- Associated Press - Thursday, October 14, 2010

TRENTON, N.J. (AP) - Drugmaker Merck & Co. said Thursday it doesn’t expect arbitrators to rule until sometime next year on its multi-billion-dollar dispute with Johnson & Johnson over rights to two lucrative drugs for immune disorders.

That’s after an arbitration panel of three former federal judges heard and saw evidence from the rival drugmakers during hearings in New York that began in late September.

The dispute centers on rights to more than $2 billion in annual sales for two medicines for rheumatoid arthritis and other immune diseases, Remicade and successor drug Simponi. J&J argues that because Merck bought Schering-Plough Corp., J&J’s deal to share the drugs’ revenue with Schering-Plough should be terminated.

Merck, based in Whitehouse Station, N.J., said Thursday the hearings have ended, but refused to say when that happened or give any details.

“The next steps are that both sides are going to file post-hearing briefs to the panel,” followed by oral arguments, said Merck spokesman Steven Campanini.

A Johnson & Johnson spokesman said in an e-mail that evidence collection has finished in the arbitration, which J&J initiated in a bid to gain all global revenue from the drugs. They are on pace for combined sales of well over $7 billion this year.

“Oral argument is scheduled for late in this year. It is possible we could have a decision in the first half of 2011,” spokesman Bill Price wrote.

That revenue was a key reason Merck bought Schering-Plough for $41.1 billion last November. In a strategy to hang onto that revenue, Merck structured the purchase of Kenilworth, N.J.-based Schering-Plough as a reverse merger, meaning that technically Schering-Plough was listed as the surviving corporation even though the company retained Merck’s much better-known name.

Johnson & Johnson argued even before the deal was concluded that it still amounted to a change in control of Schering-Plough, which would allow Johnson & Johnson to terminate their revenue-sharing agreement.

Under that deal, Schering-Plough was entitled to sell Remicade _ and then Simponi after it was approved in April 2009 _ outside the United States, Japan and some Asian markets. Merck reported $1.34 billion in sales of Remicade alone in the first six months of 2010.

Through its Centocor Biotech subsidiary, Johnson & Johnson sells the drugs in the U.S. J&J, based in New Brunswick, N.J., had $2.3 billion in sales from Remicade in the first six months of this year.

Neither company has reported sales of Simponi so far, an indication they are still relatively low. New prescription drugs generally take a few years for sales to build up if competing drugs are already on the market, and Remicade is approved to treat more disorders than Simponi.

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