Lilly files $500M lawsuit against Canada

Eli Lilly ($LLY) has ratcheted up its international fight with Canada over what it considers unfair patent rulings. The Indianapolis, IN-based Lilly has now filed a $500 million lawsuit against the Canadian government alleging its patent laws are inconsistent and permitted generics of some of Lilly's drugs to hit the market sooner than they should have.

"Patent decisions in Canada over the last decade not only fly in the face of long-established international standards, but they're subjective and completely unpredictable. The standard seems to be that there is no standard," Doug Norman, general patent counsel for Lilly said in a statement, according to ABC News in Indianapolis.

The case was filed Thursday according to provisions of the North American Free Trade Agreement after a 90-day consultation process failed to settle the fight. Lilly turned to international authorities under NAFTA in December 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.

While other drug companies have been unhappy about Canada's aggressive patent decisions, Lilly has been the most vocal. Earlier this year, Lilly CEO John Lechleiter said 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, warning that if the "pattern persists" there may be no reason for the drugmaker to continue to do business there.

The European Union has also been wrestling with Canada over its patent standards. As part of its negotiations in the Canada-European Comprehensive Economic and Trade Agreement (CETA), it has asked Canada to adopt Europe's 10-year patent protection for drugs instead of the 8 years Canada now provides. The provision has been opposed by many of the local governments, who say it will raise the costs to their healthcare budgets.

Patent losses have taken a toll on the drugmaker, and more are to come. The company in July reported improved earnings, but only after it implemented cost-cutting measures, slashed jobs and upped prices on the blockbuster antidepressant Cymbalta, which loses patent protection in the U.S. later this year.

- read the ABC News story