Sandoz Inc. v. United Therapeutics Corp.
| Decision Date | 30 March 2022 |
| Docket Number | 2:19-cv-10170 (BRM) (JSA) |
| Parties | SANDOZ INC., et al., Plaintiffs, v. UNITED THERAPEUTICS CORPORATION, Defendant. |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
REDACTED OPINION
Before the Court is Plaintiff Sandoz Inc.'s (“Sandoz”) Motion for Partial Summary Judgment pursuant to Federal Rule of Civil Procedure 56. (ECF No 319.) Defendant United Therapeutics Corporation (“UTC”) filed an opposition to the motion (ECF No. 341), and Sandoz filed a reply (ECF No. 364). Also before the Court is UTC's Motion for Summary Judgment pursuant to Federal Rule of Civil Procedure 56. (ECF No. 321.) Plaintiff RareGen, LLC (“RareGen”) and Sandoz (collectively, “Plaintiffs”) filed an opposition to UTC's motion (ECF No. 336), and UTC filed a reply (ECF No. 365). Further, before the Court is UTC's Motion to Exclude the damages opinion of Dr. Anupam Jena offered by Plaintiffs. (ECF No. 333.) Plaintiffs filed an opposition to the motion (ECF No. 348), and UTC filed a reply (ECF No 358). Having reviewed the parties' submissions filed in connection with the Motions and having declined to hold oral argument pursuant to Federal Rule of Civil Procedure 78(b) for the reasons set forth below and for good cause having been shown, Sandoz's Motion for Partial Summary Judgment is GRANTED, UTC's Motion for Summary Judgment is GRANTED IN PART and DENIED IN PART, and UTC's Motion to Exclude is DENIED.
This matter concerns the sale of brand name and generic treprostinil, a medication used to treat patients with pulmonary arterial hypertension (“PAH”).[2] (UTC's Statement of Material Facts (“SMF”) (ECF No. 322-1) ¶¶ 1-3; Sandoz's Resp. to UTC's SMF (ECF No. 336-1) ¶¶ 1-3.) UTC manufactures and sells the brand name medication, Remodulin, and Sandoz manufactures and sells generic treprostinil[3] (Sandoz's SMF (ECF No. 320-1) ¶¶ 2-3; UTC's Resp. to SMF (ECF No. 362-1) ¶¶ 2-3.) Treprostinil is an injectable medication administered either intravenously or subcutaneously.[4] (ECF No. 320-1 ¶¶ 20-21; ECF No. 362-1 ¶¶ 20-21.) Subcutaneous administration of treprostinil requires a pump, such as the CADD-MS 3 pump, and a three-milliliter medical cartridge. (ECF No. 322-1 ¶¶ 4, 9-10; ECF No. 336-1 ¶¶ 4, 9-10.) In administering treprostinil, the medication is placed in a disposable medical cartridge that is then loaded into the pump. (ECF No. 320-1 ¶ 23; ECF No. 362-1 ¶ 23.)
Until 2019, Smiths Medical ASD Inc. (“Smiths”) was the only manufacturer of the CADD-MS 3 pump and medical cartridge used to administer Remodulin. (ECF No. 320-1 ¶ 23; ECF No. 362-1 ¶ 23.) Smiths's CADD-MS 3 pump is only compatible with Smiths's three-milliliter medical cartridge. (ECF No. 322-1 ¶¶ 12-13; ECF No. 336-1 ¶¶ 12-13.) Smiths sold its CADD-MS 3 pumps and medical cartridges to two specialty pharmacy distributors, Accredo Health Group (“Accredo”) and CVS Specialty (collectively, the “Specialty Pharmacies”), who in turn provided the injectable medication to patients. (ECF No. 320-1 ¶¶ 24-26; ECF No. 362-1 ¶¶ 24-26.)
According to Sandoz, UTC allegedly cornered the market for cartridges needed for subcutaneous injection of Remodulin and generic treprostinil, effectively blocking the entry of Sandoz's generic product to the market. (See generally, ECF No. 336.) Sandoz further alleges UTC's conduct-allegedly blocking entry of generic treprostinil-was a breach of the parties 2015 settlement agreement (“2015 Settlement Agreement”). (See generally, ECF No. 320.)
UTC moves for summary judgment as to all of Sandoz's claims, and Sandoz moves for summary judgment on its breach of contract claim.
UTC launched its branded Remodulin in 2002. (ECF No. 322-1 ¶ 3; ECF No. 336-1 ¶ 3.) In 2011, Sandoz submitted an abbreviated new drug application (“ANDA”) with the Food and Drug Administration (“FDA”), seeking approval to market its generic treprostinil. (ECF No. 3201 ¶ 3; ECF No. 362-1 ¶ 3.) Shortly thereafter, UTC sued Sandoz, contending the generic version infringed on its patent. (ECF No. 320-1 ¶ 5; ECF No. 362-1 ¶ 5.) Ultimately, on September 29, 2015, UTC and Sandoz entered into the 2015 Settlement Agreement to resolve the litigation. (ECF No. 320-1 ¶¶ 8-9; ECF No. 362-1 ¶¶ 8-9.)
