Johnson & Johnson Inflames Abbott

• Email
• Share
• Print

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.

Further Foolishness:

• Roundtable: Lessons from the Madoff mess.
• Bonds beat stocks, but not really.
• REMS: Not just for sleeping anymore.