BioPharma

Gilead to pay Merck $2.54B in largest-ever patent infringement case

A federal jury has awarded $2.54 billion in royalties to Merck, ruling against Gilead in a monumental patent infringement case involving two blockbuster hepatitis C drugs. The kicker? The judge has the power to triple that figure.

gavel

The billion-dollar hepatitis C market has set the stage for the largest ever patent infringement case in U.S. history.

A federal jury awarded $2.54 billion in royalties to Merck, which owns the patents that Gilead allegedly infringed upon to create its two blockbuster hep C drugs, Sovaldi and Harvoni.

presented by

Thursday’s settlement was calculated as 10 percent of the drugs’ combined sales of $25.4 billion. Gilead was also found to have willingly infringed on the invention, which means the judge could double or even triple the damages awarded to Merck.

In a statement forwarded to STAT News, Gilead said it would appeal the ruling.

The compound in question is sofosbuvir, the active ingredient in Sovaldi and one of two therapeutic compounds in Harvoni. Approved in 2013 and 2014 respectively, the drugs currently account for more than half of Gilead’s revenue.

Sofosbuvir has taken the biopharma giants to court before. Merck won and then lost a $200 million patent dispute in June 2016. Gilead was initially ordered to share royalties, but the decision was overturned by a California judge based on evidence that a key witness for Merck — a retired scientist — had knowingly lied in a pretrial deposition.

The real origins of the dispute, however, predate both Merck and Gilead. As is often the case with Big Pharma, both companies acquired the patents, the drug programs and the dispute.

Idenix Pharmaceuticals filed the original patent, which Merck alleges guided the development of sofosbuvir. It filed a lawsuit against Gilead for infringing on its patents in late 2013, a week before Sovaldi gained its FDA approval.

Six months later, Idenix was acquired by Merck for $3.85 billion, bolstering the latter’s hepatitis C portfolio. This program went on to deliver Zepatier, approved in January 2016 for the same indication. As part of the acquisition, Merck also inherited the contentious patent estate.

Gilead signed up for its side of the battle through its 2011 purchase of Pharmasset for $11 billion. Despite the acquisition price tag and Thursday’s ruling, Gilead has still come out on top.

The hepatitis C market has broken many records. With a list price of $84,000 — or $1,000 per pill — Sovaldi made Gilead billions, while also triggering debates about pharmaceutical pricing. A year later, Harvoni clocked in with a price tag of $94,500. As with most drugs, discounts were available for both, but the sticker-shock was still very real.

In December, Gilead CEO John Milligan went so far as to apologize for the price tag of Sovaldi, claiming the company greatly underestimated the number of patients in need of the drug.

Milligan may have a little less remorse now, as the company faces the prospect of splitting its hepatitis profits.

There is one silver lining for Gilead: Its R&D engine seems to be much more finely tuned than its rival’s. As quoted by Bloomberg, Merck acknowledged they had a major headstart with Idenix — even though Gilead beat them to the market by several years.

“We were first,” Merck lawyer Stephanie Parker said in closing arguments on Thursday. “That’s the most important thing. All of the Gilead work comes after ours. Our patent was first. The Gilead story starts years later.”

Photo: Mykola Velychko, Getty Images