Pharmaceutical IP Strategy in the US - Merck´s Latest Tactic for Zocor

In preparation for expiry of the key blocking patent covering Zocor (Simvastatin), Merck has made two strategic but controversial moves in the USA to neutralize any advantage that generic first filers Ivax (Teva) and Ranbaxy would obtain from the generic 180 day exclusivity under the Hatch-Waxman legislation:

1. In 2003, Merck requested that the Orange Book patents listed in relation Zocor be delisted. This controversial tactic effectively removed the chance of generic exclusivity and is currently the subject of litigation before the US Court of Appeals for the Federal Circuit. (Click here to read my article about this from 29 May.)
2. It was widely reported on Wednesday 21 June (for example by Reuters), that Merck intends to sell Zocor at a price lower than the generic entry price. (Merck secured the cheapest co-payment level for its Zocor branded drug on the coverage list of U.S. health insurer UnitedHealth Group Inc.)

The molecule patent for Merck’s Zocor product (US 4,444,784) expired on 23 June 2006. (To be strictly correct, the 6 month pediatric exclusivity expired on that day.)

Needless to say both moves by Merck are controversial and this latest one has prompted at least one request for a U.S. Federal Trade Commission investigation (from Senator Charles Schumer of New York).

The advent of strategies such as these and others (eg. the various forms of authorised generics) underscore that the chess game played out in the global (and particularly the US) pharmaceutical market is becoming a lot more complicated (and interesting).

Of course, such strategies may also be adopted in other jurisdictions. However, they are less critical because without the Hatch-Waxman legislation to encourage earlier generic entry, there is less need. In other countries, Brand pharmaceutical companies have traditionally been able to maintain a sufficient brand premium and market share so as not to bother with such strategies.

Generic activity in the US under the Hatch-Waxman regime has reached a level at which the brand premium alone is insufficient – clearly Merck is more interested in market share in this latest move.

No doubt the ongoing CAFC litigation and the outcome of any Federal Trade Commission investigation will be closely monitored by other players in the industry. Depending on the result, generic players may need to brace themselves for more of the same from other brand companies. (There are, of course strategic responses available, but that’s a topic for another day.)

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