Allergan Wins Legal Battle to stop sales of Botox Rival, Xeomin by Merz

It was announced this week that Allergan Inc. who manufacture the anti-wrinkle drug, Botox® have won a court order in Santa Ana, California, USA which blocks one of their rivals in the botulinum toxin world, Merz Pharma from selling its neurotoxin product Xeomin®, which recently received FDA approval in August 2011 for the treatment of glabellar (frown lines) and was due for commercial launch for cosmetic use in America at the upcoming American Academy of Dermatology (ADD) annual meeting on 12th March 2012.

The legal proceedings came about due to a claim from Allergan that its trade secrets were stolen. It alleged that as Merz prepared to sell Xeomin for other approved indications in 2010 it targeted Allergan sales representatives to jump over to their company to work. On doing so, Allergan claims that the reps took confidential materials including sales figures and customer lists with them to Merz. It is also reported that some Allergan employees had signed job contracts with Merz and then delayed giving final notice so that they could email company data out to their personal email accounts.

Allergan’s legal team sought to get a court order which would block the sale of any product by Merz which would directly compete with Botox for one year, as well as a bar on the sale of their product to anyone who has been an Allergan customer. They also sought the return of their ‘trade secrets’. During the trial, Merz responded that the materials that Allergan referred to were neither trade secrets, nor were they confidential and they were not seen or used by Merz employees anyway.

On 6th March, U.S. District Judge Andrew J. Guildford issued an injunction against Merz following the trial without jury which blocked the immediate sale of Xeomin.

On news of their success, Allergan said; “For more than 20 years, we have invested millions of dollars in the research, clinical development and marketing of Botox and we are pleased that our intellectual property has been protected.”

Judge Guildford’s written findings and conclusions were set to be released three days later on 9th March which would specify the length and terms of the injunction that he had granted. This is still pending and will be updated when it becomes available.

In a statement from Merz Aesthetics, the UK branch of the company, they said; “Court action by Allergan Inc. in the USA has resulted in an injunction against Merz Inc., the makers of XEOMIN (botulinum toxin), a competitor to Botox®. Recent FDA approval for XEOMIN in both neurological and aesthetic indications has given US based physicians a welcome choice in the fast-growing area of neuromodulators. 

Allergan has been in dispute with Merz in its home market over allegations that former Allergan sales representatives had copied confidential company data and released it to Merz prior to changing over their employment. This dispute relates only to the United States, is not related to product safety or efficacy and does not affect any other territory. XEOMIN is licenced and marketed in 21 countries worldwide. Both XEOMIN and BOCOUTURE continue to be marketed as normal in the UK.”

Some commentators have argued that this legal posturing is unnecessary, greedy and childlike, and that the only ‘real’ people to suffer are the potential U.S. patients and the U.S. physicians who find themselves right in the middle of this fight, being denied the choice of alternative treatment options within the field of botulinum toxins by such an injunction against sales of a competitor brand. It is argued that the two companies can litigate quietly and agree settlements such as monetary compensation for damages, ongoing royalty payments from sales or similar for any proven theft of trade secrets without the need to block sales of the competing product which affects the wider community and makes Allergan appear protectionist.

The case reference is Allergan v. Merz, 11-00446, U.S. District Court, Central District of California (Santa Ana).

Updated 13th March 2012

It has been ruled by Judge Andrew Guilford that Merz violated California's Uniform Trade Secrets Act and misappropriated important trade secrets belonging to Allergan. These include "the specific identities and financial details" of the latter's relationships with doctors in the USA that are using Botox for cosmetic and therapeutic indications, and the facial filler Juvéderm. Judge Guildford also found that Merz misappropriated Allergan's marketing plans, including those to address competition from Merz, saying "the value of this information is incalculable."
 
The injunction set by Judge Guildford prohibits Merz Aesthetics and Merz Pharmaceuticals from "selling or soliciting purchases of their product…in the facial aesthetics market for 10 months". He noted that "the right of free competition does not include the right to use the confidential work product of others".

Updated 15th March 2012

The Merz Pharma Group today confirmed that its two US subsidiaries Merz Aesthetics Inc. and Merz Pharmaceuticals LLC will for now not be allowed to market Xeomin or its dermal fillers in the U.S. market without restrictions. The ruling was handed down by a U.S. federal court in the state of California last Friday.

The ruling puts a stop to the sale of Xeomin for aesthetic indications in the US for a maximum of 10 months or until the injunction is lifted, whichever is earlier in time. For the same timeframe, sales of Xeomin for therapeutic use are restricted from certain physicians in certain territories of the US unless these customers voluntarily request to purchase the product without solicitation from the Company. The dermal fillers Radiesse and Belotero can be distributed to certain pre-existing customers of Merz Aesthetics and to customers that voluntarily request to purchase these products without solicitation by the company.

The decision represents the end of the first phase of a two-year-long ongoing litigation between Merz and Allergan.