Reports: Insurance Won't Cover Teva's Damages in $1.6b Pfizer Suit

Teva, Sun sold generic heartburn drug Protonix before U.S. patent expired.

Teva Pharmaceutical's insurance company is refusing to cover the damages that the generic powerhouse must pay competitor Pfizer after losing a patent lawsuit, according to U.S. media reports.

Teva and its Indian partner Sun Pharmaceutical Industries signed a compromise with Pfizer, under which they would pay a total of $2.1 billion in compensation for violating the latter's patent on acid-reflux drug Protonox.

Teva's share of the compensation is $1.6 billion, although the Israeli generic giant said at the time that its insurance company would bear $500 million of that.

However, the insurance company has reportedly rejected Teva's claim.

Teva stated in response that it was examining the insurance company's decision and would respond accordingly.

This is the first instance of generic drugmakers paying damages for marketing a copy of an existing drug for which patents have yet to expire - known as an "at-risk" launch.

Protonix recorded peak annual revenue of almost $2 billion in 2007, before sales plunged following the launch of generic versions by Teva in 2007 and Sun Pharma in 2008.

In May 2010, the court ruled against Teva and Sun. Teva wrote down a $760 million loss in the third quarter of 2012 due to that court ruling, and is expected to write down another $930 million in the second quarter of this year.

The patent covering the active ingredient in Protonix - pantoprazole - expired in January 2011.

With reporting by Reuters.

Tomer Appelbaum