Court decision prevents Teva from producing a generic version of Singulair, Merck’s best-selling drug

Merck & Co. has won a court decision that prevents Teva Pharmaceutical Industries Ltd. from selling a copy of Merck’s best-selling drug -- the asthma and allergy treatment Singulair -- for three years.

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WHITEHOUSE STATION, N.J.—Merck & Co. has won a courtdecision that prevents Teva Pharmaceutical Industries Ltd. from selling a copyof Merck's best-selling drug—the asthma and allergy treatment Singulair—forthree years.
In making its case, Teva had argued that the patent on themain ingredient of Singulair is invalid or unenforceable. U.S. District JudgeGarrett E. Brown Jr. in Trenton, N.J., said, however, that Teva can't sell ageneric version of the drug until the patent expires in 2012.
Teva sought approval from the U.S. Food and DrugAdministration (FDA) in February 2007 to sell a generic version of 4, 5 and 10mg tablets of Singular.
Brown's ruling came three days before the expiration of a30-month stay that prevented Teva from manufacturing or selling genericSingulair due to the legal battle.
As the case unfolded, many analysts and legal observersbelieved that Merck had the upper hand in the case because Singulair was aninnovative approach to treating asthma when it hit the market in 1998.
In a February trial before Brown, Teva lawyers argued thatthe patent for Singulair was invalid because prior research would have taughtanyone experienced in drug research and development how to invent Singulair.They based their argument on an aspect of patent law called "prior art," whichcan be grounds for invalidating a patent's claims.
Teva also alleged that the patent was unenforceable becauseMerck misled the U.S. Patent and Trademark Office (PTO) when it applied for thepatent.
During the proceedings, Merck's lawyers and witnessesdisputed these claims, arguing that researchers followed a path marked byexhaustive trial and error in the development of the drug.
Brown wrote in his ruling that the patent is "valid andenforceable," and that Teva's application to market a generic copy infringes onthe patent.
The patent covers montelukast, the active ingredient inSingulair. Approved by the FDA in 1998, the medicine is based on research thatshowed one way to treat the disease is to block leukotrienes, compounds thatcause muscle contraction and increase secretions in the lungs.
Merck "put forth sufficient evidence of the failed attemptsof others to develop a leukotriene antagonist," Brown said in his opinion.
Brown also ordered that a permanent injunction be issuedrestraining Teva from manufacturing or selling a generic version of Singulair untilthe patent expires in 2012.
Teva spokeswoman Denise Bradley said, "We are currentlyreviewing the court's decision to determine our next course of action."
Bruce Kuhlik, executive vice president and general counselfor Merck, said in a statement that the ruling was appropriate and that thecompany vigorously defends its patent rights.
"The court appropriately ruled that the patent for Singulairin the U.S. is valid," Kuhlik said. "We invest heavily in the R&D that isneeded to discover innovative medicines like Singulair, and we will vigorouslydefend our intellectual property rights."
The ruling is a victory of sorts for Merck, which faces theloss of patent protection in the next five years on drugs with more than $8billion in annual sales.
In an effort to head off the anticipated loss of patentprotections, Merck is buying rival Schering-Plough Corp. and cutting jobs toboost profits. That deal is expected to be finalized later this year.
Singulair was the ninth best-selling prescription drug inthe world last year, according to drug-data provider IMS Health. During thesecond quarter of 2009, Singulair recorded worldwide sales of $1.3 billion, up16 percent from the year-ago period. The drug had total sales of $4.3 billionin fiscal 2008, accounting for about 18 percent of Merck's total revenue.Defending Singulair's patent was thus quite crucial for Merck. If Teva had beensuccessful in its case, its generic version would have torpedoed Singular'ssales.
"We believe this is a major win for Merck as an unfavorableruling would have hurt its top-line badly. The court not only upheld Merck'spatent, but also issued an injunction blocking the approval of Teva's genericstill Singulair's patent expires in August 2012," iStockAnalyst said on its Website following the ruling.
Following the news, Merck stock was trading at $31.56, up 85cents or 2.77 percent, on the NYSE with a volume 14.4 million shares. In thepast 52-week period, the stock has traded in the range of $20.05 to $36.57,with an average three-month volume of 18.9 million shares, according to theTrading Markets Web site.
After the announcement, Teva stock was trading at $51.50, up71 cents or 1.40 percent, on the NYSE with a volume of 3.6 million shares. Inthe past 52-week period, the stock has trended in the range of $35.89 to$54.95, with an average three-month volume of 5.27 million shares, according tothe Web site.
The opinion came just days after a lawsuit was filed in U.S.District Court in New Jersey against Merck by a group of drug distributors andhealth insurers over the patent for Singulair.
The companies allege in the lawsuit that Merck, by blockingentry of generic competition, has kept a monopoly on the drug. As a result,they claim that they have overpaid for Singulair over the last six years. Theclaimants in the cases are Louisiana Wholesale Drug Co., Burlington Drug Co.,Miami-Luken Inc., District Council 37 Health & Security Plan and TheGuardian Life Insurance Co. 

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