Amgen Fails To Block Cipla’s Generic Cinacalcet In US, And It May Change How Patent Settlements Are Drafted
Executive Summary
Amgen is unlikely to succeed on the merits of its breach of contract claim, court says, concluding that Teva’s December launch of its noninfringing generic precludes the Sensipar marketer from seeking recovery for Cipla’s at-risk launch under the Amgen-Cipla settlement agreement.
A US federal judge has denied Amgen Inc.'s request to halt Cipla Ltd.’s sales of a generic version of Sensipar (cinacalcet), ruling that Amgen is not likely to succeed on the merits of its breach of contract claim against the generic firm.
In a 2 May opinion, Chief Judge Leonard Stark of the US District Court for the District of Delaware concluded that the February 2018 patent settlement agreement between Amgen and Cipla precludes Amgen’s ability to seek relief for Cipla’s at-risk cinacalcet launch. This is because Teva Pharmaceutical Industries Ltd. launched at-risk before Cipla and was not found to have infringed Amgen’s ‘405 formulation patent on Sensipar, the court said.
The court’s ruling could have the practical effect of making brand and generic companies rethink how they draft patent settlement agreements.
The district court ruled in favor of Cipla despite finding that three of the four prongs of the standard for granting a preliminary injunction favored Amgen.
The practical effect of the court’s ruling is that Cipla, the only cinacalcet abbreviated new drug application sponsor currently on the market, can stay there for the time being, although Amgen has filed an expedited motion for an injunction pending appeal of Judge Stark’s order.
“Amgen is disappointed in the court’s ruling,” the company told the Pink Sheet. “We have filed our notice of appeal with the appellate court.”
Longer term, the court’s ruling could have the practical effect of changing how patent settlement agreements between reference product and generic drug sponsors are written.
Litigation Merry-Go-Round
Judge Stark’s decision marks yet another step in the legal merry-go-round involving Amgen and various ANDA sponsors over the calcium-sensing receptor agonist.
In 2018, Teva (through Watson Laboratories Inc.), Piramal Enterprises Ltd. and Amneal Pharmaceuticals LLC were found by US Judge Mitchell Goldberg not to infringe Amgen’s formulation patent. (Also see "Sensipar Generics: US Court Victory, FDA Approval Position Piramal For Launch" - Pink Sheet, 8 Aug, 2018.)
Teva launched the first cinacalcet generic in late December but settled with Amgen just days later. (Also see "Launch Abbreviated: Teva Halts US Generic Sensipar Sales After Patent Deal With Amgen" - Pink Sheet, 3 Jan, 2019.) Cipla, which previously settled with Amgen, raised an antitrust challenge to the Amgen-Teva settlement. Cipla also asserted Teva’s launch triggered its ability to come to market under its own settlement agreement with Amgen. (Also see "Generic Sensipar: Cipla Challenges Legality of Amgen/Teva Patent Settlement" - Pink Sheet, 14 Feb, 2019.)
Cipla and Piramal announced launches in early March, and Amgen sought preliminary injunctions to get both companies’ generics off the market. (Also see "Cipla, Piramal Launch Sensipar Generics Amid Growing Antitrust Challenges to Amgen/Teva Settlement" - Pink Sheet, 12 Mar, 2019.)
Piramal agreed to entry of an injunction on 15 April halting sales of its generic. (Also see "Piramal’s Sensipar Generic Blocked In US, For Now " - Scrip, 24 Apr, 2019.) Judge Stark heard oral arguments on Amgen’s motion for preliminary injunction against Cipla on April 2.
Amgen alleged that Cipla’s launch breached the terms of the parties' patent settlement agreement and it would suffer irreparable harm unless sales of the generic were enjoined prior to trial.
Unredacted Opinion Shines Light On Pacts
Judge Stark’s opinion initially was sealed. However, it was unsealed and released in full on 3 May after the judge concluded that Amgen’s proposed redactions to the opinion were overly broad.
Cipla’s position that the opinion should be made public without redaction was “far more reasonable,” the judge said.
“The Court strongly disagrees with Amgen's suggestion that this case is a commercial dispute ‘of little legitimate public interest;’ the public's interest in the disposition of Amgen's motion substantially outweighs any interest in the confidentiality of the information discussed in the Court's Opinion,” the judge said in an oral order.
