Rulings will impact future of drug patents

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Two Supreme Court rulings handed down in January stand to drastically alter the way pharma companies enter into licensing agreements and impact the future strength of drug patents, legal experts said.

On Jan. 9, the Supreme Court ruled 8-to-1 to reinstate a lawsuit filed by MedImmune to pursue a court case challenging a patent dispute over the childhood respiratory drug Synagis.  
In overturning the lower court ruling, the Supreme Court determined the dispute between  MedImmune and Genentech was a “controversy,” meeting the requirements of the Constitution, and sent the case back to the Court of Appeals for the Federal Circuit.

Supreme Court Justice Antonin Scalia wrote that the plaintiff MedImmune, “must bet the farm or (as here) risk treble damages and the loss of 80% of its business before seeking a declaration of its actively contested legal rights finds no support in Article III” of the Constitution.

On Jan. 16, the Supreme Court sent another patent dispute case involving MedImmune back to the Federal Circuit court. This case involved a licensing dispute between MedImmune and Johnson & Johnson subsidiary Centocor. The Supreme Court's ruling was of little surprise as it presented most the same issues.

Both rulings illustrate that the Supreme Court has decided that the patent system is too strong, said Bruce Lehman, former US assistant secretary of commerce, commissioner of patents and trademarks, who is now senior counsel at the law firm of Akin Gump Straus Hauer & Feld.
“Clearly they did not come down on the behalf (of the patent holder),” he told MM&M. “I am concerned and disturbed that we are seeing an inappropriate diminishing of patent holders.”
He said the recent Supreme Court decisions will set the hurdle higher for large pharmas with patents. “It takes away some of their flexibility and makes them even more careful about licensing and so on.”

The MedImmune decisions will also impact the way drug companies enter into licensing deals in the future, said Jay Lesser principal with the law firm Darby & Darby. 

“Companies can now challenge license agreements without breaching them,” he said. “The other reason has to do with Abbreviated New Drug Application litigation. The courts have thrown out those cases saying that there is really no controversy until they get on the market or they are closer to getting on the market…So, I think that several generic companies are going to test the statute again.”

Richard Samp, chief counsel at the nonprofit Washington Legal Foundation argued that the Supreme Court's decisions are just bad policy, given that new drug approvals were close to an eight-year low, last year.

“If what you want is to promote innovation by potential inventors and for them to devote the time and resources to come up with new products and to publicly disclose what they have invented, you tend to undermine that system,” he said. “If what you want is stability in the patent system, I think it's probably not a good thing.”

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