Pharma Wins Again on Deducting Patent Dispute Costs for Generics

An appellate court has affirmed that the legal fees a maker of a new generic drug pays in defending against patent infringement claims arising from its application to the FDA need not be treated as a cost of obtaining an intangible asset. In Mylan, Inc. & Subsidiaries v. Commissioner, the court agreed with the taxpayer that the FDA’s scientific review of the new drug and a district court’s adjudication of a related patent dispute were independent albeit coordinated proceedings and, as such, the costs of one need not be treated as a cost of the other.