“It does not serve the important public interests involved here for the Court to release a version of the Opinion that does not fairly reveal what is in dispute and the reasoning for the Court’s decision. Amgen had an opportunity to propose reasonable redactions and failed to do so.”
In seeking redactions to the court’s decision, Amgen likely sought to keep certain details about Teva’s launch and settlement with Amgen confidential, as well as details about its own settlement with Cipla. Some of these details are included in the publicly released opinion.
The decision states that Teva launched its cinacalcet generic on 28 December by shipping 409,128 bottles to wholesalers.
Teva shipped more than 409,000 bottles of generic cinacalcet to wholesalers on 28 December, an amount the company estimated would result in about $200m in revenue unless another generic came to market.
“An internal Teva email estimates this quantity of cinacalcet constitutes 1.6 to 3.6 months of supply for the United States, depending on the dosage form,” the opinion states. “In an internal email, Brendan O'Grady, Teva's Executive Vice President and Head of North America Commercial, estimated that Teva would realize about $200m in revenue from this shipment, assuming that no other company launched a competing generic drug – and noting that Teva's revenue would ‘drastically decreas[e]’ if other generics entered the cinacalcet market.”
Under Teva’s settlement with Amgen, Teva stipulated that its product does infringe Amgen’s ‘405 formulation patent. In addition, Teva agreed to pay Amgen up to $40m “depending (in part) on how long the cinacalcet market remains free of non-Amgen and non-Teva generic products, and appears to have agreed to stop selling the Teva Product,” the court said.
“For its part, Amgen agreed to withdraw its appeal of this Court's judgment of non-infringement by the Teva Product. Amgen further agreed to release any claims that could be made in connection with the Teva Product that had been sold to that point,” Judge Stark said.
Dissecting The Settlement Agreement
Judge Stark said a preliminary injunction is extraordinary relief that may be awarded only after the court considers:
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Likelihood of success on the merits of Amgen’s breach of contract counterclaim;
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Likelihood of irreparable harm to Amgen absent preliminary relief;
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Balance of equities between the parties; and
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Public interest.
If Amgen fails to meet its burden on either of the first two prongs of the preliminary injunction standard, its request for preliminary relief fails, the court said.
The parties’ dispute centers on whether Cipla obtained the right to launch its generic under Section 5.2(b) of the Amgen-Cipla agreement, which relates to a third-party launch, or some other provision in the agreement.
The court focused on the second sentence in Section 5.6 of the Amgen-Cipla agreement, which states the conditions limiting Amgen’s ability to seek injunctive relief against Cipla in the event of another generic manufacturer’s at-risk launch. (See box.)
Amgen-Cipla Agreement
Section 5.6
- [2] “Notwithstanding anything to the contrary in this Settlement Agreement, if [i] any Third Party that has made an At Risk Launch of a Generic Cinacalcet Product (where such At Risk Launch is before or after an at risk launch by Defendants) is not found to have infringed one or more valid and enforceable claims of the '405 patent or [ii] has not ceased or agreed to cease selling such Generic Cinacalcet Product following an At Risk Launch, then Amgen shall not be entitled to seek or recover any relief from Defendants for Defendants' at risk sales, offers for sale, distribution, or importation of Defendants' Product.”
The court agreed with Cipla’s argument that this provision precludes Amgen from seeking relief from Cipla for its generic launch because Teva also had launched at-risk and was not found to have infringed Amgen’s patent, even though Teva subsequently settled with Amgen.
The first condition ([i]) in the second sentence of Section 5.6 was satisfied because Teva was found by Judge Goldberg not to infringe ‘405 patent, and the Amgen-Cipla agreement language does not require the finding of noninfringement be a final court decision, Judge Stark said.
Notably, Judge Goldberg in late March denied a joint motion filed by Amgen and Teva for an indicative ruling, which essentially would have vacated the court’s previous finding of noninfringement for Teva.
“The Court must deny the preliminary injunction motion because Amgen is unlikely to succeed on the merits of its breach of contract counterclaim, since condition [i] of sentence [2] of Section 5.6 – that Teva ‘is not found to have infringed’ – is satisfied, triggering the restriction on Amgen's ability to seek relief for Cipla's At Risk Launch of its Cipla Product,” Judge Stark said.
“Nevertheless, given the urgency of the parties' disputes, and the resources they and the Court have invested in them, the Court now also addresses condition [ii], satisfaction of which would be an independent and adequate ground for triggering the same restriction on Amgen.”
