In Re: Amitiza, No. 21-11057-MJJ, (D. Mass. Jan. 27, 2025)[1]
Factual Background
In 2004, Sucampo Pharmaceuticals, Inc. (“Sucampo”) entered into a marketing agreement with Takeda Pharmaceutical Company Limited, Takeda Pharmaceuticals U.S.A., Inc., and Takeda Pharmaceuticals America, Inc. (collectively, “Takeda”). The marketing agreement included a 16-year exclusive licensing arrangement for certain drugs, which came to include Amitiza.
In 2012, a predecessor to Par Pharmaceutical, Inc. (“Par”) had its application accepted to sell a generic version of Amitiza. Sucampo and Takeda subsequently commenced patent litigation proceedings against Par, and a settlement was reached in 2014, under which Par agreed to delay launching the generic version of Amitiza until January 1, 2021, at which point it could sell either its own generic product or a Sucampo-supplied generic product.
In 2017, Par entered in a Product Purchase Agreement (the “Agreement”) with Meijer, Inc. and Meijer Distribution, Inc. (collectively, “Meijer”), which covered “all generic pharmaceutical products distributed by Par” and included a clause requiring any controversy or claim arising out of or relating to the Agreement to be determined only by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules (the “AAA Rules“).
The Court Proceedings
In June 2021, Meijer, as proposed class representative for Direct Purchaser Plaintiffs (“DPPs”), filed a claim against Takeda and Par alleging that the settlement agreement was an implicit “no-AG [authorized generic]” “pay-for-delay” or “reverse payment” agreement causing direct purchasers to pay higher prices for brand or generic Amitiza. Takeda and Par filed a motion to dismiss (following which Par filed for bankruptcy and was dismissed from the claim), which was granted in part. Takeda then filed an answer, which did not raise arbitration as an affirmative defense. Takeda and the DPPs subsequently engaged in discovery, which included the production of the Agreement.
A year after receiving a copy of the Agreement from Par, but six months after receiving it from Meijer, Takeda notified counsel for Meijer that it intended to seek arbitration and filed a motion to compel arbitration. In its response, Meijer argued that (1) the Agreement did not bear on Meijer’s present claims, and therefore they were not arbitrable, and (2) Takeda had waived any right to arbitrate.
The Decision of the Court
On arbitrability, the court held that the parties to the Agreement had delegated issues of arbitrability to the arbitrator by its terms and under the AAA Rules. Accordingly, the court could compel arbitration and leave it for the arbitrator to determine, in the first instance, whether the Agreement covered Meijer’s claims.
On the question of waiver, the court held that Takeda’s actions did not demonstrate the intentional abandonment of the right to arbitrate. In making its ruling, the court considered whether Takeda had waived its right to arbitrate by virtue of the fact that Takeda: (i) was in possession of the Agreement (produced by Par) for a full year before moving to compel arbitration; (ii) actively participated during that time in discovery and obtained information that would not necessarily be available in arbitration; and (iii) filed an Answer without raising arbitration as an affirmative defense. However, the court found that Takeda had repeatedly requested documents showing an agreement to engage in alternative dispute resolution and had explained to Meijer that those documents could affect DPPs’ standing to bring their claims. The court also found that there was no evidence that Takeda had used the litigation machinery for an improper purpose or held off on its motion to gain a strategic or tactical advantage during the course of litigation.
The court stayed the proceedings pending resolution of the arbitration proceedings and ordered the parties to file a joint status report within seven days of the conclusion of the arbitration proceedings.
This Article was originally published in the North America Newsletter.
