Generic to pay for original’s lowered pricing loss?

Decade-long Xyprexa damage suit against generics to end soon

Polarized by Patent Court and High Court, Supreme Court gets a final say

Generic early release to get affected if original wins

To this date, a boundary of patent infringement damage against generic was up to ‘sales profit of generic’.

 

But now a lawsuit claims the damages should include ‘loss made from original’s price reduction’ due to generics’ launch.

 

Related court case is currently waiting for the Supreme Court’s final decision.

 

Lilly Korea and two Korean companies, Hanmi Pharmaceutical (“Hanmi”) and Myung In Pharm (“Myung In”), are tangled in a decade-long fierce dispute over patent covering Xyprexa (olazapine).

 

Initially, Xyprexa’s patent was supposed to expire on Apr.

 

24 of 2011, but Hanmi and Myung In challenged the patent.

 

Both ‘Intellectual Property Trial and Appeal Board’ and Patent Court ruled in favor of the Korean companies stating that the original’s patented invention lacks creativity.

 

Based on the ruling, Hanmi and Myung In launched their generics in early 2011, a few months earlier than the challenged patent’s expiration date.

 

At the same time, Xyprexa’s price was lowered by the government.

 

Patent case gets a twist, litigation for damages immediately followed But, things got complicated as the Supreme Court overruled the previous decision stating the patent is still valid.

 

The patentee, Eli Lilly, filed litigation for damages against the two Korean companies’ patent infringement.

 

As a result, Hanmi and Myung In paid Lilly all sales profit made from the generic as damages.

 

Typically, a patent infringement case concludes there.

 

But Lilly did not stop and filed another case claiming the two companies should also pay for Lilly’s loss caused by the original’s price reduction.

 

Lilly insisted Hanmi and Myung In’s early generic release had the original’s price to drop and hence, the loss from the price reduction should be compensated.

 

Contrasting second trial, Supreme Court to make final decision in December at earliest The court gave a nod to some of Lilly’s claim at the first trial against each of the two Korean companies.

 

But the second trial was ruled quite the opposite.

 

The Seoul High Court dismissed Lilly’s claim on the case against Hanmi.

 

Infringement of patent was recognized, but the court rejected damage claim on loss by drug price reduction.

 

On the other hand, the Patent Court agreed with Lilly’s case against Myung In.

 

The decision ordered Myung In to pay damages even for Lilly Korea’s loss generated by the original’s price drop.

 

The court stated “The generic’s drug price listing application has directly affected government’s decision.

 

And it brought Xyprexa’s price down to 80% of the original price”.

 

The two contrasting decisions have been sent to the Supreme Court.

 

Experts predict the court would make a decision by the end of the year.

 

“The Supreme Court is reviewing legal principle and the issue comprehensively.

 

The court decision would be out before next year,” a legal expert commented.

 

More burden on early generic release if Lilly wins Actually, the damage amount alone for the two Korean companies was not that much.

 

For instance, Myung In was ordered to pay damage of KRW 98.07 million from the first and second trials.

 

The total sales were low to begin with, as the launch was only a few months ahead of the patent expiration.

 

However, pharmaceutical industry’s patent experts view the decision on the litigation would significantly affect the industry.

 

The court ruling in favor of Lilly would heavily influence early release of generics in the future.

 

If patent infringement damages are to consist of generic sales profit and loss by the original’s price reduction, the damage amount could sum up astronomically and detrimentally depending on the generics’ release date.

 

The Supreme Court’s final decision is soon to be made.

 

As a matter of fact, Korean judiciary has never made a precedent ordering a generic manufacturer to pay for the original’s loss by price reduction.

 

Now the public waits to see whether or not an exceptional decision would be made.