American Journal of Law & Medicine

Merck KGAA v. Integra Lifesciences I, Ltd: implications of the Supreme Court's decision for the people who matter most ... the consumer.


Sales of brand and generic pharmaceuticals in the United States reached $274.7 billion in 2006. (1) Consumers in this country, including the federal government, are paying tremendous amounts of money for drugs and the cost continues to be a growing concern for all parties involved. Part of this increased cost encountered by consumers can be directly attributed to the ever-increasing costs manufacturers must cope with in the development of new drugs. Economists estimate that it takes twelve to fifteen years to develop a single new drug and have it approved by the Food and Drug Administration ("FDA"). (2) The average cost: $800 million. (3) For every 10,000 compounds investigated, only five are ever tested as potential medicines in clinical trials and only one is ever approved for patient use. (4) Of all the drugs approved by the FDA, only three out of ten generate revenues that meet or exceed average research and development costs. (5) Thus, the pharmaceutical industry and consumers have great incentive to find ways to expedite the development of new drugs while controlling the costs associated with research and development.

The United States Constitution authorizes Congress "to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." (6) Federal patent power stems from this provision of the Constitution, (7) and is currently expressed by Congress in the Patent Act of 1952 ("Patent Act"). (8) One goal of the Patent Act is to encourage the creation and disclosure of innovative technologies by granting inventors the reward of an exclusive monopoly to market and sell their product for a limited period of time. (9) Temporary monopoly status is often necessary to provide sufficient incentive for drug companies to invent new products that benefit consumers. (10) Without patent protection, many new drugs could be quickly and easily duplicated by other manufacturers, preventing the innovator firm from obtaining enough reward to justify its investment. (11)

When the patent on a protected drug expires, generic drug manufactures enter the market and begin selling generic copies of the exact same chemical formulation. (12) Prior to 1984, a generic drug manufacturer was delayed from entering the market by the length of time it took for the generic company to gain regulatory approval. (13) This was so because, during that period, the law prohibited the use of an already patented invention to gain approval. (14) The process changed, however, when Congress enacted the Drug Price Competition and Patent Term Restoration Act of 1984 ("Hatch-Waxman Act"). (15) This legislation was designed to increase the availability of low-cost generic drugs while attempting to "balance two conflicting policy objectives: to induce name-brand pharmaceutical firms to make the investments necessary to research and develop new drug products, while simultaneously enabling competitors to bring cheaper, generic copies of those drugs to market." (16)

Essential to achieving this purpose was the enactment of a "safe harbor" provision, codified at 35 U.S.C. [section] 271(e)(1). (17) This section provides that it "shall not be an act of infringement to make, use, ... or sell ... a patented invention ... solely for uses reasonably related to the development and submission of information under a Federal law which regulated the manufacture, use or sale of drugs." (18) The provision was certainly intended to protect research that directly generated information required under the Federal Food, Drug, and Cosmetic Act ("FDCA"). (19) Yet, it also had the effect of facilitating investigational research that is neither part of an FDA application nor expressly required under law. (20)

On June 13, 2005, the Supreme Court decided Merck KGqA v. Integra Lifesciences I, Ltd. (21) In this case, the Supreme Court attempted to determine the scope of [section] 271(e)(1). The Court held that the exemption set forth in the "safe harbor" provision of the patent code protected preclinical studies of patented compounds that could be submitted to the FDA in the regulatory-approval process. (22)

This Note will focus on the likely implications of the Supreme Court's broad interpretation of the safe harbor provision as expressed in the Merck decision. Part II will address patentee rights prior to the enactment of the Hatch-Waxman Act. It will also discuss the Act itself, including its legislative history, and the establishment of the safe harbor provision. Part III will address the series of cases leading up to Merck and dissect the Supreme Court's ruling in the case. Part IV will examine the impact of the Court's decision on the pharmaceutical industry and ultimately on the American consumer. Finally, this Note concludes in Part V that the Supreme Court was correct in ruling that the activities of Merck and the other defendants were covered by the "safe harbor" provision and in expressly endorsing a broad safe harbor exemption which will eventually benefit consumers.


