Merck not only loses hep C case against Gilead, it gets stuck with the bill

Justice statue with sword and scales

Merck & Co. was sitting pretty earlier this year after winning a legal dispute over sofosbuvir, the active ingredient in Gilead's multibillion-dollar babies Sovaldi and Harvoni. But all of that turned around when a judge threw out the victory and snatched back the $200 million Merck had been awarded. Now, to add insult to injury, Merck has been handed a $200 million bill for Gilead’s legal fees.

In a filing on Thursday, U.S. District Judge Beth Labson Freeman said that Gilead was entitled to relief from the fees it incurred while defending the case, Reuters reports.

Merck had won the case in March, but then in June, Labson Freeman reversed the decision, saying she found “a pervasive pattern of misconduct” by Merck ($MRK) in the patent fight. A retired Merck scientist and lawyer “intentionally fabricated testimony” about early discoveries that led to the development of next-generation hepatitis C drugs, including Gilead’s blockbuster duo, Harvoni and Sovaldi, the ruling states. And Merck supported the “bad faith conduct,” the judge said.

Merck, which has trailed Gilead in the lucrative hep C market, had hoped to capture a piece of Gilead’s enormous revenue stream from Harvoni and Sovaldi. The earlier jury verdict delivered only a $200 million award but also opened the way for Merck to pursue royalties from the two blockbuster drugs’ ongoing sales. Merck’s rival hep C cocktail, Zepatier, recently won FDA approval, but Gilead’s meds have an enormous head start in the market, with more than $23 billion in combined sales since their launches.

Merck said earlier that it intended to appeal, saying the judge’s ruling “does not reflect the facts of the case.”

- read the Reuters story

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