Replies to post #128425 on Biotech Values

[mouton29]

Legal response by MNTA team to request for modification or elimination of TRO. For this post, I did not have to OCR the pdf, unlike the prior one, but the formatting is still not great.

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
)
MOMENTA PHARMACEUTICALS, INC. )
and SANDOZ INC., )
Plaintiffs, )
)
v. ) Civil Action No. 11-11681-NMG
)
AMPHASTAR PHARMACEUTICALS, INC., )
INTERNATIONAL MEDICATION SYSTEMS, LTD., )
and WATSON PHARMACEUTICALS, INC., )
)
Defendants. )
)
PLAINTIFFS’ MEMORANDUM IN OPPOSITION TO DEFENDANTS’ EMERGENCY
MOTION TO MODIFY OR DISSOLVE TEMPORARY RESTRAINING ORDER
Sarah Chapin Columbia (BBO #550155)
[e-mail]
Melissa Nott Davis (BBO #654546)
[e-mail]
MCDERMOTTWILL& EMERYLLP
28 State Street
Boston,MA02109
Tel.: [phone]
Fax: [phone]
- and -
Thomas P. Steindler (pro hac vice pending)
[e-mail]
MCDERMOTTWILL& EMERYLLP
600 13th Street, NW
Washington, D.C. 20005-3096
Tel.: [phone]
Fax: [phone]
Attorneys for Plaintiff Sandoz Inc.
Robert S. Frank, Jr. (BBO #177240)
[e-mail]
Eric J. Marandett (BBO #561730)
[e-mail]
Jessica Gan Lee (BBO #670970)
[e-mail]
Courtney M. Schou (BBO #671104)
[e-mail]
CHOATE HALL & STEWART LLP
Two International Place
Boston, MA 02110
Tel: [phone]
Fax: [phone]
Attorneys for Plaintiff
Momenta Pharmaceuticals, Inc.
Dated: October 13, 2011
Case 1:11-cv-11681-NMG Document 56 Filed 10/13/11 Page 1 of 10
This memorandum is filed in opposition to Defendants’ Motion to Modify or Dissolve
the Temporary Restraining Order entered by the Court on October 7, 2011.
This action was filed on September 21, 2011. The Complaint requests a temporary
restraining order and a preliminary injunction. A motion seeking a temporary restraining order
and preliminary injunction was filed on September 30, 2011. The hearing on the motion for a
temporary restraining order was held on October 7, 2011, a full week later. At that hearing, the
Court afforded the defendants an opportunity to describe the harm that they would suffer if a
TRO were to be granted. They did not mention the harms that are now asserted in their Motion
to Modify or Dissolve. After the hearing, the defendants made an ex parte submission to the
Court regarding their alleged damage in the event of a TRO. Although the contents of that
submission are not known to the plaintiffs, they apparently did not mention the supposed harms
that they now cite. Then, the defendants waited for another five full days. They now identify
harm that they say will occur in the remaining eight days of the temporary restraining order.
As will be demonstrated below, the conduct in which the defendants propose to engage is
precisely the type of conduct that will cause the irreparable harm to Momenta and Sandoz that
the TRO is designed to prevent, and the harm that defendants have belatedly identified is
speculative, has already occurred, or is unlikely to ever occur.
ARGUMENT
I. The DefendantsWere Not Misled By The Court.
The defendants argue, at the outset, that their prior failure to identify the harm that they
now assert was the fault of someone other than the defendants themselves. It was not.
