[Ip-health] Wall Street Journal: Lucrative Drug Niche Sparks Legal Scramble (Battle Escalates for Dominance in Treatments for Hepatitis C)
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Tue Jul 22 05:56:53 PDT 2014
Lucrative Drug Niche Sparks Legal Scramble
Battle Escalates for Dominance in Treatments for Hepatitis C
By PETER LOFTUS
July 20, 2014 7:17 p.m. ET
The pharmaceutical industry's battle for dominance in the fast-growing and
lucrative market for treatments of hepatitis C is prompting an
unprecedented legal scramble.
The prospect that hepatitis-C drug sales could soar to $20 billion annually
by the end of the decade is spurring attempts by drug companies to assert
the patent rights they'll need to grab a piece of the pie.
The frenzy has accelerated with the launch of Gilead Sciences
<http://quotes.wsj.com/GILD> Inc.'s hepatitis-C treatment, Sovaldi, which
racked up an estimated $5 billion in sales in the first half of 2014, in
what is believed to be the best-selling prescription drug launch in history.
Several companies, including Roche Holding <http://quotes.wsj.com/CH/ROG>
and Merck <http://quotes.wsj.com/MRK> & Co., have taken aggressive legal
steps to claim that Sovaldi infringes upon their patents or contract
rights, and to argue that they deserve a cut of its sales. AbbVie
<http://quotes.wsj.com/ABBV> has gone a step further, obtaining U.S.
patents covering combinations of dozens of drugs to treat the
liver-damaging hepatitis-C virus—including those developed by competitors
such as Gilead—because it is developing a combination treatment of its own.
Patent battles in the pharmaceutical industry usually involve branded drug
makers trying to block generic competitors from selling cheap copies of
their drugs. The hepatitis-C battle is unusual because it pits branded drug
maker against branded drug maker, in disputes more typical of smartphone
manufacturers and other tech companies.
It "speaks to the blockbuster aspect of this drug [Sovaldi], both from a
scientific standpoint and obviously from a monetary standpoint, that we're
seeing very involved litigation from many different players," said Theresa
Kavanaugh, a patent attorney with Goodwin Procter LLP who has represented
drug makers but isn't involved in the hepatitis-C litigation.
In a lawsuit filed in February, AbbVie noted it patented the idea of
combining two of Gilead's drugs—Sovaldi and an experimental drug called
ledipasvir, which Gilead plans to combine into one treatment—and is
therefore entitled to monetary damages if Gilead brings the combination
pill to market. Legally, AbbVie can't market Sovaldi or ledipasvir because
it doesn't have the patents on the underlying compounds. But it is legal
for companies to seek and obtain patents describing a particular "method of
use" of products that don't belong to them.
Gilead disputes the claims of AbbVie and the other companies. A spokeswoman
said Gilead believes it has the sole right to commercialize Sovaldi and
products containing Sovaldi's active ingredient, known as sofosbuvir. An
AbbVie spokeswoman said the company believes Gilead infringes its patents,
and that it stands behind the validity and enforceability of those patents.
The appeal of Sovaldi and other new drugs in development is that they
generally have higher cure rates, shorter treatment durations and more
tolerable side effects than older treatments. AbbVie, Merck and Bristol-Myers
Squibb <http://quotes.wsj.com/BMY> Co. are planning to bring their own new
regimens to market to compete with Gilead's.
The litigation provides a glimpse of the hardball tactics drug makers are
using. In a lawsuit filed in August 2013, Gilead revealed that a Merck
executive phoned a Gilead counterpart last year with a proposal to license
two Merck patents to Gilead in exchange for a royalty of 10% of sales of
Sovaldi-containing products. Merck subsequently codified the offer in an
August 2013 letter.
In response to Gilead's lawsuit, Merck claimed in court papers that Sovaldi
infringes upon its patents covering compounds related to Sovaldi's active
ingredient. Gilead said in a court document that a 10% royalty is a
"prohibitive demand." Gilead is seeking a judgment that Sovaldi doesn't
infringe upon Merck's patents. The case is pending.
A Merck spokeswoman declined to comment beyond Merck's court filings.
Merck's legal battle is poised to widen because it recently agreed to
acquire Idenix Pharmaceuticals <http://quotes.wsj.com/IDIX> Inc. for $3.85
billion. Idenix, which has developed an experimental hepatitis-C drug with
a mechanism similar to Sovaldi's, has been embroiled in patent litigation
with Gilead over the invention of certain types of hepatitis-C drugs. An
Idenix spokeswoman declined to comment.
Roche, meanwhile, claims it has rights to Sovaldi because of a 2004
research collaboration with Pharmasset, the company that developed the drug
and was acquired by Gilead in 2012 for more than $11 billion. Roche
initiated private arbitration proceedings against Gilead last year, seeking
a ruling that it has an exclusive license to Sovaldi and that Gilead is
infringing upon those rights. A Roche spokeswoman said an arbitration
decision is expected later this year.
The Gilead-AbbVie battle has grown particularly acrimonious, with both
sides trading sharp barbs. Gilead sued AbbVie and its former parent
company, Abbott Laboratories <http://quotes.wsj.com/ABT>, in federal court
in Delaware in December, claiming they conducted a "fraudulent scheme" by
falsely telling the U.S. Patent and Trademark Office they invented methods
of treating hepatitis C that were actually invented by Gilead and
Abbott Labs applied for the two patents in question in 2011, and the PTO
issued them to AbbVie in mid-2013, after AbbVie was spun out as an
independent company. One of the patents covers the administration of at
least two antiviral agents to treat a type of hepatitis C known as genotype
1 for 12 weeks, without the use of an older injected drug, interferon. The
second patent is almost identical, but also excludes the use of another
older drug, ribavirin.
Both patents list several dozen antivirals that could be used as part of
this method, including Gilead's Sovaldi and ledipasvir. AbbVie says it
applied for the patents because it was developing its own combination
product. It has submitted the product for U.S. regulatory approval and
expects a decision later this year.
Gilead says it has separate patents covering the underlying active
ingredients of Sovaldi and ledipasvir, and that it first applied for a
patent covering the drugs' combination on Sept. 16, 2011, before AbbVie's
application the next month. Gilead and the PTO declined to comment on why
it hasn't been issued.
In its lawsuit, Gilead says AbbVie's experimental combination treatment is
"inferior" to Gilead's. Gilead said Abbott set out in 2011 to "eclipse its
competitors, not through innovation or the advancement of science," but
through its patent efforts.
AbbVie shot back in its own lawsuit that Gilead was slandering its
integrity. It also accused Gilead of focusing on profits to recover the
"inflated" $11 billion price it paid to acquire Pharmasset in 2011.
AbbVie said it legitimately secured patents covering Gilead's products
based on a "sophisticated computer model" to predict the effectiveness of
numerous drug combinations that hadn't previously been tested.
*Write to *Peter Loftus at peter.loftus at wsj.com
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