Microbix Biosystems, Inc. v. Biowhittaker, Inc.
| Decision Date | 28 March 2000 |
| Docket Number | No. MJG-97-2525.,MJG-97-2525. |
| Parties | MICROBIX BIOSYSTEMS, INC. Plaintiff v. BIOWHITTAKER, INC., et al. Defendants Abbott Laboratories Counterclaimant v. Microbix Biosystems, Inc. Counterclaim-Defendant |
| Court | U.S. District Court — District of Maryland |
Joseph D. Edmondson, Jr., Foley and Lardner, Washington, DC, Daniel A. Small, Michael D. Hausfeld, Matthew F. Pawa, Cohen, Milstein, Hausfeld & Toll, Agnieszka Fryszman, Ann C. Yahner, Law Office, Washington, DC, for Plaintiff.
John Henry Lewin, Jr., Maria F. Howell, Venable Baetjer and Howard LLP, Baltimore, MD, Peter Thauer, East Rutherford, NJ, Jennifer M. Horn, Venable Baetjer and Howard LLP, Baltimore, MD, Robert P. Schlenger, Lord & Whip, Baltimore, MD, David M. Rosenzweig, Jeffrey I. Weinberger, Munger Tolles & Olson, Los Angeles, CA, Kenneth D. Greisman, Nicholas A. Poulos, Abbott Park, IL, for Defendants.
MEMORANDUM AND ORDER RE PLAINTIFF'S CLAIMS
The Court has before it Defendants' Motion for Summary Judgment. The matter has been fully briefed. The Court has considered the materials submitted by the parties, held a hearing, and had the benefit of counsel's arguments.
Plaintiff Microbix Biosystems, Inc. ("Plaintiff" or "Microbix")1 brought this antitrust action against Defendants Abbott Laboratories ("Abbott"),2 BioWhittaker, Inc., and BioWhittaker Holdings, Inc. (collectively "BioWhittaker")3 under sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2 (West 1999).
At all times relevant hereto, Plaintiff attempted to develop, obtain FDA approval for, and market generic urokinase products that would compete with Abbott's products. Plaintiff alleges that after learning about Plaintiff's urokinase project, Abbott sought, and entered into, an exclusive supply agreement with BioWhittaker. The intent of the agreement was to deny Plaintiff access to BioWhittaker's HNK cells. Plaintiff alleges that this conduct violated the Sherman Act and caused Plaintiff's injury.
To provide a context for Plaintiff's allegations, the Court shall discuss the urokinase products at issue, the parties' conduct during the relevant period leading up to the lawsuit, the pertinent post-lawsuit events, and the procedural history.
Urokinase is a protein enzyme used to dissolve blood clots in human veins or arteries.4 Urokinase may be derived from human urine, genetically-engineered cells (recombinant urokinase) or tissue culture.5
Abbott dominates the urokinase market in the United States.6 In the 1970s, Abbott developed a tissue-culture urokinase marketed under the trade name Abbokinase. In 1978, FDA approved Abbokinase for labeled (systemic) applications to treat blood clots in heart arteries (acute myocardial infarction) and blood clots in the lungs (pulmonary embolism). However, physicians have used Abbokinase primarily for off-label (catheter-directed) applications to treat other conditions, especially blood clots in the legs or acute peripheral arterial occlusion ("acute PAO").7 In 1983, the FDA approved OpenCath8 (another urokinase product of Abbott) for labeled uses in the clearance of central venous catheters blocked by clotted blood. Up until 1993, Abbott had a monopoly in the relevant urokinase market because of Abbott's patents on Abbokinase. Abbokinase continued to dominate the market of urokinase for PAO and catheter clearance after the patents expired in 1993.9
The expiration of Abbott's urokinase patents in 1993 provided an opportunity for Microbix to enter the urokinase market. In 1994, Microbix began an experimental program that resulted in a set of procedures for developing commercial quantities of urokinase from HNK cells. Microbix's generic urokinase products, if approved by FDA, would be marketed under the trade names ThromboClear and CathClear.10
As a small company with limited resources, it was not feasible for Microbix to undertake the urokinase project by itself. Thus, in 1995, Gensia Laboratories, Ltd. ("Gensia")11 approached Microbix to discuss a potential partnership. In September 1996, Microbix and Gensia entered into a Development and License Agreement. Defs' Ex. 30. Under this agreement, in exchange for the exclusive right to develop, make, use, and sell ThromboClear in the United States, Gensia agreed to provide Microbix with milestone-based development funding.12 Defs' Ex. 30; Defs' Ex. 6. In addition, Gensia agreed to support Microbix in its development efforts, to assist with the necessary regulatory filing with the FDA,13 and to be primarily responsible for the scale-up and pivotal studies of the product's final formulation. Id.
