On September 15, 2014, New York Attorney General Eric Schneiderman filed an anti-trust lawsuit against the specialty pharmaceutical company Forest Laboratories and its new owner, Actavis. In the suit, Schneiderman alleges the companies' plans to remove from the market a soon-to-be generic version of the Alzheimer's medicine Namenda are "manipulative" and "illegal".
"Purely to squeeze every last dollar out of their Namenda franchise, and with no concern about the effects that its 'forced switch' could have on the highly vulnerable Alzheimer's patient population, [the] Defendants are substituting their own, profit-driven motives for the judgment of physicians and patients," the 39-page complaint contends.
But the case is more than just a pronouncement about a single company's ethics. It could have widespread implications for the life sciences industry and how pharmas typically manage loss-of-exclusivity, that important point in a drug's life cycle when it loses patent protection and suffers a sharp drop-off in revenues thanks to generic competition.
Indeed, The People of the State of New York v. Actavis raises questions about when product switching, one of the standard mechanisms the pharma industry uses to extend a drug's patent life, is legal - and when it's not. Moreover, while this is not the first product switching case to land in the courts, it is the first one mounted by government regulators. As such, it bears close scrutiny. (Prior challenges have been brought by pharmacy benefit managers, health plans or generic companies.)
Product switching is just one of a set of tools pharma companies typically employ to extend the life cycle of a portfolio drug. By altering a medicine's formulation to change how - or when - it is dosed, a company is eligible for additional patents that can stave off generic competition after the original composition-of-matter patents have expired. In the case of Namenda, for instance, the short-acting, twice-daily version, Namenda IR, loses patent protection in July 2015, but the long-acting, once-daily form, Namenda XR, is protected until 2025.
Since new patents only apply to a specific product iteration not the original formulation the tactic only preserves revenues if physicians stop prescribing the older version in favor of the newer one. Thus, how a company achieves a switch from an older product to a newer one is a key component of the life-cycle management strategy. And, as the New York AG's lawsuit...