Drug makers see high stakes in patent fight

WASHINGTON -- The Supreme Court today hears oral arguments in a case that turns on a simple, but essential question for drug companies seeking Food and Drug Administration approval: Which experiments can they conduct without incurring liability for infringing on others' patents?

According to the Pharmaceutical Research and Manufacturers of America, the lower court ruling the Supreme Court agreed to review ''represents a direct and substantial threat to future drug development," an activity its members spent $38 billion on last year. PhRMA, the drug industry's Washington lobbying organization, was among scores to file friend-of-the-court briefs.

The Supreme Court ruling in Merck KGaA v. Integra LifeSciences could clarify a section of law made murky by the lower court's ruling.

Congress, in an attempt to speed the arrival of cheaper generic drugs, in 1984 allowed manufacturers to, under certain conditions, begin studies before patents expired on the brand name drugs. In a later decision, the Supreme Court said that FDA exemption was not limited to generic drug manufacturers.

Germany's Merck KGaA -- unrelated to the American drug company -- in 1995 agreed to work with a Scripps Research Institute scientist on a potential anticancer drug that Merck expected to test in humans.

They tested the safety and effectiveness of three drug candidates with the potential of starving cancerous cells of the blood they need to thrive, using animal studies to winnow the field to a single promising candidate. Integra LifeSciences, however, held various patents related to those peptides -- sequences of amino acids -- being studied. After Merck declined to enter into a license agreement, Integra sued in 1996, alleging patent infringement.

The case has worked its way through the courts, resulting in a $15 million jury damage award against Merck for infringing on the Integra patents, later reduced by a district court to $6.4 million.

In its ruling, the US Court of Appeals for the Federal Circuit said that such exploratory research does not qualify for the FDA exemption. The FDA ''has no interest in the hunt for drugs that may or may not later undergo clinical testing for FDA approval," the divided panel wrote.

The Supreme Court has received nearly two dozen legal briefs. ''It's a huge deal. Drug companies have been doing testing to get FDA approval, thinking that there's this protection out there," said Denise DeFranco, a partner in Foley Hoag's Boston office. DeFranco wrote the brief filed by an association of 16,000 intellectual property law lawyers.

''It's not pulling the rug out from under the entire approval process," she said. ''This decision has only messed things up insofar as it relates to animal studies. But how can you get to the human clinical study stage, until you march through that step of animal studies?"

E. Joshua Rosenkranz, who will argue Merck's case, said the legal question is an important one.

''Do we allow them to optimize the drug, which is to say, to tweak it to make it safer and more effective? Or, do they get the protection of the FDA exemption only at the point at which they've selected the candidate that they will move forward to the FDA?" said Rosenkranz, of Heller Ehrman, in New York.

Merck's case is bolstered by a Department of Justice brief and the participation of the Solicitor General's office in oral arguments.

Select preclinical studies, however, are eligible for the FDA exemption, said Cathryn Campbell, who represents Integra.

''But for them to receive it, they have to be supported by credible evidence, which was not present in this case," said Campbell, of McDermott Will & Emery in San Diego. ''Merck, in fact, took on the portion of the work that would be related to obtaining FDA approval. Merck had facilities that were appropriate for FDA-related experiments; Scripps did not."

Diedtra Henderson can be reached at dhenderson@globe.com.