WASHINGTON -- The Supreme Court agreed to step into a dispute Friday over how far a patent can go to thwart a rival drug company's efforts to conduct research, a question with big-money ramifications in the pharmaceutical industry.
Justices will review a lower ruling that a competitor's patent prohibited Germany's Merck KGaA from beginning research into a potential new anticancer drug, even if the drug could not feasibly be marketed until after the patent expired.
Justices Sandra Day O'Connor and Stephen Breyer did not participate in deciding whether to hear the case. O'Connor and Breyer own shares in the U.S.-based Merck & Co. (NYSE MRK), which was affiliated with Merck KGaA in the 1800s. The two companies are now separate.
The case centers on a patent held by Integra LifeSciences Holdings Corp. on molecules called peptides that was set to expire by 2006. Integra sued for patent infringement after Merck set up animal trials for a promising cancer therapy as a first step in a decade-long plan toward possible approval.
The peptides, or biological molecules, contain a specific amino acid sequence that researchers hope could inhibit tumors.
Merck contends it was entitled to the "head-start" research under a Food and Drug Administration exemption for studies "reasonably related" to a future drug application, saying it would promote the innovation of cutting-edge treatments while respecting the rights of patent holders.
The Washington-based U.S. Court of Appeals for the Federal Circuit, however, ruled that the FDA exemption did not extend to exploratory research -- only later-phase, human trials typically involving generic drugs. It reasoned that Congress intended only to promote the growth of generics when it passed the exemption in 1984.
"The FDA has no interest in the hunt for drugs that may or may not later undergo clinical testing for FDA approval," the court stated
Merck's appeal for review has the backing of the Bush administration and AARP, the advocacy group for older Americans. They argue in friend-of-the-court filings that the Federal Circuit's broad definition of patent infringement will deter important drug research, which will hurt older Americans amid skyrocketing prescription drug costs.
From 1990 to 2002, spending on prescription drugs nationwide has quadrupled from $40.3 billion to $162.4 billion, according to AARP.
"If this decision stands, the inevitable effect will be that the costs of drug development will be driven up even further and it will serve to delay the development of new medicines," the group states.
The case is Merck v. Integra Lifesciences, 03-1237. Justices will hear the case this spring, with a ruling expected by July.
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