Merck could keep its patent edge by shifting Keytruda cancer drug to a simple shot

© Reuters. FILE PHOTO: The Merck logo is seen at a gate to the Merck & Co campus in Rahway, New Jersey, U.S., July 12, 2018. REUTERS/Brendan McDermid

By Michael Erman

(Reuters) - U.S. drugmaker Merck & Co hopes to patent a new formulation of its $20 billion cancer immunotherapy Keytruda that can be injected under the skin, allowing it to protect its best-selling drug from competition expected as soon as 2028.

For years Merck has relied on Keytruda to fuel its growth. The treatment, approved in 2014, harnesses the body's own immune system to fight cancers with dramatic results. Against advanced lung cancer, it has led to a five-year survival rate in about one-quarter of people compared to 5% of people historically.

But the key patents on Keytruda will begin to expire in 2028, opening the door to biosimilars - near copies of expensive biologic drugs whose complex molecules cultivated inside living cells make it impossible to manufacture exact copies.

Merck is testing in clinical trials two versions of the drug that can be injected subcutaneously, a quick alternative to infusions, the current delivery method in which patients receive an intravenous drip in a health office once every three or six weeks. The company reported early data from one of those trials last year.

While Merck has disclosed that it is developing subcutaneous versions of Keytruda, it has not previously said that it expects the new formulation to become the most widely used version of the drug after it is rolled out and an engine for growth toward the end of the decade.

If successful, Merck could begin marketing the new formulation within a few years, a top Merck executive told Reuters. It expects it to fuel Keytruda's growth as it gains approvals in earlier stage cancers. Keytruda now accounts for more than one-third of Merck’s sales.

"We believe that subcutaneous formulation has the potential to be novel, non-obvious and useful, which means we would get a new patent for it," Merck CFO Caroline Litchfield said in an interview, using the terminology for the criteria under U.S. law to determine what technologies merit a patent.

"The clock for that patent would start ticking from the time we would get that patent approved."

While some patients would likely still receive the original formulation if it is being administered along with chemotherapy or other intravenous drugs, the subcutaneous formulation could replace the IV version for most patients, Merck Chief Medical Officer Eliav Barr told Reuters.

    "In theory it could replace everywhere that Keytruda currently is used," Barr said.

Drug patents have a guaranteed term of exclusivity for 20 years after receiving a patent under U.S. law, but sometimes the companies are able to add additional patents that extend their exclusivity.

For example, the primary patent on Abbvie's arthritis drug Humira expired in 2016 but the drug will not face U.S. competition until 2023, in part because the company eventually received more than 130 patents that protect the drug.

Merck's patents on the subcutaneous version of Keytruda could protect that formulation until at least 2040, according to Tahir Amin, co-founder of drug patents watchdog group Initiative for Medicines, Access & Knowledge (I-MAK).

"It's the way the pharmaceutical companies now use that system -- it's all about taking up as much space as possible, making it difficult for anybody to enter," Amin said. "Keytruda is going to be the next Humira by all accounts."

Asked whether it was motivated more by patent issues than medical need, Merck said it was continuously focused on improving Keytruda and getting it to more patients.

Merck said it may seek patents for innovations in how the drug is used, its formulation, the size and schedule of doses and combinations with other drugs.

"These patent applications, if granted, may provide varying degrees of protection beyond 2028. However, we would continue to point to late 2028 as the most likely timeframe for biosimilar entry into the market," Merck said in a statement.

DO PATIENTS PREFER SHOTS?

Getting doctors and hospitals to adopt the new formulation before biosimilar competition arrives could help Merck protect more of its Keytruda revenue for longer but is not certain, analysts said. On average, they expect Keytruda revenues to top $30 billion in 2026 and $35 billion by 2028, according to Refinitiv data.

   "Theoretically, in the US, they could transition all of the market," Mizuho analyst Mara Goldstein said, "depending on how quickly they can get it to market."

    However, BMO Capital's Evan Seigerman said that private insurers in the U.S. might balk at paying for the more expensive branded product and prefer a biosimilar infusion version. Still, he believes the new formulation could allow the company to hold onto as much as 20 percent of its Keytruda revenue into the 2030s.

Two doctors interviewed by Reuters said they were not convinced that the new route of administration represents a significant enough clinical improvement over IV infusions to justify the additional system-wide healthcare costs that might be a product of Merck receiving a new patent.

    "I don't think it's going to improve the safety or the effectiveness of the drug," said Dr. Shailender Bhatia, an oncologist at the Fred Hutchinson Cancer Center in Seattle.

    Merck's Barr said the easier-to-use formulation of the drug could help patients' health by keeping them on Keytruda and on schedule, and could keep high-risk cancer patients from spending long times in hospital settings where they could be exposed to other diseases.

"From a quality of life and patient perspective, it's for sure going to be helpful," Barr said.

That view is backed by clinical studies that have found that patients prefer subcutaneous injections to intravenous administration which can be time-consuming and invasive.

How much hospitals and doctors embrace the method could reflect how they will be impacted by the change financially.

Hospitals are typically paid less to administer an injection than a long infusion. That could be offset somewhat if the drug's price is higher, since providers receive a percentage fee for physician-administered drugs, according to Lisa Mulloy, chief pharmacy officer for New York's Northwell Health hospital system.

Merck said it would not speculate on the expected price of pipeline products. The infusion's list price is about $185,000 per year, though the drug may cost less with company discounts.

Northwell's Mulloy said moving patients to subcutaneous versions of drugs also opens up spots in infusion centers for additional patients.