Amgen Patent Victory Sparks Biotech Rally, Ethics Debate

A federal court ruling preserving Amgen’s patent on its blockbuster anemia-fighting drug Epogen sparked a rally among biotech stocks Monday--as well as a debate about patents and the ethics of drug pricing.

The debate is not new, and this decision will not end it, but the resounding victory by Amgen (ticker symbol: AMGN) in the case starkly spotlights the power of biotech patents and raises anew questions about whether strong patent protection is a net good for medical research and society at large, observers said.

A federal judge ruled Friday that Transkaryotic Therapies (TKTX) had infringed on three of Amgen’s patents on Epogen, a drug that uses the protein erythropoietin to boost red blood cells and offset anemia’s debilitating symptoms. Two other patents, covering processes, were not infringed upon, the court found.

Thanks to a series of patents, the most recent of which was granted in 1999, Amgen’s monopoly on Epogen will extend to nearly 30 years if the decision is upheld on appeal. The drug’s monopoly already has paid for the cost of its research, experts said.

The ruling was cheered Monday on Wall Street, where Amgen, up $7.63 to $67.63, led a strong rally among biotechnology shares. The Nasdaq biotech index spiked up 4.6%, and other big winners included Applera-Celera Genomics (CRA), up $2.81 to $43.88, Protein Design (PDLI), up $3.63 to $58.25 and Millennium Pharmaceuticals (MLNM), up $2.81 to $48.

Investors’ verdict was just as clear on Transkaryotic Therapies, which plunged $10.88 to $23.13.

Some argue that the monopolies granted by patents--until 2015 in the case of Epogen--are too extensive and end up raising prices for consumers and stifling competition.

However, others contend that without strong patents, investors would not be willing to pay for drug development.

But even advocates of strong patents concede that Amgen’s array of protections was unusual and exceptionally strong.

In 1999 alone, the drug pulled in $1.8 billion in sales for Amgen, a figure that rises to $4 billion including sales through Amgen’s licensing partner Johnson & Johnson (JNJ).

Financial analysts said the decision was good news for biotech companies, with the obvious exception of Transkaryotic, because it reaffirmed the strength of patents in an industry that depends heavily on the monopolies they grant to recoup the often astronomical cost of bringing a new drug to market.