United States: A Brief Analysis of the Significance of the Supreme Court’s Decision in Integra v. Merck

The United States Supreme Court’s June decision to reverse the Federal Circuit in Integra v. Merck KGaA (U.S. 2005) can be analyzed by examination of a table, which graphically analyzes the likely impact of Integra on a variety of common types of biotechnology patents. The table below summarizes the change in the law with respect to activity in biotechnology companies. As can be seen, there is no change in the law that has any effect on the activity of generic drug companies. Those companies could always develop generic drugs similar to those already on the market.

One significant change, however, is in the work on patented but nonmarketed drugs. The Supreme Court has now cleared the way for some research on such drugs to be performed without concern about patent infringement. In this way all companies can develop new drugs independent of the patent landscape. However, it costs a large amount of money to undertake that development. No company is incentivized from a business viewpoint to perform that work unless it also can get its own patent on the resulting drug. That means that while the work can be performed, the end result will still be nongeneric drugs for sale at the same high prices of other drugs. Of course, if the patent covering those drugs has not expired by the time the drug is on the market, the patent owner can still sue for infringement. Unlike the case with a generic drug, however, the patentee cannot get an automatic stay of sale of the new drug — this will increase litigation over drugs to the extent that such patents exist in the future. Note that this is good for both big pharmaceutical companies (Big Pharma) and small biotechnology companies alike. Both are looking for new drugs and both want to have freedom to see if patented drugs can be used.

The Supreme Court left unanswered the issue of research tool patents. While it seemed to support the concept that screening patents (where the company has a novel way to find new drugs) would probably not be exempt, the breadth of such support was unclear. This means that biotechnology companies that are based solely upon such patents may be in a more challenging position with regard to future funding and investment.

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