At stake: Teva's profits from its 180-day exclusivity period (gained by being the first to challenge the validity of Merck's patents), and perhaps industrywide profits in the future. Since generics are, well, generic, that 180-day window is often an important part of the overall profitability model for a generic company to not only develop a drug but also launch litigation to overturn the patent in question.
But Merck has negotiated separate deals with health insurance companies like UnitedHealth
Of course, that's not the way you're going to hear it from Merck. From its point of view, this is just the competitive market working itself out -- and hey, isn't it great that consumers will benefit from lower-cost drugs?
It remains to be seen whether other large pharmaceutical companies like Pfizer
When all's said and done, I can't imagine that Congress will let the branded pharmaceutical industry choke off the generic industry through authorized deals and special pricing. That might mean a period of pronounced uncertainty and legal wrangling, as people debate and lobby for the best angle for their respective needs and interests. Given how much the markets hate uncertainty, though, that could also mean that big generic drug companies might go on sale for patient long-term investors.For more pharm-fresh Foolishness:
Fool contributorStephen Simpsonhas no financial interest in any stocks mentioned (that means he's neither long nor short the shares).