Pfizer and Teva Reach $2 Billion Deal on Patent Spat
June 13th, 2013 // 12:31 pm @ jmpickett
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After almost 10 years of fighting, Teva Pharmaceuticals and Sun Pharmaceuticals agreed to settle on a very hot patent fight with Pfizer on the acid reflux drug Protonix. The agreement was to pay Pfizer $2.15 billion. Teva specifically will pay $1.6 billion and Sun will pay out the remainder.
The issue was a bet by Teva to start marketing a generic type of Protonx in 2007, while it also was challenging the patent on the drug which was being sold by Wyeth. Pfizer then acquired that company. The idea was that Teva, which has been involved in at risk launches before, would come out on top in that litigation.
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But this plot went south when a jury decided in 2010 that Teva had infringed on that patent. This set up another round of fighting over monetary damages and how to award them. Now the maker of generic drugs will absorb its first loss in this sort of affair. Teva right now is paying out triple damages.
This is a unique case because it is the first time when a generic firm is paying monetary damages for an at risk launch. It is seen as an important milestone because it sets a precedent in the industry. It will help to encourage patent settlements in the future. Other major precedents may be set in the future in this realm as the US Supreme Court decides on the veracity of several patent settlements….some people call them reverse settlements and others calls them pay to delay tactics.
Pfizer is only going to get 65% of the monetary settlement. The rest has to be paid to Takeda Pharmaceutical, which bought the patent rights for Protonix after it bought Nycomed in 2011. Nycomed put a license on that patent, which accompanied the Nocomed purchase.
At Teva, the pay out is about 4% of its market cap, but the firm did set aside $670 million for this purpose last year, so it knew a deal was coming. Up to $560 million could be covered by insurance connected to the settlement.
