Protecting Profits

It was an awkward situation, to put it mildly.

The year was 1992, and AstraZeneca International was on the verge of losing its rights to a major blockbuster drug--Tamoxifen citrate. London-based AstraZeneca earned millions of dollars each year on sales of Tamoxifen, one of the most prescribed cancer drugs in the world. To protect its valuable monopoly, AstraZeneca previously had sued Barr Laboratories, seeking to stop the New Jersey-based firm from producing a generic version of the drug.

Pharmaceutical companies have pounced on these rulings, using exclusion payments to settle almost two dozen infringement suits since March 2005. And those numbers are expected to rise.

"In the current legal climate, there is every reason to expect the upsurge in such settlements to continue and early entry of generics ?? 1/2 to decline," FTC Commissioner Jon Leibowitz told the Senate Judiciary Committee in early 2007.

"There should be a presumption of illegality ?? 1/2 that would put the burden on the drug companies to show a high likelihood that the patent owner would have prevailed if the case had gone to trial," says Thomas Cotter, who teaches patent and antitrust law at the University of Minnesota.

Unless Congress acts, many observers expect the Supreme Court to step in and resolve the circuit court split over how to handle exclusion payments. There is simply too much at stake--for the U.S. economy, pharmaceutical innovation and the health care system--for the High Court to ignore the problem.


Steven Seidenberg

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