Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2014 |
Loss Contingency, Information about Litigation Matters [Abstract] | ' |
Commitments and Contingencies | ' |
Commitments and Contingencies |
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Hospira is involved in various claims and legal proceedings, as well as product liability claims, regulatory matters and proceedings related to Hospira's business, including in some instances when Hospira operated as part of Abbott Laboratories. |
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Precedex™ Matters |
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Hospira is involved in a number of lawsuits relating to the ability of various competitors to market a generic form of Hospira's Precedex™ (dexmedetomidine hydrochloride), a proprietary sedation agent. |
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On January 15, 2014, the FDA opened a public docket to solicit comment from potential generic competitors for Precedex™ concentrate regarding the ability of those competitors to "carve-out" labeled indications and potentially achieve final product approval at any time. On August 18, 2014, the FDA allowed a carved-out label. Immediately following that decision, Mylan Institutional, LLC ("Mylan") and Par Sterile Products, LLC ("Par") launched generic versions of Precedex™ concentrate. On August 19, 2014, Hospira commenced action in the U.S. District Court for Maryland against the FDA (Sylvia Mathews Burwell, Secretary, U.S. Department of Health and Human Services and Dr. Margaret Hamburg, Commissioner, U.S. Food and Drug Administration) requesting, among other relief, a temporary restraining order. Mylan and Par intervened. Although a temporary restraining order was granted initially, the Court ruled in favor of the FDA on September 5, 2014, and Mylan and Par resumed their generic sales. On September 5, 2014, Hospira appealed to the U.S. Court of Appeals for the Fourth Circuit. On October 29, 2014, the Fourth Circuit Court dismissed the appeal, as the parties to the litigation entered into a settlement agreement on October 28, 2014. Pursuant to that settlement agreement, Mylan and Par may continue their generic sales under a carved-out label until near the end of the first quarter of 2015, after which those sales may continue with either the carved-out label or a full label. |
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On August 25, 2014, Par filed a declaratory judgment action in the U.S. District Court for the District of New Jersey, Case 3:14-cv-05343-MLC-TJB seeking, inter alia, a finding of non-infringement and invalidity of U.S. Patent No. 6,716,867 (the "867 patent") (expires March 31, 2019), as well as injunctive and monetary relief against Hospira for violations of Section 2 of the Sherman Act, 15 U.S.C. § 2. This litigation was settled and dismissed as part of the settlement of the litigation discussed in the previous paragraph. |
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In December 2013, Hospira entered into a settlement agreement in its patent infringement litigation over Precedex™ with Sandoz, Inc. and Sandoz Canada, Inc. (collectively "Sandoz"), related to Sandoz's "Paragraph IV" notice indicating that it has filed an abbreviated new drug application ("ANDA") with the FDA for a generic version of Precedex™. On September 22, 2014, the settlement agreement was amended to allow Sandoz to launch a generic version of Precedex™ in the U.S. from that date and Sandoz immediately launched a generic version of Precedex™ in the U.S. |
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Hospira and Orion Corporation have brought suit in separate actions against the following parties alleging infringement of the 867 patent: |
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Defendant | U.S. District Court Where Filed* |
Caraco Pharmaceutical Laboratories, Ltd. | Eastern District of Michigan, No. 10-cv-14514 |
Akorn, Inc. | Northern District of Illinois, No. 14-cv-02811 |
Actavis US Holding LLC and Actavis LLC | District of Delaware, No. 14-cv-00488 |
Ben Venue Laboratories, Inc. d/b/a Bedford Laboratories | District of Delaware, No. 14-cv-00487 |
Aurobindo Pharma Ltd. and Aurobindo Pharma USA, Inc. | District of Delaware, No. 14-cv-00486 |
Intas Pharmaceuticals Ltd. and Accord Healthcare, Inc. USA | Middle District of North Carolina, No. 14-cv-00336 |
*All filed April 18, 2014, except Caraco Pharmaceutical Laboratories, Ltd., which was filed November 12, 2010. |
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The lawsuits are based on the "Paragraph IV" notice provided by the respective ANDA holders, above, indicating that each has filed an ANDA with the FDA for a generic version of Precedex™. Hospira seeks a judgment of infringement, injunctive relief and costs. Intas Pharmaceuticals Ltd. and Accord Healthcare, Inc. have notified Hospira that they converted their Paragraph IV certification to a "little viii" indicating an amendment to their label to carve out an indication. Caraco's ANDA has received tentative approval from the FDA. |
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On June 20, 2014, Hospira received another "Paragraph IV" notice from Bedford Laboratories referencing Hospira's patents for Precedex™, including patents covering the pre-mix formulation of Precedex™. On August 1, 2014, Hospira brought suit against Ben Venue Laboratories, Inc. formerly d/b/a Bedford Laboratories, Hikma Pharmaceuticals Plc, and West-Ward Pharmaceutical Corp. in the District of Delaware, Case No. 14-cv-01008 seeking a judgment of infringement, injunctive relief and costs. |
