Merck, Bristol-Myers, Ono Pharmaceuticals Agree to Settle Keytruda Patent Infringement Suit

Known as MSD outside of North America, Merck & Co (NYSE:MRK) has been long celebrated as a global health care leader that now operates in more than 140 countries to deliver modern, innovative medical treatments and new health solutions.

This week, however, the company has announced an agreement to settle over licensing issues with Bristol-Myers Squibb Co and Japan’s Ono Pharmaceutical Co Ltd in order to resolve all global patent-infringement litigation in relation to its well-known cancer drug, Keytruda. The settlement announcement comes only a day after Bristol-Myers commented it would aim to expedite approval for a combination of two immunotherapy drugs as a primary lung cancer treatment.

In this settlement, Merck will make one payment of $625 million Bristol-Myers and Ono and then will also pay a 6.5 percent royalty on all Keytruda sales between January 2017 and December of 2023. After this, Merck will pay a 2.5 percent royalty rate for an additional three years. Of these payment, Bristol-Myers will receive 75 percent. Finally, all parties involved have agreed to dismiss all claims as related to these legal proceedings.

You may not realize that Bristol and Ono had originally co-developed the first PD-1 antibody—known more commonly as Opdivo—so when Merck launched Keytruda, the pair filed a suit in September of 2014. The suit alleges that the proprietary Keytruda PD-1 antibody had actually infringed on US patents as well as patents throughout Europe, Japan, and Australia.

Merck chairman and chief executive officer Kenneth C. Frazier notes, “Today’s announcement eliminates uncertainty and enables us to continue to focus on KEYTRUDA, our immuno-oncology medicine, which is already helping thousands of patients around the world and becoming a foundation for the treatment of cancer through our industry-leading clinical development program.”

In addition, Bristol-Myers Squibb chief executive officer Giovanni Caforio comments, “Bristol-Myers Squibb and Ono’s agreement with Merck protects our scientific discoveries and validates the strong intellectual property rights we secured as the early innovators in the science of PD-1, a key mechanism in Immuno-Oncology that has proven to have transformational impact in cancer care.”