New contention a Merck scientist lied sends Gilead hep C patent fight back to court

Lady Justice

That patent fight that Merck ($MRK) recently won entitling it to a significant piece of Gilead Sciences' ($GILD) huge hep C drug profits? Well, you can forget that for now. A disclosure that a Merck scientist may have “lied” during sworn testimony has led the judge to reopen the case.

On Friday, U.S. District Judge Beth Labson Freeman gave lawyers until today to file additional pleadings, Bloomberg reports. She said she was “outraged” that retired scientist Phil Durette may have deceived jurors when he testified that he had made early scientific advancements that led to development of hepatitis C drugs that are now curing the disease.

In the legal proceedings, the two have been fighting over which was first to develop a compound used in the hepatitis C drugs. Gilead got its technology for Sovaldi and Harvoni when it acquired Pharmasset in 2011. Merck has done in-house development of its drug but at one point looked into buying Pharmasset, and therein lies the question over Merck’s scientist.

During deposition testimony, Durette had said he was not on a call with Pharmasset officials when Merck was looking into buying the company and Pharmasset’s compound was discussed, Bloomberg said. But during the trial in March, he referred to notes and said he was reminded that he had been on that call. Merck claims he did not intentionally deceive jurors and that his testimony did not equate to Merck’s conduct.  

But the judge said that was to be sorted out in court. “It may be the case, it may not,” Bloomberg reports Judge Labson Freeman saying at the hearing.

The jury had awarded Merck $200 million in March after factoring out Gilead's R&D investment and factoring in a 4% royalty. Gilead is appealing the verdict, and the final outcome could be years away unless the two reach a settlement.

Gilead got to market first with its drugs and has dominated the category. U.S. sales for its two drugs from launch through Dec. 31 totaled $12 billion for Sovaldi and almost $11 billion for Harvoni. Merck, which recently won FDA approval for its third-to-market hep C contender Zepatier, has sales expectations much more modest than those for Sovaldi and Harvoni. But its drug is already having an impact on Gilead's sales.

Last week, Foster City, CA-based Gilead reported Q1 revenues of $1.28 billion and $3.02 billion for Sovaldi and Harvoni, respectively. That was below analyst forecasts of $1.37 billion in sales for Sovaldi and $3.13 billion for Harvoni.

In a call with analysts, Gilead Executive VP Paul Carter attributed some of the miss to greater discounts offered to payers. He said after Merck’s Zepatier entered the market, Gilead offered some payers “a little bit of discount” to keep Harvoni on formularies without restricting patients’ access.

- read the Bloomberg story

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