At the time of the temporary restraining order (“TRO”) hearing, this case had been
pending for more than two weeks, and the plaintiffs’ TRO motion had been pending for a full
Case 1:11-cv-11681-NMG Document 56 Filed 10/13/11 Page 2 of 10
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week. The hearing was scheduled several days in advance. As the defendants state in their
Memorandum (at p. 7), the legal standard that applies when evaluating a motion for a TRO is
well known. One component of that standard is a balancing of the harm to the plaintiff if an
injunction is not granted against the harm to the defendant if an injunction is granted. The
defendants are represented by three separate, highly sophisticated law firms. They had at least
five lawyers in the courtroom during the October 7 hearing. The suggestion that, prior to the
October 7 hearing, no one on the defense team considered the alleged harm to the defendants if a
TRO were to be granted strains credibility. The further contention that none of the experienced
lawyers in the courtroom was capable of identifying and articulating that harm at the October 7
hearing is equally implausible. Even after the hearing, and thus after a further opportunity to
consult with their clients on the specific subject of the potential harm to the defendants from a
TRO, the defendants apparently did not, in their submission regarding an injunction bond,
identify the injury that they now say will amount to tens of millions of dollars and requires
emergency relief.
The defendants suggest that their failure to identify the potential harms to the defendants
during the full week that the TRO motion was pending was caused by the Court’s Order issued at
5:20 p.m. in the evening of the day before the hearing. They quote the Order twice in their
memorandum. Each time they omit its last sentence. The omitted sentence said: “If the parties
can reach agreement as to defendants’ relevant conduct between now and the time the Court
decides the motion for injunctive relief after it is fully argued, no hearing need be held
tomorrow.”
This sentence informed the parties that a purpose of the hearing “to be held tomorrow”
was to determine whether, in the absence of agreement by the parties, a constraint would be
Case 1:11-cv-11681-NMG Document 56 Filed 10/13/11 Page 3 of 10
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placed on “defendants relevant conduct” during the period prior to “the time the Court decides
the motion for injunctive relief.” Further, the October 6 Order states that the Court would
entertain an oral presentation by the defendants with respect to the preliminary injunction
motion. The suggestion that no one on the defense team thought that such a presentation should
or could include a description of potential harms to the defendants if an injunction were to be
granted is unsustainable.
The defendants also state that the Court’s October 6 Order induced them to refrain from
making a written submission to the Court, which, they imply, would have included a presentation
on the subject of the potential injury to the defendants. Memorandum at 5. The defendants fail
to state that at the October 7 hearing the Court gave the defendants the opportunity to make an ex
parte written submission to the Court on the sole question of potential harm to the defendants
during the period of a TRO. Apparently no presentation of the harms now cited by the
defendants was made.
The instant motion is the defendants’ third bite at the apple. It comes too late and, as will
be explained below, it is without merit.
II. Bid Submissions to Group Purchasing Organizations.
Amphastar relies on the Liawatidewi Declaration. In that declaration, Mr. Liawatidewi,
an Amphastar officer, states that Amphastar wishes to submit bids on contracts to be entered into
by two Group Purchasing Organizations (“GPOs”). Individual GPOs purchase product on behalf
of hospitals and health care systems located throughout the United States. Liawatidewi Decl.,
¶¶ 7, 8. Mr. Liawatidewi states that one such bid was due on October 11. He states that it
involves sales of $240 million. The other bid is said to be due on October 14. It is alleged to
involve $30 million of sales. Liawatidewi Decl., ¶ 15. However, the defendants’ motion was not
Case 1:11-cv-11681-NMG Document 56 Filed 10/13/11 Page 4 of 10
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filed until 5:42 p.m. on October 12. Thus, if Mr. Liawatidewi is to be believed, the time for
bidding on the vastly larger, $240 million contract had expired the day before the Emergency
Motion was filed. A modification of the injunction could have no effect on that bidding
situation.
