I've been remiss in not covering the Plavix situation, which is quite a story. The huge-selling anticoagulant is marketed in the US by Bristol-Meyers Squibb and in the rest of the world by Sanofi-Aventis. It's been the target of the Canadian generic firm Apotex, who've maintained that key parts of its patent coverage are invalid. They won the right from the FDA back in January to sell their generic form - but keep in mind that the FDA is not concerned with patent law, only the drug's manufacturing standards and identity with the original version.
The company was in the middle of their patent suit with BMS and S-A, and were holding back to see how that would go. In March, though, a deal was cut: Apotex agreed to wait until 2011, the lifetime of the (unchallenged) patent, and in return they got paid by the larger firms and received a guarantee that they wouldn't be undercut until then.
Paying generic firms to go away is not unheard of, but companies can put themselves at risk when such deals are made too blatantly. This one fell apart, big-time, last month. Not only was it rejected by various state attorneys-general, but a criminal investigation was launched into the whole matter.
The ceiling tiles really began to rain down at that point. There was a clause in the agreement that if the deal didn't go through, Apotex could start selling its generic version with five days notice, and that's exactly what they've started doing as of earlier this week. The generic isn't all that much cheaper, but it's enough to torpedo the branded version.
What's more, it appears that BMS and Sanofi-Aventis limited their potential recourse. Under the usual rules, they'd be able to sue and obtain triple damages if they won, but they seem to have waived that right, along with several others. This would seem to be an indicator of just how much they wanted to keep the generic off the market, and how hard a bargain Apotex drove. It's enough to make you wonder if Apotex factored in, up front, the chance of the whole thing being rejected and decided to give their rivals enough rope with which to hang themselves.
Update: as pointed out in the comments, the CEO of Apotex is making it sound like that was exactly the plan. Perhaps he's laying it on a bit thick, but he's in a position to, isn't he?
Shares of both Bristol-Meyers Squibb and Sanofi-Aventis took a fine hammering, as you can well imagine, since Plavix represents about 30% of BMS's profits. (Here's a read-'em-and-weep chart). Apotex is privately held, which is a shame in a way, because it would have been something to see what the trading in their stock would have been like. Sanofi may try to obtain an injunction to stop the generic sales, but no one seems to think that it will be granted - partly because of all those Apotex-favoring terms that the companies agreed to originally.
It's difficult to see how this could have worked out more horribly for the two big companies here: their best-selling drug is under attack five years early, they've signed away their rights to do much about it, the analysts are downgrading their stock and the financial rating agencies are looking at lowering their credit ratings, and the criminal investigation is rolling right along. Short of a meteor strike or a plague of frogs, I'm not sure what else could go wrong. And the worst part is, they brought it on themselves. Their patent position should have been stronger in the first place to protect a compound of this importance, and they shouldn't have pushed the envelope so much with their go-away payments to Apotex. It didn't have to be this way. Did it?