Sample Research Paper On Current Event: Mylan V. Glascoklinesmith
The case No. 12-1539 between Mylan Pharmaceuticals Inc. and GlaxoSmithKline Beecham took place in the United States Court of Appeals for the Third Circuit on the 8th of January, 2013 after an appeal from the United States District Court for the District of New Jersey. The presiding Circuit Judges were Scirica, Ambro and Fuentes. The case involved the competing rights over the pharmaceutical drug paroxetine hydrochloride controlled release tablets in their generic form (Paroxetine Hydrochloride Extended-release (ER) Tablets). The Defendant was SmithKline Beecham Corp currently holding FDA rights and a patent to market and sell the drug paroxetine meant for the treatment of depression under its brand name Paxil CR.
As part of a settlement agreement in 2007, GSK had granted the plaintiff/appellant Mylan Inc. certain rights for the production, marketing and selling of the generic paroxetine. Later on in 2010, however GSK agreed after an unrelated settlement to begin the supply of GSK-produced generic paroxetine to Apotex Inc. for sale and marketing to the downstream customers. It is after this involment of a third party player in the market scheme that Mylan filed a lawsuit against Apotex and GSK claiming that the agreement in 2010 violated its 2007 licensing agreement with GSK (Mylan Inc.; Mylan Pharmaceuticals Inc. v Glaxosmithkline Corp 3) According to the case filed by Mylan, GSK was not permitted to produce and provide its own source of the generic paroxetine to any other generic drug company like Apotex for a competitive marketing and selling platform with Mylan (Mylan Inc.; Mylan Pharmaceuticals Inc. v Glaxosmithkline Corp 4).
The case had been initially filed at The District Court whereby the terms of the GSK-Mylan agreement were found to be unambiguous and did not limit to whom GSK was allowed to market and sell its original version of generic paroxetine. The court had therefore held that GSK did not breach its agreement when it agreed to provide Apotex with the GSK-produced generic drugs for sale and marketing and a summary judgment was made against Mylan on all claims.
The Court of Appeal however reversed the Court‘s grant of summary judgment on the breach-of-contract as a cause of action against GSK and remanded the parties to proceed to trial based on that claim (Mylan Inc.; Mylan Pharmaceuticals Inc. v Glaxosmithkline Corp 5). The grant of summary judgment on all the other claims was however affirmed. The District Court had denied the initial motion by GSK to strike the expert damages report by Mylan as moot and therefore based on its summary judgment rulings, the Court of Appeal vacated that denial for reconsideration on remand.
The U. S Court of Appeal therefore held a ruling that GSK did not violate the License Agreement with Mylan Inc. and that it only implied a covenant of good faith and fair dealing in the absence of proof of bad motive. Furthermore, because the court found no protectable right in the contract, it also held the claims by Mylan against Apotex, this therefore meant that both GSK and Apotex were entitled to judgment of law based on all the claims that were brought by Mylan. This ruling was made based on the principles of equitable discretion (Amoco Production Co. v. Gambell, 480 U.S. 531, 542, 107 S.Ct. 1396, 94 L.Ed.2d 542 (1987)). Mylan had on appeal challenged the District Court‘s interpretation of the Authorized Generic Clause together with its consequent grant of summary judgment that was in favor of the two other parties GSK and Apotex. According to Mylan, GSK was favored on Mylan’s contractual claims while Apotex was favored on Mylan‘s tortious interference claim. It is important to note that GSK maintains patent rights under U.S. Patent No 7,229,640 which is due to expire in July 2016. GSK is additionally authorized to market and sell paroxetine with respect to the pursuant FDA-approved New Drug Application, NDA No. 02-0936. NDA always provides a clear statement on the component of a drug, scientific data that indicates the safety and effectiveness of the drug as well as proposed labeling that describes the different uses for which the drug may be marketed.
The District Court had initially granted summary judgment that was favor of GSK and Apotex, a judgment that ruled that the Authorized Generic Clause of the Second Amendment was unambiguous and clear. It is also these judgments that permitted GSK to market and sell the AG paroxetine drug after the two year exclusivity period for Mylan to whomever it wished, including Apotex.
The District Court had identified two grounds on which Mylan‘s claim of a breach of the implied covenant of fair dealing and good faith claim failed. To begin with, the extent of the cause of action by Mylan had been based on its right to preclude any third-party generic companies from selling the AG paroxetine drug, this claim was rejected by the court because it had been already determined that the language of the contract was ambiguous and that according to GSK‘s damages agreement, there was no establishment that it was entitled to judgment as a matter of law on the contract claim.
Mylan had submitted an expert report on the damages it claimed to have suffered from the sales by Apotex of AG paroxetine in the District Court. GSK had however moved to strike on the ground that the report had relied on opinions and documents that had been withheld by Mylan during discovery. The Court denied this motion as moot when it found out that GSK was entitled to judgment as a matter of law on the contractual claims by Mylan‘s contractual claims. However, because the motion had not been addressed by the District Court, the U.S Court of Appeal did not speculate on its merits bur rather allowed a consideration on remand. Secondly, GSK suggested a number of alternative factual scenarios it claimed would also have generated generic paroxetine market competition and in the same way would have accordingly harmed Mylan’s sales and profits. Whether or not and to what degree these hypothetical scenarios by GSK‘s hypothetical scenarios would have affected the profits of Mylan under the License Agreement and hence damages from a breach thereof, it was still a disputed issue of material fact left to be resolved at trial.
