One of the more common drugs featured in recent television advertisements is Celebrex®, a painkiller manufactured by pharmaceutical giant Pfizer®. Holding a patent on Celebrex® allows Pfizer® to exclusively make, use, sell, or offer to sell the drug. The United States Patent and Trademark Office (USPTO) granted Pfizer® a “reissue” patent on the active ingredient in Celebrex® in 2013. A reissue patent corrects an error of an original patent. But, earlier this month, the U.S. District Court for the Eastern District of Virginia invalidated this reissue patent. The ripple effect from the ruling could have a lasting impact on the pharmaceutical industry.
The reissue patent would have extended Pfizer®’s exclusive rights in the active ingredient in Celebrex® to December 2, 2015, eighteen months after the date the original Pfizer® patent for a Celebrex® compound was set to expire. Pfizer®, as one might expect, disagrees with the District Court ruling and is expected to immediately appeal the decision. According to the Wall Street Journal, Celebrex® had domestic sales of $1.93 billion and global sales of $2.92 billion in 2013. Reuters said that news of the decision caused Pfizer®’s shares to close down 1.4% on the New York Stock Exchange on March 12. Given the substantial value of the drug, one can see why it would behoove Pfizer® to challenge the ruling.
As it stands, Pfizer® will have to cede its exclusive rights on May 30. At that point, since Pfizer® would no longer possess the exclusive right of sale, other drug companies would be able to sell generic versions of the currently-patented Celebrex® compound. Teva, Mylan PC, and Actavis PLC have already earned approval from the United States Food and Drug administration to sell cheaper, generic versions of Celebrex®. Once the other companies release the generic versions, Pfizer®’s stranglehold on the Celebrex® market will drastically loosen. Analysts have estimated that the decision could cost Pfizer® $3 billion in revenue by the end of 2015.
Ultimately, the decision could improve the marketplace for consumers as more choices and cheaper generic versions of Celebrex® ought to help more people afford the drug. But the patent system is designed to reward innovation by providing an exclusive monopoly to inventors of patented developments. Here, Pfizer® has been capitalizing on its successful patenting of Celebrex® for years. But the District Court in this case underscored the value of intellectual property and patent protection with this ruling. Investing in a granted patent can serve as a boon for companies with popular products. Losing a patent to an invalidity ruling can in turn cost a company a year’s worth of revenue. Barring a successful appeal, Pfizer® will have to make a long march back to the drawing board.
(Neeraj Joshi)