Usually generic-drug makers are working to get courts to find patents invalid, so when I read that generic-drug maker Teva Pharmaceuticals (Nasdaq: TEVA) was trying to get the FDA to reinstate a branded-drug maker's patent, I thought I was reading wrong.
But my eyes weren't playing tricks on me. Yesterday, Teva announced that it's suing the FDA to get Johnson & Johnson's (NYSE: JNJ) patent on Risperdal, its antipsychotic tablets, reinstated.
As you'd expect, the generic-drug maker has an ulterior motive. In 2001, Teva filed a marketing application for its generic version of Risperdal claiming that J&J's patent was invalid. Later that year, the FDA removed the patent that was listed in its Orange Book, but didn't award the 180-day exclusivity period to Teva. Teva wants the patent relisted so it can challenge it -- and get 180 days of competition-free marketing.
If Teva doesn't win its lawsuit, the generic-drug maker will likely have to compete with Par Pharmaceutical (NYSE: PRX), Mylan (NYSE: MYL), Barr Pharmaceuticals (NYSE: BRL), and others, which already have tentative approvals with the FDA, when J&J loses marketing exclusivity in June.
There's no way to know which way the lawsuit will go, but we're definitely not talking about peanuts here. Sales of antipsychotics in the U.S. by J&J totaled more than $2.7 billion last year, and Risperdal accounts for a large chunk of that. If Teva obtains the six-month exclusive marketing rights, it could price the drug just below J&J's price and make a small fortune until the other companies could join in.
The lawsuit is certainly no reason to go out and buy stock in Teva, but investors who've bought in for other reasons could get a pleasant surprise in the first half of the year if the court finds for Teva.
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