Under the 2015 Settlement Agreement, UTC granted Sandoz the right to make and market its generic treprostinil beginning June 2018.[5] (ECF No. 320-1 ¶ 10; ECF No. 362-1 ¶ 10.) Pursuant to Section 11(b) of the 2015 Settlement Agreement, UTC agreed “[n]ot to take any action directly or indirectly to prevent, delay, limit, or otherwise restrict the launch, manufacture, use, sale, offer for sale, importation or distribution of the Sandoz ANDA Product in [the United States].” (ECF No. 320-1 ¶ 11; ECF No. 362-1 ¶ 11.) Section 4(1) defines the “Sandoz ANDA Product” as “the treprostinil injection for subcutaneous or intravenous use pharmaceutical products that are described in, and are the subject of, the Sandoz ANDA . . . [but] shall expressly not include . . . any technology associated with any UTC product(s).” (Sandoz's Mot. Br., 2015 Settlement Agreement (ECF No. 320-8) at 7 of 26; ECF No. 362-1 ¶ 84.)
(ECF No. 320-8 at 15 of 26; ECF No. 320-1 ¶ 12; ECF No. 362-1 ¶ 12.) Section 13(c) of the 2015 Settlement Agreement disclaimed any right to delivery devices, stating “[n]othing in this agreement shall be construed to grant any right to any Third Party proprietary technology, including Remodulin Implantable System, the DEKA pre-filled semi-disposable pump system, any other pump or delivery system for the Sandoz ANDA Product or any other form of treprostinil.” (ECF No. 320-8 at 13 of 26.)
In January 2005, Smiths started developing the CADD-MS 3 pump, which is a modified insulin pump.[6] (ECF No. 322-1 ¶¶ 7, 9; ECF No. 336-1 ¶¶ 7, 9.) The CADD-MS 3 pump can be used to administer treprostinil intravenously or subcutaneously. (ECF No. 322-1 ¶ 10; ECF No. 336-1 ¶ 10.) Essentially, Smiths reprogrammed an insulin pump's software so the pump would dispense medicine by milliliters instead of units of insulin. (ECF No. 322-1 ¶¶ 7, 9; ECF No. 3361 ¶¶ 7, 9.)
In 2015, Smiths decided to discontinue making the CADD-MS 3 pump “primarily due to the lack of ongoing availability of critical components from third party suppliers.” (ECF No. 3221 ¶¶ 18-19; ECF No. 336-1 ¶¶ 18-19.) On August 25, 2015, Smiths sent an end-of-life notice for the CADD-MS 3 pump to the Specialty Pharmacies dispensing treprostinil to patients. (ECF No. 322-1 ¶ 21; ECF No. 336-1 ¶ 21.) The end-of-life notice stated Smiths “is discontinuing the sale of CADD-MS 3 [pumps] effective immediately, ” but “is continuing to supply the 3mL Medication Cartridge, . . . to be available for use with the CADD-MS 3 pump, for at least three years.” (Id.) By October 2015, Smiths shut down its manufacturing line for CADD-MS 3 pumps. (ECF No. 322-1 ¶ 24; ECF No. 336-1 ¶ 24.) Smiths discussed the discontinuation of the CADD-MS 3 pump with UTC before making the announcement. (ECF No. 322-1 ¶ 28; ECF No. 336-1 ¶ 28.)
Around this time, UTC was investigating alternatives to the CADD-MS 3 pump while trying to develop the “next generation” drug delivery technology for new ways to administer Remodulin. (ECF No. 322-1 ¶¶ 30, 33; ECF No. 336-1 ¶¶ 30, 33.) These new delivery systems include an implantable pump and a pump using “acoustic volume sensing technology, ” but those alternatives were not ready for market.[7] (ECF No. 322-1 ¶ 33; ECF No. 336-1 ¶ 33.) UTC was concerned there may not be delivery platforms available for commercial use by the time Smiths exhausted its remaining supply of CADD-MS 3 pumps. (ECF No. 322-1 ¶ 34; ECF No. 336-1 ¶ 34.) Smiths understood UTC could “not afford any gaps in supplying [UTC's] $300M business to life-critical patients.” (ECF No. 322-1 ¶ 35; ECF No. 336-1 ¶ 35.)
In late 2015, seeking to ensure a supply of pumps and cartridges were available until its “next generation” delivery systems were ready for market, UTC discussed with Smiths a “program to extend [the CADD-]MS 3 pump platform.” (ECF No. 322-1 ¶¶ 36-37; ECF No. 336-1 ¶¶ 3637.) Ultimately, Smiths agreed to restart production and develop a partially updated version of the CADD-MS 3 pumps. (ECF No. 322-1 ¶ 39; ECF No. 336-1 ¶ 39.)
In March 2016, UTC and Smiths executed a supply agreement for the CADD-MS 3 pumps (“2016 Supply Agreement”) to “ensure continued availability of a pump capable of delivering Remodulin subcutaneously[.]” (ECF No. 322-1 ¶ 45; ECF No. 336-1 ¶ 45.) Under the 2016 Supply Agreement, Smiths committed to producing I CADD-MS 3 pumps and I cartridges. (Id.) UTC agreed to pay I immediately, and a total of I for the pumps and for the cartridges. (Id.) The Parties dispute whether the 2016 Supply Agreement provided UTC with exclusivity over both pumps and cartridges or pumps only.[8] (Id.) However, the 2016 Supply Agreement allowed Smiths to accept other offers to produce additional pumps or cartridges, though UTC had the right of first refusal to match any offer. (Id.) Smiths was also allowed to sell approximately XXXXX “residual pumps” to its legacy customers. (Id.) The 2016 Supply Agreement further required Smiths to track its inventory of pumps and cartridges and provide UTC with...
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