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Why Gilead May Not Have to Pay Merck $200 Million After All

New Hepatitis C wonder drug is costlyNew Hepatitis C wonder drug is costly
GIlead's SovaldiPhotograph by MCT via Getty Images

A judge has ruled that Gilead Sciences (GILD) won’t have to pay rival Merck (MRK) $200 million in damages (and potentially billions in future royalties) due to misleading testimony from a former Merck scientist during a recent trial.

The Monday decision reverses a big legal win for Merck in March that would have given the company a significant boost in its next-gen hepatitis C drug scuffle with Gilead.

The case centers on a patent dispute in which Merck claimed Gilead infringed on two of its and partner Ionis Pharmaceuticals’ patents on compounds similar to the ones at the center of Gilead’s bestselling (and pricey) hep C meds Sovaldi and Harvoni. The two treatments brought in sales of $12.4 billion in 2014 and $19.1 billion in 2015.

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A northern California jury recently agreed with Merck’s argument. The decision could have given the company as much as 10% in U.S. royalties from the blockbuster drugs. But U.S. District Judge Beth Labson Freeman was swayed by Gilead’s subsequent argument that former Merck scientist Phil Durette delivered misleading and even contradictory testimony.

 

“Dr. Durette’s lying at his deposition, recanting that testimony at trial without proper prior notice to Gilead, and further untruthful testimony at trial all support the court’s conclusion that Merck did intend to deceive Gilead and the court,” wrote Freeman in her ruling.

“The judge’s ruling does not reflect the facts of the case, and we will be filing the appropriate motions to begin the appeals process,” Merck said in a prepared statement. The company is planning to appeal the judgment. “In its decision,” Merck continued, “the jury recognized that patent protections are essential to the development of new medical treatments. The compounds and methods at issue in this case facilitated significant advances in the treatment of patients with HCV infection, and achieving these advancements required many years of research and significant investment by Merck and its partners.”

Gilead did not immediately return a Fortune request for comment on the case.