Johnson & Johnson falls short in a Remicade patent case as star drug slips in Q4

Johnson & Johnson fell short in its appeal of a Remicade patent decision. (United States Court of Appeals for the Federal Circuit)

With billions on the line between pharma giants Johnson & Johnson and Pfizer, an appeals panel upheld a decision to invalidate a key Remicade patent.

In a judgment entered Tuesday, the United States Court of Appeals for the Federal Circuit found a Remicade patent to be "unpatentable under the doctrine of obviousness-type double patenting" and affirmed the U.S. Patent and Trademark Office's prior decision. The patent was granted in September 2001 and was set to expire this September, according to PTO records.

A Pfizer spokesperson said it's "a good day for patients battling chronic diseases, because the court has ruled a key patent that J&J has asserted to block access to Inflectra is invalid." 

But, he added that J&J "continues to use their scheme of exclusionary contracts to maintain Remicade's monopoly position, and prevent patients, payers and providers from using its biosimilar Inflectra."

A J&J representative said on Wednesday the company was "disappointed" with the ruling.

"We believe that biopharmaceutical intellectual property protections, such as patents and data protection, enable us to invest in the discovery and development of tomorrow’s life-changing and life-saving new medicines," she said. "We’re proud of the impact Remicade has made in improving the health and lives of more than 2.6 million people worldwide and are committed to helping ensure Remicade remains accessible and affordable to patients."

RELATED: With its Remicade biosimilar stymied by the brand, Pfizer sues Johnson & Johnson for 'anticompetitive' dealmaking 

The decision comes at a tense time for the companies. Pfizer recently sued J&J for "anticompetitive" contracting on Remicade that it claims unfairly protects the big brand against biosimilar entrants. Inflectra has not gained meaningful market share since its 2016 launch.

Pfizer argued in court filings that J&J entered exclusive contracts that tie discounts on the existing Remicade patient base to a stipulation that payers don't use biosims. Pfizer's Inflectra sales demonstrate its struggles—the medication turned in just $74 million in the U.S. through the first 9 months of 2017.

RELATED: Could Pfizer's at-risk Inflectra launch set a biosimilars precedent for Amgen, Novartis? 

Remicade, on the other hand, generated $4.5 billion in U.S. sales last year, J&J reported Tuesday. That was a 6.5% decline versus 2016 as J&J has increasingly competed on price against cheaper biosims. In the fourth quarter, J&J experienced an 8.5% decline in U.S. Remicade sales.

"While this is more of a decline than the modest levels of erosion we experienced during the first three quarters of 2017, demand was relatively stable and the erosion was primarily driven by negative price," J&J CEO Alex Gorsky said on the company's conference call.

Questioned by Credit Suisse analyst Vamil Divan on the price subject, J&J's investor relations VP Joseph Wolk said Remicade's volume is still up "around the high 90%."

"So, all of the change that you saw in the quarter of about 9% down was associated with price declines," he said.

And now that J&J is facing off against a second Remicade biosim from Merck and Samsung, CFO Dominic Caruso said his company expects "acceleration of that biosimilar impact to Remicade" this year, declining to offer specifics. Remicade remained J&J's biggest selling drug in 2017, generating $6.3 billion in sales around the globe.

J&J's loss in the Remicade patent fight comes right on the heels of a legal setback with Zytiga, as the company came up short in an inter partes review against Argentum Pharmaceuticals last week. J&J now faces the prospect of generics this year to the blockbuster prostate cancer drug.