Teva has agreed to make a one-time undisclosed payment to Novartis to resolve patent litigation over the herpes drug Famvir (famciclovir). It will also continue to pay royalties on U.S. sales of its generic version of the drug.

The lump sum payment likely covers damages for Teva's at-risk launch of famciclovir. The company launched the drug in September 2007 after the U.S. District Court for the District of New Jersey denied Novartis' request for a preliminary injunction. The U.S. Court of Appeals for the Federal Circuit subsequently issued an order temporarily prohibiting Teva from selling the drug ('The Pink Sheet' DAILY, Sept. 10, 2007) but three weeks later it denied Novartis' motion for an injunction and Teva resumed marketing. At the time of Teva's launch Famvir had annual sales of approximately $200 million.

While Teva defeated Novartis' efforts to keep its product off the market, it lost the patent case at trial. In November 2009 a jury found that the basic patent on Famvir was not invalid due to obviousness and that it was not unenforceable due to inequitable conduct.

The patent at issue in the case, No. 5,246,937, expires on Sept. 21, 2010 but has an additional six months pediatric exclusivity. Additional Famvir patents cover methods of use and expire in 2015-2016 with pediatric exclusivity.

Deal May Curtail Some At-Risk Launches

The agreement between Novartis and Teva subsidiary Teva Pharmaceuticals USA covers all claims for patent infringement and damages involving Teva's famciclovir and releases Teva from liability for all past and future activities in connection with U.S. marketing and sale of the drug.

Teva has a track record of launching generics before a court issues a final ruling on a patent dispute. Such at-risk launches include those for AstraZeneca's Pulmicort in 2008, Wyeth's Protonix (pantoprazole) in 2007 and Pfizer's Neurontin (gabapentin) in 2004.

At-risk launches don't always go perfectly for Teva. The Pulmicort case produced a similar settlement to Famvir, with AstraZeneca receiving royalties on the generic, but Teva was also forced to pull its budesonide product off the market for a year ('The Pink Sheet,' Dec. 1, 2008).

Depending on the size of the payment to Novartis, Teva may be more cautious of such launches in the future. The Famvir settlement "may lead generic companies to question more thoroughly the decision to launch at risk," said Chad Landmon, a partner at Axinn, Veltrop & Harkrider.

Teva has been on a settlement binge. Last month it settled litigation over AstraZeneca's Nexium (esomeprazole), receiving a license to market the heartburn drug five years before the latest patent expires ('The Pink Sheet' DAILY, Jan. 7, 2010). And in December Teva struck a deal with Abbott that would delay its launch of generic TriCor (fenofibrate) ('The Pink Sheet,' Dec. 7, 2009).

While much of its recent deal-making has been in the generic space, Teva emphasized its brand portfolio during its recent earnings call on its 2009 results (see Also see "Teva Targets $113 Billion In Branded Sales With Dozens Of Pending Applications" - Pink Sheet, 16 February, 2010. ).

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

Famvir Patent Settlement: 17 Months After At-Risk Launch, Teva Must Pay Novartis

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