U.S. lawmakers join Lilly's attacks on Canada's patent attitude

Rep. André Carson

In the most polite terms, one of more than 30 members of the U.S. Congress targeting Canada called it a patent pariah which should be tagged as such, setting it up for special sanctions. The lawmakers asked the U.S. Trade Representative's office to put Canada on a "priority watch list" because it has invalidated patents on drugs made by Eli Lilly ($LLY) and others.

"While we have a great relationship with our neighbors, we can't turn a blind eye to patent violations that have real economic consequences for innovative American companies, especially those that are so important to Indianapolis," Rep. André Carson, whose district includes Lilly's home in Indianapolis, told the Indianapolis Star.

Last year, Lilly filed a $500 million international lawsuit against Canada alleging its approach to patents violates long-standing international norms and has been applied inconsistently. The suit came after a Canadian federal court ruling tossed out its 1996 Canadian patent for the ADHD drug Strattera. Lilly has also lost patent cases over its osteoporosis drug, Evista, and Zyprexa, a treatment for schizophrenia. Lilly CEO John Lechleiter says the loss of exclusivity on those drugs cost Lilly more than $1 billion in Canadian sales. He said that has led to at least 280 job cuts since 2006, and he has warned that if the "pattern persists" there may be no reason for the drugmaker to continue to do business there.

Lilly CEO John Lechleiter

The consumer advocacy group Public Citizen in Canada has come to the country's defense, saying Canada has a right to set its own definition of how a drug's usefulness must be demonstrated to gain patent protection and to protect its consumers.

Last year, the U.S. Trade Representative's office placed Canada on its "watch list," but Carson and others want to see that raised to the priority list, a designation given to the most egregious violators of intellectual property rights and one that could lead to U.S. trade sanctions.

While other drugmakers have also complained about Canada's approach to their patents, Lilly is in a more delicate financial situation than some of the others. In fact, CEO John Lechleiter has said 2014 would be the most financially challenging year yet as it faces generic competition for its top-selling drug, Cymbalta. It announced last month that it was again freezing salaries and cutting some cash bonuses in the face of reduced sales.

- read the Indianapolis Star story

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