Lilly waging battle to protect its coveted cancer drug: Drugmaker keeps rivals after Gemzar at bay through patent-infringement lawsuits

March 17, 2008

As Eli Lilly and Co. fends off allegations in an Alaskan courtroom involving its top-selling Zyprexa drug, the pharmaceutical giant is locked in another battle closer to home.

The dispute winding through U.S. District Court in Indianapolis concerns the billion-dollar cancer drug Gemzar and Lilly's attempts to prevent rivals from selling generic versions.

While patent-infringement claims may be less intriguing than accusations that Lilly failed to warn doctors and patients about complications related to Zyprexa, the Gemzar case still has major implications.

At stake are future U.S. sales of a drug that has become standard therapy for advanced pancreatic cancer and some forms of lung and breast cancer.

Lilly has faced similar challenges before on other drugs, including Zyprexa, and expects to prevail in this case as well. Yet, statements made in its latest annual report personify the seriousness of the threat.

"An unfavorable outcome could have a material adverse impact on our consolidated results of operations, liquidity and financial position," the company said.

The local drugmaker in February 2006 sued Israel-based Teva Pharmaceutical Industries Ltd. and its California subsidiary, Sicor Pharmaceuticals Inc., claiming they infringed upon Gemzar's patent. A trial date has been set for July 2009.

Meanwhile, Lilly brought a similar complaint in October 2006 against Australia-based Mayne Pharma Ltd. Federal Judge Sarah Evans Barker last month closed the case until the Teva lawsuit is finalized.

In addition, the Indian-based Sun Pharmaceutical Industries Inc. also is the target of yet another Lilly suit. A jurisdictional issue led to a change of venue from Indianapolis to a federal court in Michigan.

Lilly's actions to protect the drug are in response to so-called "abbreviated new drug applications" the companies filed with the U.S. Food and Drug Administration to market doses of gemcitabine, the compound that makes up Gemzar.

The lawsuits accuse them of violating the patent covering the gemcitabine compound that expires in 2010 and a patent covering the use of the compound in treating cancers that expires in 2013.

Gemzar's robust sales make the drug attractive to competitors that want a share of the market, said Les Funtleyder, an analyst who covers Lilly for New York-based Miller Tabak & Co. LLC.

"In general, generic companies won't go to the hassle of challenging patents on small drugs," he said "If they think they have a case, they'll give it a shot."

Lilly's track record in similar cases is mixed. In 2005, a U.S. District Court judge ruled that the company's patent covering Zyprexa was valid and enforceable. That denied three companies, including Teva, the chance to sell generic versions of the anti-psychotic before its patent expires in 2011.

But Lilly lost patent protection in 2000 for its then-best-seller, Prozac, to New Jersey-based Barr Pharmaceuticals Inc.

In 2006, Lilly dismissed its infringement claim against Barr over Prozac Weekly, a longer-lasting version of Prozac. Its patent is valid until 2017.

Generic drugmakers such as Barr that are the first to file abbreviated new drug applications are awarded exclusive rights to sell the generic version for six months. The incentive, and the high cost of health care in general, often prompts companies to mount a challenge, Funtleyder said.

Indeed, global sales of generic drugs are expected to grow more than 20 percent this year and could reach $80 billion, according to the Connecticut-based IMS pharmaceutical research firm.

For Lilly and other pharmaceutical companies, the cost of protecting their patents is part of normal business operations.

"We really rely on our intellectual property protection to protect what we discover here," Lilly spokesman Mark Taylor said. "It's part of doing business, but it's something we take seriously."

Drug companies can spend more than $1 billion to research and develop a new drug and will go to great lengths to protect their innovations, said Paul Maginot, an intellectual property lawyer at the local Maginot Moore & Beck LLP firm. Maginot is not involved in the Lilly case.

"It tends to be an unfair situation when a generic ... takes the technology of the company that spent all that money to develop it," he said. "It gives them quite an advantage if they can do that."

Lilly introduced Gemzar to the U.S. market in 1996 as a treatment for advanced pancreatic cancer. It since has received approval for treatment, in combination with other drugs, of non-small-cell lung cancer and advanced breast cancer.

Gemzar ranked fifth among Lilly drugs with $670 million in domestic sales in 2007. If successful, the patent challenges would affect only Gemzar's U.S. sales.
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