[Ip-health] WSJ: In Drug Mkt, Scientists Assert Power of Patents

[Mike Palmedo]

http://online.wsj.com/article/0,,SB108414082395206169,00.html?mod=home%5Fpage%5Fone%5Fus

In Drug Market, Scientists Assert Power of Patents

Dr. Demuth Argues He Owns New Diabetes Treatment; Will Manufacturers
Agree? An Enzyme's Surprising Role

PETER LANDERS
WALL STREET JOURNAL
May 10, 2004; Page A1

HALLE, Germany -- A new method for treating diabetes is so promising
that three of the world's biggest drug companies are planning to test it
in thousands of patients. If it works, the drug promises to eliminate
side effects of existing medication, such as fainting spells.

The market may be worth billions of dollars -- and Hans-Ulrich Demuth
wants a share of that money. Two and a half years ago, the 51-year-old
eastern German scientist and his colleagues captured a U.S. patent that
covers the new treatment method. He says the three companies, and anyone
else who markets a similar drug, owe him royalties. One of the three,
Merck & Co., has agreed to pay up.

Companies searching for the next wonder drug are increasingly running
into aggressively entrepreneurial researchers like Dr. Demuth, who
dabbles in real-estate speculation on the side. In an era when a drug
can bring in billions of dollars a year in sales, more and more
scientists are securing patents for discoveries that have only hazy
applications -- but might be the basis of a blockbuster down the road.
The process is made easier by broad patents that allow scientists to lay
claims to entire methods of treatment, not just specific products.

Scientists are also demonstrating a growing willingness to pursue their
claims in court. The University of Rochester has been fighting for
royalties on Pfizer Inc.'s $3 billion-a-year arthritis drug Celebrex.
The university contends that Celebrex falls under its patented method
for creating a targeted painkiller, based on decades of research into
how aspirin works. In February, a three-judge panel on a federal appeals
court sided with Pfizer, calling the patent too general. The university
has asked the full court to reconsider the ruling.

Another fight has broken out over a Massachusetts Institute of
Technology patent for manipulating genes to produce more of a certain
protein. This month, a small Massachusetts company that licensed the
method from MIT sued ImClone Systems Inc., maker of the newly approved
cancer drug Erbitux. The suit says ImClone used the MIT technique to
manufacture Erbitux. ImClone says the suit is without merit.

Intense Interest

Dr. Demuth's patent and the research behind it have attracted intense
interest because the market for diabetes drugs is growing rapidly.
Novartis AG estimates that more than $11 billion of diabetes medicine
will be sold this year. That will likely rise as people struggle with
obesity, which can lead to Type 2 diabetes. This variant of the disease,
which accounts for more than 90% of cases, typically means that the
pancreas isn't producing enough insulin to break down sugars from food.
In the U.S., it affects 5% of the population and costs as much as $200
billion a year to treat.

Dr. Demuth's patent covers one approach to treating diabetes: blocking
an enzyme called DP-4, which impedes insulin production. Studies suggest
that "DP-4 inhibition" could let diabetics take an insulin-triggering
pill that would kick in only after meals, when blood sugar spikes.

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