Positive reading for Sanofi Plavix deal

The recent recommendation by the US Solicitor General to deny a request for a Supreme Court hearing on the legality of a brand/generic patent settlements with cash payments, in the test case of the Federal Trade Commission versus Schering-Plough regarding K-Dur (extended-release potassium chloride), is a positive indication for a similar deal concerning French drug major Sanofi-Aventis and US firm Bristol-Myers Squibb's in their settlement with Apotex over the blockbuster antiplatelet drug Plavix (clopidogrel; Marketletter March 27).

This is the view of analysts at Lehman Brothers, who say this means that "the '11th Court decision' that patent settlements involving payments are not necessarily anti-competitive should stand." Interestingly, they say that the Solicitor General's opinion suggests that the more aggressive actions of generic firms in challenging patents under Hatch-Waxman legislation increases the likelihood that branded pharmaceutical groups will want to settle, and these deals are increasingly likely to involve payment to the generics companies.

The analysts say they believe that the Solicitor General's decision "reinforces our view that there is a >50% probability that the FTC will approve the proposed brand/ generic settlement on Plavix," and reiterate their 1-overweight rating on Sanofi-Aventis. Additionally, they state that, while the US Congress appears to be supporting the FTC's views against reverse payments in patent deals with generics firms, they do not expect these efforts to lead to any legislative changes.