December 26, 2003

Needed: Lawyers as Well as Scientists

Indian pharmaceutical firms need lawyers as well as scientists:

Generic Drugs From India Prompting Turf Battles: At 2 that cool winter morning last year when news trickled in that Dr. Reddy's Laboratories had successfully challenged the patent on a blockbuster hypertension drug in a New Jersey court, jubilant senior executives uncorked a bottle of Champagne. By daybreak, however, the celebration at Dr. Reddy's, a leading Indian drug maker based in Hyderabad, had come to an abrupt end. The patent holder, Pfizer Inc., loath to give up rights to the drug, Norvasc, with its worldwide sales of $3.8 billion last year, had announced that it would take the challenge to a higher court. One year later, the introduction of Dr. Reddy's version of the drug is still on hold, awaiting an imminent ruling from federal court in Washington, even though the company received final approval from the United States Food and Drug Administration. Pfizer has sued the agency over that approval, too.

The Norvasc dispute is just one of many battles being fought between increasingly aggressive Indian generics makers and global drug companies increasingly fierce about protecting their turf. For decades, Indian drug makers honed their copycat skills under a domestic policy that allowed them to make copies of best-selling, patent-protected drugs and sell them domestically or in unregulated countries as long as they used a different manufacturing process. Now generics companies like Dr. Reddy's and Ranbaxy Laboratories, two of India's largest, and even smaller ingredients manufacturers like Matrix Laboratories and Shasun Chemicals & Drugs, all eager to expand in or enter foreign markets, are combining their re-engineering skills with legal ingenuity to challenge patents held by the world's leading drug companies.

The intense overseas focus comes in part because the domestic market is stagnant, with hundreds of manufacturers vigorously competing with versions of every big brand name drug. More urgent, however, is a looming deadline for the country to recognize international product patents granted after 1995, to comply with World Trade Organization requirements. Also under that agreement, a product patent system will replace the current process patent system in India. Both changes are to take effect in 2005. The patent fights over the United States' $17 billion generics market are particularly ferocious. "The U.S. is an attractive market for Indian exporters, whether shoes, software or drugs,'' said G. V. Prasad, chief executive of Dr. Reddy's. "It is huge, fast-growing and offers the biggest margins."

Besides, changing regulations in America, like the F.D.A.'s banning of multiple patent extensions on a particular drug, have combined with a push by the federal government, faced with an aging population and squeezed health care budgets, to encourage the entry of more low-cost, generic drugs into the market despite the stiff resistance of the rich and politically powerful global drug makers....

Posted by DeLong at December 26, 2003 06:20 AM | TrackBack


Medicare Law Might Limit Drug Discounts for Insurers

Two provisions buried deep in the nearly 700-page Medicare drug law may limit the discounts that insurers and pharmacy benefit managers can get from drug makers - and, therefore, how far the new drug benefit for the elderly will stretch, executives say.

One provision allows doctors to prescribe for their Medicare patients whatever drug they deem "medically necessary," even if that drug is not on an insurer's list of preferred drugs. Other language in the measure, which President Bush signed into law on Dec. 8, requires that companies providing a drug benefit make at least two comparable drugs available in every treatment category.

Both provisions, industry executives say, could limit the negotiating power of companies that use preferred drug lists, known as formularies, to win discounts from drug makers. Without significant drug discounts, monthly premiums for the benefit could soar above the expected $35 a month, said Terry Latanich, a senior vice president of Medco Health Solutions, one of the nation's largest pharmacy benefit managers....

Posted by: anne on December 26, 2003 07:20 AM


Bracing for the Blow

I.B.M. has sent a holiday chill through its American employees with its plans to ship thousands of high-paying white-collar jobs overseas to lower-paid foreign workers.

"People are upset and angry," said Arnie Marchetti, a 37-year-old computer technician at I.B.M.'s Southbury, Conn., office whose wife gave birth to their first child in August.

The company has not made any announcements, and the employees do not know who will be affected, or when. The uncertainty about whose jobs may be sent to India or China, the two main countries in the current plans, has raised workers' anxiety in some cases to an excruciating level.

"I understand that this is a lightning rod issue in the industry," an I.B.M. spokesman told me this week. "It's a lightning rod issue to people in our company, I suppose. But I don't think anybody expects us to issue blanket statements to the work force about projections."

Referring to employees who may be affected by the plans, he said, "We deal with them as they need to know."

"Offshoring" and "outsourcing" are two of the favored euphemisms for shipping work overseas. I.B.M. prefers the term "global sourcing." Whatever you call it, the expansion of this practice from manufacturing to the higher-paying technical and white-collar levels is the latest big threat to employment in the U.S.

Posted by: anne on December 26, 2003 07:24 AM


Actually, Anne, if this indicates a general trend, then it's great news. Finally, the poor will reap more of the gains of trade. For many years, the costs of trade were born by poorer workers (like those in textiles) while the benefits (which invariably outweigh the costs) were spread throughout society. Now richer workers will bear more of the costs while the benefits are spread through the society. Now free trade will be good for efficiency and equity, making it an even better policy than it was before.

Posted by: Keith on December 26, 2003 10:00 AM


Brad, the font of the indented article is much smaller than usual, and difficult to read, as are all the others in your posts. I haven't made changes to my browser, so I assume that it must be a change you made.

Posted by: Adam Morgan on December 26, 2003 11:47 AM


The Amgen suit against Transkaryotic Therapies alleging the latter infringed the patent on Epogen is interesting. TT did not infringe the actual process but rather found a new process. The actual treatment is something that is naturally produced so is Amgen saying it has patented nature?

Posted by: Harold McClure on December 26, 2003 11:52 AM


The Amgen suit against Transkaryotic Therapies alleging the latter infringed the patent on Epogen is interesting. TT did not infringe the actual process but rather found a new process. The actual treatment is something that is naturally produced so is Amgen saying it has patented nature?

Posted by: Harold McClure on December 26, 2003 11:55 AM



Thank you. I am wrestling with the trade issue and will consider well your reasoning. All I really ask is fiscal policy that tries to protect displaced workers by creating demand elsewhere in the economy.

Posted by: anne on December 26, 2003 02:54 PM


The heading for this topic "Needed: Lawyers as Well as Scientists" threw me. Before reading on, I thought for a moment we were going to start outsourcing the work of lawyers.

This is a great idea. Legal fees need a little free-market pressure as do doctor's fees.

Posted by: Andy Hughes on December 28, 2003 06:41 AM


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