US District Court of Delaware rules against Merck in case related to hepatitis C drugs Sovaldi and Harvoni
On 16 February 2018, U.S. District Judge Leonard Stark of D. Delaware overturned a $2.54 billion jury verdict against Gilead and instead ruled that Merck’s patent, asserted against hepatitis C drugs Sovaldi and Harvoni, was invalid.
Of past events, see Merck wins $2.54 billion in hepatitis C drug trial against Gilead from 16 Dec 2016:
Merck on Thursday was awarded $2.54 billion in royalties by a federal jury in a patent lawsuit against Gilead Sciences over Gilead's blockbuster hepatitis C drugs Sovaldi and Harvoni.
(...)
Harvoni's list price is $1,125 per pill and $94,500 for a 12-week regimen. Foster City, California-based Gilead, one of the world's largest biotechnology companies, made nearly $20 billion on the two drugs in 2015.
See also a piece by MICHAEL HILTZIK in the October 26, 2017 Los Angeles Times:
To begin with, the evidence that Gilead itself uses its profits to "innovate" is thin at best. In 2016, the company reported profit of $13.5 billion. It spent $11 billion to repurchase its own shares, and about $2.5 billion on stock dividends. So the buybacks and dividends together came to $13.5 billion, in effect consuming 100% of the company's profit.
All that spending benefits shareholders -- the repurchases prop up the value of their shares and enhance their gains when they sell, and dividends are, of course, a direct payout. Innovation? Gilead spent $5 billion on research and development, according to its annual report.
In 2015, a similar phenomenon reigned. Gilead recorded $18.1 billion in profit, and spent $10 billion of it on buybacks and $1.87 billion on dividends. R&D cost $3 billion. Since 2011, the Gilead board has authorized stock repurchases totaling $37 billion, of which $9 billion was still unspent as of the end of 2016. Gilead declined to comment for this column.
Gilead doesn't do much research and development itself. Instead, it has acquired firms that have done the heavy lifting and market their successes. It acquired its blockbuster hepatitis C drug, Sovaldi, by paying $11 billion for the drug's developer, Pharmasset, in 2011.
(...)
Gilead rationalized the price by noting that the near-term cure of hepatitis C meant even greater savings over time from a reduction in liver disease; but that was cold comfort to public budget makers and private insurers. They were faced with the prospect of laying out millions of dollars in a single year for benefits that would appear over decades, often reaped by other insurers or programs.
The near-term consequences included rules that limited approvals for the new drug to the sickest patients -- ironically, those who probably would benefit from Sovaldi the least. Because of the price, potentially millions of hepatitis sufferers went without a cure, if temporarily, until the company and insurers were able to work out discounts.
Evidence produced in 2015 by the Senate Finance Committee showed that Gilead executives didn't spend much time on the consequences for patients deprived of the cure by budgetary pressures. Instead, they calculated how high they could set the price of Sovaldi without shrinking its potential market so much that total profits would fall. The executives concluded that Gilead could make a profit by charging $55,000 per 12-week treatment. But the company decided to charge $84,000, which would deliver higher profits, albeit from fewer patients. A follow-on drug known as Harvoni, which incorporates Sovaldi, was introduced in 2016 at a price close to $100,000 for a full treatment.
Gilead at first refused to offer anything but minimal discounts to big insurers and Medicaid programs, even though they acknowledged that thousands of patients might have to go without the treatments. The company didn't seem concerned about a public backlash over its pricing, figuring that complaints from patient advocates wouldn't lead to problems with regulators or legislators. "Let's not fold to advocacy pressure ... whatever the headlines," one top executive counseled his colleagues.
It's certainly true that drug development doesn't come cheap. But there's reason to believe it doesn't cost nearly what the industry claims, and no reason to believe that the enormous profits reaped on some drugs get funneled back into research and development. When drug companies have a potential blockbuster in hand, they'll charge whatever the market will bear to maximize profits. And funding "innovation" isn't always the goal.
BUT, Business Monitor Online discussed the cost of a drug being successful:
Since 2015, Gilead's revenue has been decreasing, following the decline of its highly successful hepatitis C virus (HCV) portfolio. The medication's high cure rates reduced the patient pool, and pricing pressures rose due to greater levels of competition. Indeed, the firm's total revenue has decreased from USD30.4bn in 2016 to USD26.1bn revenue in 2017.
Text of relevance in the 2018 D. Del. opinion:
Two limitations are of particular significance in resolving Gilead's enablement challenge.
