In a unanimous decision, the Supreme Court opened the door for generic drug manufacturers to conduct pre-clinical drug testing on patented drugs. Integra brought the case, Merck KGaA v. Integra Lifesciences I, Ltd., against Merck for using patented tripeptide sequences that show promise in combating certain types of cancer. Integra alleged that Merck’s research of the patented compounds constituted patent infringement and sued Merck for damages. Integra prevailed both at trial and on appeal to the Federal Circuit by convincing the court that Merck had infringed Integra’s patent when they conducted pre-clinical research. But the Supreme Court’s opinion, which was widely supported by both the Bush Administration and the AARP, stated that Merck’s use of patented material was protected by a statutory safe harbor that allows generic drug manufacturers to conduct research using patented information.

Integra owns five patents to a tripeptide sequence that promotes cell adhesion and may reverse the effects of certain types of cancer. Beginning in 1988, Merck funded research of Integra’s tripeptide compound at the Scripps Research Center. Early trials showed promising results as the institute succeeded in reversing tumor growth in chicken embryos. Based upon their success, Scripps entered into an agreement with Merck to conduct pre-clinical testing to identify suitable drug compounds that could eventually lead to clinical studies that would determine the efficacy and safety of the drug. After learning of Merck’s research using their patents, Integra filed a patent infringement suit against Merck in 1996. Integra alleged that Merck had willfully infringed Integra’s patents and sought damages and declaratory judgment. After a jury awarded damages to Integra, Merck appealed to the Federal Circuit. The Federal Circuit also ruled in favor of Integra, finding that the safe harbor is available only to clinical testing. The Supreme Court reversed.

In general, the use of patented inventions is barred by federal law. However, the Federal Food, Drug, and Cosmetic Act (“FDCA”), 21 U.S. C. Section 301 et seq., provides a safe harbor for generic manufacturers to conduct research using patented information. 35 U.S.C. Section 271(e)(1) 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 a Federal law which regulates the manufacture, use, or sale of drugs . . .”

Congress passed Section 271(e)(1) in 1984 as part of the Drug Price Competition and Patent Term Restoration Act. The Act was passed for two reasons. First, Congress sought to restore patent terms to pharmaceutical companies that must often endure a lengthy procedure for FDA approval of new drugs. Second, they sought to increase competition in the market by creating a safe harbor for generic drug manufacturers. Section 271(e)(1) protects generic manufacturers by allowing them to conduct drug testing while the original patent is still enforceable. This allows generic drugs to enter the market as soon as the original patent expires.

Much of the argument in the Merck case revolved around the exact meaning of Section 271(e)(1)’s directive that research may be done “solely for uses reasonably related to the development and submission of information.” Construed narrowly, the statute only applies to experimentation conducted late in the process where drugs are tested to determine efficacy and safety. Such information would later be submitted to the FDA as part of an Abbreviated New Drug Application (“ANDA”) for approval as a generic drug. But construed broadly the statute applies to all levels of testing that are “reasonably related” to submitting information to the FDA. A broad interpretation extends not only to the development of generic drugs, but also to the possible development of new drugs while the patent is in force.

A divided panel for the Federal Circuit initially interpreted the statute narrowly, construing it to apply only to clinical trials that would ultimately be submitted to the Food and Drug Administration (“FDA”) for approval. The Federal Circuit believed that the safe harbor provision applies only to clinical trials that will eventually be submitted to the FDA for approval of a new drug. In its analysis, the Federal Circuit focused on the use of the word “solely”, concluding that it restricts the safe harbor to a limited class of experiments that are only designed to test the efficacy and safety of a new generic drug. Furthermore, the Federal Circuit believed that the legislative record supported their interpretation of the statute. As they noted, Congress intended the safe harbor to have only a de minimus impact on the patentee’s right to exclude other competitors. Thus, they believed that the exception applied only to clinical tests – those that determine the efficacy and safety of a generic drug.

But Merck conducted pre-clinical trials as opposed to clinical trials. While clinical trials are designed to test the safety and efficacy of a drug, Merck’s pre-clinical trials were focused on discovering new uses for the tripeptide sequences and the most effective compounds for administering them. Thus, the Federal Circuit determined that Merck was infringing on Integra’s patent and could not seek shelter from Section 271(e)(1)’s safe harbor.

In a unanimous opinion, the Supreme Court reversed the Federal Circuit’s decision and agreed with Merck. They found that the safe harbor provision is much broader than the Federal Circuit believed. According to the Supreme Court, Section 271(e)(1)’s safe harbor extends beyond clinical testing and the creation of generic drugs. “Rather, it exempted from infringement all uses of patented compounds “reasonably related” to the process of “developing information for submission under any federal law regulating the manufacture, use, or distribution of drugs.”

The Supreme Court recognized that drug research is a process of trial and error. Accordingly, results cannot be guaranteed at any stage of testing. Section 271(e)(1) was designed to account for this uncertainty. Therefore, any tests designed to reach the goal of submitting any information to the FDA for approval must only be “reasonably related” to that purpose. By construing the Section 271(e)(1)’s safe harbor broadly, the Supreme Court left “adequate space for experimentation and failure on the road to regulatory approval.” They went on to say that “at least where a drugmaker has a reasonable basis for believing that a patented compound may work, . . . that use is ‘reasonably related’ to the ‘development and submission of information under . . . Federal law.'” Accordingly, all research reasonably related to any submission of information to the FDA is exempted.

The FDA requires information that summarizes the pharmacological, toxicological, pharmacokinetic, and biological qualities of the drug in animals. Thus, the exemption extends well beyond the clinical trials necessary to create a generic drug. It extends to all stages of research provided the drugmaker has a reasonable basis for believing that the information will be submitted to the Federal Government for regulation by the FDA. This information can be discovered in pre-clinical trials, before clinical trials that determine the efficacy and safety of a drug are fully determined.

The Supreme Court’s decision enables generic drug manufactures to begin their research of patented compounds earlier in the process than was previously understood. As the Court noted:

“Congress did not limit Section 271(e)(1)’s safe harbor to the development of information for inclusion in a submission to the FDA; nor did it create an exemption applicable only to the research relevant to filing an ANDA for approval of a generic drug.”

So long as the research is “reasonably related” to the goal of submitting information to the FDA, then the safe harbor applies and a generic manufacturer cannot be sued for patent infringement.

Authored by:
Robert M. Ziff