AbbVie stands to potentially receive significant damages, possibly amounting to hundreds of millions of dollars, due to a contractual manufacturing agreement with Takeda that went awry. The Delaware Court of Chancery recently ruled in favor of AbbVie, granting the pharmaceutical company almost the entirety of the $480.6 million it sought in damages from Takeda regarding a problematic supply agreement concerning Lupron, as reported by Bloomberg Law. In contrast, Takeda had advocated for lower damages of around $295 million.
Lupron is a medication used to treat specific conditions such as endometriosis, uterine fibroids, advanced prostate cancer, and central precocious puberty, as outlined on AbbVie’s website.
AbbVie initiated legal action against Takeda in November 2020, alleging that the Japanese pharmaceutical company breached their agreement for Lupron supply due to manufacturing issues at a Takeda production facility in Japan, resulting in a shortage of AbbVie’s medication.
The Delaware Court’s Vice Chancellor, Sam Glasscock III, had previously found Takeda guilty of contract breach in September 2021. Subsequently, a trial was held in January to determine the extent of damages incurred by AbbVie.
In this latest ruling, Glasscock affirmed the reliability and appropriateness of AbbVie’s methodology for calculating damages. Nevertheless, he ordered some adjustments to this methodology, so the precise amount of damages remains undisclosed. AbbVie’s approach is grounded in the notion that the Lupron shortage prompted customers to switch to competing products, causing a decline in AbbVie’s sales and potentially diminishing Lupron’s market share permanently, as articulated by Glasscock.
Takeda contested AbbVie’s model on two fronts: purported data manipulation by AbbVie and the overall methodology employed to estimate damages.