Two patent rulings raise issues for biotechs, generics

Two court decisions in the past two weeks set new bounds in the murky territory of patent infringement.

A jury last week found that Eli Lilly owes $65 million in back royalties to Ariad Pharmaceuticals for infringing on a patent that covers the biological pathway known as NF-Kappa B. Lilly was also ordered to pay a 2.3 percent royalty on future sales of osteoporosis drug Evista and sepsis drug Xigris, which act on the NF-Kappa B pathway.

The suit raised questions about the scope of patents covering naturally-occurring phenomena in the body.

Ariad has argued that its patent -- which it licenses from Harvard University, the Massachusetts Institute of Technology, and the Whitehead Institute -- covers all methods of treating diseases through regulating NF-Kappa B.

Lilly has argued that the patent is "unenforceable" and demonstrates "improper coverage of natural processes." The company issued a statement saying that it will appeal the decision.

The US Patent and Trademark Office is currently examining the patent. Neither company could immediately be reached for comment.

Bradford Duft, a partner at law firm Duane Morris, which was not involved in the case, noted that the suit raises common issues in the area of biotech law.

"These cases all depend on individual patents," he said. "Just about everything in biotechnology involves some aspect of nature."

Separately, Teva Pharmaceuticals won its suit against FDA and received 180 days of marketing exclusivity for a generic version of Merck's cholesterol drug Zocor.

Teva had challenged Merck's patent under Paragraph IV of the Hatch-Waxman Act, a provision of which provides marketing exclusivity to generic companies that can successfully prove that a brand's patent is invalid.

But when Merck decided not to fight Teva, FDA determined that the patent was not in dispute and denied marketing exclusivity for Teva?s generic product.

Gregory Glass, principal of the consulting firm Gregory Glass Associates, noted that the case clarifies what happens when a generic company challenges a patent and the brand name company does not fight the challenge.

In the past, FDA has required generic companies to win a lawsuit in order to get marketing exclusivity. "That rule's gone now," Glass said. "[This case] provides more certainty in circumstances where the brand choose not to sue the generic company."

He estimated that brand name companies decline to sue the generic company in about 15% of patent challenges.