Avid Bioservices Inc (CDMO)

[biopharm]

Bristol-Myers Squibb sues Merck over Keytruda: What does it mean for us?

Sept 19, 2014

Somewhat lost in the hoopla earlier this month surrounding the FDA approval of Keytruda was this little footnote – Bristol-Myers Squibb immediately sued Merck for patent infringement.

Um, say what? A huge oncology breakthrough clears the last hurdle to go to market, and the first reaction is to sue? Leave it to the lawyers to get involved, just as the doctors and regulators were finally getting their acts together to expedite the development and approval of life-saving cancer treatments.

While this makes for a catchy headline, the details reveal a glimpse into the business of developing medications and how it is not easy to declare good guys and bad guys based on opposing sides in litigation. Here’s how this all unfolded, as best I can tell, and the impact it has on future medical advances.

First, the details, as simple and concise as I can make sense of them. Technically, Ono Pharmaceuticals, a Japanese company, owns the patent for PD-1. Pharmaceutical patents are fairly complex; the BMS patent covers the “method of use,” which means (I think) how, and how much of a drug is administered (as opposed to a product patent - the more common type that covers the chemical makeup and/or manufacturing process). BMS licensed the patent from Ono, and thus is claiming Merck developed a drug that was already patented, and owes royalties. Merck is claiming the lawsuit is without merit (although a possible confounding factor is that Merck just lost a challenge of an European patent, opening itself up to both arguments and increased royalties exposure).

OK, so now that all the easy reading is finished - what does this lawsuit mean for those of us outside the courtroom? My first inclination, as a patient who writes about the lives of patients, is "this flat-out goes against the best interest of the people needing the medicine." I simply couldn’t think of a way it could benefit the end customer (but hey, aren’t most lawsuits to the detriment of the average American consumer?). Worse, would this inhibit pharma from creating more treatments because a rival corporation holds a patent?

Patents are designed, in part, to fuel innovation by protecting the considerable investment required to discover, develop and commercialize a compound. The biggest concern over this courtroom tennis match is a large judgment for the plaintiff actually becomes a deterrent to future growth; what if the next PD-1-esque breakthrough is languishing on a shelf somewhere because a company cannot or is not able to bring it to market? What if a competitor decides that the ROI isn't enough to risk the cost of clinical trials and filings, just to pay a handsome royalty fee, or worse yet, end up in federal court? What happens when the right investigator works for the wrong research or pharmaceutical entity?

This is amplified when a patent-holder is dragging its feet in development (or, worse yet, not developing it at all). BMS wasn’t exactly galloping forward with nivolumab (at least in melanoma), and you wonder if they would have continued to be deliberate with their development had Merck not gone cruising past them. Strategically, economically, it may have been the right thing for BMS to do; but try telling that to all the patients who will get PD-1 for the first time starting from the September 4th Keytruda approval date. My guess is a significant number would not be around to discuss it by the time Opdivo finally gets regulatory approval in the US (it should be filed by the end of September, with approval likely for early 2015). Sort of like Frank Shirley says in Christmas Vacation, “Sometimes things look good on paper, but lose their luster when you see how it affects real folks.”

Having a pharma industry background, I have a decent understanding of how "the machine" functions. Insane prices are justified by the equally insane costs to bring a drug to market, not to mention cover the costs of other promising compounds that didn't work as expected after millions were spent determining their safety and efficacy. It's a business, I get it. At the heart of every pharma company are smart, dedicated people who have a passion for making the world a better place through medicine. Sometimes, the pretty amazing work they do can be overshadowed by the other invested groups in drug development - the agencies that regulate, the hospitals that distribute, and the insurance companies that reimburse the product, plus the investors that demand earnings and, of course, the government that cannot keep out of the overall mess healthcare has made of itself.

The counter-argument to the patient side is pharmaceutical companies must be afforded protection for their significant investment; few of us have a spare billion laying around and wouldn't mind sacrificing profits after doing a lion’s share of the legwork to create a new product to sell. That is the conundrum when pharma development is centered in a free market structure; part of the fabric of a capitalist society is that innovation is spurned by both demand, and ability to capitalize on that demand with the protection of investment.

In the end, it seems there is going to be little tangible impact for melanoma patients, and probably on the pharmaceutical industry. No one is stopping Keytruda from shipping to cancer centers, no doctors are prevented from prescribing it to patients who need it. I still worry that somewhere, someone will be discouraged from pursuing Compound X vs. Compound Y, simply because of a competitor's patent on X makes it less attractive to pursue. Surprisingly, former pharmaceutical colleagues I spoke to did not think this was a concern; while revealing they sometimes focused on a promising drug because their employer held the rights, they also assured there are plenty of experimentations that cross patent boundaries.
In the end, this really comes down to the shuffling of paper and money between the suits in the executive offices and the shareholders they represent. Keytruda is going to be available (as will Opdivo, shortly) and both Merck and Bristol-Myers will profit. Some judge will decide whether Merck should pay BMS for “renting” the PD-1 rights, much like Amtrak leases its rail lines to SEPTA, NJ Transit, and others. If Merck needs to fork over a “finder’s fee” to BMS and Ono, my guess is it will still be worth it to them in the long run. I know that it has certainly been worth it for myself and the many others who are receiving Keytruda, or who will be starting their road to recovery soon. Here’s hoping the settlement reached will encourage more innovation and collaboration for the benefit of the end consumer - patients like you and I.

http://www.philly.com/philly/blogs/patient1/Bristol-Myers-Squibb-sues-Merck-over-Keytruda-What-does-it-mean-for-us.html