While negotiations between Gensia and Microbix continued,14 Microbix approached BioWhittaker to discuss the purchase of HNK cells. In March 1996, Microbix audited BioWhittaker's Maryland facility to ensure BioWhittaker was in a position to serve as Microbix's HNK cell supply source. The audit did not identify any deficiencies. Microbix then proceeded to purchase small amounts of HNK cells from BioWhittaker for experimental purposes.15
Anticipating additional needs for HNK cells for eventual production of urokinase in commercial quantities, Microbix sought to secure BioWhittaker's commitment to a future supply. In August 1996, Microbix representatives met with Noel Buterbaugh ("Buterbaugh")16 and allegedly obtained Buterbaugh's assurance that BioWhittaker could, and would, supply the HNK cells that Microbix would need.17 Gastle Dec. ¶ 14. On April 16, 1997, BioWhittaker (through Buterbaugh) allegedly reaffirmed that it would supply cells to Microbix for a five-year period at a price of $300 per million cells.
The record leaves unclear precisely what transpired during the negotiations between Microbix and BioWhittaker concerning the supply of HNK cells. Nevertheless, Plaintiff alleges that Abbott's conduct caused BioWhittaker to renege on its earlier assurances, thereby impeding Plaintiff's ability to obtain HNK cells. Specifically, in October 1996, a month after Abbott learned of Microbix as a potential competitor,18 Abbott proposed to BioWhittaker an exclusive supply contract for HNK cells. Pl's Ex. 43, 44. In response, BioWhittaker proposed to Abbott a five-year exclusive contract to begin on January 1, 1997. Pl's Ex. 45. In May 1997, BioWhittaker informed Microbix that BioWhittaker would not accept any new orders for HNK cells from Microbix. On July 19, 1997, Abbott and BioWhittaker executed a five-year exclusive supply agreement for thirty-five lots of HNK cells per year at $397 per million cells.19 The exclusive agreement prohibited BioWhittaker from selling HNK cell lots to anyone other than Abbott even when those lots did not conform to Abbott's specifications,20 and even when Abbott had already rejected such lots. Because BioWhittaker refused to supply additional HNK cells to Microbix, Microbix attempted to negotiate a solution with BioWhittaker but failed. On August 6, 1997, Microbix filed the instant case against BioWhittaker.
In June 1998 (some ten months after the instant case was filed), the FDA informed Microbix and Gensia of concerns21 regarding BioWhittaker's quality program on HNK cells. The FDA conducted a Good Manufacturing Practices ("GMPs") audit of BioWhittaker's HNK cell-product operations. After the audit, the FDA provided to BioWhittaker a "Form 483" advising the company of "objectionable conditions"22 with respect to GMPs and violations of section 501(a)(2)(B) of the Food, Drug and Cosmetic Act ("FDCA"), 21 U.S.C. § 501(a)(2)(B).
On September 18, 1998, in a Warning Letter to BioWhittaker, the FDA reiterated concerns about deficiencies23 in BioWhittaker's manufacturing process and imposed an Import Alert (still in effect today), prohibiting the importation of HNK cells from Cali, Colombia. Thereafter, BioWhittaker repeatedly tried to address the FDA's concerns, but to no avail. Olsen Aff. at ¶¶ 7-12, 16-23 ().
Similarly, in October and November of 1998, the FDA inspected Abbott's urokinase-manufacturing operations and issued a Form 483, citing numerous violations of GMPs.24 Beginning in November 1998, the FDA imposed a hold on the release for sale of all lots of Abbokinase.25
On July 2, 1999, the FDA advised BioWhittaker that it considered all of BioWhittaker's HNK cells to be "adulterated" within the meaning of FDCA. Pl's Ex. U to Olsen Aff. Thus, the Import Alert issued on September 18, 1998 continued to be in effect. From Abbott's and BioWhittaker's standpoint, it appeared that short of destroying the imported HNK cells and all urokinase manufactured from them, Abbott and BioWhittaker would be unable to address the FDA's safety concerns regarding the HNK cells previously imported by BioWhittaker. Olsen Aff. at ¶¶ 13-14. Therefore, on November 23, 1999, Abbott sent a letter to the FDA confirming that, with the exception of small samples that would be retained for testing purposes, Abbott would destroy all remaining Abbokinase inventory and all remaining lots of BioWhittaker cells. Defs' Long Aff. at ¶ 28; Ex. C to Long Aff.
By April of 1998, Microbix had completed the experimental phase of the urokinase project and was ready to begin commercial manufacturing. As the next step, Microbix planned to enter into a contract with Creative BioMolecules ("CBM"), a manufacturing facility in New Hampshire. To convince CBM that Microbix would have enough HNK cells to proceed, on April 9, 1998, Microbix moved for a preliminary injunction requesting, inter alia, a three-year supply of cells from BioWhittaker. See Defs' Ex. 3 (May 13, 1998 Hearing Transcript).
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