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MERCK MODURETIC PATENT SUIT: N.J. FEDERAL COURT REJECTS BIOCRAFT

Executive Summary

MERCK MODURETIC PATENT SUIT: N.J. FEDERAL COURT REJECTS BIOCRAFT argument that Merck's patent for the amiloride/hydrochlorothiazide combination is invalid because the product was an "obvious" invention. In a July 11 decision, the New Jersey Federal District court ruled in favor of plaintiff Merck, stating that the Moduretic patent "claims are sufficiently non-obvious so as to sustain the validity of the patent." Merck had filed suit against Biocraft following the generic firm's submission of an ANDA for the product in October 1985. Biocraft's argument of "obviousness" hinges on the similarity of the combination of amiloride and hydrochlorothiazide to an existing patent (called 813 by the court) "which speaks of the co-administration of a pyrazinoylguanidine [a class that includes amiloride] with other diuretic agents, among which is hydrochlorothiazide." Addressing that argument, the court said: "It is clear to this court, and I so find, that while the passages referred to in the 813 patent suggest that it is 'obvious to try' combining a pyrazinoylguanidine with another potassium losing diuretic, (one of which is hydrochlorothiazide), it does not teach the unique specific combinations of drugs as outlined in [Merck's] patent. It is well settled that 'obvious to try' is not the standard for determining obviousness and does not support a conclusion that an invention would have been obvious." The court went on to say that "since the 813 patent discloses in excess of 120 pyrazinoylguanidine and 10 possible potassium losing diuretics, there are more than 1200 possible combinations, of which the combination of amiloride and hydrochlorothiazide would be one. And there is no indication in the 813 patent as to the preference for amiloride as opposed to any other pyrazinoylguanidine compound, nor hydrochlorothiazide as opposed to other diuretics. Nor is there any hint as to the proportions that would be contained in the mixture." Therefore, the ruling continues, "while the 813 patent might titillate one's desire to experiment, it clearly does not teach and thereby make obvious the claims" in Merck's patent. In a July 13 release announcing the decision, Biocraft said it was "very surprised and disappointed in the court's ruling and presently intend[s] to appeal the decision." The firm's counsel, Finnegan, Henderson, Farabow, Garrett & Dunner, expects to file the appeal "imminently." Biocraft's ANDA for the product was approved on July 15, 1987. The approval, however, had a delayed effective date of April 17, 1988 under provisions of Waxman/Hatch, providing a 30-month marketing delay in patent challenge cases. During the course of the trial, the court issued a interlocutory injunction restraining marketing pending the outcome of the trial. Under the current ruling, Biocraft would not be able to bring the product to market until Dec. 24, 1990, the date Merck's patent expires. Commenting on the effect of the ruling on the company's financial position, Biocraft noted that it "will not have to pay any compensatory damages in the case since there have been no sales of the product, but legal fees for the first quarter of fiscal 1989 should be substantial." The firm said it is "optimistic about receiving another major drug approval towards the end of fiscal 19989 [year ending March 31]," but that it expects "sales and earnings for the first and second quarters [to] be below those of last year." In the first and second quarters of fiscal 1988 Biocraft reported sales of $ 28.5 mil. and $ 29.5 mil. and earnings of $ 4.9 mil. and $ 4.7 mil., respectively.

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