Law Firms: Representing Both Brand And Generic Drugs?

In the pharmaceutical industry, companies often manufacture both brand-name and generic drugs, blurring the line between the two. This has led to the question of whether a law firm can represent both brand-name and generic drug manufacturers. The answer is yes, law firms can and do represent both sides, as the brand-generic divide is not as clear-cut as popularly perceived. Increased consolidation in the industry has resulted in an ecosystem where many companies produce both types of drugs, and some brand manufacturers even have their own generic subsidiaries. Hiring a firm with experience on both sides of the brand-generic divide can be advantageous for pharmaceutical manufacturers, as it provides special insight into opposing counsel's litigation strategies and valuable relationships with opposing counsel.

Pharmaceutical patent litigation

The line between brand-name and generic drugs has become blurred in recent years, with many companies manufacturing both types of drugs, and some brand manufacturers even having their own generic subsidiaries. This has led to a shift in the legal landscape, with law firms now commonly representing both brand-name and generic drug manufacturers. This can be advantageous as it provides firms with special insight into opposing counsel's litigation strategy and valuable relationships with other firms.

When a generic manufacturer files an ANDA under Paragraph IV, the brand-name company has 45 days to file a related patent infringement lawsuit. Paragraph IV challenges have been shown to increase generic entry and improve social welfare by shifting economic surplus from producers to consumers. However, generic and brand-name companies may also choose to avoid litigation through settlement, which sometimes involves a "reverse payment" from the brand-name company to the generic manufacturer in exchange for delaying their entry into the market. While these settlements can be beneficial for consumers, they have also raised concerns about their potential anticompetitive nature, with some commentators arguing that they violate antitrust laws.

The process of bringing a biosimilar drug to market involves a complex series of steps, including regulatory and statutory exclusivity requirements, patent litigation, and notification periods. For example, after receiving FDA approval for a biosimilar drug, the manufacturer must notify the reference drug sponsor of its intent to commercialize, and the biosimilar drug may not be marketed or sold during the next 180 days.

Industry consolidation

The pharmacy industry has seen significant changes over the past two to three decades, with increased consolidation and vertical integration. This has resulted in a market dominated by large chain pharmacies, supermarkets, and mass retailers. Of the roughly 60,000 retail pharmacies in the US, one-third are independent, while two-thirds are part of larger retail chains, supermarkets, or mass retailers, which generate 56% of retail prescription revenues. This shift has been driven by several factors, including the rise of generic drugs, the expanding power of entities that pay for and negotiate drug prices, increasing development costs, and the growing risk of commercial failure, which have collectively strained the finances of many traditional drug companies.

In response to these challenges, many drug companies have pursued consolidation through mergers and acquisitions (M&A) to reduce costs or create new revenue streams. This trend has led to an all-time high in M&A activity within the pharmaceutical industry, sparking concerns about the potential harm to competition and future innovation. However, it's important to note that the impact of consolidation on innovation is complex and depends on various factors, including the specific dynamics of the industry and the role of external innovation.

The consolidation of the pharmacy industry has had both positive and negative effects. On the one hand, it has offered patients increased convenience through features such as 24-hour availability and the option to pick up prescriptions from multiple locations. Additionally, larger chain or mass retail pharmacies may be able to leverage their buying power to negotiate lower prescription drug costs. On the other hand, independent pharmacies face rising challenges, and there are concerns about the potential negative impact on competition and drug prices.

Policymakers and analysts play a crucial role in understanding the dynamics of industry consolidation and its impact on innovation and affordability. By evaluating mergers based on their likely effects on aggregate drug innovation, they can make informed decisions that promote cost-effectiveness and access to pharmacy services. This includes considering the potential benefits of consolidation, such as increased efficiency and streamlined operations, which can free up resources for external innovation and encourage early-stage innovation in small firms and biotech companies.

Litigation strategy

The traditional perception of law firms is that they are pigeonholed by potential conflicts, forcing them to "'pick a side'" and represent either brand-name drug manufacturers or generic drug manufacturers. However, this perception is outdated and no longer reflects the reality of the pharmaceutical industry. Due to consolidations and mergers, many pharmaceutical companies now manufacture both brand-name and generic drugs, blurring the lines between the two. As a result, law firms can and do represent both "sides" in pharmaceutical patent litigation.

For pharmaceutical manufacturers, hiring a firm with experience on both sides of the brand-generic divide can offer several advantages. Firstly, such a firm is likely to have special insight into opposing counsel's litigation strategy, having worked with them in previous litigations. This includes knowledge of opposing counsel's relationships with other firms, which can be beneficial when coordinating with co-defendants. Secondly, a firm that has crossed the brand-generic divide can bring a more comprehensive perspective to the case, including a deeper understanding of the issues and strategies involved in pharmaceutical patent litigations. This includes anticipating an opponent's strategic objectives and moves, which can be crucial for developing an effective litigation strategy.

