Do you have to pay royalty during clinical trials?
Whether you are doing clinical trials for drug or medical device you need to be aware of a safe harbor provision in the US patent. This exemption from infringement is known as Section 271(e)(1) and is especially important for the pharmaceutical industry. This issue is made famous by the Merck vs. Integra case. The Supreme Court reviewed a decision of the court of Appeals for the Federal Circuit and held that Merck was not guilty of patent infringement for using Integra’s patents for clinical research.
Integra Lifesciences purchased all the patents from a company called Telios Inc. in a bankruptcy sale for $20 million. Merck & Co., Inc. a United States pharmaceutical company used one of those patents to conduct clinical research in order to submit an Investigational New Drug Application (“IND”) to the FDA. The patent in question relates to peptides involved in interactions between cell surfaces and the extra-cellular matrix namely the RGD peptide.
The Supreme Court concluded that Merck’s actions fell safely within an exception enacted by the congress especially for the pharmaceutical industry. This exception known as the “§271(e)(1) exception” states :
‘It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention …solely for uses reasonably related to the development and submission of information under the Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.’
In brief the exception provides a “safe-harbor” from patent infringement for research reasonably related to an FDA submission.
Integra argued that Merck conducted pre-clinical studies related to efficacy, mechanism of action, pharmokinetics, and the pharmacology and not just on the toxicology as required by the IND application and hence had conducted research outside the exemption. The Supreme Court however dismissed the argument by saying that FDA specifically asks if the clinical trial poses an “unreasonable risk” for which to be assessed requires the tests conducted by Merck to be done. They also concluded that as long as there is reasonable basis for believing that the experiments will produce the information that are relevant to an IND or NDA (Non Disclosure Agreement) it falls under the exception.
The broader issue relates to research exception at universities for patented technologies. Prior to the Bayh-Dole act it can be argued that academic research is for the purpose of “philosophical experimentation” with no “intent to use for profit.” However almost all universities have a technology transfer office and it is hard to argue that there is no intent to commercialize the research result.
However some questions do remain unanswered. The “§271(e)(1) exception uses the term “patented invention” and not just “patented drug” or “patented compound” and so the limits of this exception are not clearly defined.
Links
Merck v. Integra : The Supreme Court’s Take On The Research Exception To Patent Infringement , Les Nouvelles, June 2006
Supreme Ct. to Hear Merck Case – SMITH HOPEN INTELLECTUAL PROPERTY LAW
Merck vs. Integra – Letters from Babylon
It started off many years ago as the "Experimental Use Exception". It was expanded by case law and statute to include Clinical studies for FDA approval. So if you are using a drug in a Clinical Trial, you are not infringing any patent for that drug. By HC
Clinical Trial inventory is segregated and never mixed with commercial product, although there will be no difference most generally. We would not pay royalties on Clinical Trial inventory as it should not be product released for commercial use. By TS
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