NEW BRUNSWICK, N.J. (AP) — Johnson & Johnson has filed a demand for arbitration to terminate an agreement between its Centocor Ortho Biotech unit and Schering-Plough Corp., in light of the latter company’s impending merger with rival drugmaker Merck & Co. The agreement covers Remicade, a treatment for rheumatoid arthritis and Crohn’s disease, and Simponi, a treatment for rheumatoid arthritis and active psoriatic arthritis. Terminating the deal would return full rights to Johnson & Johnson to distribute these products in markets outside the United States, where Schering-Plough currently has the rights to distribute the drugs. “As its public statements have made clear, Merck is acquiring Schering-Plough,” J&J said late Wednesday. “The acquisition constitutes a change of control that triggers the right of our Centocor Ortho Biotech subsidiary to terminate the agreements.” Whitehouse Station, N.J.-based Merck and Kenilworth, N.J.-based Schering-Plough said they are “fully prepared to arbitrate the matter and to vigorously defend their rights.” Schering-Plough reported in April that its first-quarter Remicade sales rose 2 percent to $518 million. The companies said they are confident an arbitrator will agree that the Merck/Schering-Plough merger does not give Johnson & Johnson the right to terminate the agreement. Their acquisition agreement is structured as a reverse merger, with Schering-Plough as the surviving company, to avoid triggering change-in-control terms in Schering’s deal with Johnson & Johnson. The arbitration process is expected to take place over the next nine to 12 months and could be ongoing after the closing of the companies’ merger, expected in the fourth quarter.
