Pfizer 2006 Annual Report Download - page 68

2006 Financial Report 67
Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies
cannot reasonably estimate the maximum potential exposure or
the range of possible loss in excess of amounts accrued for these
contingencies. These assessments can involve a series of complex
judgments about future events and can rely heavily on estimates
and assumptions (see Note 1B. Significant Accounting Policies:
Estimates and Assumptions). Our assessments are based on
estimates and assumptions that have been deemed reasonable by
management. Litigation is inherently unpredictable, and excessive
verdicts do occur. Although we believe we have substantial
defenses in these matters, we could in the future incur judgments
or enter into settlements of claims that could have a material
adverse effect on our results of operations in any particular period.
Patent claims include challenges to the coverage and/or validity
of our patents on various products or processes. Although we
believe we have substantial defenses to these challenges with
respect to all our material patents, there can be no assurance as
to the outcome of these matters, and a loss in any of these cases
could result in a loss of patent protection for the drug at issue,
which could lead to a significant loss of sales of that drug and
could materially affect future results of operations.
Among the principal matters pending to which we are a party are
the following:
A. Patent Matters
We are involved in a number of suits relating to our U.S. patents,
the majority of which involve claims by generic drug
manufacturers that patents covering our products, processes or
dosage forms are invalid and/or do not cover the product of the
generic manufacturer. Pending suits include generic challenges to
patents covering, among other products, amlodipine (Norvasc),
atorvastatin (Lipitor), tolterodine (Detrol), celecoxib (Celebrex) and
atorvastatin/amlodipine combination (Caduet). Also, counterclaims
as well as various independent actions have been filed claiming
that our assertions of, or attempts to enforce, our patent rights
with respect to certain products constitute unfair competition
and/or violations of the antitrust laws. In addition to the challenges
to the U.S. patents on a number of our products that are discussed
below, we note that the patent rights to certain of our products,
including without limitation Lipitor and Celebrex, are being
challenged in various other countries.
Norvasc (amlodipine)
Between 2002 and 2005, we brought patent infringement suits
in various federal courts against several manufacturers that have
filed abbreviated new drug applications with the FDA seeking to
market a generic version of amlodipine besylate, which is the salt
form contained in Norvasc. Our patent for amlodipine besylate
is being challenged in all of the suits. While the basic patent for
amlodipine also was challenged in certain of the suits, that patent
expired in 2006 and those challenges did not go to trial.
In the first of these actions to go to trial, in January 2006 the U.S.
District Court for the Northern District of Illinois held that our
amlodipine besylate patent is valid and infringed by the generic
manufacturer Torpharm/Apotex Inc.’s product. The court issued
an injunction prohibiting Torpharm/Apotex from marketing its
generic amlodipine besylate product before the expiration of
our amlodipine besylate patent (including the additional six-
month pediatric exclusivity period) in September 2007. In February
2006, Torpharm/Apotex appealed the decision to the U.S. Court
of Appeals for the Federal Circuit. A hearing on the appeal was
held in November 2006; the appeals court has not yet handed
down its decision.
Similarly, in the second of these actions to go to trial, in August
2006 the U.S. District Court for the Middle District of North
Carolina held that our amlodipine besylate patent is valid and
infringed by generic manufacturer Synthon Pharmaceuticals,
Inc.’s product. The court issued an injunction prohibiting Synthon
from marketing its generic amlodipine besylate product before
September 2007. In September 2006, Synthon appealed the
decision to the U.S. Court of Appeals for the Federal Circuit. This
appeal has not yet been heard.
Finally, in the third of these actions to go to trial, in February 2007
the U.S. District Court for the Western District of Pennsylvania held
that our amlodipine besylate patent is valid and infringed by
generic manufacturer Mylan Pharmaceuticals, Inc.’s product. The
court issued an injunction prohibiting Mylan from marketing its
generic amlodipine besylate product before September 2007. In
February 2007, Mylan appealed the decision to the U.S. Court of
Appeals for the Federal Circuit. This appeal has not yet been
heard.
Separately, in November 2005 Synthon IP filed an action against
us in the U.S. District Court for the Eastern District of Virginia
alleging that our sales of Norvasc and Caduet infringe Synthon’s
patent relating to the manufacture of amlodipine. In August
2006, the jury held that Synthon’s patent is invalid and is not
infringed by our sales of Norvasc and Caduet. The court’s final
judgment, which has not yet been handed down, will be subject
to possible appeal.
Lipitor (atorvastatin)
The generic manufacturer Ranbaxy Laboratories Limited filed an
abbreviated new drug application with the FDA for atorvastatin
(Lipitor) in 2002 and amended the application in 2003 to allege
that its product would not infringe our basic product patent for
atorvastatin. Shortly thereafter, Ranbaxy also asserted that our
patent covering the active enantiomeric form of the drug is
invalid. Our basic patent for Lipitor, including the additional six-
month pediatric exclusivity period, expires in March 2010. Our
enantiomer patent, including the six-month pediatric exclusivity
period, expires in June 2011.
In 2003, we filed suit in the U.S. District Court for the District of
Delaware against Ranbaxy for infringement of both our basic
product patent and our patent covering the active enantiomeric
form of the drug. In late 2005, the District Court held that both
patents are valid and infringed by Ranbaxy’s generic atorvastatin
product.
In August 2006, a panel of the U.S. Court of Appeals for the
Federal Circuit affirmed the District Court’s decision with respect
to our basic product patent. In August 2006, Ranbaxy filed a
request for a review of that decision by the full U.S. Court of
Appeals for the Federal Circuit, and that request was denied in
October 2006. In January 2007, Ranbaxy filed a request for a
review of the panel’s decision by the U.S. Supreme Court; the court
has not yet ruled on Ranbaxy’s request.