A Question About ‘Sales’
Judge Stark said that although Teva may have ceased, or agreed to cease, selling its generic, the record is not sufficiently clear on this point and any doubts must be resolved against Amgen.
“It is unclear whether Section 5.6 requires that Teva have agreed to cease (or to have ceased) both direct and indirect sales – and if both are required, whether the Amgen-Teva Agreement constitutes an agreement by Teva to cease both types of sales,” the court said.
Although the record establishes that Teva ceased direct sales on 2 January, “that does not necessarily mean that indirect sales – in the form of those same dosages originally directly sold by Teva on or before January 2 moving through the drug ‘pipeline’ (e.g., to wholesalers, pharmacies and end users) – also have ceased,” the court said. “In fact, it is undisputed that (at least as of the April 2 hearing) many bottles of Teva Product sold by Teva to wholesalers are still moving through the marketplace.”
Amgen Established Irreparable Harm
Although Judge Stark concluded that Amgen failed to show a likelihood of success on the merits and a preliminary injunction is not warranted, he nevertheless examined the other three prongs in the preliminary injunction analysis, concluding they all favored Amgen.
Judge Stark was persuaded that absent a preliminary injunction, “Amgen will experience irreversible price erosion, long-term loss of market share, harm to its goodwill, and other nonquantifiable harms, such as potential layoffs of experienced staff.”
In terms of irreparable harm, Judge Stark said he was persuaded that absent a preliminary injunction, “in the time between now and trial Amgen will experience irreversible price erosion, long-term loss of market share, harm to its goodwill, and other nonquantifiable harms, such as potential layoffs of experienced staff.”
The court disagreed with Cipla’s contention that all of Amgen’s harms can be remedied by monetary damages, or that all of the harms Amgen will suffer are not fairly traceable to Cipla.
“It is, of course, true that other players in the market have sold generic versions of Amgen's Sensipar,” the court said. “But the quantities of generic product Cipla appears to have sold and is willing and able to sell in the absence of a preliminary injunction, and the length of time Cipla will be selling (throughout the months if not years until this case reaches judgment on the merits), will mean that a substantial portion of Amgen's irreparable harm will be due to Cipla.”
The decision references a statement by Cipla that the company has the ability to make a “‘nine-figure sale into the market.’”
Patent Misuse Analysis
The balance of equities also favored Amgen, although not by much, the court said. “On balance, it appears that the magnitude of the harm to Amgen in having its market genericized by Cipla is greater than the harm to Cipla in missing out on pre-genericization sales.”
In addition, Cipla failed to persuade the court it is likely to prevail on the merits of its patent misuse defense, the judge said.
“Amgen has not committed patent misuse per se. It has not required Teva to pay royalties after the expiration of the '405 patent, nor has it improperly tied a license to its '405 patent to Teva's obligation to buy some unpatented product,” the court said. “While Cipla may eventually demonstrate patent misuse under a rule of reason analysis, it has not done so at this stage.”
The court said it is “plausible” that Amgen and Teva may have colluded to divvy up the cinacalcet market to share supracompetitive profits and deter true generic competition.
Judge Stark pointed to several notable features of the Amgen-Teva agreement that give rise to patent misuse concerns. They include the requirement that Teva request, along with Amgen, that Judge Goldberg enter a judgment of infringement despite the post-trial judgment of noninfringement. Also notable was the fact that Amgen and Teva structured their agreement so that both would make more money the longer the market remains free of other generic competition, with Teva required to pay Amgen greater amounts the longer other generics remain off the market.
“However, it also seems plausible that Amgen and Teva may have reasonably assessed the risks each faced on appeal (and otherwise) and reached a rational compromise of their patent disputes,” Judge Stark said. “If this is what the evidence ultimately shows, then Cipla will fail to prove patent misuse.”
Finally, the court agreed with Amgen that the public interest would favor granting its motion if Amgen had succeeded in showing a likelihood of success on the merits, “albeit only slightly.”
“The Court does not believe (and certainly does not intend) that its denial of the motion – which, in the Court's view, turns on honoring the clear and unambiguous settlement agreement to which Amgen and Cipla voluntarily bound themselves – will make it even more difficult to settle pharmaceutical patent litigation,” the opinion states.