()

A Trenton, N.J., federal judge has denied GlaxoSmithKline’s bid to toss out a $106 million verdict against it for breaching a contract granting Mylan Pharmaceuticals exclusive rights to make a generic version of the antidepressant Paxil CR.

Ample evidence supported the jury’s finding that GSK breached its contract with Mylan concerning sales of Paxil, and nothing about the verdict presents a miscarriage of justice, U.S. District Judge Joel Pisano ruled July 16 in denying a new trial or judgment as a matter of law in Mylan v. SmithKline Beecham, 10-cv-4809. Similarly, in denying GSK’s bid for remittitur, Pisano rejected its claims that the damages calculation failed to account for short supplies of Mylan’s version of the drug.

The judge also granted Mylan’s motion for permanent injunction against GSK’s manufacture, distribution and sale of generic Paxil to another drug company, Apotex, finding that GSK should have ceased that conduct after the verdict. In addition, Pisano granted Mylan’s request for an accounting of supplemental damages it incurred as a result of GSK’s postverdict sales of its drug to Apotex.

A jury awarded the $106 million verdict March 25, after finding GSK breached an agreement with Mylan concerning sales of generic Paxil. The agreement stemmed from an earlier patent infringement suit by GSK, after Mylan sought approval to make a generic version of Paxil.

That suit was resolved with a June 2007 agreement granting Mylan exclusive rights to make a generic version of the drug in exchange for royalty payments for the nine-year period until the patent expired. After the Federal Trade Commission objected to the exclusive nature of the deal, GSK and Mylan modified their agreement in September 2007, creating two exceptions to Mylan’s exclusive rights to sell generic Paxil, according to court documents.

The first exception provided that, where GSK learned a third-party generic company filed an Abbreviated New Drug Application with the U.S. Food and Drug Administration to make generic Paxil, and brought a patent infringement suit, GSK could settle the suit by entering into a licensing agreement. The second provision said that GSK or an affiliate could sell its own generic version of the drug two years after Mylan launched its generic version, according to court documents.

GSK later brought a patent infringement suit against Apotex when that company announced plans to sell a generic version of Paxil. That case was settled with an agreement calling for GSK to produce and sell generic Paxil to Apotex, court documents said.

Mylan, of Canonsburg, Pa., sued GSK for breach of contract after learning of its deal with Apotex. Mylan claimed GSK violated the second provision of the agreement, allowing GSK or an affiliate to sell a generic version of the drug, since Toronto-based Apotex is not affiliated with GSK, whose headquarters are in Philadelphia, according to court documents.

GSK claimed its deal with Apotex was consistent with the second provision and, in February 2012, Pisano agreed, granting the company summary judgment. But the U.S. Court of Appeals for the Third Circuit overturned that ruling in July 2013. The breach of contract claim proceeded to trial in March 2014 and the jury found GSK’s deal with Apotex breached its agreement with Mylan.

Following the March 25 verdict finding it breached its contract with Mylan, GSK continued to supply generic Paxil to Apotex, according to court documents.

Pisano found the injunction was warranted because after the verdict, GSK “knowingly engaged in the behavior the jury found to be a breach of the licensing agreement. Thus, by entering an injunction, the court is not harming GSK but rather, is forcing it to cease engaging in conduct that it should have ceased already.”

Mylan is entitled to an accounting of sales, and Apotex’s resales, of Paxil CR because all of GSK’s postjudgment motions have been resolved and the verdict stands, Pisano said. He also awarded prejudgment interest starting with the period of GSK’s breach of contract in 2010 but granted an exclusion for the 16-month period Mylan was pursuing its appeal at the Third Circuit. Pisano also denied Mylan’s request for a 2 percent enhancement of the prejudgment interest rate, finding no unusual circumstances to warrant an increase.

GSK spokesman Robert Perry said, “We are disappointed in the decision, but of course, will comply with the court’s directions.”

GSK was represented by Thomas Cunniff of Fox Rothschild in Lawrenceville, N.J., along with Kirkland & Ellis in Washington, D.C. Mylan’s lawyers were John Vazquez of Critchley, Kinum & Vazquez in Roseland, N.J., along with Alston & Bird in New York.

Contact the reporter at ctoutant@alm.com.