Judges Cloud Battle Over Pfizer's Neurontin

The company wins a battle to keep selling a generic of its own product.
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Two federal judges late Wednesday set into motion a chain of events involving generic challenges to

Pfizer's

(PFE) - Get Report

epilepsy drug Neurontin that are bound to keep lawyers busy and investors perplexed.

By Thursday, shares of all of the principal players in this long-running saga were down. Pfizer's stock, for example, closed off 47 cents, or 1.6%, to $29.08.

In Washington, D.C. a federal district court judge rebuffed the attempt by one generic drug company to stop Pfizer's Greenstone unit from selling a generic version of Neurontin. Pfizer took the rare step of selling generic Neurontin last week to blunt the impact of competitors selling copies of the medication.

Separately, in Newark, N.J., a federal district court judge denied Pfizer's request for a preliminary injunction in its patent infringement lawsuit against a second generic drug company, which has begun selling a copy of Neurontin even though the patent case hasn't been resolved.

And just to make things interesting, the generic company involved in the New Jersey case,

Alpharma

(ALO) - Get Report

has teamed up with the generic company in the Washington, D.C. case,

Teva Pharmaceutical Industries,

(TEVA) - Get Report

to market the reduced price version of Neurontin, whose scientific name is gabapentin.

On Thursday, Teva's stock dropped 84 cents, or 3.3%, to $24.56. Alpharma's stock fell 82 cents, or 4.8%, to $16.43.

Pfizer said late Wednesday, as it has said during several developments in the unfolding litigation, that if the federal judge in Newark rules against Alpharma and Teva in the patent case, Pfizer will seek "all available remedies and damages, including damages based on Pfizer's lost profits." The judge has set Nov. 18-19 as the next dates for the next step -- a request for summary judgment by Alpharma.

Clearly, this isn't your routine generic drug story in which a brandname product loses patent protection and generic companies swoop in. At stake is a drug that was Pfizer's fifth-best selling product for the first half of 2004, producing $1.48 billion sales, or 6% of corporate revenue.

On Friday, after markets had closed, Pfizer announced that its Greenstone subsidiary would begin selling a generic Neurontin in 100-milligram, 300-milligram and 400-milligram capsules.

Pfizer said it was acting because Alpharma and Teva began selling similar capsules even though the federal judge in Newark hadn't yet ruled on Pfizer's preliminary injunction by Pfizer.

Alpharma entered the picture in January 2003 after the Food and Drug Administration said the Fort Lee, N.J., company could market the three different doses of generic Neurontin. Under federal law, that endorsement gave Alpharma a 180-day period in which it could be the only seller of generic Neurontin. The company received final approval from the FDA 13 months ago, but that decision was challenged by yet another generic drug company, the privately held

Apotex,

which sued the FDA.

In July 2004, a federal district court in Washington, D.C. issued a stay, blocking the FDA from approving Alpharma's products pending resolution of the Apotex suit. On Sept. 17, a federal appeals court vacated the stay, allowing Alpharma to begin selling the drugs. A few days later, Pfizer went to a different federal court seeking to prevent Alpharma from selling the drugs.

And even though several lawsuits are pending, the story doesn't end there. Another company also is selling generic Neurontin, despite Pfizer's efforts to stop it in court. That company is

Ivax

(IVX)

, which began selling Neurontin tablets in doses of 100-milligrams, 300-milligrams and 400-milligrams in mid-August.

Ivax also has claimed 180-day exclusivity because it is selling tablets rather than the capsules that the Alpharma-Teva team is selling. Pfizer and Ivax are locked in a patent infringement suit that hasn't come to trial yet. And like the other companies Thursday, Ivax saw its stock decline -- losing 45 cents, or 2.4%, to $18.15.