This aspect of the defendants’ motion is flawed for at least five additional reasons. First,
the conduct in which Amphastar proposes to engage will cause precisely the harm to the
plaintiffs that the TRO is designed to avoid. Mr. Liawatidewi states that Amphastar’s plan is to
bid “significantly below the current generic market price of enoxaparin.” Liawatidewi Decl.,
¶ 16. The TRO is designed to preclude the price erosion that Amphastar’s sales activity will
cause during the period of time when the Court is considering the pending preliminary injunction
motion. As the affidavits filed by the plaintiffs establish, and as Mr. Liawatidewi and the
defendants do not contest, once that price erosion occurs, market prices will be permanently
affected, efforts by Sandoz to reverse that effect will likely result in significant harm to Sandoz’s
relationships with its customers, and the other related harms identified in the affidavits filed by
Momenta and Sandoz will occur. Picard (9/30/11) Decl. ¶ 17; Shea Decl. ¶¶ 11-16. Thus,
Amphastar is complaining that it cannot do exactly what the TRO is intended to prevent it from
doing.
Second, the Liawatidewi Declaration states that Amphastar wishes to submit two bids.
There is, of course, no assurance that its bids would be successful. To the contrary, Mr.
Liawatidewi states that, in his opinion “the legal uncertainty created by these proceedings will
reduce the likelihood that Amphastar’s bids… will be accepted”, and “is likely to have a serious
negative impact on Amphastar’s likelihood of winning the contracts.” Thus, Amphastar would
impose on the plaintiffs the harm that the TRO is designed to avoid -- price erosion that will not
Case 1:11-cv-11681-NMG Document 56 Filed 10/13/11 Page 5 of 10
5
be reparable -- in order that it might bid on contracts that, it states, Amphastar is unlikely to win
in any event -- because of the uncertainly created by the existence of this case (not by the TRO).
Third, Mr. Liawatidewi states that “some GPO contracts are ‘sole source’ contracts,
meaning that the GPO will only contract with a single supplier for a specific product.”
Liawatidewi Decl., ¶ 9 (emphasis supplied). He does not say that the two specific contracts on
which Amphastar proposes to bid are sole source contracts, and does not say that the relevant
GPOs will not enter into other contracts to purchase the same products. Liawatidewi Decl.,
¶¶ 15, 16. In fact, neither proposed contract is a sole source contract. Picard (10/13/11)
Declaration, ¶ 5. If a preliminary injunction is not granted, Amphastar may bid on other
contracts for enoxaparin to be entered by the same GPOs.
Fourth, Mr. Liawatidewi acknowledges that GPO contracts “typically have termination
rights.” Liawatidewi Decl., ¶ 10. He does not explain why a GPO would not exercise those
rights if, as Mr. Liawatidewi states, Amphastar will, in the absence of an injunction, offer prices
that are “significantly below the current generic market price for enoxaparin.” Id. at ¶ 16.
Moreover, the Picard Declaration, filed herewith, establishes that the contracts being bid this
week are for product that will not be shipped until mid-2012. Those contracts typically include
provisions that allow the GPO to delete a product (e.g., enoxaparin) from the contract on very
short notice if a competing product later enters the market at a more competitive price. Picard
(10/13/11) Decl., ¶¶ 6, 7.
Fifth, if the preliminary injunction is granted, Amphastar will be precluded from entering
contracts with the relevant GPOs even if it were the winning bidder on the two contracts.
Amphastar’s motion apparently assumes that the preliminary injunction will be denied and that
the relevant GPOs -- whose goal is to purchase products as inexpensively as possible -- will not
Case 1:11-cv-11681-NMG Document 56 Filed 10/13/11 Page 6 of 10
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wait and entertain Amphastar’s bid after the TRO expires, seven days from now. Indeed, the
only way that Amphastar’s request for permission to bid on the $240 million contract could
possibly be relevant is if the GPO is actually willing to extend the October 11 deadline for that
bid.
In sum, the conduct proposed by Amphastar is precisely the conduct that the Court
sought to prevent during the time that it was considering the preliminary injunction motion, and
the harm to Amphastar from a continuation of the TRO for another week is (a) highly speculative
and (b) likely curable if a preliminary injunction is not granted.
III. Overage Product
Amphastar states that it has product that will expire on December 31, 2011. It suggests
that if the TRO remains in place for eight more days, until October 21, it will be injured because,
although it could somehow sell that product in the next eight days, it will be unable to sell the
same product thereafter.
