Orange Book Blog

A group of pharmacies led by Walgreen Co. recently filed suit in the U.S. District Court for the District of Columbia, alleging that Astra Zeneca (AZ) illegally monopolized the market for its proton pump inhibitor drugs Prilosec, Nexium, and their AB-rated generic equivalents, by engaging in a scheme to convert the prescription drug market for Prilosec to Nexium.  Proton pump inhibitors are widely used for the treatment of persistent heartburn.  In its complaint, the pharmacy group alleges that the scheme was enacted solely for the purpose of impeding generic competition for Prilosec, allowing AZ to continue charging monopoly prices for its proton pump inhibitor drugs free from generic competition.

The active ingredient in Prilosec is omeprazole, a racemate of R and L enantiomers, while the active ingredient in Nexium is esomeprazole, the L enantiomer of omeprazole.  By 1999, sales of Prilosec were more than $4 billion dollars per year.  The Orange Book-listed patents for Prilosec expired in October of 2001.  The pharmacy group alleges that, in anticipation of huge losses in sales due to generic competition, AZ came up with a scheme to maintain its monopoly in the lucrative proton pump inhibitor prescription drug market by carrying out the following steps designed to convert the prescription market for Prilosec to Nexium:

• Introducing Nexium as a replacement for Prilosec, even though AZ knew that Nexium provided no advantage over Prilosec; since the active ingredient in Nexium is not the same as that in Prilosec, generic Prilosec would not be AB rated to Nexium (and thus pharmacists could not dispense generic Prilosec to a customer presenting a prescription for Nexium);
• Engaging in a false and misleading advertising campaign to convince physicians that Nexium is superior to Prilosec, thereby converting Prilosec prescriptions to Nexium prescriptions;
• Withdrawing branded Prilosec from the market and applying for over the counter (OTC) status, which was designed to cause managed care organizations (MCOs) to stop covering the cost of generic prescription Prilosec; and
• Selling its OTC Prilosec (which was granted 3 year exclusivity in 2003) as a 14 day or less regimen and advising customers to consult their physician if symptoms persisted for more than 14 days; the pharmacy group alleged that this was designed to encourage physicians to prescribe Nexium to OTC Prilosec customers, since MCOs would be unlikely to cover the cost of generic prescription Prilosec.

Generic Prilosec was introduced to the market in December of 2002, and the pharmacy group alleges that AZ's unlawful monopolization and attempts to monopolize the Prilosec/Nexium/AB-rated generic equivalent market resulted in increased costs of more than $2 billion dollars to direct purchasers of Prilosec and Nexium.  The complaint does not provide any specifics regarding price differences between generic prescription Prilosec, OTC Prilosec, and Nexium.