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Securities Litigation |
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On September 5, 2014, the U.S. District Court for the Northern District of Illinois approved a settlement and dismissed a class action lawsuit filed against Hospira and certain of its current and former corporate officers alleging violations of the Securities and Exchange Act of 1934. In City of Sterling Heights General Employees' Retirement System, Individually and on behalf of all others similarly situated vs. Hospira, Inc., F. Michael Ball, Thomas E. Werner, James H. Hardy, Jr., and Christopher B. Begley, amended complaint filed June 25, 2012, the plaintiffs alleged, generally, that the defendants issued materially false and misleading statements regarding Hospira's financials and business prospects and failed to disclose material facts affecting Hospira's financial condition. The settlement was fully funded by insurance proceeds. |
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Derivative Securities Litigation |
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The parties have reached a tentative agreement to settle, subject to the Court's review and approval, two shareholder derivative lawsuits, which name as defendants certain current and former Hospira officers, and members of Hospira's Board of Directors. The first case, which consolidated two lawsuits filed in the United States District Court for the Northern District of Illinois in December 2011, is: Lori Ravenscroft Geare and Robert J. Casey, II, Derivatively for the Benefit of Hospira, Inc. v. Christopher B. Begley, F. Michael Ball, Thomas E. Werner, Irving W. Bailey, II, Jacque J. Sokolov, Barbara L. Bowles, Roger W. Hale, John C. Staley, Connie R. Curran, Heino von Prondzynski, Mark F. Wheeler, Terrence C. Kearney, Ronald A. Matricaria and Brian J. Smith and Hospira, Inc. (Nominal Defendant). The second case, filed in June 2014 in Delaware Chancery Court, is: International Union of Operating Engineers Pension Plan of Eastern Pennsylvania and Delaware v. Christopher B. Begley, F. Michael Ball, Thomas E. Werner, Irving W. Bailey, II, Jacque J. Sokolov, Barbara L. Bowles, Roger W. Hale, John C. Staley, Connie R. Curran, Heino von Prondzynski, Mark F. Wheeler, Terrence C. Kearney, and Ronald A. Matricaria and Hospira, Inc. (Nominal Defendant). In general terms, both lawsuits allege breaches of fiduciary duties by the individual defendants and seek damages, purportedly on behalf of Hospira, in connection with the matters covered by the securities lawsuit described under "Securities Litigation" above. It is anticipated that the settlement will be fully funded by insurance proceeds. |
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Regulatory Matters |
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Hospira's businesses are subject to regulatory inspections by regulatory authorities across the globe. Such regulatory inspections may lead to observations (commonly referred to as Form 483 observations in the U.S.), untitled letters, warning letters or similar correspondence, voluntary or involuntary product recalls, consent decrees, injunctions to halt manufacture and distribution of products, seizures of violative products, import and export bans or restrictions, monetary sanctions, delays in product approvals, civil penalties, criminal prosecution and other restrictions on operations. |
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Hospira has received warning letters from the FDA related to matters affecting its pharmaceutical manufacturing facility in Mulgrave, Victoria, Australia, pharmaceutical and device manufacturing facilities in Clayton and Rocky Mount, North Carolina, its device manufacturing facility in La Aurora de Heredia, Costa Rica, Irungattukottai, India, and its device quality systems and governance in Lake Forest, Illinois. The Company has responded fully, and in a timely manner, to these warning letters. The remediation plans involve commitments by Hospira to enhance its quality system, products, facilities, employee training, quality processes and procedures, and technology. While Hospira continues implementing its remediation plans, the plans are subject to update and revision based on issues encountered by Hospira or its third-party consultants during the remediation process, or on further interaction with the FDA or other regulatory bodies. Hospira cannot, however, give any assurances as to the expected date of resolution of the matters identified in the warning letters. |
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Litigation Exposure Evaluation |
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Hospira's litigation exposure, including product liability claims, is evaluated each reporting period. Hospira's accruals, which are not significant at September 30, 2014 and December 31, 2013, are the best estimate of loss. Based upon information that is currently available, management believes that the likelihood of a material loss in excess of recorded amounts is remote. |
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Additional legal proceedings may occur that may result in a change in the estimated accruals recorded by Hospira. It is not feasible to predict the outcome of such proceedings with certainty and there can be no assurance that their ultimate disposition will not have a material adverse effect on Hospira's financial position, cash flows, or results of operations. |