Lilly Keeps Control of Prozac in Patent Case

Eli Lilly & Co. spent $4 million for some peace of mind about Prozac on Monday, but the payment to settle part of a patent dispute doesn’t help consumers hoping to get a cheaper version of the antidepressant.

Lilly agreed to a partial settlement with three generic drug companies in a lawsuit over two U.S. patents for Prozac, the best-selling treatment for depression.

Analysts said the agreement means Lilly should have more time as the sole marketer of Prozac in the United States.

Without competition from makers of generic drugs, Lilly can continue to charge about $60 a month for the drug. The company gets about one-third of its revenue from Prozac, whose sales totaled $2.6 billion worldwide last year.

The deal was announced less than an hour before a federal judge in Indianapolis was to hear opening arguments in Lilly’s three-year legal battle to block generic competition for Prozac.

The lead litigant among the generic companies, Barr Laboratories Inc. of Pomona, N.Y., said it settled so it can concentrate on a federal appeal of the strongest portions of its patent challenge. U.S. District Judge Sarah Evans Barker threw out those arguments two weeks ago.

The strategy could save Barr a year in bringing generic Prozac to the U.S. market, said Barr General Counsel Paul Bisaro. In its best-case scenario, Barr could have it on the market by the end of next year, or three years before Lilly’s last patent in the case would expire.

Lilly contends that is unlikely to happen, and analysts agree.

“We firmly believe Judge Barker’s ruling will be upheld,” Lilly spokesman Ed West said.

West said the settlement puts to rest half the patent claims Barr and its co-defendant, Geneva Pharmaceuticals Inc., a unit of Novartis, can argue on appeal.

Even if Lilly loses in the next round, further appeals could tie the case up for years, delaying the introduction of generic versions of Prozac that would be discounted 20% or more below Lilly’s price.

Barr and Geneva had sought approval from the Food and Drug Administration to sell generic versions of Prozac, alleging Lilly’s patents were invalid. Lilly sued Barr for patent infringement in February 1996 and Geneva in 1997, and the cases were consolidated.

Lilly’s patent on fluoxetine, the active ingredient in Prozac, expires in February 2001. A second patent on how Prozac works expires in December 2003.

Lilly will pay the $4 million to Barr, Geneva and a third defendant, Toronto-based Apotex Inc., to reimburse their legal expenses.

Shares of Eli Lilly rose $6 to $84.25, while Barr fell $2.75 to $40.88, both on the New York Stock Exchange.