Biotech Values

[DewDiligence]

Re: Details of Plavix ruling and SNY/BMY screw-up

I finally got around to reading the Court’s ruling end to end—all 58 pages. There were two important decisions before the Court: 1) Whether to grant a preliminary injunction; and 2) Whether to order a recall.

What I found remarkable was the disparity between the amount of attention devoted to each of these two matters in the ruling. The judge spent more than 50 pages laying out in painstaking detail why SNY (and BMY) had a reasonable probability of prevailing on the merits of the patent at trial and thereby were entitled to a preliminary injunction. Then, in little more than one page, the judge dismissed SNY’s argument for a recall:

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The motion is denied to the extent it seeks a recall of the generic product already manufactured and distributed.

Although “it is well settled that a court has the power to issue a mandatory injunction to restore the situation to the status quo when a party, with notice of impending injunction proceedings, completes or performs the action sought to be enjoined,” …this is not a case where the unusual remedy of a mandatory injunction ordering a product recall is appropriate.

Here, Sanofi specifically foresaw the possibility that Apotex would declare that there had been Regulatory Denial as defined in the agreement…and that Apotex would then be able to launch its generic. Sanofi also agreed that it would “not seek a temporary restraining order or preliminary injunction” for 5 business days after Regulatory Denial became effective…and indeed, even after that 5 day period expired, Sanofi would not file for a preliminary injunction until it had given Apotex 5 business days notice “of its intention to do so,” and that notice “will not be given before Apotex has initiated a launch of a generic clopidogrel product.”

…These provisions all foresaw the possibility that Apotex would launch a generic product and prohibited Sanofi from seeking injunctive relief for a specific period of time after the launch occurred. Thus, Sanofi participated in a knowing business decision, in exchange for which it received valuable consideration…

Under these circumstances, a mandatory injunction ordering recall would be inequitable and the Court will not intervene to reverse the effects of Sanofi’s own agreement [emphasis added throughout].
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Contemplating the above excerpt from the ruling, I think it’s reasonable to surmise that SNY and BMY could have won a full-fledged recall of generic Plavix had they not waived the right to seek an injunction during the first five days of Apotex’s launch.

Given the immense economic consequence of not obtaining a recall, I must conclude that SNY and BMY botched the negotiation with Apotex to an even greater degree than is generally recognized.