Mylan Pharmaceuticals hopes its $107 million verdict last week against GlaxoSmithKline is just the first of a two-part victory in preserving its rights to market generic Paxil.
A federal court jury in Trenton found Glaxo’s 2010 deal with a Canadian drug maker, Apotex, breached its 2007 contract giving Mylan rights to sell its version of the antidepressant.
Mylan will now seek to compel Glaxo to sever its agreement with Apotex, an equitable claim that could not go to the jury, says plaintiff lawyer John Michael Vazquez of Critchley, Kinum & Vazquez in Roseland.
Mylan, of Canonsburg, Pa., began selling generic Paxil in May 2008 under the 2007 contract, which gave it exclusive rights to sell generic Paxil except under two conditions—added to address antitrust concerns about the deal raised by the Federal Trade Commission.
Under the first scenario covered in the contract, a third party could sell generic Paxil if it filed for approval with the Food and Drug Administration, and Glaxo sued the filer, and Glaxo and the filer reached a settlement.
Under the second scenario, Glaxo or its affiliate could launch its own generic version of the drug two years after Mylan’s version goes on sale.
When, in 2010, Apotex, of Toronto, began selling a generic version of Paxil manufactured by Glaxo, but Mylan sued Glaxo and Apotex, claiming neither of the contractual scenarios had been met.
U.S. District Judge Joel Pisano granted summary judgment to Apotex and Glaxo in February 2012. Mylan appealed. In January 2013, the U.S. Court of Appeals for the Third Circuit affirmed as to Apotex but reinstated the suit against Glaxo, disagreeing with Pisano’s conclusion that the contract language was unambiguous.
On remand, Glaxo claimed the dispute could be reduced to a simple interpretation of contract language that “GSK or its affiliate may commence marketing and selling” generic Paxil two years after Mylan launched its version. Glaxo contended that the arrangement with Apotex was permitted under that clause.
Mylan, for its part, contended that Apotex was not a Glaxo affiliate. Mylan argued that New Jersey law controlled in the case because its contract with Glaxo specified so and earmarked the District of New Jersey as the venue for resolution of any disputes.
New Jersey courts have endorsed an “expansive view” that endorses application of “all of the relevant evidence that will assist in determining the intent and meaning of a contract,” Mylan said in its trial brief.
Further, Mylan officials who negotiated the 2007 contract testified at trial that they did not intend for the contract to permit another generic drug maker such as Apotex to commence sales of Paxil, Mylan asserted.
Finally, Mylan claimed the arrangement between Glaxo and Apotex does not meet the definition of “marketing and selling” as those terms are used in pharmaceutical industry parlance.
Mylan’s economic expert said the company lost $43.5 million due to past sales of Apotex’s generic version of Paxil and is expected to lose another $63.6 million in the future.
Vazquez says a critical factor in the jury’s consideration was that the entire agreement, read together and in context, appeared to support Mylan’s position. “You couldn’t just isolate any one phrase,” he says.
The plaintiff’s co-counsel was Alston & Bird in New York.
Glaxo’s lawyers, Thomas Cuniff of Fox Rothschild in Lawrenceville and Kirkland & Ellis in Washington, did not return calls about the case.
Mary Rhyne, a spokeswoman for GlaxoSmithKline, says, “We are disappointed in the outcome and are considering all our options.”
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