Mylan Laboratories, Inc. - Order and Stip

UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF COLUMBIA

FEDERAL TRADE COMMISSION, Plaintiff

MYLAN LABORATORIES, INC., CAMBREX CORPORATION, PROFARMACO S.R.L., and GYMA LABORATORIES OF AMERICA, INC., Defendants

Civil 1:98CV03114 (TFH)

ORDER AND STIPULATED PERMANENT INJUNCTION

Whereas Plaintiff Federal Trade Commission ("Commission") has filed its amended Complaint against Defendants Mylan Laboratories, Inc., Cambrex Corporation, Profarmaco S.r.l., and Gyma Laboratories of America, Inc., pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), seeking injunctive and other equitable relief for violations of Section 5 of the FTC Act, 15 U.S.C. § 45; whereas the Commission and Defendants have stipulated and agreed to entry by the Court, without further notice, of the following findings and permanent injunction; whereas this Order is entered for settlement purposes only and does not constitute any evidence against or an admission of liability by the Defendants; and whereas the Court, being advised in the premises, finds:

1. The Commission brings this action under Sections 5 and 13(b) of the FTC Act, 15 U.S.C. §§ 45 and 53(b). In its Amended Complaint (dated February 8, 1999), the Commission seeks permanent injunctive and other equitable relief, including disgorgement. The Commission alleges that the Defendants conspired to monopolize and entered into agreements that unreasonably restrained trade in the lorazepam and clorazepate tablet and active pharmaceutical ingredient markets. The Commission further alleges that Mylan Laboratories, Inc., monopolized and attempted to monopolize the markets for lorazepam and clorazepate tablets. This Court has held that, pursuant to Section 13(b), the Commission has authority to seek the relief it has requested.

2. This Court has jurisdiction over the parties and the subject matter of this action. Venue is proper in the District of the District of Columbia. This Court has held that the Complaint states a claim upon which relief may be granted against Defendants under Sections 5 and 13(b) of the FTC Act, 15 U.S.C. §§ 45, 53(b).

3. The Defendants' activities are in or affecting commerce, as defined in 15 U.S.C. § 44.

4. This Court has held that this case is a proper case for the issuance of a permanent injunction pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b).

5. Defendants waive all rights to appeal or otherwise challenge or contest the validity of this Final Order and Stipulated Permanent Injunction, and Defendants waive any claim under the Equal Access to Justice Act, 28 U.S.C. § 2412.

6. Each Defendant, without admitting that it has violated Section 5 of the FTC Act, 15 U.S.C. § 45, or that entering an injunction under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), is proper, agrees to the entry of this Order under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b).

7. Entry of this order is in the public interest.

IT IS ORDERED that, as used in this Order, the following definitions shall apply:

A. "Agreement" means anything that would constitute an agreement under Section 1 of the Sherman Act, 15 U.S.C. § 1, or Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45.

B. "ANDA" means Abbreviated New Drug Application, as defined under 21 U.S.C. § 355(j) et seq.

C. "API" means active pharmaceutical ingredient.

D. "Cambrex" means Cambrex Corporation; its divisions and subsidiaries; and their directors, officers, employees, agents, representatives, successors and assigns, and all other persons or entities in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise.

E. "Commerce" has the same definition as it has in 15 U.S.C. § 44.

F. "Commission" means the Federal Trade Commission.

G. "DMF" means Drug Master File, as provided under 21 C.F.R. 314.420.

H. "Enter into" means join, participate in, or implement.

I. "FDA" means the United States Food and Drug Administration.

J. "Gyma" means Gyma Laboratories of America; its divisions and subsidiaries; and their directors, officers, employees, agents, representatives, successors and assigns, and all other persons or entities in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise.

K. "Mylan" means Mylan Laboratories, Inc.; its divisions and subsidiaries, including Mylan Pharmaceuticals; and their directors, officers, employees, agents, representatives, successors and assigns, and all other persons or entities in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise.

L. "Person" means any natural person, partnership, corporation, or business entity.

M. "Profarmaco" means Profarmaco S.r.l.; its divisions and subsidiaries; and their directors, officers, employees, agents, representatives, successors and assigns, and all other persons or entities in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise.

N. "Settlement Agreement" means the agreement (and attachments thereto) executed by the Commission, the Plaintiff States, and Defendants, which governs the resolution of the above-captioned matter and the States Action.

II.

IT IS FURTHER ORDERED that, not later than three (3) days after service of this Order, Mylan Pharmaceuticals, Inc., pay $71,782,017 to an escrow fund for purposes of satisfying consumer claims in the related matter Connecticut v. Mylan, Civil 1:98CV03115 (D.D.C.) (the States Action), and $28,217,983 to an escrow fund for purposes of satisfying state agency claims in the States Action. The escrow funds are intended to be qualified settlement funds within the meaning of Treas. Reg. Sections 1.468B-1, et seq., and distributions from the escrow funds are subject to the Settlement Agreement and further order from this Court.

III.

IT IS FURTHER ORDERED that Defendants Mylan, Cambrex, Profarmaco, and Gyma are each enjoined from entering into or attempting to enter into any agreement with any person, in or affecting commerce, concerning any API if the agreement (1) prohibits the API supplier from supplying any person not a party to the agreement, (2) prohibits any person not a party to the agreement from referencing the API supplier's DMF, or (3) exclusively licenses the API supplier's DMF; and further provided that the effect of such an agreement is to unreasonably restrain trade, create an unlawful monopoly, or attempt to create an unlawful monopoly.

