Amarin: Any chance of a settlement before the appeal?

Zachary Silbersher

Settlement is fundamentally a business decision.  In the Hatch-Waxman context, the proposed terms of a settlement may make business sense for one generic, but not for another generic.  The same terms may hypothetically make business sense for Hikma to settle, but not Dr. Reddy’s.  While we do not have insight into any past or present discussions among the parties, we see at least three obstacles to settlement at this time before resolution of the appeal: money, entry and invalidity.

First, money.  In recent years, ever since the Supreme Court’s decision in FTC v. Actavis, pay-for-delay settlements have been more heavily scrutinized by the FTC and challenged within class-action lawsuits.  It is unlikely that Amarin and each of the generics can bridge the gap to a settlement by finding the right number.  Pay-for-delay settlements that are more than $7 million are likely to raise a red flag with the FTC.  That is not something that either Amarin or the generics want to enteratin.  While Amarin appears to have paid Teva $2 million as part of their settlement, it is unlikely that Hikma or Dr. Reddy’s would accept that, or anything under $7 million.  Having gone to trial, their legal bills alone are likely more than that.  More importantly, the generics just won a bench trial.  Their settlement leverage just spiked.  Even if the parties were inclined to entertain a payment as part of the settlement, there is unlikely a payment that is low enough to steer clear of FTC scrutiny, but high enough to satisfy the generics.

Second, entry.  A tractable obstacle to settlement with Hikma and Dr. Reddy’s is likely the prior settlement with Teva.  We know that Teva agreed to enter in 2029, but the publicly-disclosed terms indicate Teva can enter earlier upon “commercial launch by another generic.” Thus, Teva’s settlement agreement likely provides that Amarin cannot offer another generic an earlier entry date without simultaneously offering that same date to Teva, or something to that effect. 

Thus, Teva’s prior settlement agreement probably means that Hikma and Dr. Reddy’s cannot agree on an entry date before 2029 that will simultaneously exclude Teva entering at the same time, or even beforehand.  But that is not likely something either Hikma or Dr. Reddy’s are interested in.  They each want to enter as early as possible with as few other generics as possible.  The business case for any settlement drops quickly if there are three generics on the market.

Hikma and Dr. Reddy’s may take into account that it will take Amarin a few years to build up the patient population for the REDUCE-IT indication.  Nevertheless, they just won the trial.  They have considerable leverage right now that they lacked before trial.  They most likely do not want to agree to a settlement that contemplates a simultaneous entry with Teva.  If Amarin is not at liberty to offer Hikma or Dr. Reddy’s something close to what they want, and the generics figure they have more than 50% chance of prevailing on appeal, then a settlement is not likely. 

Finally, invalidity.  This is probably the biggest obstacle to settlement at this time, even though we are discussing it third.  Even if Amarin and the generics could theoretically arrive at a mutually-agreeable entry date, the fact remains that the patents have been invalidated.  That creates a problem not just for Amarin, but also for Hikma and Dr. Reddy’s. 

If the parties settle before the appeal, then Amarin will essentially be waiving its right to appeal Judge Du’s decision invalidating the patents.  That decision will therefore stand, unless it is vacated.  However, it can be very difficult to vacate a decision of invalidity before an appeal.  There is not a tremendous amount of caselaw on this issue.  Yet, in Protegrity USA, Inc. v. Netskope, Inc., Case No. 15-2515 (N.D. Cal.), the court refused to vacate an invalidity decision on account that the parties had settled.  Importantly, the court observed that invalidity decisions are “valuable to the legal community as a whole,” and not presumptively dispensed with just because the parties have settled. 

Here, there are other generics that have filed ANDAs against the Marine indication.  There are also other generics most likely contemplating whether to file ANDAs given the opportunity to use off-label generic sales to piggy-back off of Amarin’s sizing up the patient population with REDUCE-IT prescriptions.  Neither Hikma nor Dr. Reddy’s want to be in a position where they agree to enter in 2025 or 2026, only for another generic to swoop in and take advantage of the invalidity decision.  Thus, because the outcome of the trial turned on invalidity, rather than a ruling on non-infringement that would not read-through to future generics, Amarin is almost compelled to pursue the appeal.

Even if the invalidity decision could be vacated, that problem—or the risk of that problem—does not necessarily go away.  A vacated invalidity decision is not binding on other district courts, but it is nevertheless persuasive.  If Amarin chooses to file against the next generic in Delaware,  exhibit-number-one held up by that generic will be Judge Du’s invalidity decision.  There is a very big difference between a vacated decision, which has not gone through appellate review, and a reversed decision.  Neither Amarin nor Hikma and Dr. Reddy’s can assume that a new judge will not defer in substantive ways to Judge Du’s decision given that—from the perspective of judicial resources—it was clearly the effort of considerable time and effort, especially from the perspective of a sister court.  Indeed, this was one of the factors considered by the court in the Protegrity decision.

Finally, the docketing statements filed by the parties all indicate that mediation will not be helpful.  That, more than anything, is a fairly clear tip-off that the parties are most likely not pursuing settlement at this time.  This scenario is not uncommon when a plaintiff loses a patent case where (1) the patent was invalidated at trial, (2) there are likely future infringers, and (3) the relief sought at trial was injunctive relief, rather than damages.  Settlement is much more feasible where the only thing at stake is money, and the defendants have no stake in deterring future infringement.  Here, the defendants have their own interest in keeping out future infringers in the form of more ANDAs.  That makes settlement following an invalidity decision more difficult.

In sum, given the circumstances of this case, a settlement before the appeal is resolved appears to have numerous obstacles—even if there is a rational economic desire on all sides to reach a resolution.  The best path forward for Amarin, at least through the lens of the patent issues, remains prevailing at the Federal Circuit.