December 3, 2013 / 7:00 PM / 4 years ago

AstraZeneca awarded $76 million from Apotex for Prilosec generic

NEW YORK (Reuters) - A U.S. federal judge has awarded AstraZeneca Plc $76 million in damages from generic drug manufacturer Apotex for infringing upon patents for AstraZeneca’s blockbuster heartburn drug, Prilosec, between 2003 and 2007.

Following a two-week non-jury trial, U.S. District Judge Denise Cote in New York said Apotex, Canada’s largest generic pharmaceutical company, must pay AstraZeneca the equivalent of 50 percent of its profits during the three-and-a-half years it sold a generic version of Prilosec.

A different federal judge in New York had already found in 2007 that Apotex’s version of the drug infringed AstraZeneca’s patent due to a thin, microscopic salt layer that formed during the manufacturing process, leaving the amount of damages as the only issue to be resolved during the trial.

Lawyers and a spokesman for Apotex declined to comment on the ruling, which was dated November 26, but kept under seal until Tuesday, while Cote considered whether to redact any portions at AstraZeneca’s request.

A call to AstraZeneca for comment was not immediately returned.

The verdict is the final chapter in broader litigation undertaken by AstraZeneca against various generic drug makers to protect Prilosec, one of the world’s highest-selling drugs before losing U.S. patent protection.

AstraZeneca launched an over-the-counter version of Prilosec as its patent expired, as well as a next-generation heartburn drug, Nexium, which has mirrored its predecessor’s multibillion-dollar sales.

In a 128-page decision, Cote analyzed both companies’ positions in “imagining a successful hypothetical licensing negotiation between Astra and Apotex in November 2003, on the eve of Apotex’s launch.”

Apotex, which had failed to create a non-infringing generic version of Prilosec, or omeprazole, would have been far more motivated to enter into a licensing agreement than AstraZeneca, Cote concluded.

“Because Apotex expected to (and did) make substantial profits from its sales of omeprazole, it would have been willing to pay a large share of those profits for the right to use the patents in 2003,” she wrote.

By contrast, AstraZeneca would have been concerned that the entry of a licensed generic would cannibalize Prilosec sales, not only eating into its revenues but threatening its strategy of shifting Prilosec patients to Nexium, Cote said.

“Since it is necessary, however, to assume that both parties were willing to enter into a license, Astra has shown through overwhelming evidence that it was in the driver’s seat in the negotiations and would have required Apotex to pay a hefty portion of its profits for a license,” Cote wrote.

Apotex had asked for a judgment of less than 7 percent of its net sales, noting that three other generics had already reached market by November 2003.

Two were under the threat of patent litigation, however, and the maker of the third did not have the manufacturing capacity to meet the market’s full demand, leaving prices high, Cote said. The entry of a second generic unfettered by legal risk would likely have created significant price reduction and represented a “golden opportunity” for Apotex, she concluded.

The judgment does not include interest. The two sides were ordered to present a proposed amount that includes interest by December 6.

The case is AstraZeneca AB et al. v. Apotex Corp. et al., U.S. District Court for the Southern District of New York, No. 01-9351.

Reporting by Joseph Ax. Editing by Andre Grenon

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