Congress enacted the Hatch-Waxman Act with two stated goals in mind. First, the Act was intended "to make available more low cost generic drugs by establishing a generic approval procedure for pioneer drugs." (23) The second purpose of the act was "to create a new incentive for increased expenditures for research and development of certain products which are subject to pre-market government regulation." (24) The safe harbor provision is an essential tool in accomplishing these goals. While the plain language of [section] 271(e)(1) makes clear its applicability within the context of a generic drug manufacturer seeking FDA approval, courts have had to define the exact scope of the statute. (25) Through the use of tools of statutory interpretation, courts have developed a framework under which to analyze the activities covered by the safe harbor provision.


The origins of the "safe harbor" doctrine, the common law experimental use defense to an infringement, like many doctrines in patent law, dates back to the days of Justice Story. (26) More recently, the Court of Appeals for the Federal Circuit, in Madey v. Duke University, (27) narrowed the availability of this defense to a limited set of circumstances. The court held that the defense was limited to actions performed "for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry" and the defense was unavailable at the first indication of commercial purpose. (28) The court additionally noted that "use in keeping with the legitimate business of the alleged infringer does not qualify for the experimental use defense." (29) Limiting the safe harbor doctrine in this way makes clear that this defense does not offer much security to quell the fears of potential patent-infringement defendants, especially not potential defendants in pharmaceutical industry. (30)


The Hatch-Waxman Act was introduced, in part, as a response to a decision by the Court of Appeals for the Federal Circuit. (31) In Roche Products, Inc. v. Bolar Pharmaceutical Co., Inc., (32) plaintiff Roche was the assignee of the rights in a patent which expired on January 17, 1984. (33) One of the chemical compounds disclosed in the patent was flurazepam hydrochloride ("flurazepam hcl"), the active ingredient in Roche's successful brand name prescription sleeping pill "Dalmane." (34) Bolar, a generic drug manufacturer, was interested in marketing a generic equivalent to Dalmane once the patent expired (35) To get its generic drug to market immediately upon the expiration of Roche's patent, Bolar acquired flurazepam hcl from a foreign manufacturer and began to complete the steps necessary to file a New Drug Application to the FDA. (36) Roche filed suit seeking an injunction to prevent Bolar from conducting FDA-related experiments on flurazepam hcl during the patent term. (37)

On appeal from the district court's decision in favor of Bolar, the generic manufacturer argued that the use of the patented compound was protected by a common law "fair use" defense, (38) a contention rejected by the Federal Circuit. (39) Bolar then presented a public policy argument to justify the use of the patented compound. (40) Bolar argued that Roche was using the amended FDCA to effectively extend the life of a drug patent beyond the patent term, and thus the court should apply the infringement sections of the Patent Act, as they relate to the new drug market, differently than to other unregulated markets. (41) In holding that Bolar had infringed Roche's patent, the Federal Circuit refused to formulate an exception for the new drug market, stating that this was the role of Congress and not the courts. (42) A few months later, Congress acknowledged the court's suggestion and enacted the Hatch-Waxman Act.


Public policy favored providing low-cost drugs to the public as soon as possible. (43) To reiterate, Congress generally enacted the Hatch-Waxman Act to increase access to low-cost genetic drugs. (44) Nevertheless, Congress had to address two competing policy goals to effect the main aim of the Act. It had to encourage brand pharmaceutical firms to engage in the financing of research and development of new drug products while concurrently enabling generic drug manufacturers to provide generic substitutes of those drugs at a lower cost. (45) Titles I and II of the Act are the result of Congress' attempted balance of these competing objectives.

Title I of the Act created an abbreviated new drug application ("ANDA") process designed to expedite the arrival of generic drugs to the pharmaceutical marketplace by amending the FDA approval process. (46 Rather than filing a complete new drug application, manufacturers of generic drugs only need to complete an ANDA. (47) The generic drug manufacturer does not have to replicate the clinical trials and other testing performed by the brand manufacturer, but need only show the drug includes the same active ingredients and is the bioequivalent to the brand drug. (48)

Congress enacted Title II of the Hatch-Waxman Act as a means of mitigating the distortion to the patent term created by the FDA regulatory process. …

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