Teva’s $4 Billion Medicine Faces Patent Judgment Day in U.S.

  • Ruling on patent for blockbuster drug Copaxone due by Aug. 25
  • Analysts see generic competition cutting sales by $3.2 billion

Three judges are set to rule this month on Teva Pharmaceutical Industries Ltd.’s last line of defense for Copaxone, its best-selling multiple sclerosis injection.

The U.S. Patent & Trademark Office will decide on the legitimacy of patents that expire in 2030, which safeguard the drug’s thrice-weekly regimen and the $4 billion in annual sales it rakes in, by Aug. 25. The 40-milligram injection allowed Teva to hang on to sales when the original version of Copaxone -- half the dose, taken once a day -- began facing generic competition last year.

Should the office’s Patent Trial and Appeal Board -- known as the “death squad” for its proclivity to nullify patents -- rule against Teva, it leaves the entire Copaxone franchise open to generic competition. With Novartis AG and Momenta Pharmaceuticals Inc. jointly selling a cheaper version of the daily shot, Israel’s largest company has switched about 80 percent of patients to the 40-mg injection.

"If they lose, it’s not going to be nice, especially in light of Teva’s optimism that there won’t be generics," said Steven Tepper, an analyst at Israel Brokerage & Investments. "In the worst case scenario, we could see generics in mid-2018."

Differing Views

Teva isn’t worried. It expects Copaxone to generate $4 billion in sales this year, and then sees the revenue dropping by $200 million to $300 million annually until 2019, Chief Financial Officer Eyal Desheh said on July 13.

Analysts don’t share the company’s sanguine attitude. Generic competition could wipe out as much as $3.2 billion in sales by 2019, according to the average forecast compiled by Bloomberg. 

The Food and Drug Administration is already reviewing an abbreviated new drug application for generic Copaxone in the 40-mg dosage, and may give its provisional consent this year, Momenta said in May. The company and Sandoz, the Novartis unit for copycat medicines, began selling their 20-mg version in the U.S. in June 2015.

Spokesmen for Teva and Sandoz declined to comment for this story.

For more analysis of Teva’s legal fights, click here.

As in most patent cases, lawyers argue whether the patent covers something different from what came before. In this case, Mylan NV and Amneal Pharmaceuticals LLC are disputing whether doses administered six times in two weeks, versus seven times, warrant the additional protection. The fight involves three different patents, all tied to the 40-mg dose of the medicine.

Mylan declined to comment, and Amneal didn’t respond to e-mailed questions.

There are three possible outcomes in the PTO ruling:

  • All three patents are invalidated
  • All three patents are upheld
  • A mixed result

Teva loses only if the judges rule against all patents. If it wins, it will be free from the generic threat well into the next decade, said Tepper, despite likely appeals by Mylan and Amneal. A loss starts the complicated countdown to 40-mg generics.

Court Battle

In a separate trial in Delaware, where the burden of proof is stricter and more favorable to branded drugs, Teva is suing generic companies for violating its patents. A victory there could buy the company some time and keep the threat of suing for lost profits viable. A ruling is expected early next year.

Both the patent office challenges and any ruling from the district court will head to the same appeals court in Washington, one that specializes in U.S. patent law. Even if the patent office or trial judge invalidate the patents, generic-drug makers typically wait until the U.S. Court of Appeals for the Federal Circuit rules before entering the market.

A fifth patent covering the thrice weekly injection schedule was issued last week, which won’t be affected by the upcoming PTO decision. The legal outcome for the previous Copaxone patents will be "highly predictive" for the new patent too, since they are all quite similar, Liav Abraham, an analyst for Citigroup Inc. in New York, said in a note to clients.

Invalidating Teva’s patents is the first step toward generics. Getting approval from the FDA would be the next. That has proven difficult in the case of Copaxone.

Difficult Road

It took Momenta seven years to obtain regulatory permission to sell its 20-mg knockoff, while others including Mylan have yet to win over the FDA.

"It’s a complex molecule," said Aude Gerspacher, a Bloomberg Intelligence analyst. "The FDA took so long to approve the original version but that experience could translate to a timely tentative approval for 40-mg."

Sandoz is most likely the first to get the FDA’s blessing, because it has a shorter distance to go from 20-mg to 40-mg than its peers, Tepper said.

Novartis’s $5.7 billion in cash also place it in a better position for a so-called "at risk" launch, or selling generics under threat of future lawsuits, with the assumption that patents protecting the branded-drug will eventually be abolished, said Gerspacher.

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