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When the patent on Bristol-Myers’ drug BuSpar was set to expire, the company took unusual — and possibly unlawful — steps to maintain its monopoly. At midnight on Nov. 22, 2000, Mylan Laboratories Inc., the nation’s largest manufacturer of generic drugs, was getting ready to roll out its newest product. The company’s trucks were stocked with buspirone, the generic version of BuSpar, Bristol-Myers Squibb Co.’s popular anti-anxiety medication. Bristol-Myers’ patent was set to expire, and Mylan’s trucks were ready to roll. But the trucks never left the lot. For more than two years, Bristol-Myers had been working to make sure generic buspirone would not hit the shelves as planned. BuSpar sales had brought in over $4 billion for Bristol-Myers since it was placed on the market in 1986, and the company wasn’t ready to bow out gracefully. Instead, Bristol-Myers tried to obtain another patent for buspirone. It did not succeed, but the company did persuade the U.S. Patent and Trademark Office to issue a patent covering a chemical compound — or metabolite — that is created when buspirone is digested in the body. It also persuaded the patent office to expedite the application so that the patent would be issued the day before the original one expired. With their patent in hand, Bristol-Myers was able to get the Food and Drug Administration to deny Mylan’s application to market generic buspirone. The tactic eventually backfired, but the company bought itself an additional 127 days of protection. At a time when BuSpar revenue averaged more than $2 million per day, the delay allowed Bristol-Myers to garner more than $250 million. It may be a hollow victory. In May 2001 Mylan and another generic manufacturer, Watson Pharmaceuticals Inc, sued Bristol-Myers for antitrust violations. And throughout the summer of 2001 an assortment of consumer groups, HMOs, drug wholesalers, drugstore chains, and 30 state governments sued the company for antitrust violations as well. All of the suits were consolidated in August 2001, and a federal judge has refused Bristol-Myers’ request to dismiss the case. If the company loses the suit, it risks paying treble damages that may run into the hundreds of millions of dollars. Other big-name drug manufacturers are paying close attention to the case. A loss for Bristol-Myers could mean serious trouble for all of them. The antitrust suit “is a big win for consumers and generic drug manufacturers,” says Daniel Small, a partner at Washington D.C.’s Cohen, Milstein Hausfeld & Toll, who is representing the Gray Panthers and other buspirone purchasers in the antitrust litigation. Bristol-Myers’ troubles began on Aug. 5, 1999, when it filed a series of secondary patent applications for buspirone. The company tried to patent a process for administering buspirone to reduce anxiety. This was already covered by the company’s original buspirone patent, so the patent office repeatedly rejected the applications. That’s when Bristol-Myers applied for the patent on the metabolite. The claim, prosecuted by Bristol-Myers’ in-house patent counsel, Richard Ryan, was accepted by the patent office only when Bristol-Myers specifically told the patent office that buspirone would not be covered by the second patent. The fact that its second patent would not cover buspirone didn’t stop Bristol-Myers from asking the patent office, on Sept. 22, 2000, to expedite approval before its buspirone patent expired on Nov. 22. (The patent office regularly expedites approval upon request, without considering the reason for the petition.) Bristol-Myers got its patent just in time — at noon on Nov. 21. The company hand-delivered copies to the FDA, and applied to have the patent listed in the FDA’s “Approved Drug Products” publication (known as the Orange Book). In the Orange Book the company listed its new patent as covering both the metabolite and buspirone. Because Bristol-Myers’ patent did not claim buspirone, its listing with the FDA should not have prevented Mylan from selling generic buspirone. But it did. The FDA rejected Mylan’s application to market generic buspirone. The FDA also rejected an application from Watson Pharmaceuticals, Inc., which was planning to market generic buspirone in a few weeks. And Bristol-Myers sued Mylan and Watson for patent infringement. Bristol-Myers was able to maneuver this way because the FDA doesn’t oversee Orange Book listings. “The FDA does not have the expertise to evaluate patents,” says agency spokesperson Christine Parker. “If a firm submits a patent for listing and claims that it applies to the drug, then the FDA lists the patent,” she says. Bristol-Myers also had the 1984 Hatch-Waxman law on its side. The law was intended, in part, to encourage the development of the generic drug industry. And it has done that: According to the Pharmaceutical Research and Manufacturers of America, in 1984, brand-name makers dominated with an 80 percent market share; today, generics make up almost half of the drug market. Under Hatch-Waxman, a generic company can apply for FDA approval for a patented drug by filing for what is known as a paragraph-three or paragraph-four certification with the FDA. Mylan and Watson filed for paragraph-three certification in 1998, saying that the application for buspirone covered a patented drug, but that the patent was expiring soon. With a paragraph-four certification, a generic tells the FDA that the proposed drug does not infringe a listing because it differs from the listed patent or because the patent is invalid. After Bristol-Myers’s second patent was listed in the Orange Book, Mylan and Watson filed supplemental paragraph-four certifications with the FDA. By asking for FDA approval for a patented drug, a paragraph-four certification can be considered an act of infringement. The certification process, therefore, is a bit convoluted. Paragraph-four applicants must notify a patent holder that it has applied for approval with the FDA. Then a 45-day stay automatically goes into effect. During this