Plavix Debacle

Canadian generic drug firm Apotex appears to have outwitted pharma giant Bristol-Myers Squibb (BMS) and marketing partner Sanofi-Aventis in negotiations over the blood thinner Plavix. Thanks to loopholes in a patent suit settlement among the three companies, Apotex started the U.S. launch of its generic version of Plavix (clopidogrel bisulfate) on Aug. 8, five years ahead of schedule.

The launch is a major blow for BMS. Plavix is by far the company's biggest seller, bringing in $3.77 billion in U.S. sales in the 12 months through June 2006, according to IMS Health. Analysts expect to see job cuts at BMS as a result of lost sales.

FDA cleared Apotex' clopidogrel in January, but a patent infringement suit by BMS and Sanofi kept the drug off the market. By March, the three companies had reached an agreement that gave Apotex an exclusive license for clopidogrel in the U.S. In exchange, Apotex would delay sales until September 2011.

But in late July, the Federal Trade Commission rejected the pact. And although BMS and Sanofi revived the patent suit last week, unusual clauses in the March agreement let Apotex launch its drug with little fear of financial consequences.

Under the agreement, even if BMS and Sanofi win their court battle, Apotex will not have to pay the treble damages that usually accompany such suits. Furthermore, they have agreed to limit the damages sought from Apotex to 50% of the net sales of generic Plavix.

The agreement also required BMS and Sanofi to wait five days before seeking an injunction ordering Apotex to halt sales of the generic drug. A survey conducted by Morgan Stanley reveals that, in just those few days, drug benefit manager Medco already had received enough of Apotex' clopidogrel to last through the end of the year.

According to Morgan Stanley stock analyst Jami Rubin, not only is it unlikely that product sent to wholesalers will be recalled, but she says the big drug companies will have a hard time ever regaining their share of the blood thinner market, even if they win the patent suit.