First, the claim includes structural limitations (hereinafter, the "Structural Limitations"). The term "β-D-2'-methyl-ribofuranosyl nucleoside" encompasses any β-D-nucleoside that includes "a five member sugar ring with a methyl group in the 2' up position and non-hydrogen substituents at the 2' down and 3' down positions." (D.I. 237 at 12; D.I. 516 at 22)
Second, at Idenix's urging, the Court construed the claims to contain a functional limitation, through claim l's preamble ("A method for the treatment of a hepatitis C virus infection") and its "effective amount" term. (See D.I. 446 at 8-13) Specifically, the Court concluded that claim 1's preamble is limiting and that the term "effective amount" means "an amount [of the . . . ribofuranosyl nucleoside . . .] that is effective to treat HCV" (hereinafter, the "Functional Limitations") (D.I. 447).
Combining these two limitations, the claims cover all those nucleosides, but only all those nucleosides, that meet the Structural Limitations — including a methyl group at the 2'-up position [*29] — and the Functional Limitations of exhibiting effective anti-HCV activity. (See, e.g., D.I. 446 at 8-13; Secrist Tr. at 1576-77; Meier Tr. at 1865-66) Thus, as further explained below, the claims as construed combine Structural Limitations that are satisfied by an enormous number of compounds with Functional Limitations that are satisfied by an unknown, but far smaller, number of undisclosed compounds.
Also pertinent to the Court's analysis is what is not in its claim construction. Targeting the NS5B polymerase — which Idenix contends is the key to a compound demonstrating effectiveness in the treatment of HCV (see, e.g., D.I. 554 at 8) (identifying "a defined target (NS5B)") — is not an explicit claim limitation. The patent claims are not limited to compounds that are effective in treating HCV due to their acting on the NS5B polymerase. Nor does the patent specification even teach that to identify effective compounds a person of ordinary skill in the art ("POSA") must or even should be looking for compounds that target the NS5B polymerase. Instead, the patent explains that effective compounds can act through "inhibiting HCV polymerase, by inhibiting other enzymes needed in the replication [*30] cycle, or by other pathways."
Of note:
The Court now turns from the undisputed facts to those facts that are disputed but which, in the Court's view, present disputes on which a reasonable jury, taking the trial record in the light most favorable to Idenix and drawing all reasonable inferences in favor of Idenix, could only have found in favor of Gilead. "The rule that a jury verdict is reviewed for support by 'substantial evidence' does not mean that the reviewing court must ignore the evidence that does not support the verdict.... That is, the court should give credence to the evidence favoring the nonmovant as well as that evidence supporting the moving party that is uncontradicted and unimpeached." Integra Lifesciences I, Ltd. v. Merck KGaA, 496 F.3d 1334, 1345 (Fed. Cir. 2007).
The Court concludes that while each of the following topics were disputed, they are not genuinely in dispute, in that a reasonable factfinder could only have found for Gilead on these disputes. Nor does the Court find that there are any other material factual disputes regarding enablement that are in genuine dispute. Instead, Gilead has shown that "the record is critically deficient of the minimum quantity of evidence to sustain the verdict." Accumed LLC v. Advanced Surgical Servs., Inc., 561 F.3d 199, 211 (3d Cir. 2009) (internal quotation marks omitted).
(...)
For the reasons stated above, a reasonable jury, even taking all the evidence in the light most favorable to Idenix and drawing all reasonable inferences in favor of Idenix, could only have concluded that Idenix's '597 patent is invalid due to lack of enablement. The only reasonable finding, based on the trial record, is that Gilead met its burden to prove nonenablement by clear and convincing evidence. The trial revealed that there are no genuinely disputed material facts with respect to enablement. Accordingly, Gilead is entitled to judgment as a matter of law that the asserted claims of the '597 patent are invalid due to lack of enablement.
Footnote 13:
Neither Gilead nor its experts have endorsed the position that inventions in this area of art — or even inventions in this area of art having structural limitations that are literally satisfied by billions of compounds — are automatically non-enabled or inherently suspect. As is made clear throughout the remainder of this Opinion, the required enablement analysis must take into account numerous factors, facts, and circumstances, leading to an ultimate conclusion as a matter of law. A wide disparity between the number of compounds satisfying the Refined Structural Limitations and those also satisfying the Functional Limitations, combined with only a little bit of guidance given in the patent for how to navigate from the larger to the smaller category, are big factors (though not the sole considerations) in rendering the '597 patent invalid for lack of enablement. See generally Wands, 858 F.2d at 737 ("Whether undue experimentation is needed is not a single, simple factual determination, but rather is a conclusion reached by weighing many factual considerations."); but see also generally In re Fisher, 427 F.2d 833, 839, 57 C.C.P.A. 1099 (C.C.P.A. 1970) ("In cases involving unpredictable factors, such as most chemical reactions and physiological activity, the scope of enablement obviously varies inversely with the degree of unpredictability of the factors involved.").
