Sandoz and United Therapeutics’ yearslong dispute over a generic to pulmonary arterial hypertension med treprostinil has swung in Sandoz’s favor with a New Jersey district court deciding that the former Novartis subsidiary is owed damages from lost profits stemming from a 2015 breach of contract.
The case stretches back to 2011, when Sandoz filed for FDA approval of its generic to United’s branded treprostinil drug-device combo Remodulin. United responded with a patent lawsuit, and the two settled in 2015, giving Sandoz permission to market its version in 2018. As per the agreement, United was not to take “any action directly or indirectly to prevent, delay, limit or otherwise restrict” Sandoz’s launch.
But in 2015, United’s device supplier, Smiths Medical ASD, decided to discontinue production of its pumps but agreed to make more solely for United in 2016.
Smith later alerted United that customers had been purchasing large quantities of the cartridges for other uses, prompting an agreement that required Smith to use “commercially reasonable efforts” to restrict cartridges sold to other parties. When Sandoz prepared to launch its generic, United and Smiths agreed that United could approve every Smiths cartridge sale to specialty pharmacies to ensure use for Remodulin only.
Sandoz’s promotion partner RareGen (which now operates as Liquidia after a 2020 merger) managed to get its hands on more than 3,000 pumps for its launch but couldn’t secure the cartridges required for the product. After licensing talks with Smiths fell through, Sandoz and Liquidia found alternative cartridges to use with Smiths' pump, which were cleared for use by the FDA in 2021.
Sandoz filed its initial complaint against United and Smiths in 2019, alleging restraint of trade and monopolization, among other related charges, and seeking damages for lost profits from the lack of necessary cartridges. Sandoz and Smiths have since settled over the course of the litigation, but United persisted.
After a trial earlier this year, the U.S. District Court for the District of New Jersey has now agreed that Sandoz’s lost profits after its launch were a “natural and probable consequence” of United’s breach of its 2015 settlement promise to not restrict the generic’s launch, U.S. District Judge Brian Martinotti wrote in a recently unsealed Sept. 6 opinion.
The damages Sandoz is owed for lost profits stand at $137 million, but a reduction “is warranted” due to the saved cost of Liquidia’s profit share. That reduction should be calculated between the parties who “shall consider the actual profits that were realized” in Sandoz’s intravenous-only launch, Martinotti noted. Liquidia and Sandoz will divide the proceeds from the litigation evenly, but Liquidia will not retain any of the net proceeds due to litigation finance agreements, Liquidia said in a statement.
Meanwhile, United and Liquidia are battling in separate litigation over Liquidia’s proposed competitor to United’s inhalation powder treprostinil, Tyvaso DPI. United sued the FDA in February over its approval process for Liquidia’s Yutrepia, then sued the generic manufacturer over a recently acquired patent. After a judge in Delaware removed an injunction that prevented the FDA from approving Yutrepia, the agency last month opted to hold off on a full approval until United’s market exclusivity runs out in May 2025.