In a warehouse in Virginia, tens of thousands of boxes filled with generic fluoxetine, the antidepressant long sold under the brand name Prozac, sit ready to be shipped.
After a five-year, multimillion-dollar court battle with Eli Lilly, the maker of Prozac, Barr Laboratories says it expected to begin shipping the fluoxetine pills to pharmacies yesterda, the day Eli Lilly's 17-year patent comes to an end.
Expectations of those shipments have already lifted the fortunes of Barr, a generic drug maker based in Pomona, New York. The company's stock price has risen 50 percent since May 1 as it has come closer to collecting on what some analysts say could prove to be the biggest financial gain ever for a maker of generic drugs on a single medicine. Shares of Barr fell 84 cents on Wednesday, to US$85.04.
All Barr needs is final approval from the Food and Drug Administration. "We have been informed that all the necessary sign-offs are complete," said Bruce L. Downey, Barr's chairman and chief executive. "It is going to be a great day."
Thousands of Americans who take the antidepressant will also win. They can expect to buy generic versions of Prozac immediately for discounts of about 30 percent off the US$2.50 retail price for each 20-milligram pill. Much greater discounts will come next spring when more companies are allowed to sell low-priced versions of the drug.
Prozac, which had retail sales of US$2.7 billion in the US last year, is the biggest-selling medicine yet to lose its patent protection. It is also part of an unprecedented wave of patent expirations on brand-name drugs in the US that consumers, insurance companies, employers and hospitals are counting on to help offset escalating drug costs.
According to UBS Warburg, brand-name drugs with annual sales of as much as US$40 billion are expected to lose their patent protection between 2000 and 2005. That means that the generic drug industry's revenue, UBS Warburg estimates, could double to US$20 billion over the next five years.
"For the first time, people see that generic companies can make a lot of money," said Sergio Traversa, a portfolio manager for Merlin BioMed, a health care investment fund.
This fall, Prilosec, the biggest-selling medicine in the world, is expected to lose its patent. Other drugs expected to follow include Claritin, for allergies, Neurontin, for epilepsy, and Flovent, for asthma.
The losers, of course, are the big brand-name companies like Eli Lilly, which have made billions of dollars on these drugs but now must cope with plunging sales.
Eli Lilly executives said on Wednesday that they thought that the patents on Prozac were still valid. The company plans to appeal its case to the US Supreme Court.
"We believe the federal circuit wrongly decided this case," said Robert Armitage, vice president and general patent counsel at Lilly, whose shares fell US$0.38 on Wednesday, to US$78.90.
Lilly estimates that 40 million patients have taken Prozac since it was introduced in 1986. Last year, Prozac accounted for a quarter of Lilly's US$11 billion in sales.
To protect part of those sales, Lilly created two new versions of the pill -- a once-a-week formulation and a lavender-and-pink-colored capsule called Sarafem -- which have patents protecting them for many years. Sarafem has the same ingredients as Prozac but is marketed to women for premenstrual disorder.
Lilly is also counting on new drugs now coming from its labs. Nearest to government approval are Xigris, a treatment for sepsis, and Forteo, for osteoporosis.
As more drug patents expire, some big drug companies have become aggressive in trying to protect their products from generic competitors, many of which have recently become stronger after mergers and more able to take on the big brand-name giants.
The Federal Trade Commission is investigating whether Bristol-Myers Squibb and GlaxoSmithKline broke any laws as they tried to protect their products by filing numerous patents on a single drug. Both of those companies have said they did nothing illegal.
Government lawyers have also accused other brand-name companies of colluding with generic companies by paying them not to sell low-cost versions of a drug when its patent expires. Barr is one of those companies that the government has questioned. The questions concern Barr's deal with Zeneca, a company now known as AstraZeneca, on a breast cancer drug called tamoxifen. While Barr sells a generic version of tamoxifen, the medicine is still made by AstraZeneca and sells for only a slight discount from the brand-name drug.
Barr said it thinks that the Justice Department will determine that the deal is appropriate and has helped consumers.
Downey said that Barr planned to capture 80 percent of the Prozac market in the first six months. The company has been making fluoxetine since March, he said, and plans to ship as many as 100 million capsules on Thursday, including some by overnight mail.
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