When representing a brand-name drug manufacturer, a law firm may employ various strategies to protect their client's interests. One common strategy is to create "patent thickets," where multiple patents are filed to cover a single product, effectively delaying or deterring competitors from entering the market. This tactic takes advantage of the patent system to extend monopoly rights on pharmaceuticals and maximize profits. Another strategy is "evergreening," where companies serially file patents to extend the life of a product, preventing generic alternatives from being introduced. These strategies are often completely legal but can manipulate the patent system in ways it was not designed to handle.

On the other hand, when representing a generic drug manufacturer, a law firm may focus on strategies that challenge the brand-name drug manufacturer's patents. This can include searching for loopholes or expiration dates on patents to introduce a generic alternative to the market. Additionally, the law firm may advise the generic drug manufacturer on ways to meet regulatory requirements, such as demonstrating therapeutic equivalence to the brand-name drug within a certain margin. Navigating these requirements is crucial for gaining approval from regulatory bodies and bringing the generic drug to market.

In conclusion, law firms can and do represent both brand-name and generic drug manufacturers, employing a range of litigation strategies depending on their client's needs and the specific circumstances of the case. While the traditional perception of a divide between "brand firms" and "generic firms" persists, the reality is that the lines between the two have blurred, and law firms must adapt to the evolving landscape of the pharmaceutical industry.

Opposing counsel relationships

The blurring of the lines between brand and generic drugs in the pharmaceutical industry has led to a re-evaluation of the traditional "pick a side" approach in pharmaceutical patent litigation. This evolution has resulted in a scenario where law firms with experience on both "sides" of the brand-generic divide can offer unique advantages to pharmaceutical manufacturers.

When it comes to opposing counsel relationships, there are several factors to consider. Firstly, it is essential to recognise that opposing lawyers who are friends are not prohibited from representing adverse clients. The American Bar Association's (ABA) guidance on this matter states that the analysis depends on the closeness of the friendship. If the relationship is superficial or coincidental, such as occasional joint attendance at law-related events, disclosure to the client is not mandatory but remains an option. However, if the relationship is intimate, there is a heightened risk of inadvertent disclosure of confidential client information. This could occur through work conversations or the presence of work files at their shared home. In such cases, Model Rule 1.6, dealing with client confidentiality, may be violated.

Secondly, informed consent plays a crucial role in opposing counsel relationships. If a lawyer has an intimate relationship with opposing counsel and does not wish to disclose this to their client, they cannot proceed with the representation without obtaining informed consent from the client. The lawyer must assess whether they reasonably believe they can provide competent and diligent representation despite the personal interest conflict. If so, written informed consent from both clients is required to proceed, as outlined in Model Rule 1.7(a)(2).

Additionally, the lawyer's role in the matter is significant. Sole or lead counsel is more likely to encounter a disqualifying personal interest conflict than a lawyer with a subordinate or tangential role and limited contact with opposing counsel. It is worth noting that personal interest conflicts typically do not extend to other lawyers within the same firm.

Furthermore, the ABA's guidance highlights that common representation of clients with similar interests in civil litigation is permissible if certain requirements are met. However, representing multiple defendants in a criminal case is generally discouraged due to the potential for a severe conflict of interest.

In conclusion, the evolving landscape of the pharmaceutical industry has led to a re-evaluation of traditional opposing counsel relationships in brand and generic drug litigation. Lawyers must navigate complex considerations regarding personal relationships, informed consent, and potential conflicts of interest to ensure ethical and effective representation.

The pick a side paradigm

The "pick a side" paradigm in pharmaceutical patent litigation refers to the perception that law firms must represent either brand-name drug manufacturers or generic drug manufacturers, but not both. This perception is based on the idea that there is a divide between the two types of manufacturers, and that potential conflicts of interest would arise if a law firm were to represent both "sides".

However, in recent years, the line between brand-name and generic drugs has become blurred due to industry consolidation. Many pharmaceutical companies now manufacture both brand-name and generic drugs, and some brand manufacturers have their own generic subsidiaries or are permitted to sell generic versions of their own brand-name drugs. As a result, it has become increasingly common for law firms to represent both brand-name and generic drug manufacturers.

Representing both "sides" can be advantageous for pharmaceutical manufacturers. A firm that has experience with both brand-name and generic drug litigation is likely to have special insight into the litigation strategies of both "sides". Additionally, a firm that has worked with opposing counsel in previous litigations may have a good working relationship that could benefit their client.

Despite the benefits of hiring a firm with experience on both "sides" of the brand-generic divide, there are still potential conflicts of interest that may arise. For example, a law firm that represents both a brand-name drug manufacturer and a generic drug manufacturer could face a conflict if the two clients were involved in a patent dispute. In such a case, the law firm would likely have to "pick a side" and represent only one of the clients.

Overall, while the "pick a side" paradigm may still have some relevance in certain situations, the increasing consolidation of the pharmaceutical industry has made it less applicable in many cases. Law firms that can offer expertise in both brand-name and generic drug litigation may be able to provide significant advantages to their clients.

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