Incyte and Novartis Settle Long-Running Jakafi Royalty Dispute

Incyte Corporation and Novartis have reached a settlement agreement in their protracted legal battle over royalties for the blockbuster drug Jakafi, just days before the scheduled trial. This resolution marks the end of a dispute that has been ongoing since 2020, highlighting the complexities of pharmaceutical partnerships and revenue-sharing agreements.

Background of the Dispute

The conflict stems from a 2009 licensing agreement between Incyte and Novartis, which granted Novartis the rights to develop and commercialize Jakafi (ruxolitinib) outside the United States. Under this arrangement, both companies agreed to pay royalties based on Jakafi sales in their respective markets. However, in May 2019, Incyte allegedly made a unilateral decision to reduce its royalty payments to Novartis by 50% through 2021, with plans to cease payments entirely after that period.

Novartis filed a lawsuit in 2020, claiming that Incyte owed $27.5 million plus interest in missed royalty payments. The Swiss pharmaceutical giant argued that Incyte had leveraged its relationship with Novartis to grow from a company with approximately $9 million in annual revenues to a billion-dollar pharmaceutical powerhouse, only to attempt to "rewrite the parties' bargain" once it achieved commercial success.

Financial Impact and Market Performance

The settlement comes at a time when Jakafi continues to be a significant revenue driver for both companies. In the last fiscal year, Jakafi generated $2.7 billion in sales for Incyte, along with $418 million in royalty revenues. Novartis reported $1.9 billion in full-year sales for the drug, marketed as Jakavi outside the United States.

Incyte has expanded its Jakafi franchise with the introduction of Opzelura, a topical formulation of ruxolitinib, which is not included in the original license agreement with Novartis. This diversification strategy is particularly important as Jakafi is expected to lose its U.S. market exclusivity in 2028, prompting Incyte to focus on developing new revenue streams.

Implications for Future Pharmaceutical Partnerships

The resolution of this dispute underscores the importance of clear and adaptable agreements in pharmaceutical collaborations. As companies like Incyte grow and evolve, the terms of long-standing partnerships may come under scrutiny, potentially leading to legal challenges.

Both Incyte and Novartis have remained tight-lipped about the details of the settlement, with neither company immediately responding to requests for comment. The joint request to adjourn the planned trial in favor of a final settlement agreement suggests that both parties have found a mutually acceptable resolution to their differences.

As the pharmaceutical landscape continues to evolve, with increasing focus on innovative therapies and strategic partnerships, the industry will likely watch closely for any ripple effects from this high-profile settlement on future licensing and royalty agreements.