Supreme Court Victory for Pharma; Defeat for Some Biotechs
In a ruling eagerly awaited by biotech investors and drug manufacturers alike, the Supreme Court has ruled today in Merck KgaA v Integra Lifesciences that Merck KgaA did not violate Integra’s patents when it used patented RGD peptides during the course of its drug discovery efforts. The unanimous decision delivered by Justice Scalia overturned a Federal Circuit Court ruling that had sided with Integra in the dispute.
The Court supported Merck’s activities under §271(e)(1), which provides that “It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913) …) solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs … .”
The Supreme Court held that (my highlights): “The use of patented compounds in preclinical studies is protected under §271(e)(1) at least as long as there is a reasonable basis to believe that the compound tested could be the subject of an FDA submission and the experiments will produce the types of information relevant to an IND or NDA. The statutory text makes clear that §271(e)(1) provides a wide berth for the use of patented drugs in activities related to the federal regulatory process, including uses reasonably related to the development and submission of any information under the FDCA. Eli Lilly & Co. v. Medtronic, Inc., 496 U. S. 661, 665-669. This necessarily includes preclinical studies, both those pertaining to a drug’s safety in humans and those related to, e.g., a drug’s efficacy and mechanism of action. Additionally, §271(e)(1) exempts from infringement the use of patented compounds in preclinical research, even when the patented compounds do not themselves become the subject of an FDA submission.”
This decision is a major defeat for biotech companies that rely on licensing of intellectual property covering drugs and drug-like substances (peptides, antibodies, antisense, siRNA, etc.) to pharma for the bulk of their revenues. At the same time, it frees drug companies to pursue drug discovery and development activities unburdened by negotiations, licensing fees, royalties, and the potential for litigation associated with the use of compounds whose protecting patents are held by others. The ruling essentially eliminates the need for drug companies to license such patents, granting them the ability to use such compounds as needed to support drug discovery and development activities that could reasonably lead to an IND or NDA filing at some point. If you’re a drug company investor or a consumer, you have to be happy about this ruling, because it should spur drug discovery productivity.
