The two companies have been at loggerheads regarding Betaseron since Novartis' acquisition of vaccine manufacturer Chiron in 2006.
At the time, Bayer announced its intention to exercise change of control rights and acquire all Betaseron-related assets at the former Chiron site in Emeryville, California.
Novartis disputed this move and the two firms have been quarrelling over the transfer ever since.
This latest announcement resolves all the outstanding legal disputes between the two companies and leaves both with refreshed interferon beta-1b
production plans.
Bayer will acquire the biologics manufacturing facility in Emeryville, where Betaseron is currently produced, and will retain full control of all manufacturing and process technology used in the drug's production.
The company will shell out a one-off payment of $110m for equipment and the lease of buildings at Emeryville, and $90m for other interferon beta-1b
product inventory.
After six years all land and buildings leased to Bayer Schering Pharma for the production of Betaseron will revert back to Novartis, who will continue vaccine and diagnostics operations at the Emeryville site, as well as the pharmaceutical research carried out by the company's Institutes for Biomedical Research.
Bayer will also cease all royalty payments on Betaseron to Novartis in October 2008, when the original regulatory filing, development and supply agreement that Bayer originally signed with Chiron in 1993 expires.
Novartis, on the other hand, is planning to produce its own branded interferon beta-1b product for the treatment of multiple sclerosis, to be introduced in the first half of 2009.
Bayer is due to support Novartis through the regulatory filing process for its branded product, and following health authority approval will also supply the medicine to Novartis from 2009 in return for "a double digit royalty payment."
Novartis will have the right to further develop new formulations and presentations of the new branded version of Betaseron.
The company believes the own-brand version will help the firm gain more of a foothold in the growing MS market, currently worth around $5bn, in the run-up to the introduction of its new MS drug product, FTY720 (fingolimod).
"The introduction of our own interferon beta-1b brand in 2009 will allow Novartis to build its presence in multiple sclerosis ahead of the FTY720 submission, which has the potential to become the first once-daily oral treatment for multiple sclerosis," a company spokesperson told In-PharmaTechnologist.com.
The new therapy is currently in Phase III trials with US and EU submissions planned for 2009.
Bayer management board chairman Arthur Higgins sees the Betaseron deal as offering expanded opportunities for both companies, by "improving the profitability of the Betaseron franchise" and as having a "second independent brand will reinforce the existing growth of the global MS market."
The deal is due to be complete by the third quarter 2007.