The gloves are off and Johnson & Johnson has confirmed that it is pushing forward with plans to see whether it can get a marketing partnership with Schering-Plough for Remicade terminated.

J&J has made a filing with the American Arbitration Association, requesting a ruling that the proposed merger between S-P and Merck & Co constitutes “a change of control” that would permit the ending of its agreements regarding the rheumatoid arthritis and Crohn’s disease blockbuster Remicade (infliximab) and the recently-approved arthritis treatment Simponi (golimumab). The termination of the deal would return full rights to J&J for the distribution of these products in markets outside the USA.

J&J further claims that “as its public statements have made clear, Merck is acquiring S-P”, so a change of control is taking place. However the two prospective partners dispute this.

The stance being taken by Merck and S-P is that their proposed deal is structured as a reverse merger, allowing the latter firm to remain as a surviving entity. They say that J&J’s position “is contradicted by the plain language of the Remicade distribution agreement” and are confident that an arbitrator will support their position.

Merck and S-P noted that the arbitration process is expected to take place “over the next nine to 12 months and could be ongoing even after the merger has closed”. That process involves a number of steps, “including the selection of an independent arbitrator, information exchanges and hearings, before a final decision is reached”.

There is a chance that arbitration may not be required, and Merck and S-P said that “the initiation of the proceedings does not preclude a negotiated settlement”. However they also insisted that they are “fully prepared to arbitrate the matter and to vigorously defend their rights”.

There is a lot of money at stake as Remicade generated about $2.1 billion in sales for S-P last year.