IV.

IT IS FURTHER ORDERED that Defendant Mylan is enjoined for five (5) years from the date this Order is entered from entering into or attempting to enter into any agreement, in or affecting commerce, with Defendants Cambrex, Profarmaco, or Gyma that (1) prohibits Profarmaco, Cambrex, or Gyma from selling lorazepam or clorazepate API to any person, (2) prohibits any person from referencing Profarmaco's DMF for lorazepam or clorazepate API, or (3) exclusively licenses Profarmaco's lorazepam or clorazepate DMF to Mylan.

IT IS FURTHER ORDERED that Defendant Mylan is enjoined from entering into or attempting to enter into any agreement with any person, in or affecting commerce, concerning any API, if (a) Mylan does not reference the API supplier's DMF and (b) the agreement (1) prohibits the API supplier from supplying any person not a party to the agreement, (2) prohibits any person not a party to the agreement from referencing the API supplier's DMF, or (3) exclusively licenses the API supplier's DMF.

VI.

IT IS FURTHER ORDERED that, for five (5) years from the date this Order is entered, Mylan shall notify the Commission thirty (30) days before entering into any agreement, in or affecting commerce, with any person concerning any API for which the API supplier has a DMF, if the agreement (1) prohibits the API supplier from selling the API to any person not a party to the agreement, (2) prohibits any person not a party to the agreement from referencing the API supplier's DMF, or (3) exclusively licenses the API supplier's DMF to Mylan. Such notice shall include:

(a) A copy of the proposed agreement;

(b) To the extent not reflected therein, the identification of all parties to such agreement, the API(s) involved, and all terms relating to exclusivity and compensation (including prices, profit-sharing, royalties, and other payments); and

(c) For the three most recent years, all IMS data, purchased in the ordinary course of business, relating to the finished drug product involved in the agreement, or, if no IMS data is available, any available data on sales in units, prescriptions, and dollars of the finished drug product involved.

VII.

IT IS FURTHER ORDERED that, for five (5) years from the date this Order is entered, Cambrex, Profarmaco or Gyma shall notify the Commission thirty (30) days before entering into any agreement, in or affecting commerce, with any person concerning any API for which the API supplier has a DMF, if the agreement (1) prohibits the API supplier from selling the API to any person who references the DMF, (2) prohibits any person not a party to the agreement from referencing the API supplier's DMF, or (3) exclusively licenses the API supplier's DMF. Such notice shall include:

(a) A copy of the proposed agreement;

(c) Data sufficient to show each sale of the API involved in the agreement in the past three years, the identity and location of the customer for each sale, the amount in kilograms of each sale, and the total amount in dollars of each sale of the API involved.

VIII.

IT IS FURTHER ORDERED that each Defendant shall:

A. File a verified, written report with the Commission setting forth in detail the manner and form in which it has complied and is complying with this Order: (1) within ninety (90) days from the date this Order is entered, (2) annually thereafter for five (5) years on the anniversary of the date this Order is entered, and (3) at such other times as the Commission may require by written notice.

B. For a period of five (5) years from the date this Order is entered, maintain and make available to Commission staff for inspection and copying upon reasonable notice, records sufficient to describe in detail any action taken in connection with the activities covered by this Order.

C. Notify the Commission at least thirty (30) days prior to (1) any proposed change in the corporate Defendant, such as its dissolution, assignment, or sale resulting in the emergence of a successor corporation, or (2) any other change or the creation or dissolution of subsidiaries that may affect compliance obligations arising out of this Order.

D. Address each notice and report that this Order requires to Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue, NW, Washington, DC 20580, and send a copy of each notice pursuant to paragraphs VI and VII to the Assistant Director of Health Care, Bureau of Competition, at the same address.

IX.

IT IS FURTHER ORDERED that the following do not violate, and are not subject to, the Order:

A. Any agreement relating to:

(1) Any API or finished drug product during the period the manufacture and sale of which is protected by a patent.

(2) The development of any patentable API or finished drug product for which a New Drug Application would be necessary to sell the finished drug product in the United States.

(3) The development of any API or generic finished drug product, if the API supplier has not filed a DMF with the FDA at the time of the agreement.

(4) The development of any generic finished drug product, if there is no existing or pre-existing commercially available generic finished drug product that references the API supplier's DMF at the time of the agreement.

B. Any exclusive distributorship agreement, such as that currently in effect between Profarmaco and Gyma, by which the API supplier designates an exclusive distributor of one or more APIs to API purchasers in the United States or any portion thereof.

C. Any purchase order for any API submitted to, and accepted by, an API supplier in the ordinary course of business.

IT IS FURTHER ORDERED that this Order shall take effect on, and expire ten (10) years from, the date this Order is entered, and that this Order may become null and void before the expiration of the ten-year period as provided in the Settlement Agreement or by further order of the Court.

XI.

IT IS FURTHER ORDERED that the Court retains jurisdiction of this matter for purposes of construction, modification and enforcement of this Order.

Washington, DC, this day of 2000.

__________________________________
Thomas F. Hogan
UNITED STATES DISTRICT JUDGE