Forest Settles Lexapro Suit

In return, Forest gives Alphapharm exclusive rights to sell generic Lexapro under certain circumstances -- two weeks before the patent expires, if an appeals court rules the patent invalid or unenforceable, or if another company starts selling a generic copy before a final court ruling.

The agreement also was signed by Danish drug company H. Lundbeck, which licenses Lexapro's U.S. marketing rights to Forest.

The agreement with Alphapharm is another example of "authorized generics," a practice by which a company gives a generic drugmaker a license to sell a copycat version of a brand-name product. The strategy gives the brand-name maker some extra revenue when its drug loses patent protection.

Additionally, the move cuts in to the sales of a competing generic company -- in this case, Ivax -- that claims "first-to-file" status. When a brand-name drug loses patent protection, the Food and Drug Administration says the first company filing a proper generic drug application gets 180 days of marketing exclusivity for its product.

Shares of Forest rose 39 cents to $37.99 after having moved as high as $38.39. Shares of Ivax slipped 14 cents to $26.82.

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