Running head: Patent Games: Plavix

Patent Games: Plavix Case Study
Columbia Southern University – DBA 7035

Patent Games: Plavix Case Study
This paper will take a close look at some of the issues surrounding Apotex in the early 2000s. This company was working increasingly hard to break into the U.S. Market with their generic version of clopidogrel bisulfate, also known as Plavix. In addition, this paper will also explore how Sanofi-Aventis and Bristol-Meyers tried to maximize on forming monopolies to wean out their competitors, but instead caused more issues for their companies and how they FTC and state attorneys could have also shown a little more control and flexibility in making this agreement work for each party.

Q1.
Why did Bristol-Myers Squibb and Sanofi-Aventis seek a settlement rather than let the patent infringement case go to trial?
The reason why Bristol-Myers Squibb and Sanofi-Aventis decided to seek a settlement could easily be because the patent infringement could have easily costs the companies more money if it were set to go to trial. In many instances, businesses pay more money by going directly to trial than settling out of court for a better result. Baron states, “Bristol-Myers Squibb and Sanofi – Aventis also agreed to pay Apotex at least $40 million if the agreement were approved and a $60 million break – up fee if the agreement would not receive antitrust approval” (Baron, 2010, p. 407). This settlement allowed Bristol Myers and Sanofi-Aventis the opportunity to buy more time in case the Federal Trade Commission decided more information was needed for the settlement. In addition, Fortado and Decker stated, “under the now-defunct settlement, Sanofi and Bristol-Myers agreed to cap damages that Apotex would have to pay should it begin sales of generic Plavix and then lose the patent case”(Fortado and Decker, 2007).
Q2
Should Bristol-Myers Squibb and Sanofi-Aventis have attempted to pay Apotex to prevent it from launching a generic version of Plavix?

For Bristol-Myers Squibb and Sanofi, it would have been beneficial for them to have paid the company, Apotex to prevent them from launching the generic version. The reason being is because if these two companies would have paid Apotex, both could have saved time and money on investigating and paying a settlement to allow Apotex access to the U.S. Market. Baron describes Richard Sherman’s account for competition in saying the following, “They say I stalk my prey. I say I don’t ever shy away from a fight.” He added, “The system is being screwed up by greedy people who see this big pot to be split, and they no interest in consumers, who get screwed by paying more money than they should for medications they need” (Baron, 2010, p. 406). Sherman makes a great point, but for the most part he was also showing greed as well. This is the reason why even after they decided to come to an agreement, Bristol-Myers and Sanofi only reached an agreement because there was only eight months left before the patent would actually expire. The Wall Street Journal states, “Federal authorities caught wind of the deal and started a criminal antitrust probe” (Wall Street Journal website, 2012). If Bristol-Myers and Sanofi would have agreed to pay off Apotex for their generic version, then a criminal investigation would not have occurred and the issue could possibly have been resolved upfront without any violations.
Q3.
Was Sherman’s strategy that of a shrewd business executive? Did Sherman act ethically in his strategy?
Sherman’s strategy was definitely not one of the best business decisions an executive could make. It seems that Sherman acted on impulse and for the moment only thought of how much financial gain or loss the company would have. It appears that at first he may have had the consumers in mind, but once he saw that the other two companies were not going to give up a fight, it seemed that he used this information to go further. Baron clearly shows the shrewd side of Sherman by recovering some of the information from one of Sherman’s interviews. Sherman states, “I thought the FTC would turn (the modified agreement) down, but I didn’t let on that I did. But they seemed blind to it.” He also commented, “They couldn’t see that maybe certain things were to going to end them up in prison” (Baron, 2010, p. 408). As a business leader it is imperative that issues are carried out within reason and in order. The way Sherman handled this part of the settlement was unethical and improper because he was only thinking of his financial gain.
Q4.
Should the FTC and the state attorneys general have rejected the agreements?
It is possible if the FTC and the state attorneys general would have rejected the original agreements that many of the issues that arose would not have withheld. For example, in the first agreement there was a six-month period before Bristol-Myers and Sanofi could have marketed a generic drug and also not oppose the breakup fee, then Bristol-Myers and Sanofi would have had an opportunity to jump into the market with their generic drug and would have become a part of the competition in the market, instead of fighting so hard to prove which would could be the leader by allowing the other to stay put in the pharmaceutical market. Wechsler points out, “Federal Trade Commission (FTC) officials say they are concerned about an increasing trend of pharmaceutical companies paying makers of generic medication to delay marking competitive products. FTC commission Jon Leibowitz, JD, has criticized “reverse payments” settlements, which involve a branded manufacturer compensating a generic medications manufacturer for agreeing to delay marketing efforts for a generic product until the innovator’s patent expires”(Wechsler, 2006, p. 295). If the FTC and state attorneys would have reviewed this information further it appears that the other two companies would not have been responsible for paying so much to Apotex and those companies would have had an opportunity to fight back if Apotex would have tried to stop the current agreement.

Q5.
Did Bristol-Myers Squibb violate the deferred prosecution agreement?
Based on the information provided, one could say that Bristol-Myers Squibb did violate some forms of the deferred prosecution agreement. The company was ready to settle and didn’t want any information to be at the forefront if any issues arose. The Wall Street Journal points out the following, “that probe ended with a deferred prosecution agreement under which Bristol-Myers was supposed to stay out of trouble for two years and avoid indictment. Bristol’s deal with Apotex to delay generic Plavix violated that agreement” (Wall Street Journal website, 2012). Because of this deal, Bristol-Myers Squibb was found guilty of providing false information to the FTC, which caused them to be fined 1 million dollars to resolve the Justice Department probe (Wall Street Journal website, 2012). If Bristol-Myers would have tried to remain open and honest then they would have never be fined and indicted for violating an agreement.

References
Baron, David P. (2010). Business and its environment. Customer Edition. Saddle River, New Jersey. Pearson Education.
Fortado, L. and Decker, S. (2007, February 15). Bristol-Myers, sanofi trial over Plavix patent ends in New York. Retrieved from: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_u8u0TtBTEE
The Wall Street Journal website. (2007, February 8). Apotex pays Bristol, sanofi damages over plavix. Retrieved from: http://online.wsj.com/article/AP1014976e51794b219c841c152ddc9f8e.html
Wechsler, J. (2006). Deal limitations, promotion of generic medications aim to stem rising costs, but threaten access. Formulary, 41(6), 295.