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Dispute Over Thalidomide Never Settled, Judge Says

PHILADELPHIA (CN) - An antitrust battle over the formula for the once banned, but now promising, drug Thalidomide will continue, a federal judge ruled Tuesday, denying Lannett Co.'s motion to enforce a putative settlement agreement that apparently never existed.

Lannett claimed it came to an oral agreement in July 2009 with Celgene Corp., which holds the drug's now-expired patent.

But U.S. District Judge Timothy Savage saw it differently.

Far from providing a picture of perfect accord, Lannett's September 2009 letter to Celgene showed that Celgene was wary of giving Lannett capsules of the drug so Lannett could conduct an analysis and develop a generic equivalent. "Contrary to Lannett's contention that its counsel's September 24, 2009 letter to Celgene's counsel memorialized the parties' agreement, it actually demonstrates that the parties were still in negotiations and were attempting to reach an agreement," Savage wrote.

Lannett, the nation's oldest generic drug manufacturer, sued Celgene under the Sherman Act in August 2008, claiming Celgene was placing "onerous and overbroad" requirements on it in an "intentional delaying tactic" to frustrate Lannett's attempt to craft a generic drug.

The drug was blamed for a raft of deformities in babies in the 1950s and 1960s; Celgene said its requirements were necessary to protect it from any claims that could result from Lannett's use of the test pills.

"Lannett contends that after the parties had reached an agreement in a meeting in chambers, Celgene repeatedly changed the terms of the agreement by modifying the conditions, demanding more each time Lannett satisfied the agreed upon conditions. Simply stated, Lannett argues that Celgene has employed a moving target that is impossible to hit," the judge wrote.

Lannett claimed the parties finally came to an oral agreement at a conference in July 2009.

"According to Lannett, at the conference, it agreed to dismiss its antitrust claim against Celgene in return for Celgene's selling Lannett a quantity of Thalomid (thalidomide) pills necessary to conduct Lannett's pilot bioequivalence study. As a condition of the sale, Lannett was to provide Celgene with an indemnification agreement, liability insurance covering Celgene, a study protocol for the bioequivalence testing in a form approved by the FDA, and Lannett's adverse drug event reporting history for the previous five years," the 5-page ruling states.

But Judge Savage found that there was no such deal: "No written settlement agreement was ever executed. The parties never reached a point in their discussions where all issues had been resolved."

Previously banned worldwide and an anathema, Thalidomide has caught the interest of researchers trying to treat multiple myeloma, a blood cancer. In 1998, the Food and Drug Administration approved the drug to treat leprosy patients.

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