A Lawsuit Loss to Remember

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Johnson & Johnson (NYSE: JNJ) would probably like to forget its latest legal loss.

Barr Pharmaceuticals (NYSE: BRL) and Mylan (NYSE: MYL) got a court to overturn Johnson & Johnson's patent on its Alzheimer's drug, Razadyne. The court also refused to institute a restraining order that would stop the companies from launching their generic version.

Unlike some other branches of the FDA, the office of generics was quick to turn Barr's and Mylan's tentative approvals into a final approval, which will allow the generic-drug companies to launch the drug "immediately."

While Barr and Mylan are free to launch at this point, if Johnson & Johnson wins the appeal it's planning on filing, the generic-drug companies would be on the hook for damages. Actually, if that came to pass, Teva Pharmaceuticals (Nasdaq: TEVA) would probably have to pay Johnson & Johnson -- it'll likely close on its purchase of Barr before this courtroom drama finishes playing out.

The companies will share the marketing exclusivity period granted to the first drugmaker(s) that successfully file a patent challenge. That'll keep the myriad of other generic-drug makers with tentative approvals from launching their versions for 180 days.

One big question is what effect the availability of generic Razadyne will have on sales of other brand-name Alzheimer's drugs -- Forest Labs' (NYSE: FRX) Namenda, Novartis' (NYSE: NVS) Exelon, and Aricept from Pfizer (NYSE: PFE) and Eisai. I suspect the effect will be minimal, compared to what we sometimes see in other diseases. Because Alzheimer's is such a complex disease, most doctors are likely to leave patients on a medication that appears to be working, rather than switching them to a lower-cost generic.

Barr has been successful in overturning patents recently. If Teva is smart, it'll keep those lawyers around after the acquisition.

Further far-from-generic Foolishness:

• Teva Gets a Taste of Its Own Medicine
• Benefiting From 2008's Generic Drugs
• 8 Generic-Drug Makers for 2008
• The Best Company I've Ever Seen