Pfizer Wins Multibillion-Dollar Settlement from Teva and Sun for Infringement of Protonix Patent

Pfizer has reached a $2.15-billion settlement with Teva Pharmaceuticals Industries and Sun Pharmaceutical for patent-infringement damages resulting from their "at-risk” launches in the United States of generic Protonix (pantoprazole), a drug to treat acid reflux. The settlement comes after a nearly 10-year legal battle in which Pfizer and Nycomed (now part of Takeda) sought to enforce the patent for the the drug. Pfizer and Takeda will divide the proceeds of the settlement with Pfizer receiving 64%.

“We are pleased with today's settlement, which recognizes the validity and value of the innovation that led to Protonix,” said Amy W. Schulman, executive vice-president and general counsel of Pfizer, in a company statement. Richard Egosi, Teva’s group executive vice-president and chief legal officer, commented in a statement: “We are pleased to put this matter behind us as we continue to focus on delivering safe and affordable medicines to patients around the world.”

Under the terms of the settlement, Teva and Sun will pay a total of $2.15 billion to compensate Pfizer’s subsidiary Wyeth and Takeda for the damages they suffered when Teva and Sun launched “at-risk” generic versions of Protonix prior to the January 2011 expiry of the patent for pantoprazole, the active ingredient in Protonix. These “at-risk” launches were determined by a jury in a New Jersey federal court to violate United States Patent No. 4,758,579, which is owned by Takeda and was licensed exclusively to Wyeth in the United States, according to the Pfizer statement. The parties reached the settlement shortly after the commencement of a trial to determine damages in the same New Jersey federal court.

Teva will pay Pfizer and Takeda $1.6 billion, and Sun will pay $550 million. Teva will pay $800 million in 2013 and the remaining $800 million by October 2014; Sun’s entire payment will be made in 2013. “As part of the settlement, both Teva and Sun have admitted that their sales of generic pantoprazole infringed the patent that was held valid by the court,” said Pfizer in its statement.

As a result of this settlement, Teva expects to incur a charge of approximately $930 million in the second quarter of 2013 in addition to the $670 million provision previously recorded in its 2012 financial statements, according to Teva in its statement. The company says it believes it may have up to $560 million of net insurance coverage in connection with this settlement, subject to recovery from the insurance carriers.