MedImmune sues Abbott over distribution agreement

Listen to this article

Pharmaceutical company MedImmune Inc. has filed a lawsuit claiming a breach of contract against Abbott International LLC over the international distribution of a new generation respiratory drug.

MedImmune, a division of U.K.-based AstraZeneca PLC, and Illinois-based Abbott have had an agreement in place since 1997 for the international distribution rights of Synagis, a treatment for respiratory syncytial virus. When development of its successor drug, called Numax, hit a snag Abbott decided not to pursue approval outside the U.S. and pushed to lower the amount it paid to its partner for sales of the older drug.

Gaithersburg-based MedImmune filed the lawsuit in U.S. District Court in Greenbelt on Sunday to prevent that from happening. MedImmune did not list a specific amount for damages in the lawsuit, but claimed that the difference in the amount paid could be at least $50 million a year.

MedImmune spokeswoman Karen Lancaster declined to comment on the pending litigation. Calls to Abbott were not returned.

Synagis received Food and Drug Administration approval in 1998 as a treatment for respiratory syncytial virus, or RSV. According to the Centers for Disease Control and Prevention, RSV is a common infectious virus that affects the lungs and breathing passages. Most people recover in one to two weeks, but it can lead to more severe problems in some infants and older adults, including pneumonia and bronchiolitis.

In 1997, MedImmune and Abbott entered into an agreement making Abbott the exclusive distributor of Synagis outside the U.S., with MedImmune receiving a percentage of the net sales. Public filings have put MedImmune’s cut at between 40 percent and 50 percent of the $750 million in annual sales of Synagis.

The agreement was amended in 2005 to reflect MedImmune’s development of Numax, the next generation anti-RSV drug. According to court documents, the companies agreed to increase the percentage paid out and both companies would pursue approval with MedImmune in the U.S. and Abbott in Europe. The agreement included the caveats that if both companies decided in writing not to pursue Numax, the agreement would revert to the older, lower-paying agreement.

In December 2010, the FDA notified MedImmune that it had concerns about the new drug. MedImmune decided shortly after that to withdraw its application for approval of Numax.

Abbott said that with MedImmune’s withdrawal it would not pursue approval outside the U.S. According to court documents, Abbott said MedImmune’s decision triggered a revision clause in the agreement that would reduce payments to the lower, pre-2005 agreement rate. MedImmune argued in the lawsuit that both sides needed to agree in writing to discontinue all development of Numax, which it did not do.

“MedImmune has no obligation, contractual or otherwise, to provide ex post facto ratification of Abbott’s unilateral decision to discontinue the development of [Numax] for foreign markets based on commercial considerations,” the company wrote in the lawsuit.

MedImmune said that sales of Synagis outside the U.S. were more than $750 million a year. The company said reverting to the older agreement would reduce its cut of the sales by about $50 million a year.