OnPoint Analytics

$76 Million Awarded to AstraZeneca from Apotex for Prilosec Generic

A U.S. federal judge awarded AstraZeneca Plc $76 million in damages from generic drug manufacturer Apotex for infringing on patents for the heartburn drug, Prilosec® during 2003 to 2007.

After a two-week bench trial, Judge Denise Cote in New York concluded that Astra is entitled 50% of the profits gleaned by Apotex, Canada’s largest generic pharmaceutical company, from its infringing sales during the three-and-a-half years it sold a generic version of Prilosec.

Dr. Gordon Rausser, Chairman and Co-founder of OnPoint Analytics and Robert Gordon Sproul Distinguished Professor at the University of California, served as one of five expert witnesses for AstraZeneca. Dr. Rausser’s study of pharmacy log data and his supporting testimony played a significant role in litigation involving AstraZeneca’s efforts to protect their top-selling drugs over the course of the last decade.

A calculation of damages was the remaining issue in this trial because in 2007 Barbara S. Jones, a federal judge in New York, determined that the Apotex generic infringed AstraZeneca’s patent due to a microscopic, water-soluble salt layer or subcoating formed during the manufacturing process.

This decision finalizes action by AstraZeneca against various generic drug makers in an effort to protect their blockbuster drug Prilosec, before U.S. patent protection ends.

AstraZeneca successfully launched a non-prescription version of Prilosec as its patent expired, and their next-generation heartburn drug, Nexium, has garnered multibillion-dollar sales.

The case is AstraZeneca AB et al. v. Apotex Corp. et al., U.S. District Court for the Southern District of New York, No. 01-9351.

As one of five expert witnesses called to examine evidence and provide supporting testimony in AstraZeneca AB et al. v. Apotex, Dr. Rausser examined pharmacy log data for all prescription PPI purchases from sixteen California pharmacies and fourteen Massachusetts pharmacies obtained when Astra was responding to class action claims that consumers were misled into believing that Nexium® was superior to Prilosec®, and were injured by having to pay an unjustified price premium for Nexium®.

Dr. Rausser’s evaluation of the data provided incontrovertible evidence to support his opinion and expert testimony that a large portion of the proposed class suffered no economic harm because Nexium® was a less expensive therapy.

The study also demonstrated that the effective cost of Nexium® therapy for Third Party Payers (TPPs) to whom Astra offered rebates was often less than omeprazole therapy during the period between December 2002 and November 2003.

Astra’s official rebate policies support Dr. Rausser’s overarching hypothesis that Nexium® rebates were to some degree responsive to the price of generic omeprazole. Following the entry of generic omeprazole, Astra increased its rebates on Nexium®, and included the generic product in calculations of market share for rebates that were determined on that basis.

Dr. Rausser’s analysis could not include rebates generic omeprazole manufacturers may have been giving to mail order pharmacies. Because the data available to him included only the “deepest available rebates”, Dr. Rausser could not determine the effect those rebates might have had on average prices of omeprazole. But the mail order market accounted for only 13% of all U.S. drug sales in 2003, and only 8.5% of Nexium® sales from January to October 2003.