A federal jury has ordered drugmaker Gilead Sciences, Inc. to pay Merck & Co. $200 million for infringing on patents for hepatitis C medications Sovaldi (sofosbuvir) and Harvoni (ledipasvir and sofosbuvir).
What’s the Problem?
March 28, 2016 – The award is far below the more than $23 billion in damages Merck sought, but the trial moves to a new phase this week. The San Jose, CA., jury will then decide whether the company is due royalties for sales of Harvoni and Sovaldi, according to Bloomberg Business.
Merck, which recently launched a hepatitis C treatment medication called Zepatier (elbasvir and grazoprevir), claims 2 patents that it and partner Ionis Pharmaceuticals filed in 2002 were the basis for Gilead’s sofosbuvir, the active ingredient in Sovaldi and part of combination drug Harvoni, which are among the world’s most profitable prescription drug franchises.
Sovaldi and Harvoni combined for worldwide sales of over $19 billion in 2015, nearly two-thirds of Gilead’s revenue for the year. Merck initially sought damages including 10% of U.S. sales of Harvoni and Sovaldi through the end of 2015, which totaled $23.1 billion. The drugmaker is also seeking royalties of 10% of U.S. sales of the 2 hep C meds from Jan. 1, 2016 on.
Gilead said it will appeal the $200 million award if it is upheld.
“Since Merck made no contribution and assumed none of the risk in the discovery and development of sofosbuvir, we do not believe Merck is entitled to any amount of damages,” Gilead said. “We continue to believe the Merck patents are invalid.”
However, the judge overseeing the case ruled that Sovaldi and Harvoni did infringe on Merck’s patents. The jury then upheld the validity of the 2 patents, which were filed in 2002 for “compounds and methods” to treat hepatitis C patients.
Merck alleged that Pharmasset, a company Gilead acquired for $11 billion in 2011 to gain the rights to sofosbuvir, used data in the patents to synthesize the drug. Merck said it, Ionis and their partners spent years and significant money developing the patents.
Gilead denies engaging in patent infringement, saying Pharmasset began developing sofosbuvir in 2001. According to Merck, Gilead initiated the litigation by seeking a declaratory judgment stating that the patents were invalid.
“The jury’s verdict upholds patent protections that are essential to the development of new medical treatments,” Merck said in response to the ruling.
Patent laws guarantee drugmakers exclusive sales for at least a decade before generic competition is allowed, so the companies can recoup their investment and use profits to develop new products.
Zepatier was approved by the U.S. Food & Drug Administration (FDA) on January 28, which Merck priced well below Harvoni’s cost of $94,000 per treatment course. That set up a battle over formulary positions and sales from insurers and prescription benefit managers.
Merck was one of 2 major manufacturers of hepatitis C drugs until the approval of Sovaldi and Harvoni, medications that revolutionized treatment of the virus. The drugs cure about 95% of hep C patients in 8 to 12 weeks, but their astronomical prices have strained the budgets of insurers and government health programs.