Patent Games Plavix: Case Study

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Abstract

One of the most common pieces of commercial laws is the law that deals with patent issues. Patent laws have become very crucial in commercial cases. Patents in their rights promote inventions and innovation in society, hence the need to be protected. In the United States, patent issues are highly upheld in every industry to protect patent rights and ensure the growth of the commercial sector. This study looks at Patent Games Plavix, which was one of the most famous cases on patent matters in the United States. The various elements of the case are outlined as follows:

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Outside Court Settlement

Bristol-Meyers Squibb and Sanofi-Aventis were forced by various legal factors to use agreements in handling the issues of patent infringement. One of the factors was that the FDA had granted Apotex the right to manufacture and market its Plavix. In 2006 the FDA had given Apotex the right to sell its Plavix version at its own risk. This approval came earlier before the court ruling on patent infringement that was filed by Bristol-Meyers Squibb and Sanofi-Aventis. The court’s ruling was scheduled for June 2006. The two companies also realized that Apotex had already established the manufacturing plant for clopidogrel in 2005. The situation, therefore, presented a serious threat to the Plavix version that was manufactured and marketed by Bristol-Meyers Squibb and Sanofi-Aventis (Carrey & Lublin, 2006).

Another legal factor that facilitated the agreement was that Bristol-Meyers Squibb conducted its operations under a creed that was signed by the Federal Trade Commission. The agreement did not only regulate uncompetitive practices of the company but also delayed the production of its generic drugs (Yu & Chatterji, 2008). The situation, therefore, made the two companies organize an outside court settlement. The agreement was to ensure that Apotex could only sell its products from September 2011. The two companies had the objective of reducing competition in the market by restricting the production of Plavix (Baron, 2010). Bristol-Myers Squibb and Sanofi-Aventis were not sure whether they could win the legal suit against Apotex and get financial compensation for the damages. For instance, if they could have won the case, Apotex would have paid for the financial damages caused by infringing their patent rights. On the other hand, if Apotex could have won the case the organizations could have experienced serious financial losses. The conditions, therefore, pushed the two companies to make an outside court arrangement where the legal obligations would not attract serious financial damages. The organizations believed the court process was very expensive in terms of time and financial requirements (Carey, 2006).

Attempts to Pay Apotex

Attempts made by Bristol-Myers Squibb and Sanofi-Aventis to pay Apotex to stop launching its Plavix version were clear indications of the efforts to reduce competition in the pharmaceutical industry. Initiatives to pay Apotex also reflected how the two companies were not concerned about the ethical issues in business and the requirements of the Federal Trade Commission. The agreements also interfered with the trial that had been filed in the court. In this case, the court was forced to postpone the trial since it could not act before the agreement was approved (Carrey & Lublin, 2006).

In addition, the parties themselves were not sure whether the agreements would be approved by the Antitrust Division. The Federal Trade Commission also opposed the agreement since it restricted the introduction of generic drugs in the market. Other areas of concern that were raised by the FTC touched on the break-up fee and the six months after patents of the organizations had expired. The breakup fee revealed the organizations’ attempts to regulate the production and sale of generic drugs. It was therefore very unethical for the two organizations to attempt paying Apotex (Blumenthal, 2013).

Sherman’s Strategies

Even though Sherman’s strategies were aimed at enhancing the organization’s performance, issues of ethics were seriously ignored in the strategies. For instance, Apotex got the approval from the FDA to produce and sell Plavix in January 2006 when in a real situation the organization had produced the drug in 2005. The leader also sought the approval of the FDA to produce the drug even though Sanofi’s patent was still valid. The initiative was taken by Sanofi to file a case against the company indicated that Sherman’s strategy was unethical since it infringed the patents enjoyed by a third party (Yu & Chatterji, 2008). Sherman also had the intention of benefiting from a suggested oral agreement that was never established. In this case, the leader was driven by greed to acquire the $ 60 million that was set as a break-up fee. Sherman through the attorney of the company requested Bristol-Myers Squibb and Sanofi-Aventis to pay $ 60 million immediately the Federal Commission and The Antitrust Division rejected the initial agreement. The six months in the agreement that was started by Sherman was also meant at reducing competition in the market. Apotex also used the suggestions in the modified agreement to sell its products to the consumers. By the time two companies filed another case to stop the sales Apotex had already shipped large quantities of the drug to different markets. Moreover, the organization’s attempt to file an emergency injunction revealed that the leader of the organization had the intention of increasing the sales of the shipped products without considering the impact of the initiative on the two companies (Carey, 2006).

Rejecting the Agreements

The Federal Trade Commission and state attorneys should have rejected the agreements that were signed between the two companies and Apotex since the agreements promoted uncompetitive activities in trade. For example, the initial agreement that was signed before the modified one inhibited Apotex from selling its generic products in the market. In this agreement, Bristol-Myers Squibb and Sanofi-Aventis had the intention of enhancing the sales of generic products at the expense of Apotex. Rejecting the agreements also created an equal ground where the parties could exercise their rights without interference. For example, the modified agreement could have allowed Apotex to take advantage of the implied suggestions that were made between the parties, hence promoting unfair competition in the market. Rejecting the agreement also enabled Apotex to sell its drugs that were produced earlier, hence avoiding clinical and financial implications that were associated with the drugs (Blumenthal, 2013).

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Violating the Prosecution Agreement

Bristol-Myers Squibb and Sanofi-Aventis were likely to violate the deferred agreement due to the illegal practices that were initiated between the company and the attorney from New Jersey. The leaders of the organization had agreed to commit accounting fraud on the securities of the company. The president of the company had selfish interests to gain from the fraud activities. The conditions, therefore, indicate that the organization was very likely to violate the deferred prosecution agreement. Moreover, the poor performance of the company’s shares also revealed that the organization could easily violate the prosecution agreement. The results of the investigation indicated that Bristol-Myers Squibb and Sanofi-Aventis were two companies that conducted illegal commercial activities, hence making it difficult for them to comply with any legal agreement (Carey, 2006).

References

Baron, D. P. (2010). Business and its environment. Upper Saddle River, NJ: Prentice-Hall.

Blumenthal, W. (2013). Models for merging the US antitrust agencies. Journal of Antitrust Enforcement, 1(1), 24–51.

Carey, C. T. (2006). Plavix case illustrates perils of generic drug wars regulatory problems, poor judgment to BMS’ costly situation. The National Law Journal, 3(1), 1-4.

Carey. J. (2006). Business Lawyer urges halt to generic of Plavix. New York Times, p.24.

Carrey, J. & Lublin, S. J. (2006). How Bristol-Myers fumbled defense of $ 4 billion drug. The Wall Street Journal, 12(2), 3-7.

Yu, X. & Chatterji, A. (2008). Why brand pharmaceutical companies choose to pay generics in settling patent disputes: A systematic evaluation of the asymmetric risks in litigations. North Western Journal of Technology and Intellectual Property, 18(1), 13-22.

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