Amphastar’s theory is as follows. Wholesalers “generally” require that drugs have at
least two months of remaining shelf life when the drug is received from the pharmaceutical
company. And it “generally” takes the pharmaceutical company “5-7 days to transport the drug
to the wholesaler and several more business days to process the order.” Liawatidewi Decl., ¶ 13.
This presentation overlooks the following facts: Amphastar is “the pharmaceutical
company” to which Mr. Liawatidewi refers. If it takes Amphastar “several business days” to
process an order, Amphastar only has itself to blame. Similarly, if it takes Amphastar “5-7 days
to transport product to a wholesaler,” that will be because Amphastar has chosen to avoid the
modest cost of more rapid delivery -- e.g. air freight. Further, Amphastar offers no explanation
as to why the “general” practice of wholesalers would not be modified by at least one
Case 1:11-cv-11681-NMG Document 56 Filed 10/13/11 Page 7 of 10
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wholesaler, if, as Amphastar states, it will be offering prices that are “significantly below”
current market prices. To the contrary, Mr. Liawatidewi tells us that Amphastar has successfully
sold “short dated product in the recent past.” Liawatidewi Decl., ¶ 12. Finally, Amphastar
makes the implausible argument that product will be saleable between October 14 and October
21, but cannot be sold, even a few days later. As stated in the Picard Declaration, Amphastar’s
contention is inconsistent with market realities. See Picard (10/13/11) Decl., ¶ 8.
Finally, Amphastar’s entire argument assumes that a preliminary injunction will be
denied. If the preliminary injunction is granted, Amphastar will not be able to ship the relevant
product, and a continuation of the TRO will not have affected Amphastar. For the reasons stated
in Momenta/Sandoz’s Memorandum in Support of Their Motion for a Temporary Restraining
Order and Preliminary Injunction, filed September 30, 2011, and to be stated in
Momenta/Sandoz reply memorandum, to be filed shortly, Amphastar’s assumption is unfounded.
Case 1:11-cv-11681-NMG Document 56 Filed 10/13/11 Page 8 of 10
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4955457v1
CONCLUSION
The Plaintiffs’ Emergency Motion should be denied.
Respectfully submitted,
SANDOZ, INC. MOMENTA PHARMACEUTICALS, INC.
By their attorneys, By their attorneys,
/s/ Sarah Chapin Columbia /s/ Courtney M. Schou
Sarah Chapin Columbia (BBO #440155) Robert S. Frank, Jr. (BBO #177240)
[e-mail] [e-mail]
Melissa Nott Davis (BBO #654546) Eric J. Marandett (BBO #561730)
[e-mail] [e-mail]
MCDERMOTT WILL & EMERY LLP Jessica Gan Lee (BBO #670970)
28 State Street [e-mail]
Boston, MA 02109 Courtney M. Schou (BBO #671104)
Tel.: [phone] [e-mail]
Fax: [phone] CHOATE, HALL & STEWART LLP
Two International Place
-and- Boston, MA 02110
Tel.: [phone]
Thomas P. Steindler (admitted pro hac vice) Fax: [phone]
[e-mail]
MCDERMOTT WILL & EMERY LLP
600 13th Street, NW
Washington, D.C. 20005-3096
Tel.: [phone]
Fax: [phone]
Dated: October 13, 2011
Case 1:11-cv-11681-NMG Document 56 Filed 10/13/11 Page 9 of 10
9
4955457v1
CERTIFICATE OF SERVICE
I hereby certify that this document filed through the ECF system will be sent
electronically to the registered participants as identified on the Notice of Electronic Filing (NEF)
and that paper copies will be sent to those non-registered participants (if any) on October 13,
2011.
/s/ Courtney M. Schou
Case 1:11-cv-11681-NMG Document 56 Filed 10/13/11 Page 10 of 10

[DewDiligence]

Sandoz’s affidavit is consistent with what I posted in #msg-67981704.