California, the District of Columbia, and seventeen other states have filed suit against Abbott Laboratories for allegedly entering into a scheme to block the generic version of the cholesterol lowering drug TriCor, reported the East Bay Business Times.

The East Bay Business Times reported on the suit as follows:

The prosecutors are suing Abbott as well as two subsidiaries of Brussell-based Solvay — Fournier Industrie et Sante SAS and Laboratoire Fournier SA — in federal district court in Delaware. The prosecutors say the pharmaceutical companies illegally attempted to monopolize the market for drugs containing the ingredient fenofibrate, which regulates cholesterol and triglyceride levels. Abbott licenses from Fournier American rights to the drug and Solvay sells the drug on the European market. . . .

According to the AG’s office, the companies made trivial changes to the formulations of TriCor, and marketed those while withdrawing the original drug from the market. The companies deleted references to the original forms of the drug from national drug databases, according to prosecutors, making it more difficult for a generic version of TriCor to obtain generic status. Meanwhile, the prosecutors say, Fournier obtained patents covering the variations of TriCor, and then filed patent infringement lawsuits against generic companies that tried to compete. The litigation triggered mandatory 30-month periods in which the Food and Drug Administration could not approve generic versions of TriCor.

The companies intend to fight the charges, according to the East Bay Business Times, and argue that they have not engaged in any wrongdoing.

The California Biotech Law Blog will be following this story as it unfolds.

California biotech companies are rallying behind proposed new state legislation, which would extend the time period that biotech companies have for claiming a tax deduction based on net operating losses.

The Mercury News reports:

The business leaders say their companies often labor for 15 years or more at a cost of hundreds of millions of dollars before they can get a drug approved for sale and generate enough revenue to climb out of the red. Yet under California law, they typically have only 10 years to claim a tax deduction based on their net operating losses.

Consequently, by the time they earn enough to pay state income taxes, many of them have lost the opportunity to claim the deduction. .  . .

That’s why [Assemblywoman Sally] Lieber has introduced a bill to double that deduction period, mirroring federal law. The measure, AB1370, which specifically gives biopharmaceutical businesses 20 years to claim their tax credits, was unanimously approved by the Assembly on June 6.

If it becomes law, it could give the biotech industry a big boost, according to Matthew Gardner, president of BayBio, an industry trade group based in South San Francisco.

While similar measures have failed twice before, supporters claim that this time is different, as there is more biotech support within assembly than existed in the past.  Three states–Florida, Illinois, and New York–already have a law on the books similar to this one being considered.

According to The Mercury News, this bills is not  the only way in which states are attempting to establish tax breaks for biotech companies:

Some[states] – including New Jersey and Hawaii – allow the firms to sell or trade their net operating loss credits to other businesses.

The article raises an interesting issue regarding tax deductions.  Is the bill a good idea for California’s taxpayers, or does it mean that we just have to bear more of the state’s tax burdens?