Tuesday, March 10, 2009

Any JNJ/Centocor Reversion Clause Dispute is Mandatorially Arbitrated

This will be interesting. As many experienced lawyers will tell you, in mandatory arbitration, there is an almost universal tendency to "split the baby down the middle". That is, once the arbitrators get involved, they usually find that each party gets at least a part of what each asks for. Said another way, each party walks away at least a little unhappy. That is what arbitrators often feel the face of "justice" should resemble.

So, in this case, even if -- in a court of law -- Schering-Plough might otherwise be declared a clear winner (get to keep the rights to these products), it has already agreed to accept an arbitrators' outcome. The way mandatory arbitration usually works -- and thus, this version of the standard arbitration clause -- might, on balance, encourage William Weldon to at least explore the possibilty of forcing arbitration on the Section 8.2(c) Change of Control determination. Here is that Arbitration provision, in context:

. . . .12.7 Arbitration and Limitation of Damages.

Any unresolved dispute between the parties or any claim of one party against the other arising under or in connection with this Agreement will be resolved through binding arbitration pursuant to the mechanism set forth in Appendix K [Editor's Note: Schering-Plough did not file Appendix K with the orginal contract; it is now material, and must be filed promptly]; provided, however, that no party will refer a dispute to arbitration under this Section without giving at least twenty (20) days' notice to the Oversight Committee of its intention to do so. . . .

That Appendix K might provide for an appeal to a court of law, in the event that the arbitrators' award is unsatisfactory to either party, or it might provide that the arbitrators' decision is final, binding and not subject to any additional appeals.

If the latter is the case, the only way Schering/Merck gets to a court of law, is if the clause was the subject of overreaching, fraud or bad faith (i.e., not likely).

Stay tuned for a shot a cross the bow -- from Johnson and Johnson. It is worth about $4 billion in annual sales, all in (of which Schering-Plough now books about $2.3 billion, per year). This number will be about $1 billion higher, should Simponi/Golimumab win an early approval from FDA. Well, if nothing else -- it all should be entertaining -- so, pop the popcorn!


Anonymous said...

So, what would the odds be for S/P-Merck getting to keep Remicade but having to forego Golimumab?

Remember, NICE has set policy not to pay for the use of another TNF-ab once a patient has 'failed' one.

With the new administration's proposal to have HHS perform more comparative studies-the same format for coverage may come here to the States.

So, is Golimumab the way to go or is Remicade?

Anonymous said...

what will you have to talk about now?

Anonymous said...

Since S/P's sales of either Remicade or Golimumab is only outside of the US that will be taking a 'headwind' hit in the coming year-what utility is there for Merck with either Remicade or Golimumab? Maybe they will just 'sell' it back to J/J for a theoretical price~to avoid delays, legal costs and help pay down the merger.

Anonymous said...

A thought-to be vested in S/P's retirement pension plan, you had to have worked with the company for 5 years.

I wonder how many S/P staff, that were hired after Fred came on board, will be the target of being riffed after the completion of this combination?

It would make sense to let those go~then even though you have to pay them severance there wouldn't be any cost down the road from the pension fund.

Maybe some past Pharmacia people experienced the same thing?