Watson Pharmaceuticals, Inc. today announced that its subsidiary, Watson Laboratories, Inc., has entered into an agreement with Endo Pharmaceuticals Inc. and Teikoku Seiyaku Co., Ltd to settle all outstanding patent litigation related to Watson’s generic version of Lidoderm. The agreement allows Watson to launch its lidocaine topical patch 5% product on September 15, 2013, if approved by the U.S. Food and Drug Administration (FDA). The license will be exclusive as to an authorized generic version of Lidoderm until the earlier of a third party generic launch or seven and one half months after Watson’s launch of its generic product.  Endo will receive 25% of the gross profit generated on Watson’s sales of its generic version of Lidoderm during Watson’s period of exclusivity.

Additionally, under the terms of the agreement, Watson will receive and be able to distribute equal amounts of branded Lidoderm product from Endo valued at a total of up to approximately $96 million during the first eight months of 2013. In the event that Watson has not received FDA approval to launch its own lidocaine topical patch 5% by January 1, 2014, Watson will receive additional quantities of branded Lidoderm product to distribute valued at up to approximately $80 million in 2014 over a period of twelve months and in the event that Watson has not received FDA approval to launch its own lidocaine topical patch 5% by January 1, 2015, up to approximately $64 million over a period of nine months in 2015. Watson’s availability of brand product would cease upon the launch of any generic version of Lidoderm.

“The agreement provides a date certain launch of competition for Endo’s branded Lidoderm, eliminating any risks involving current pending or future patent litigation surrounding the product,” said Paul Bisaro, Watson’s President and CEO. “By entering into this agreement, Watson ensures that consumers may benefit from generic competition at least two years prior to the 2015 patent expiry on Lidoderm assuming FDA approval. Additionally, consumers and Watson shareholders will benefit from the January 2013 distribution of select amounts of branded Lidoderm product.  We remain confident in our ability to obtain final FDA approval of our generic version of Lidoderm prior to our agreed launch date.” For the twelve months ending March 31, 2012, Lidoderm had total U.S. sales of approximately $1.2 billion according to IMS Health data.