There's one definite advantage in getting a jury to award a patent infringement verdict on a drug that's been approved for nearly seven years: The award can be big. Really big.
Yesterday, a jury ordered Abbott Labs (NYSE:ABT) to pay Johnson & Johnson (NYSE:JNJ) $1.67 billion, after finding that Abbott's anti-inflammatory drug, Humira, infringes on Johnson & Johnson's patents. The health-care giant shouldn't bother checking the mailbox for the check anytime soon, though. Abbott has already said it plans to appeal.
Abbott's Humira, Johnson & Johnson's Remicade, and Wyeth's and Amgen's (NASDAQ:AMGN) Enbrel all target the same molecule. TNF-alpha plays a role in the immune response that causes inflammation in diseases like rheumatoid arthritis and psoriasis.
This isn't the only case that Johnson & Johnson is involved with regarding Remicade. It's also in arbitration with Merck (NYSE:MRK) and Schering-Plough (NYSE:SGP) over the marketing of the drug. Schering is Johnson & Johnson's international marketing partner, but J&J wants out of the deal, claiming there's a change in control at Schering following its acquisition by Merck. For its part, Merck claims that it has set up the acquisition as a reverse merger to avoid triggering the change-in-control clause. Considering J&J's track record -- it also won a patent lawsuit against Boston Scientific (NYSE:BSX) and Medtronic (NYSE:MDT) over drug-eluting stents -- I'd expect the company to roll the dice rather than settle with Merck and Schering.
Abbott can afford to pay the ruling -- Humira brought in $4.5 billion last year -- but obviously, it doesn't want to have to fork over that much cash. A $1.7 billion piggy bank could buy a couple of development-stage drugmakers with late-stage drug candidates. We'll have to wait and see how this plays out on appeal, but so far, Johnson & Johnson seems poised to keep Abbott irritated for some time to come.
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