time, generic drug manufacturers cannot bring a declaratory judgment action for noninfringement, and the brand-name drug manufacturer has the opportunity to sue for infringement. This is exactly what Bristol-Myers did. Once an infringement suit begins, Hatch-Waxman prohibits the FDA from approving a contested drug application for a maximum of 30 months or until the patent infringement litigation is resolved. Why did lawmakers think this provision was needed back in 1984? If there were no 30-month stay, then a brand-name drug manufacturer would have to go to court and persuade a judge to issue an injunction against the generic manufacturer. In all likelihood, the generic drug maker would have caused damages before issuance of the injunction that it would be unable to pay. At least that was the theory 18 years ago, when the generic drug business was a small cottage industry. Today, many generics are large litigation-savvy companies with deep pockets of their own. By filing secondary patents and then suing generics for infringement, drug companies like Bristol-Myers are manipulating the law in a way that Congress never intended. Brand-name drug companies “are looking at this 30-month extension as a monopoly extension,” says one patent attorney who represents brand-name drug manufacturers. GlaxoSmithKline PLC, the manufacturer of the profitable antianxiety drug Paxil, has been able to forestall competition for five years by filing new patent claims and suing for infringement, according to Business for Affordable Medicine, a group of businesses, labor unions, and state governors who are lobbying Congress to close the 30-month loophole. And the secondary patent claims are becoming increasingly thin, says Steven Lee, a pharmaceutical patent attorney and a partner in the New York office of Kenyon & Kenyon. For instance, Bristol-Myers delayed generic competition for its blockbuster anticancer drug, cisplatin, by getting a second patent that claimed “putting the drug in a brown bottle to protect it from light,” says Lee. The courts eventually held this patent invalid in October 1999, but the tactic kept competition off the market for almost three years. “Sometimes, brand-name drug companies will list virtually any conceivable patent in the Orange Book,” says Brad Cameron, a spokesman for Business for Affordable Medicine. “Whether they win or lose the patent infringement case, they don’t care. They get the 30-month delay. … It’s an egregious situation.” Watson and Mylan apparently thought so: On Nov. 30, 2000, the two generics separately sued the FDA, seeking to remove Bristol-Myers’s patent from the Orange Book. Mylan added Bristol-Myers to its suit and requested that the court order the company to withdraw its second patent from the Orange Book. On Jan. 18, 2001, Watson lost its suit against the FDA. Maryland federal district court judge Frederic Smalkin held that it was not the business of the FDA to adjudicate the scope or validity of patents listed in the Orange Book. Mylan fared better. On March 13, 2001, Washington, D.C., federal district court judge Ricardo Urbina issued a preliminary injunction ordering Bristol-Myers to remove the patent from the Orange Book and the FDA to approve Mylan’s application to market generic buspirone. On March 28, 2001, Bristol-Myers withdrew its listing and the FDA gave final approval to Mylan and Watson’s request. Both companies immediately began shipping buspirone. Bristol-Myers monopoly was over. In 2001 its annual sales of BuSpar fell 52 percent. Mylan and Watson’s profits skyrocketed, and both named buspirone sales as a key factor. In the last three quarters of 2001, Mylan brought in $121.4 million from buspirone. Mylan’s first victory turned out to be fleeting. On Oct. 21, 2001, the U.S. Court of Appeals for the Federal Circuit overturned its win in the D.C. District Court. The court ruled that there was no private right of action under the patent or drug laws to compel the removal of an Orange Book listing. But since the ruling didn’t come with a court order and the FDA didn’t stop them, Mylan and Watson continued shipping generic buspirone. The generic companies were vindicated on Feb. 14, 2002, when they won the patent infringement suit Bristol-Myers initiated in the Southern District of New York. Judge John Koeltl ruled that Bristol-Myers’ patent did not cover buspirone, since the company had specifically disclaimed such coverage in order to get the patent. Moreover, if the patent did cover buspirone, it would be invalid because it covered an invention (buspirone) that was made public more than a year before the patent application was filed. That day Koeltl delivered some more bad news for Bristol-Myers. He rejected the company’s motion to dismiss the antitrust claims. (Bristol-Myers was represented in the infringement and antitrust suits by New York’s Cravath, Swaine & Moore; Hartford, Conn.’s Day, Berry & Howard; and Montpelier, Vt.’s Diamond, Diamond & Robinson. Mylan was represented by two Washington, D.C., firms, Rothwell, Figg, Ernst & Manbeck and Steptoe & Johnson; as well as Norwich, Vt.’s Charles Platto. New York’s Frommer, Lawrence & Haug and Hartford’s Cowdery, Ecker & Murphy represented Watson. The private parties in the litigation and their lawyers declined to comment.) The antitrust suit is likely to scare brand-name drug companies into being more responsible about what patents they put into the Orange Book, according to one attorney who works with pharmaceutical companies. “Up until now, they [brand-name companies] thought they could put almost any patent into the Orange Book. Now there is a downside.” On April 1, 2002, Bristol-Myers agreed to pay Watson approximately $32 million, and Watson dropped all its buspirone disputes — including the antitrust litigation. Bristol-Myers and Mylan wouldn’t comment on possible settlement negotiations. And the antitrust litigation moves forward. Perhaps Bristol-Myers executives might want to pop some buspirone for their self-inflicted stress.

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