January 20, 2015 / 3:21 PM / 5 years ago

UPDATE 3-U.S. Supreme Court rules for Teva over MS drug patent

(Adds analyst, Teva comment; updates shares)

By Lawrence Hurley

WASHINGTON, Jan 20 (Reuters) - The U.S. Supreme Court on Tuesday ruled that Teva Pharmaceutical Industries Ltd can still benefit from patent protection for top-selling multiple sclerosis drug Copaxone, dealing a blow to generic drugmakers looking to market a cheaper rival product.

In a 7-2 vote, the justices sent the case back to the U.S. Court of Appeals for the Federal Circuit for further review saying it had not used the correct approach in analyzing whether the patent, due to expire in September 2015, was valid. The appeals court had thrown out the patent in 2013.

The extended litigation of the case is likely to benefit Israel-based Teva, as it continues to sell Copaxone without competition from generic drugmakers who would offer steep discounts once they enter the market.

In the meantime, Teva is switching MS patients to a new version of Copaxone that is stronger, taken less frequently and has a longer patent life.

“Teva has done a masterful job of preventing a generic formulation of Copaxone and this elongates their swap window to move more patients,” Maxim Group analyst Jason Kolbert said. “Ultimately there will be a generic version of Copaxone, but it may not be for a while.”

Two teams are developing generic forms of Copaxone: one involving Novartis AG’s Sandoz unit and Momenta Pharmaceuticals Inc and another involving Mylan Inc and Natco Pharma Ltd.

“We will continue to explore all available avenues to protect our intellectual property for Copaxone,” Teva Chief Executive Erez Vigodman said in a statement.

The legal question considered by the Supreme Court was to what extent the appeals court has leeway to second-guess findings made by district court judges about patent claim construction. Teva had argued that the appeals court should have deferred to a district court judge, who had previously ruled in the company’s favor.

In an opinion by Justice Stephen Breyer, the Supreme Court said that the appeals court must defer to the federal district judge unless there is evidence of “clear error.” The appeals court used the wrong legal analysis in making its ruling, he said.

“A district court judge who has presided over, and listened to, the entirety of a proceeding has a comparatively greater opportunity to gain that familiarity than an appeals court judge,” Breyer added.

Justices Clarence Thomas and Samuel Alito dissented, saying the appeals court took the correct approach.

Shares of Teva were up 0.4 percent at $57.90 on the New York Stock Exchange.

The case is Teva v. Sandoz, U.S. Supreme Court, No. 13-854. (Reporting by Lawrence Hurley. Additional reporting by Bill Berkrot.; Editing by Michele Gershberg, Will Dunham and Alan Crosby)

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