Relevant:
7,608,597
Methods and compositions for treating hepatitis C virus
Of past events, see Merck wins $2.54 billion in hepatitis C drug trial against Gilead from 16 Dec 2016:
Merck on Thursday was awarded $2.54 billion in royalties by a federal jury in a patent lawsuit against Gilead Sciences over Gilead's blockbuster hepatitis C drugs Sovaldi and Harvoni.
(...)
Harvoni's list price is $1,125 per pill and $94,500 for a 12-week regimen. Foster City, California-based Gilead, one of the world's largest biotechnology companies, made nearly $20 billion on the two drugs in 2015.
See also a piece by MICHAEL HILTZIK in the October 26, 2017 Los Angeles Times:
To begin with, the evidence that Gilead itself uses its profits to "innovate" is thin at best. In 2016, the company reported profit of $13.5 billion. It spent $11 billion to repurchase its own shares, and about $2.5 billion on stock dividends. So the buybacks and dividends together came to $13.5 billion, in effect consuming 100% of the company's profit.
All that spending benefits shareholders -- the repurchases prop up the value of their shares and enhance their gains when they sell, and dividends are, of course, a direct payout. Innovation? Gilead spent $5 billion on research and development, according to its annual report.
In 2015, a similar phenomenon reigned. Gilead recorded $18.1 billion in profit, and spent $10 billion of it on buybacks and $1.87 billion on dividends. R&D cost $3 billion. Since 2011, the Gilead board has authorized stock repurchases totaling $37 billion, of which $9 billion was still unspent as of the end of 2016. Gilead declined to comment for this column.
Gilead doesn't do much research and development itself. Instead, it has acquired firms that have done the heavy lifting and market their successes. It acquired its blockbuster hepatitis C drug, Sovaldi, by paying $11 billion for the drug's developer, Pharmasset, in 2011.
(...)
Gilead rationalized the price by noting that the near-term cure of hepatitis C meant even greater savings over time from a reduction in liver disease; but that was cold comfort to public budget makers and private insurers. They were faced with the prospect of laying out millions of dollars in a single year for benefits that would appear over decades, often reaped by other insurers or programs.
The near-term consequences included rules that limited approvals for the new drug to the sickest patients -- ironically, those who probably would benefit from Sovaldi the least. Because of the price, potentially millions of hepatitis sufferers went without a cure, if temporarily, until the company and insurers were able to work out discounts.
Evidence produced in 2015 by the Senate Finance Committee showed that Gilead executives didn't spend much time on the consequences for patients deprived of the cure by budgetary pressures. Instead, they calculated how high they could set the price of Sovaldi without shrinking its potential market so much that total profits would fall. The executives concluded that Gilead could make a profit by charging $55,000 per 12-week treatment. But the company decided to charge $84,000, which would deliver higher profits, albeit from fewer patients. A follow-on drug known as Harvoni, which incorporates Sovaldi, was introduced in 2016 at a price close to $100,000 for a full treatment.
Gilead at first refused to offer anything but minimal discounts to big insurers and Medicaid programs, even though they acknowledged that thousands of patients might have to go without the treatments. The company didn't seem concerned about a public backlash over its pricing, figuring that complaints from patient advocates wouldn't lead to problems with regulators or legislators. "Let's not fold to advocacy pressure ... whatever the headlines," one top executive counseled his colleagues.
It's certainly true that drug development doesn't come cheap. But there's reason to believe it doesn't cost nearly what the industry claims, and no reason to believe that the enormous profits reaped on some drugs get funneled back into research and development. When drug companies have a potential blockbuster in hand, they'll charge whatever the market will bear to maximize profits. And funding "innovation" isn't always the goal.
BUT, Business Monitor Online discussed the cost of a drug being successful:
Since 2015, Gilead's revenue has been decreasing, following the decline of its highly successful hepatitis C virus (HCV) portfolio. The medication's high cure rates reduced the patient pool, and pricing pressures rose due to greater levels of competition. Indeed, the firm's total revenue has decreased from USD30.4bn in 2016 to USD26.1bn revenue in 2017.
Text of relevance in the 2018 D. Del. opinion:
Two limitations are of particular significance in resolving Gilead's enablement challenge.
