A few days ago, Pfizer and Johnson & Johnson announced a settlement agreement, ending a four-year legal dispute over Remicade generic drugs.

Previously, Pfizer had sued Johnson & Johnson for allegedly using an exclusive contract to hinder the development of the immunosuppressive drug Remicade biosimilar. Pfizer said in a statement provided to Bloomberg last Thursday that the settlement agreement will allow Pfizer to continue to sell Remicade's biosimilar Inflectra in the United States, but Pfizer did not disclose the specific terms of the agreement.

Pfizer initially filed a lawsuit against Johnson & Johnson in September 2017, claiming that Johnson & Johnson, in order to protect the market revenue of its blockbuster drug Remicade, blocked suppliers and patients from using the Remicade generic drug Inflectra by signing "exclusive contracts" and other methods that violated the monopoly law. .

Pfizer claims that the contract between Johnson & Johnson and the insurance company requires partners to eliminate or "significantly reduce" the use of Remicade biosimilars. The partners that signed the "exclusive contract" with Johnson & Johnson at that time included UnitedHealth Group, Anthem Inc, Aetna Inc and Cigna Corp. The contracts signed by these insurance companies covered approximately 70% of commercial insurance patients in the United States.

Pfizer argued that these insurance companies fully paid for the patient's Remicade treatment and only paid Inflectra if the Remicade drug failed. In return, Johnson & Johnson paid new and existing customers a rebate for the purchase of Remicade. For this reason, Pfizer Inflectra had to sell at a price lower than the average variable cost. Pfizer believes that unless the court intervenes, Johnson & Johnson Remicade's control of the market will not change.

After the settlement, Pfizer will continue to sell Inflectra in the US market. The company stated that Pfizer and Johnson & Johnson have agreed to resolve and dismiss all claims involving Inflectra in the US antitrust case. In addition, Pfizer has begun to anticipate the progress of the entire biosimilar market in the United States. The changes in US government-level policies and the acceptance of biosimilars by key stakeholders have provided vital significance. Patients and the entire healthcare system can benefit from the cost savings brought by these generic drugs.

Johnson & Johnson also issued a statement on the Remicade settlement, emphasizing that the market is operating as expected.

Remicade is the world's best-selling anti-inflammatory drug. It is mainly used to treat various diseases including Crohn's disease, ulcerative colitis and rheumatoid arthritis. In 2014, global sales reached 9.24 billion U.S. dollars. The drug was originally jointly developed by Hospira and Celltrion, and then Pfizer acquired Hospira for $17 billion to obtain the exclusive commercialization rights of Inflectra in the US market. In 2016, Inflectra was listed at a price nearly 15% lower than Remicade, but Inflectra's market performance did not seem to be as expected.

By the end of the second quarter of 2017, Inflectra's US sales were only US$40 million, while Remicade sales were US$2.2 billion. In 2020, Remicade created $4.195 billion in revenue in its 22nd year of listing, while Inflectra generated $659 million. Other biosimilars aimed at seizing market share of Remicade, including Merck’s Renflexis and Amgen Avsola, have also been working hard to compete.

In this regard, Johnson & Johnson believes that Pfizer misjudged Inflectra's market, saying that Johnson & Johnson Inflectra should initially be listed at a greater discount.