Merck wins major victory in hep C patent case against Gilead
- A federal jury handed Merck and Ionis Pharmaceuticals a major victory over rival Gilead, upholding all ten of Merck's claims from patents related to sofosbuvir, a compound at the heart of Gilead's $19 billion Hepatitis C franchise. In the next phase of the trial, the jury will decide the amount of damages owed to Merck. It could award Merck royalties to future sales of the two drugs comprised of sofosbuvir, Harvoni and Sovaldi.
- In the original lawsuit, Merck claimed 10% royalties, saying Gilead infringed on two 2002 patents of nucleosides related to sofosbuvir. Gilead bought the rights to the sofosbuvir in 2011 when it acquired Pharmasset for $11 billion.
- Ionis Pharmaceuticals (formerly Isis Pharmaceuticals) was a co-inventor on the patents which formed the basis of Merck's case. It will receive 20% of the damages awarded to Merck, plus a 20% cut of all future royalty payments.
On the back of Harvoni and Sovaldi, Gilead has dominated the Hepatitis C market over the past two years. Combined, the two drugs have raked in over $31 billion in global revenue for Gilead. Both command substantial prices, costing between $84,000 and $94,500 (before rebates) per 12-week treatment course.
In a statement, Merck said it is not seeking to restrict access to the two drugs but rather receive due compensation for its intellectual property.
"Merck believes the jury’s verdict accurately reflects the evidence in this case. Strong patent protection is essential to innovation," the company added.
In late January, Merck won approval from the FDA for its similarly effective hepatitis C med Zepatier, which is priced competitively at $54,600. While the approval requires liver function testing for patients prescribed the drug, Zepatier has held its own in some safety comparisons against Harvoni and Sovaldi. Its price point should give it some leverage as it breaks into the market, but Gilead's meds are well established.
A royalty judgment from the jury could help lessen the sting of that dominance and give Merck a lucrative stream of payments. For Gilead, the patent verdict adds to concerns of slower growth from Harvoni and Sovaldi, which have weighed on the value of its stock.
After the verdict was reached, Gilead deferred comment until the case reached its final conclusion. "Although we are disappointed by the jury’s verdict today, there are a number of remaining issues to be decided by the jury and the judge. Therefore, it is premature to comment any further," said Gilead spokeswoman Michele Rest.
The case was heard in U.S. District Court for the Northern District of California (San Jose).
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