Barr Pharmaceuticals, Inc. has agreed to settle litigation claims made by Novartis AG units Invamed Inc and Apothecon Inc. related to the raw material source in blood thinner Warfarin Sodium. Warfarin is a generic version of Coumadin, which is designed to reduce the threat of blood clots. Under the terms of the agreement, the Company has agreed to provide a one- time payment of $22.5 million to the plaintiffs. As a result of the settlement, the Company will record the $22.5 million payment.

In February 1998, Invamed, Inc. and Apothecon, Inc. named Barr and several others as defendants in lawsuits filed in the U.S. District Court for the Southern District of New York, alleging violations of antitrust laws and also charging that Barr unlawfully blocked access to the raw material source for Warfarin Sodium. The two actions were consolidated. On May 10, 2002, the District Court granted summary judgment in Barr’s favor on all antitrust claims in the case, but found that the plaintiffs could proceed to trial on their allegations that Barr interfered with an alleged raw material supply contract between Invamed and Barr’s raw material supplier. Invamed and Apothecon appealed the District Court’s decision to the U. S. Court of Appeals for the Second Circuit.

On October 18, 2004, the Court of Appeals reversed the District Court’s grant of summary judgment and held that the plaintiffs raised issues of material fact on their claims that Barr and others conspired to restrain trade and monopolize the supply and retail markets of generic warfarin sodium in violation of §§ 1 and 2 of the Sherman Antitrust Act and § 7 of the Clayton Act. A trial had been scheduled to begin on June 12, 2006.

The suit arose after Barr entered into an exclusive supply agreement pursuant to which ACIC/Brantford would supply Barr exclusively with commercial quantities of clathrate until another manufacturer began selling generic warfarin sodium. They also executed a confidentiality agreement that for five years prohibited either party from disclosing “valuable, proprietary, technical, commercial and other confidential information.”

In September 1997 Geneva received FDA approval for its generic warfarin sodium application. The next day it sent ACIC/Brantford an order to purchase 750 kg of clathrate for $1.8 million. By October 1997 Geneva still had not received an acceptance of its order, and it threatened legal action. On October 20, 1997 ACIC/Brantford formally rejected Geneva’s order, and thereafter refused to accept further Geneva orders. It was then that Geneva first learned of the exclusive deal between ACIC/Brantford and Barr, and that as a result, ACIC/Brantford would not be able to supply it with clathrate. Geneva sued ACIC/Brantford and Barr alleging that their secret exclusive dealing arrangement unfairly gave Barr exclusive access to the only available source of clathrate and effectively delayed their entry into the generic warfarin sodium market for one year giving Barr a monopoly in this drug during that period.

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