Teva clashes with US Trade Commission

The argument is over settlements in patent cases.

Do arrangements between generic pharmaceuticals companies and innovative companies benefit consumers, or disadvantage them? It depends whom you ask the US Federal Trade Commission (FTC) , which is responsible for antitrust supervision, or Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA), the world's largest generic drugs producer.

FTC chairman Jon Leibowitz has claimed that legislation to make it harder for generic and branded pharmaceutical companies to settle complex patent cases will save the US consumer $35 billion over a decade. Teva has published a response stating that the FTC based itself on incorrect data.

According to Teva, "The very settlements FTC opposes have produced billions of dollars in taxpayer and consumer savings."

The spat is over settlements under The Drug Price Competition and Patent Term Restoration Act of 1984, usually referred to as the Hatch-Waxman Act. When a generics company challenges a patent on an original drug, and a trial takes place to determine the validity of the patent, the companies may prefer to come to an out of court settlement that leaves them both happy. The generics company will launch its version of the drug before the expiry date of the patent, but later than the date on which it would have launched it had it won in the trial.

Teva said that such settlements have saved 138 years of monopolies under patent protection.

In other arrangements, which Teva does not take part in, the innovative company prevents a generic version of its drug coming onto the market through an agreement with the company that challenged the patent.

"Teva is in any case not a world champion in settlements," says Teva CFO Eyal Desheh. When we challenge a patent, we are 100% convinced that it is invalid. Sometimes we reach a settlement, but we don't set out with that intention. Legal compromises between two companies are part of US business culture."

Published by Globes [online], Israel business news - www.globes.co.il - on June 25, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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