The court denied defendant’s motion to enforce its settlement agreement with plaintiff after the at-risk launch and subsequent settlement of another defendant.

Case Name: Amgen Inc. v. Amneal Pharms. LLC, No. 16-853-MSG (consol.), 2019 U.S. Dist. LEXIS 159358 (D. Del. Sept. 19, 2019) (Goldberg, J.)

Drug Product and Patent(s)-in-Suit: Sensipar® (cinacalcet HCl tablets); U.S. Patent No. 9,375,405 (“the ’405 patent”)

Nature of the Case and Issue(s) Presented: Amgen originally brought claims against different defendants, including Sun in response to Sun’s filing an ANDA for generic cinacalcet HCl tablets. The parties entered into a settlement agreement and stipulated to a dismissal of all claims against Sun. Part of that agreement set forth Amgen’s obligations if other manufacturers of generic cinacalcet entered the market at risk.

After the Amgen-Sun settlement, other defendants proceeded to trial, including Teva. The court found that Teva’s ANDA product would not infringe the ’405 patent, but at that time, Teva did not have approval to market its product. Once approved, Teva launched at risk infiltrating the market with approximately six-weeks-worth of generic cinacalcet. Shortly after its launch, Amgen and Teva reached a settlement whereby Teva acknowledged that its generic product infringed the ’405 patent and agreed that it would immediately cease sales. Importantly, downstream distributors who had received Teva’s generic product were not involved in these negotiations, nor were they parties to the agreement. In response, Sun filed its motion to enforce the settlement agreement, asserting that based on Teva’s market activity and Amgen’s deficient response, the agreement grants a license to Sun and allows it to launch and sell its generic product. Amgen opposed Sun’s motion. The court found that Sun has misconstrued its rights under the agreement, and that the agreement does not entitle Sun to a license to sell and market its generic Cinacalcet product.

Why Amgen Prevailed: The parties raise two issues: (i) Amgen argues that the court does not have subject matter jurisdiction to hear this dispute; and (ii) Sun argues that, based on Amgen’s deficient response to Teva’s market entry, it is entitled to a license to sell its ANDA product.

The court first addressed relevant portions of the settlement agreement. Sun principally relies on Section 5 of its agreement with Amgen that it is entitled to a license. Section 5.1 states that from “the Entry Date through the expiration of the last to expire claim of the Licensed Patents,” Sun will be given a right and license to “make, have made, use, sell, offer to sell, import and distribute the Defendant’s Product in or for the United States.” Section 5.2 defines the “Entry Date” as the earlier of certain events which are set forth in sections 5.2(a) and (b). Section 5.2(b) states that the “Entry Date” could be the earlier of “the Launch of a Generic Cinacalcet Product by a Third Party, Amgen, or an Amgen Affiliate, except as provided under Section 5.5.” Under the agreement, “Launch” means “first sale in the United States, with regard to a Generic Cinacalcet Product.” “Generic Cinacalcet Product” means “an oral drug product containing Cinacalcet HCL that is sold, offered for sale or distributed in the United States as an Authorized Generic or under an FDA finally approved ANDA that refers to and is AB rated with the Amgen Product as the reference-listed drug.” Finally, “Third Party” is defined as “any entity or person that is not a Party or an Affiliate of a Party.” Importantly, the last portion of Section 5.2(b) references Section 5.5. Section 5.5 outlines Amgen’s obligations if a Third Party engages in an “At-Risk Launch.”

With respect to the issue of subject matter jurisdiction, a district court has jurisdiction to enforce a settlement agreement entered into by litigants in a case pending before it. Here, Amgen has asserted its right to prevent Sun from entering the market. In a Jan. 2, 2019, letter, Amgen advised Sun that it had received information about an anticipated launch by Teva, and that subsequently Teva had agreed to cease selling its generic product. Amgen then affirmatively advised Sun that it is not “authorized to launch their Product pursuant to Paragraph 5.5(a), of the Litigation Settlement Agreement.” In response, Sun pressed its rights to a license, which Amgen opposed. Therefore, Sun has a reasonable apprehension of litigation should it choose to act on its interpretation of the agreement. Moreover, the fact that Sun’s counsel informed the court at oral argument that it was prepared to launch “in a couple weeks” further created a reasonable apprehension of litigation necessary to defeat Amgen’s lack of jurisdiction arguments. Finally, section 8.3 of the agreement states, “Defendants and Amgen agree that the United States District Court for the District of Delaware retains jurisdiction over this Settlement Agreement and that the Parties agree that they are subject to personal jurisdiction in District of Delaware and/or venue is proper in the District of Delaware with regard to all disputes concerning the Settlement Agreement.”

With respect to Sun’s argument that it is entitled to a license in view of Teva’s at-risk launch, that depended on whether Amgen was obligated to effectuate a cease and desist not only with Teva, after its brief launch, but also with distributors who had received Teva’s product. Sun argued that the broad definition of “Third Party” in the agreement includes not only Teva, but also third-party distributors who received and distributed the generic cinacalcet for a short period of time. And because Amgen did not enter into a cease and desist agreement with third-party distributors, Amgen has granted Sun a license to distribute its product. The court disagreed. While the definition of “third-party” is broad, it is meant to be read in line with section 5.5. Section 5.5(a)(i)(ii) requires Amgen to enter into a cease and desist with Teva, then Amgen may seek a TRO or PI if Sun enters the market. “Put another way, a license to Sun has not been granted.” There is no language in the agreement relating to third-party distributors nor is there any requirement that Teva police the entire market after its launch and settlement. Moreover, it is undisputed that distributors and resalers did not engage in an at-risk launch—only Teva did.