Federal judge reopens high-stakes patent case between Merck and Gilead
- A federal judge in California on Friday re-opened a high-stakes patent case between Merck & Co. and Gilead, allowing the companies to file additional arguments after allegations a former Merck scientist lied to the jury, Bloomberg reports. Merck recently won $200 million in damages from Gilead over patent infringement claims tied to Gilead's blockbuster hepatitis C treatments.
- In the case, Merck successfully argued Gilead had infringed on two patents it held on the compound sofosbuvir, which is the main chemical component in Gilead's drugs Harvoni and Sovaldi. Gilead acquired the rights to the compound when it acquired Pharmasset in 2011.
- Gilead reportedly claims the scientist, Phil Durette, relied on work done by Pharmasset when he obtained a patent for Merck, even though Durette told the jury the patent was a result of his own research.
The March verdict upholding all of Merck's patent claims represented a major victory for the company, awarding it damages plus unspecified royalties on future sales of the two drugs. Gilead has dominated the hepatitis C market over the past several years, as Harvoni and Sovaldi racked up tens of billions in sales.
Merck argued it was owed a percentage of those sales due to early patents it held on sofosbuvir. But Gilead now says some of the work done by Phil Durette for Merck in 2004 was due to secrets he learned on a phone call with Pharmasset, according to Bloomberg. When Durette was deposed, he allegedly said he wasn't on the call.
The companies reportedly have until today to file additional arguments, according to The Journal.
As Merck and Gilead continue to battle over the genesis of sofosbuvir, Gilead's control over the hepatitis C market appears to be slipping. In the first quarter of 2016, U.S. sales of Harvoni and Sovaldi dropped by 40% compared to a year ago. Gilead fared better globally, thanks to strong performance by the drugs in Japan after both launched in that market last year.
But the company pointed to lower patient starts on Harvoni, as well as the impact of commercial rebates and lessening average duration of therapy as major factors in the U.S. decline.
Although the drugs continue to pull in significant revenue ($4.3 billion worldwide in Q1), analysts are concerned Gilead may be a victim of its own success. As more patients are treated and effectively cured, Gilead could face diminishing growth from its two biggest earners.
At the same time, Merck has launched its own hepatitis C treatment, Zepatier, at nearly half the cost of Harvoni. And Merck also hopes to reach underserved and untreated populations, such as injection drug users and patients with chronic kidney disease.
Merck is due to report first quarter earnings May 5. Strong performance by Zepatier could be a further sign Gilead's lock on the market is weakening.
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