Generic Business Strategies >
Patent Challenges
Developing
generic equivalents of branded pharmaceuticals that are protected
by patents and challenging those that the Company believes are
invalid, unenforceable or not infringed by its competing generic
versions of these branded products has been an important part
of Barr’s success in the past. As branded pharmaceutical
companies have increased the number of patents protecting their
products, the number of Barr’s generic products in development
facing intellectual property issues and possible litigation
has also increased. By utilizing the patent challenge process
under the Hatch-Waxman Act, the Company seeks to invalidate
patents or to obtain a declaration that its generic version
does not infringe the patent.
Generic
development activities in this area, including sourcing raw
materials and developing equivalent products, are designed to
obtain FDA product approval. Legal activities in this area,
performed by outside counsel, are designed to eliminate the
barrier to market entry created by the questionable patents.
Successful
patent challenges can result in gaining 180 days of market exclusivity
for the first company to initiate the patent challenge. If Barr
receives exclusivity for a product, it typically experiences
significant revenues and profitability associated with that
product for the six-month exclusivity period. At the end of
the 180-day exclusivity period, the Company can experience a
significant decrease in its revenues and market share associated
with the product as other approved generic competitors may be
allowed to enter the market.
The Company’s
record of successfully resolving patent challenges has contributed
to its growth, but also creates periods of revenue and earnings
volatility and will likely do so in the future. Despite the
volatility, challenging patents continues to be an important
component of Barr’s generic product selection and development
strategy.
The Company
currently has more than 10 active patent challenges targeting
products with more than $5 billion in annual brand sales. Barr
believes that it has “first-to-file” status on many
of these patent challenge cases, and expects to enjoy the 180-day
exclusivity period if successful in its patent challenge litigation.
The Company actively identifies potential patent challenge opportunities
on an ongoing basis and anticipates filing additional patent
challenges in the future.
Recently,
the issue of authorized generics has had an impact on generic
patent challenges. Authorized generics involve the brand pharmaceutical
maker licensing its drug to a company that then markets it as
a generic product. The authorized generic versions are made
by the brand-name company, and sometimes distributed by the
generic partner. Because the authorized generic is sold under
the brand pharmaceutical maker’s NDA, it can compete against
the patent challenger’s generic product during the 180-day
exclusivity period following a successful patent challenge.
The Company
believes that the marketing of authorized generics during the
180-day exclusivity period undermines the incentive integral
to the Hatch-Waxman patent challenge process, and will provide
disincentives to generic companies seeking to challenge patents.
Barr will continue to work with Congress, the Department of
Health and Human Services, including the FDA, and the generic
industry association to limit the use of authorized generics.
Product Guide 
