. Pfizer also stated that the pending application for a generic version is in an amorphous form (though not mentioned the name of company but was possibly referring to Ranbaxy ANDA). In March 2008, Pfizer extended its strategy by filing fresh infringement suit against Ranbaxy for infringement of two non-orange book listed patents – US 6,087,511 and US 6,274,740 both covering processes for the preparation of amorphous Atorvastatin which suggest that Ranbaxy possibly used amorphous atorvastatin calcium for their proposed ANDA. The process patents are due to expire in July 2016 and would mean that if Pfizer succeeds in wining the litigation that would delay Ranbaxy’s generic product till 2016. This litigation put Ranbaxy in dilemma whether to launch generic soon after the expiration of genus patent with a possible risk of treble damages or wait till litigation get over but that may possibly risk of running out 180-days market exclusivity without even launching the generic product for which Ranbaxy played such a risky game. Pfizer’s Strategy was Ranbaxy’s Dilemma.

To be continued …