FTC Probes Possible Bid to Halt Generic Version of Drug

The Federal Trade Commission is investigating whether drug giant Bristol-Myers Squibb Co. colluded with a tiny Santa Monica pharmaceuticals concern to block production of a price-slashing generic version of the cancer-fighting drug Taxol.

The probe was disclosed Wednesday during a U.S. District Court hearing at which a federal judge decided that the government lacked jurisdiction in a patent dispute over Taxol.

The ruling by Judge William Matthew Byrne Jr. probably will pave the way for the production of a generic version of Taxol in the coming months, slicing as much as $500 million annually from the cost of treating American women with breast and ovarian cancer.

It was also a major victory for Miami-based generic specialist Ivax Corp., which has sought to market paclitaxel, the generic form of Taxol, since 1997. Ivax, whose shares rose $5.50, or 17%, to close at $38 on the American Stock Exchange on Wednesday, last week received tentative approval from the Food and Drug Administration to begin marketing the generic version.

Women’s health and consumer advocates have pushed for a generic version of Taxol, which can cost $1,000 to $3,000 per course of treatment and garners Bristol-Myers an estimated $1 billion in domestic sales annually. Generic competition can cut the price of a drug by half within the first year.

“This is really good news. What has happened with Taxol is an example that grabs people’s heart strings,” said Cindy Pearson, executive director of the National Women’s Health Network in Washington.

“I hope it is a ruling that moves society to a more reasonable balance between a company’s right to make a reasonable profit and the needs of patients to pay reasonable prices for drugs,” she said.

The rights over production of Taxol, a drug discovered through a National Cancer Institute research program, has sparked a complicated three-way battle between Bristol-Myers, Ivax and American BioScience Inc. of Santa Monica that one attorney in the case likened to “a game of 3-D chess.”

American BioScience won approval of its Taxol claim from the U.S. Patent Office on Aug. 1, seven years after it first filed an application. The patent came just as Ivax was getting ready to issue its version of the drug.

American BioScience then filed a lawsuit against Bristol-Myers, which has held exclusive rights to sell the drug since 1992, seeking to force the giant pharmaceutical company to list American BioScience’s patent in the federal registry of Taxol patents. Official recognition of its claim might have allowed American BioScience to collect royalties from Bristol-Myers or other companies that wished to produce the drug.

Last month, Byrne had issued a preliminary order forcing Bristol-Myers to list American BioScience’s patent. But Wednesday, Byrne said that federal law does not allow for court intervention in disputes over which patents should be listed in the patent register, called the “Orange Book.”

Attorneys familiar with pharmaceutical regulatory law say that it is generally up to the company that holds the rights to sell a drug to decide which patents go into the Orange Book.

If Byrne had allowed American BioScience’s patent to remain on the registry, it probably would have triggered a 30-month extension in Bristol-Myer’s exclusive right to sell the drug. Such an extension would be worth several billion dollars to the company.

Joseph F. Coyne Jr., an attorney representing American BioScience, discounted the FTC’s investigation of the dealings between American BioScience and Bristol-Myers.

“They are looking at the timing of when our patent was issued, but the short answer is that is when the patent office decided to issue it. There’s not much more to it,” Coyne said.

Bristol-Myers representatives did not return phone calls seeking comment. Its shares fell $2.06 to close at $50.94 on the New York Stock Exchange.

Analysts said that Bristol-Myers could decide unilaterally to list the American BioScience patent in the registry. But any agreement between the companies at this point is sure to spark vigorous FTC scrutiny for antitrust violations, said Nicolas Barzoukas, a pharmaceutical and biotechnology patent attorney in Houston.