Gilead can recoup legal fees from Merck, judge says
- A federal judge ruled Gilead can recoup attorney fees paid during its court battle with Merck over patents related to the California drugmaker's hepatitis C drugs Harvoni and Sovaldi, reports Reuters.
- Two months earlier, U.S. District Judge Beth Labson Freeman had overturned a $200 million award to Merck, ruling Merck's patent attorney was "dishonest and duplicitous" with Gilead and with the federal court in litigating the patent dispute.
- The case stems from Merck's claims Gilead infringed on two old patents held by Merck on the compound sofosbuvir, the principal active pharmaceutical ingredient in both Harvoni and Sovaldi. Back in March, Merck had successfully argued Gilead infringed on the patents, winning $200 million in damages and potential for royalties on future sales of the drugs.
When first awarded damages in March, Merck had seemingly found a vulnerability in Gilead's dominance of the hepatitis C market. Harvoni and Sovaldi are Gilead's two best selling drugs, racking up over $30 billion in global sales over the last two years.
Under the original verdict, Merck would have received $200 million in damages from Gilead, plus potential royalties on future sales of the drugs.
But Judge Freeman later ruled Merck was guilty of "unclean hands" after finding evidence the company's former in-house patent lawyer misled the court over his role in talks with Pharmasset, the original developer of sofosbuvir.
Gilead had bought the rights to sofosbuvir when it acquired Pharmasset in 2011, but Merck claimed it was owed a percentage of sales due to its earlier patents.
While the reversal was a win for Gilead, going forward the company may struggle to maintain the sky-high sales of Harvoni and Sovaldi it has enjoyed up until now.
Combined sales of Harvoni and Sovaldi, which account for over half of Gilead's product revenue, slumped by roughly 20% in the second quarter (compared to a year prior). Notably, U.S. sales of Harvoni dropped by nearly half.
Gilead recently won approval of a new pan-genotypic hepatitis C drug, but investors worry the market may have matured to a point where there are fewer and fewer new patients left to treat. Given the high efficacy of Gilead's drugs, patients are mostly "cured" of the disease after a 12-week treatment course.
Merck, despite losing its rights to prosecute the patent case against Gilead, is also hoping to cut into Gilead's market with its competitively priced, but similarly effective, hepatitis C drug Zepatier.
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