Pfizer expects to hold off generic competition for Lipitor (atorvastatin) in the United States until November 2011 under a settlement agreement with Ranbaxy.

The deal, which ends patent litigation between the two companies in the U.S. and seven other countries, could allow Pfizer to keep the Lipitor market to itself up to 20 months longer than was expected. Analysts have predicted generic competition could begin after Lipitor's basic compound patent '893 expires in March 2010 or after its enantiomer patent '995 expires in June 2011.

The agreement gives Pfizer a little more time before generics erode profits from its cholesterol-lowering blockbuster. The number one selling drug in the world, Lipitor's U.S. sales in 2007 topped $7 billion while worldwide sales were more than $12 billion.

The deal, announced June 18, provides Ranbaxy with a license to sell generic versions of Lipitor and Caduet , a combination of Lipitor and Norvasc (amlodipine). The dates for entry into Canada, Belgium, Netherlands, Germany, Sweden, Italy and Australia vary.

Ranbaxy "First Filer" Status Provides Barrier

As the first company to file an ANDA and challenge Lipitor patents, Ranbaxy has 180 days of marketing exclusivity in the U.S. Ranbaxy said the clock would start ticking on Nov. 30, 2011.

"We think this settlement provides substantial certainty as to the date of generic entry of Lipitor," David Reid, Pfizer's acting general counsel, said in a same day conference call.

The agreement comes days after India's Business Standard newspaper reported that Pfizer might make a bid to buy 65 percent of Ranbaxy. It also comes six weeks after the U.S. Patent and Trademark Office confirmed the patentability of claims in the '893 patent.

Pfizer remains in litigation with Teva in the U.S. and Apotex in Canada over the enantiomer patent.

During the conference call, investors questioned whether other generic manufacturers could enter the market before 2011, if the courts ruled against Pfizer in these cases or the U.S. Patent and Trademark Office declined to reissue the enantiomer patent.

PTO Reviewing Enantiomer Patent

Pfizer filed an application to correct a "technical defect" in the patent after the U.S. Court of Appeals for the Federal Circuit ruled that the patent was invalid due to technical defects. Last year the PTO sent the company a "nonfinal rejection" notice concluding that some of the claims in the patent were anticipated or obvious (¹ 'The Pink Sheet,' Aug. 20, 2007, In Brief).

Reid responded that there are other Lipitor patents with later expiration dates, and companies would have to get around Ranbaxy's 180 days of marketing exclusivity. Lipitor process and crystalline form patents expire in 2016 and 2017 and the combination patent for Caduet expires in 2018. Reid said these expiration dates helped to set November 2011 as the date for Ranbaxy to launch its atorvastatin generic.

Reid noted that the settlement does not restrict Pfizer from launching its own generic version of Lipitor in the U.S. or elsewhere.

Sanford Bernstein analyst Tim Anderson said in a research note that there has been some confusion as to whether the PTO's review of the '995 patent could derail the settlement and allow earlier generic entry. But he said PTO deliberations "are now essentially a moot point because in essence, Pfizer has locked up the 180 days marketing exclusivity on Lipitor with Ranbaxy until November 2011."

Anderson said the only way Teva could come in ahead of that would be if the court issued a final unappealable ruling in its favor, which would trigger Ranbaxy's exclusivity period. Since the litigation is in the discovery stage, he said, such a ruling prior to November 2011 is unlikely.

Noting that concerns have been raised about whether Pfizer's cash flow generation and balances in the U.S. will jeopardize its dividend, Anderson said the delay in Lipitor generics should secure the dividend a bit longer. However, he said a slight delay is probably not material to investment since investors owning Pfizer stock for the dividend would want comfort that it is safe for a substantial period.

No Payments or Side Deals

During the conference call, analysts also questioned whether the Federal Trade Commission would accept the agreement. The agency has opposed as anti-competitive many patent litigation settlements between brand name and generic manufacturers. Most recently, it sued Cephalon over its payments to four generic companies to delay entry of generic versions of Provigil (modafinil) (² Also see "FTC Sues Cephalon For Anticompetitive Side Deals In Reverse Settlements" - Pink Sheet, 18 February, 2008., p. 3).

But the agency does not oppose all settlements. At a meeting last year, FTC Chairman Deborah Platt Majoras said the agency would like to come up with guidelines that distinguish which settlements restrain competition and which do not (³ Also see "FTC May Set Parameters Of Acceptable Brand/Generic Reverse Settlements" - Pink Sheet, 21 May, 2007., p. 15).

Pfizer attorneys said it expects the FTC to approve the agreement with Ranbaxy since it does not include reverse payments or side deals that have been red flags to the agency. It is "simply a compromise of time on the patent," said Marc Brotman, Pfizer's assistant general counsel for antitrust.

The deal does not cover ongoing litigation between Ranbaxy and Pfizer in five countries - Finland, Spain, Portugal, Denmark and Romania. Reid said Pfizer has won preliminary injunctions against Ranbaxy in Finland and Spain and won a lawsuit in Denmark.

The settlement also resolves Pfizer's patent litigation with Ranbaxy over Accupril (quinapril) in the U.S. and Viagra (sildenafil) in Ecuador.

- Brenda Sandburg (b.sandburg@elsevier.com)

Pfizer Settlement With Ranbaxy Delays Generic Lipitor Entry

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