A New Jersey federal jury has returned a $106.7 million verdict against GlaxoSmithKline LLC (GSK) in a suit brought by Mylan Inc. The jury found that GSK breached an exclusive contract by allowing Apotex Inc. to sell generic versions of its antidepressant Paxil as part of an antitrust settlement. The jury also found that GSK breached a 2007 agreement granting Mylan an exclusive right to market and sell paroxetine hydrochloride, the generic name for Paxil, when it allowed Apotex to sell generics of the drug in 2010.
The jury found that Mylan had been damaged by the breach of contract and awarded $106.7 million. GSK’s claim that the award should be reduced because it claimed Mylan failed to make a reasonable effort to lessen its damages was rejected by the jury. The dispute stems from a 2007 settlement between GSK and Mylan, which allowed Mylan to sell generic paroxetine tablets for nine years, in exchange for large royalty payments to GSK.
Because the Federal Trade Commission was concerned about the contract’s long exclusivity period, the companies inserted a provision entitling GSK to sell its own authorized generic beginning two years after Mylan launched its version. Several years later, GSK settled a separate suit with intermediary drug seller Apotex Inc., the first company to gain FDA approval for a generic version of the drug.
To resolve claims that the company improperly kept generics off the market, GSK paid $300 million in cash to Apotex as part of a 2010 settlement. GSK also guaranteed that Apotex would earn $180 million by selling GSK products, including generic paroxetine, which GSK manufactured and supplied to Apotex. It appears that when Mylan learned from a customer that Apotex planned to sell generic Paxil, the company sued Apotex and GSK. Mylan claimed that its licensing agreement with GSK did not permit the drug giant to provide its own form of paroxetine to another company, which would be sold in direct competition with Mylan’s product.
A New Jersey district court dismissed the suit in 2012, saying there was no limit in the 2007 contract on GSK’s rights to sell to other companies. But the Third Circuit partly overturned that decision in July, reviving Mylan’s breach of contract claim against GSK. Although the appeals court agreed that Apotex did not tortiously interfere with the 2007 agreement, the panel ruled that the district court wasn’t free to reject Mylan’s evidence. That was because the appeals court panel found the settlement agreement to be unambiguous. The appeals court ordered the contract claim against GSK to go before a jury.
In a pretrial brief filed in February, GSK argued that it had a clear right to sell generic Paxil to Apotex for resale, because GSK’s contract with Mylan guaranteed nothing more than two years of generic paroxetine exclusivity. GSK argued in its brief that “After the two years expires, GSK has an unrestricted right to sell to whomever it wishes.”
Mylan argued in its own pretrial brief that during its settlement negotiations, GSK had agreed not to provide its generic paroxetine product to a third party to sell. Mylan also argued that New Jersey law dictated that all relevant evidence be considered when a contract is interpreted, including the contract’s negotiations. The company claimed that as a result of GSK allowing Apotex to market generic paroxetine tablets, Mylan had lost sales and been forced to reduce the price of its own generic drug. Mylan sought $119.7 million in damages for lost profits, about $13 million more than the amount the jury awarded. The case was in the U.S. District Court for the District of New Jersey.
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