The impact of the launch of a generic version of Plavix - the second best selling drug in the world - will continue to weigh on Sanofi-Aventis and Bristol-Myers Squibb at least through the remainder of the year and possibly beyond despite a ruling in their favor barring Apotex' sale of generic clopidogrel.

Manhattan Federal Court Judge Sidney Stein issued the ruling Aug. 31, granting Sanofi/Bristol's motion for a preliminary injunction enjoining Apotex from infringing Sanofi's patent by selling generic clopidogrel.

However, the court denied the brand manufacturers' request to recall generic versions of the anti-clotting medication already distributed on the market.

Flood Of Generics Means Plavix Sales Drought

Despite the positive outcome on the issue of the preliminary injunction, the decision not to order a recall will have significant financial implications for Sanofi and Bristol since Apotex' generic has already flooded the market.

Sanofi/Bristol filed the motion for preliminary injunction Aug. 15, in response to Apotex' Aug. 8 "at risk" launch. During a two-day hearing on the motion in Manhattan that began Aug. 18, Apotex said it had already shipped a three-month supply of the generic drug representing roughly $500 mil. in retail sales. In addition, the company said it had $1.3 bil. in orders pending (¹ [A#00680350001], p. 3).

Other industry estimates have put the supply of generic clopidogrel at six months, or at least enough inventory to meet market demand through the end of the year.

The court ruling led Sanofi to curb its earnings per share growth estimates for the year.

"Neither the amount of sales made by Apotex prior to this injunction, nor the effect of these sales on market conditions, is currently known," Sanofi said Aug. 31.

"Nevertheless, based on information circulating on the market, it is possible that prior to the imposition of the injunction Apotex had already sold sufficient quantities in the United States to satisfy substantially all market demand through 2006."

Sanofi said it is now anticipating adjusted earnings per share growth of around 2% for the full year, taking into account the effect of Apotex' pre-injunction sales. The figure represents a significant reduction from early projections of 12% issued Aug. 2.

The impact of the generic will likely be even more significant for Bristol because the drug - with sales of nearly $3.77 bil. in the U.S. for the year ending June 30 - accounts for a larger portion of Bristol's sales.

Plavix accounted for nearly one quarter of Bristol's $2.2 bil. in U.S. pharmaceutical sales in the second quarter.

In a letter distributed to employees, Bristol CEO Peter Dolan said, "The economic and other consequences of the intrusion of a generic product that competes with Plavix in the U.S. market are impossible to fully reverse."

"Apotex has filled the distribution channels with a substantial amount of generic product. This will have a detrimental effect on future sales and pricing," he said.

A Shot In The Foot? Settlement Left No Recourse

The denial of an order to recall product already distributed is particularly notable given that Judge Stein's decision on the issue was largely based on Sanofi/Bristol's own actions allowing Apotex a window of opportunity for launching generic clopidogrel at risk.

In a now-defunct settlement agreement between Sanofi/Bristol and Apotex, the brand drug makers agreed they would not seek a temporary restraining order or file a preliminary injunction within five business days against Apotex in the event the company launched a generic at-risk. As part of that settlement, the companies also gave up the right to pursue treble damages.

Provisions in that settlement "foresaw the possibility that Apotex would launch a generic product and prohibited Sanofi from seeking injunctive relief for a specific period of time after the launch occurred," Judge Stein's ruling states.

"The court will not intervene to reverse the effects of Sanofi's own agreement."

The breakdown of that settlement agreement, which did not meet regulatory muster, led to the launch of generic Plavix and sparked a criminal investigation into Sanofi/Bristol by the Department of Justice (² [A#00680320004], p. 9).

It is unclear why Sanofi/Bristol agreed to concessions such as the five business day delay and relinquished the right to seek treble damages from Apotex as part of the settlement.

By agreeing to those terms, it appears as though the companies may have considered their patent infringement case weak. However, during the hearing on the motion for preliminary injunction, the brand drug makers presented a solid case.

In fact, in his ruling, Judge Stein says the evidence presented by Apotex in the hearing was "insufficiently persuasive to establish a likelihood of proving invalidity at trial."

The trial date for hearing the patent infringement case has been set for Jan. 22.

Plavix Patent Case Has Merit, Judge Rules

Although the preliminary injunction ruling does not determine the validity of Sanofi/Bristol's patent covering Plavix, it does offer some insight into the strength of the brand drug makers' patent infringement case.

Judge Stein weighed four factors in reaching a decision on the injunction: irreparable harm, the balance of hardships, public interest and the likelihood of success that Sanofi/Bristol would win at trial.

The burden of proof rests on the challenger in establishing invalidity as part of a patent infringement trial.

In the case of Plavix, Apotex alleged that the patent protecting clopidogrel, no. 4,847,265, is invalid based on the fact it is "anticipated" in light of prior art already included in an earlier patent, no. 4,529,596, and that the development of clopidogrel would have been "obvious to a person having ordinary skill in the art."

In its defense, Sanofi countered that the number of compounds covered by the general formula in the '596 patent could yield millions of compounds, and that the company spent hundreds of millions of dollars developing clopidogrel.

"Although Apotex has succeeded in raising a 'substantial question' as to whether the '265 patent was anticipated by the '596 patent, Sanofi has adequately demonstrated that that question 'lacks substantial merit,"' the ruling states.

On the issue of obviousness, "the court finds that it would not have been obvious prior to extensive experimentation that clopidogrel bisulfate would have the pharmaceutically superior properties it did have."

"Having found that Sanofi has clearly established a likelihood of success on the merits, the court also finds that Sanofi receives the benefit of a presumption of irreparable harm," the ruling states.

"Not only does Sanofi receive the benefit of that presumption, but it has also offered independent evidence of irreparable harm, namely evidence that this court credits that it will suffer irreversible price erosion, loss of good will, and will be forced to lay off personnel and discontinue research devoted to developing other medical uses for Plavix."

While Judge Stein says that Apotex will face significant harm from the granting of the injunction, he says those harms were triggered by the company's decision to launch generic clopidogrel at risk.

"Apotex' harms were almost entirely preventable, and were incurred by the company's own calculated risk," the ruling states.

The court ordered that Sanofi/Bristol post a bond in the amount of $400 mil., reflecting the amount that would be owed to Apotex if they were to lose the upcoming patent infringement case. The amount will be split 50/50. Apotex had requested the bond be set at $4 bil.

Long-Term Price Erosion May Be The Real Test

It is unclear what impact the launch of generic clopidogrel will have on long-term price erosion of Plavix.

During the Aug. 18 hearing, Massachusetts Institute of Health Economics Professor Jerry Hausman testified on behalf of the brand companies that Plavix would face significant price erosion that would not necessarily be reversed even if a permanent injunction were granted.

In concluding that Sanofi/Bristol would suffer irreparable harm, Judge Stein credited the companies' assertion that they would continue to face pressure from third-party payers to continue discounts offered on the brand if a generic were removed from the market.

Following the ruling, Bristol said it is "actively considering and evaluating commercial options available to us to ensure that Plavix remains available to patients."

Plavix Generic Blocked By Court, But Damage Lingers For Bristol And Sanofi

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