According to the two rulings made by the District Court and the U.S Court of Appeal there was a general conclusion that the case filed by Mylan was incompetent and that it was not a true representation of the damages encountered by the company from sales of the paroxetine drug. The District Court for instance concluded that from the amendment, the License Agreement did not limit to whom GSK was entitled to market and sell the AG paroxetine after a two year exclusivity period by Mylan.
It is however a true fact according to well established principles of equity that there was a reasonable alternative interpretation to the case that could have been pursued to defend the claims of Mylan (Weinberger v. Romero--Barcelo, 456 U.S. 305, 311-313, 102 S. Ct. 1798, 72 L. Ed. 2d 91 (1982). For example, the Authorized Generic Clause only allowed GSK to market and sell the AG drug, the supply to a third-party generic competitor with was impermissible. It is therefore correct to state that the District Court had erred when it failed to consider the evidence that was offered in support of this reading.
The crux of the claims by Mylan was that the amendment terms of the License Agreement had only allowed third-party generic companies that had initially filed their
own Abbreviated New Drug Applications (ANDAs) to sell the generic paroxetine and that even after the two-year exclusivity period granted to Mylan, it is only GSK that was allowed to engage in sales and marketing activities for the AG paroxetine drug including those directed to downstream customer who include pharmacy chains, retailers, wholesalers pharmacists, clinics, hospitals, managed market companies as well as mail orders. According to Mylan, this was consistent with the position it had initially had during negotiations to allow and otherwise would force it to engage in a competition with other generic companies which were not required to expend the resources and time for the securing of FDA approval by filing an ANDA. Mylan was therefore correct to argue that GSK had indeed violated the License Agreement when it entered into an S&D Agreement and supplied Apotex which is basically an intermediary drug company with the GSK-produced AG paroxetine drug for marketing and selling pitting it in a competition with Mylan.
It was generally unfair that the court declined to consider any of the intent evidence that was submitted by the different parties involved together with the industry as well as the custom evidence that had been offered by Mylan. This is also because it also resulted in irreparable harm and damages to Mylan Inc. (NutraSweet Co. v. Vit-Mar Enterprises, Inc., 176 F.3d 151, 153 (3d Cir.1999)).The court instead based its’ judgment the grounds the evidence was not enough to create an ambiguity where none existed in the first place in order for it to preclude summary judgment.
The announcement by Mylan on the 27th of March after trial in the United States District Court for the District of New Jersey that it had won the breach of contract case against GSK was therefore a welcome relief. The jury present had returned a verdict that was in favor of Mylan on its breach of contract lawsuit to the AG Paroxetine Hydrochloride Extended-release (ER) Tablets. The jury therefore decided that GSK owed Mylan a total sum of $106.7 million in damages (Mylan Inc., 2014).
The claims by Mylan were based on the agreements made in 2007 with GSK relating to Mylan's ANDA for the Paroxetine Hydrochloride ER Tablets. Pursuant to those agreements, Mylan was able to obtain certain intellectual property rights from GSK. Mylan then proceeded to launch its own generic Paroxetine Hydrochloride ER Tablets as of May 2008 and up to date, is the only company that has so far received FDA approval of an ANDA for this product. Mylan was pleased with the verdict of the jury verdict and has every intention of seeking for further additional relief to enable it to fully protect its rights.
The future of the case is interesting as noted from some of the statements on the final verdict of the lawsuit which had due regard to litigation as well as sales of products. The statements were made pursuant to the 1995 safe harbor provisions of the Private Securities Litigation Reform Act. Such statements involve uncertainties and risks and therefore the actual future results of similar cases may differ materially. Some of the factors that might create differences in the future include the strategies by the third parties and competitors to prevent and delay the introductions of products, risks in the periodic filings of the affected company in terms of their Securities and Exchange Commission together with risks inherent the regulatory and legal processes.
Amoco Production Co. v. Gambell. 480 United States Supreme Court .S. 531, 542, 107 S.Ct.
1396, 94 L.Ed.2d 542 (1987)).
Mylan Inc.; Mylan Pharmaceuticals Inc. v Glaxosmithkline Corp. United States Court of Appeal
for the Third Circuit. Rpt. No. 12-1539. 2013. 1-20. Judges. Scirica, Ambro & Fuentes.
Mylan Inc.; Mylan Pharmaceuticals Inc. v Glaxosmithkline Corp. United States District Court
for the District of New Jersey. D.C. Civil Action No. 3-10-cv-04809. Justice. Joel, Pisano.
Mylan Inc. Mylan Wins Breach of Contract Case against GlaxoSmithKline: Jury awards Mylan
$106.7 million in damages. March 2014. Retrieved from: ://www.mylan.com/news/press-releases/item?id=123212
NutraSweet Co. v. Vit-Mar Enterprises, Inc., United State Court of Appeal Third Circuit. 176
F.3d 151, 153 (3d Cir.1999)
Weinberger v. Romero--Barcelo, 456 United States Supreme Court. 305, 311-313, 102 S. Ct.
1798, 72 L. Ed. 2d 91 (1982).
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