First, the claim includes structural limitations (hereinafter, the "Structural Limitations"). The term "β-D-2'-methyl-ribofuranosyl nucleoside" encompasses any β-D-nucleoside that includes "a five member sugar ring with a methyl group in the 2' up position and non-hydrogen substituents at the 2' down and 3' down positions." (D.I. 237 at 12; D.I. 516 at 22)
Second, at Idenix's urging, the Court construed the claims to contain a functional limitation, through claim l's preamble ("A method for the treatment of a hepatitis C virus infection") and its "effective amount" term. (See D.I. 446 at 8-13) Specifically, the Court concluded that claim 1's preamble is limiting and that the term "effective amount" means "an amount [of the . . . ribofuranosyl nucleoside . . .] that is effective to treat HCV" (hereinafter, the "Functional Limitations") (D.I. 447).
Combining these two limitations, the claims cover all those nucleosides, but only all those nucleosides, that meet the Structural Limitations — including a methyl group at the 2'-up position [*29] — and the Functional Limitations of exhibiting effective anti-HCV activity. (See, e.g., D.I. 446 at 8-13; Secrist Tr. at 1576-77; Meier Tr. at 1865-66) Thus, as further explained below, the claims as construed combine Structural Limitations that are satisfied by an enormous number of compounds with Functional Limitations that are satisfied by an unknown, but far smaller, number of undisclosed compounds.
Also pertinent to the Court's analysis is what is not in its claim construction. Targeting the NS5B polymerase — which Idenix contends is the key to a compound demonstrating effectiveness in the treatment of HCV (see, e.g., D.I. 554 at 8) (identifying "a defined target (NS5B)") — is not an explicit claim limitation. The patent claims are not limited to compounds that are effective in treating HCV due to their acting on the NS5B polymerase. Nor does the patent specification even teach that to identify effective compounds a person of ordinary skill in the art ("POSA") must or even should be looking for compounds that target the NS5B polymerase. Instead, the patent explains that effective compounds can act through "inhibiting HCV polymerase, by inhibiting other enzymes needed in the replication [*30] cycle, or by other pathways."
Of note:
The Court now turns from the undisputed facts to those facts that are disputed but which, in the Court's view, present disputes on which a reasonable jury, taking the trial record in the light most favorable to Idenix and drawing all reasonable inferences in favor of Idenix, could only have found in favor of Gilead. "The rule that a jury verdict is reviewed for support by 'substantial evidence' does not mean that the reviewing court must ignore the evidence that does not support the verdict.... That is, the court should give credence to the evidence favoring the nonmovant as well as that evidence supporting the moving party that is uncontradicted and unimpeached." Integra Lifesciences I, Ltd. v. Merck KGaA, 496 F.3d 1334, 1345 (Fed. Cir. 2007).
The Court concludes that while each of the following topics were disputed, they are not genuinely in dispute, in that a reasonable factfinder could only have found for Gilead on these disputes. Nor does the Court find that there are any other material factual disputes regarding enablement that are in genuine dispute. Instead, Gilead has shown that "the record is critically deficient of the minimum quantity of evidence to sustain the verdict." Accumed LLC v. Advanced Surgical Servs., Inc., 561 F.3d 199, 211 (3d Cir. 2009) (internal quotation marks omitted).
(...)
For the reasons stated above, a reasonable jury, even taking all the evidence in the light most favorable to Idenix and drawing all reasonable inferences in favor of Idenix, could only have concluded that Idenix's '597 patent is invalid due to lack of enablement. The only reasonable finding, based on the trial record, is that Gilead met its burden to prove nonenablement by clear and convincing evidence. The trial revealed that there are no genuinely disputed material facts with respect to enablement. Accordingly, Gilead is entitled to judgment as a matter of law that the asserted claims of the '597 patent are invalid due to lack of enablement.
Footnote 13:
Neither Gilead nor its experts have endorsed the position that inventions in this area of art — or even inventions in this area of art having structural limitations that are literally satisfied by billions of compounds — are automatically non-enabled or inherently suspect. As is made clear throughout the remainder of this Opinion, the required enablement analysis must take into account numerous factors, facts, and circumstances, leading to an ultimate conclusion as a matter of law. A wide disparity between the number of compounds satisfying the Refined Structural Limitations and those also satisfying the Functional Limitations, combined with only a little bit of guidance given in the patent for how to navigate from the larger to the smaller category, are big factors (though not the sole considerations) in rendering the '597 patent invalid for lack of enablement. See generally Wands, 858 F.2d at 737 ("Whether undue experimentation is needed is not a single, simple factual determination, but rather is a conclusion reached by weighing many factual considerations."); but see also generally In re Fisher, 427 F.2d 833, 839, 57 C.C.P.A. 1099 (C.C.P.A. 1970) ("In cases involving unpredictable factors, such as most chemical reactions and physiological activity, the scope of enablement obviously varies inversely with the degree of unpredictability of the factors involved.").
Relevant:
7,608,597
Methods and compositions for treating hepatitis C virus
posted by Lawrence B. Ebert at 8:52 AM
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