Bristol-Myers Squibb Company has lost an unusual breach of contract case against Matrix Laboratories Ltd., a generic drug company that distributes a low-cost generic version of BMS' HIV/AIDS drug Reyataz in 49 poor and developing countries. In a 20-page decision issued Monday, Bristol-Myers Squibb v. Matrix Laboratories, 12 Civ. 5846, Southern District Judge Paul Engelmayer (See Profile) dismissed BMS' claim that Matrix, a subsidiary of Mylan Laboratories Ltd., violated a litigation amnesty agreement between the companies by selling Reyataz to the Pan American Health Organization, which in turn distributed the medicine to AIDS patients in Venezuela. Engelmayer ruled that BMS' proper recourse is to sue Matrix for patent infringement, not breach of contract.
Under the terms of a 2011 "immunity-from-suit agreement" with BMS, Matrix can sell its generic version of Reyataz in India and 48 countries in sub-Saharan Africa without facing patent infringement claims. According to BMS, Matrix also sought its permission to sell its generic in Venezuela, despite the country not being covered by the program. BMS' lawyers at Mayer Brown sued Matrix in August 2012, alleging that Matrix sold a one-year supply of the drug to PAHO, knowing full well it would distribute the drug in Venezuela. BMS, which has applied for patents relating to Reyataz in Venezuela, pegged damages at $15 million.
