Healthy Skepticism Library item: 18374

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Publication type: Electronic Source

Edwards J
Insanity Defense: Bayer Blames Alleged Patent Deception on Execs' 'Extreme Mental Degeneration'
BNet 2010 July 9
http://industry.bnet.com/pharma/10008863/insanity-defense-bayer-blames-alleged-patent-deception-on-execs-extreme-mental-degeneration/

Full text:

Bayer (BAY) has come up with a brand new legal argument in the fight over the legitimacy of its patent on the antibiotic Cipro: The insanity defense.

In an appeal filing in a California state court, Bayer purportedly claims that two executives who may have concealed evidence showing its patents on Cipro were invalid must be mistaken because they suffer from “depression,” “confused thinking,” were elderly, had a “cerebral hemorrhage” and “Parkinson’s or related degenerative disease involving extreme mental degeneration.”

Download the appeal in McGaughey v. Bayer here.
The symptoms of their craziness were remarkably specific, according to plaintiffs who’ve sued Bayer: One testified that Bayer’s Cipro patent was invalid because the company knew that the methods behind it were previously known (there was “prior art,” to use the legal term). The other one failed to disclose the same information.

The plaintiffs, California consumers who allege that Bayer’s exclusive patent rights to Cipro led to them pay higher prices for the drug, claim that it’s “incredible and unbelievable” that a patent agent and a lawyer could perform such technical, complicated work while also suffering from “crippling mental infirmities.”

The appeal filing was unsealed on July 2, according to a representative for attorney Dan Drachler from Zwerling, Schachter & Zwerling and his team, who represent the plaintiffs. The original, partially sealed and redacted case was filled with the usual boring stuff about the validity of Bayer’s “‘444 patent.” Underneath the redactions, however, lay the financial details of how much money is at stake in the case – between $1.6 billion and $5.7 billion – and Bayer’s alleged insistence that its own patent executives are completely bonkers.

In 1996, Bayer believed it would earn $1.6 billion in profits on Cipro, the plaintiffs allege. A generic drug maker, Barr (now Teva), filed to make a cheap generic version of Cipro, so Bayer made a $398 million “reverse payment” to Barr and the latter agreed not to sell its competing drug. Bayer’s board of directors were told that $3.3 billion in revenues were at stake if Barr’s version of Cipro was allowed onto the market, the plaintiffs claim. Bayer then raised the price of Cipro 16 percent and essentially extracted from consumers the cost of doing the pay-for-delay deal with Barr. All told, Bayer earned $5.7 billion in revenues on the drug during the period in which its patent gave it a monopoly.

However, the plaintiffs claim that Bayer knew of a German patent application predating its Cipro patent that was identical to its American patent. The German patent rendered Bayer’s patent void, and Bayer thus deceived the U.S. Patent and Trademarks Office, the plaintiffs allege. Bayer’s German patent agent, identified only as “Dr. Simon” in the case, testified that the company knew about the older patent. Bayer argued that Simon should be ignored, the plaintiffs claim, because:

Dr Simon suffered from “[d]epression serious enough to require treatment with tricyclic antidepressants” …[and] “confused thinking” …

Dr. Simon was 72 years old and had been retired for almost 10 years with health problems when he testified in deposition about events 14 years earlier. Dr. Simon had a cerebral hemorrhage after he retired which affected his memory and overall health.

Simon was not alone in his troubles, Bayer believes: Another patent lawyer who should have disclosed the German patent had “Parkinson’s or a related degenerative disease involving extreme mental degeneration,” the plaintiffs claim.

Bayer has yet to file a response to the appeal.