Aug. 5 (Bloomberg) -- Bayer AG lost an appeals court ruling that said its U.S. patent on the birth control pill Yasmin is invalid.

An appeals court in Washington today upheld a lower-court ruling that forced Bayer, Germany’s largest drugmaker, to reach an agreement to let Teva Pharmaceutical Industries Ltd.’s Barr unit begin selling Yasmin under its own label. The settlement was reached to protect Yaz, a newer version of the medicine, from generic-drug competition.

The Yasmin family of contraceptives generated 325 million euros ($468 million) in second-quarter sales for Leverkusen, Germany-based Bayer. The company cut the 2008 profit goal for its health-care unit after the Yasmin patent was invalidated.

Yasmin, which inhibits ovulation, is made with the active ingredient drospirenone. The patent, which expires in 2020, is on a formula for the compound drospirenone in which the particle size was reduced so it could be absorbed by the body more quickly before it is exposed to stomach acid.

The U.S. Court of Appeals for the Federal Circuit, in a 2-1 ruling, today said the trial judge was correct to rule that it would have been obvious for scientists to test a smaller particle size because it was well known that drospirenone was acid-sensitive.

“Bayer disagrees with the decision of the Federal Circuit,” Rosemarie Yancosek, a spokeswoman for Bayer, said in an interview.

Teva, based in Petah Tikva, Israel, is the world’s biggest generic-drug company.

The case is Bayer Schering Pharma AG v. Barr Laboratories Inc., 2008-1282, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Bayer Schering Pharma AG v. Barr Laboratories Inc., 05-cv-2308, U.S. District Court, District of New Jersey (Newark).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net.

Last Updated: August 5, 2009 15:19 EDT