<PAGE>   1
                                                                    EXHIBIT 10.1

                     SEVERANCE AND NON-COMPETITION AGREEMENT

         This Severance and Non-Competition Agreement, dated as of September 21,
2000, is entered into between Noven Pharmaceuticals, Inc., a Delaware
corporation (the "COMPANY"), and Steven Sablotsky (the "EXECUTIVE").

                                    RECITALS

         A. The Executive is currently employed as the Chairman of the Board of
the Company.

         B. The Executive and the Board of Directors have mutually agreed that
it would be in the best interests of the Executive and the Company for the
Executive to cease his day-to-day management activities.

         C. The Compensation and Stock Option Committee of the Board of
Directors has agreed to provide the Executive with certain severance and other
benefits, subject to the terms and conditions of this Agreement.

                                    AGREEMENT

         NOW THEREFORE, in consideration of the foregoing and the mutual
promises contained below, the parties agree as set forth below.

         1. TERMINATION OF EMPLOYMENT. The Executive's employment with the
Company will be terminated effective as of June 1, 2001 (the "Employment
Termination Date"). The Company agrees to pay the Executive his current salary
through the Employment Termination Date, together with any bonus and other
benefits to which he would otherwise be entitled as an officer of the Company,
including at least the benefits the Executive is receiving as of the date of
this Agreement; provided that the Executive shall not receive any salary
increase or stock options, except as otherwise provided herein, between the date
of this Agreement and the Employment Termination Date and shall not receive any
bonus for the Company's 2001 fiscal year. Without limiting the generality of the
foregoing, the Executive shall be entitled to receive a bonus for his
performance in the Company's 2000 fiscal year in accordance with the Company's
2000 Management Incentive Plan. Such bonus shall be paid at the earlier of the
time other officers receive their 2000 bonuses or March 31, 2001.

         2. ACCRUED VACATION. The Company agrees to pay the Executive all of the
Executive's accrued but unused vacation time which the Executive earns through
the Employment Termination Date. The Executive will not continue to earn
vacation or other paid time off after the Employment Termination Date.

         3. FULL PAYMENT. The Executive agrees that all payments provided to the
Executive under paragraphs 1 and 2 of this Agreement are in complete


<PAGE>   2


satisfaction of any and all compensation due to the Executive from the Company
through the Employment Termination Date. The Executive agrees to reimburse the
Company for all personal expenses due and owing to the Company as of the
Employment Termination Date.

         4. EMPLOYEE BENEFIT PROGRAMS. The Executive's participation in all
employee benefit programs (health, dental, life and disability) of the Company
shall continue through the Employment Termination Date, at which date the
Executive's participation in such programs shall cease in accordance with the
terms of those programs. The Executive will have the option to elect to continue
the Executive's health care coverage under COBRA for a period beginning with the
Employment Termination Date and ending 18 months after such date, provided the
Executive pays the full monthly premium cost of the Executive's coverage under
the applicable health care plans. Detailed information will be provided to the
Executive under separate cover.

         5. STOCK OPTIONS. The Company and the Executive hereby ratify and
confirm the option grants previously made to the Executive, as set forth on
Exhibit A attached hereto and made a part hereof, and the agreements evidencing
such option grants (the "Option Agreements"). Notwithstanding anything contained
in this Agreement (except as otherwise provided in paragraph 15 below), the
Option Agreements or the Company's stock option plans applicable to the Option
Agreements, subsequent to the Employment Termination Date, and provided the
Executive remains as a member of the Board of Directors of the Company, the
Option Agreements shall remain in full force and effect, with the options
vesting in accordance with the vesting schedule of each Option Agreement, and
exercisable through the expiration dates set forth therein; provided, however,
if the Executive is terminated by the Company for Cause pursuant to paragraph 16
below, such termination shall be deemed to be a termination of employment with
the Company, with the Option Agreements thereby terminating in accordance with
their terms. For as long as the Executive serves as a director of the Company,
he shall receive stock options commensurate with the stock options granted to
other outside directors under the terms of the Company's applicable stock option
plan.

         6. TAXES. All payments by the Company under this Agreement will be
reduced by all taxes and other amounts that the Company is required to withhold
under applicable law and all other deductions authorized by the Executive.

         7. ADDITIONAL COMPENSATION. In consideration for the Executive's
noncompetition agreement pursuant to paragraph 10 hereof and for his other
obligations hereunder, the Company agrees to pay the Executive the amount of
$1,200,000, payable in a lump sum on the Employment Termination Date.

         8. COMPANY PROPERTY. On the Employment Termination Date, the Executive
shall return to the Company any and all documents, materials and information
related to the Company, or its subsidiaries, affiliates or businesses, and all
other property of the Company, including, without limitation, credit cards,
phone and other charge cards, car phones, fax machines and other equipment,
files and personal computers in the Executive's possession or control, provided,
however, the Executive may purchase the Company's car phones, fax machines and
computers in his possession for a purchase price equal to their fair market



                                       2
<PAGE>   3



value. Further, the Executive agrees that on and after the Employment
Termination Date he will not for any purpose attempt to access or use any
Company computer or computer network or system, including without limitation its
electronic mail system.

         9. RELEASE. In exchange for the consideration described in paragraphs
1, 2, 5 and 7 hereof, the Executive hereby releases and discharges the Company
and its current, former or future officers, directors, employees, agents,
representatives and legal predecessors and successors from all claims,
liabilities and causes of action, whether known or unknown, up to and including
the date of this Agreement, which the Executive has, may have, or claim to have
against any of them, including without limitation those based upon or arising
out of the Executive's employment with the Company, the termination of the
Executive's employment and other relationships with the Company and any of the
Company's policies, procedures or requirements. The Executive hereby agrees not
to file any lawsuit to assert such claims, which include, but are not limited
to, any claims for breach of contract, wrongful termination or age, sex, race,
disability or other discrimination under the Age Discrimination in Employment
Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866,
the Employee Retirement Income Security Act of 1974, the Americans with
Disabilities Act of 1990, Florida's Civil Rights Act or other federal, state or
local laws prohibiting such discrimination or under any other federal, state or
local employment laws. Notwithstanding the foregoing, the Executive does not
waive any right to indemnification from the Company under law, the Company's
Certificate of Incorporation, By-laws or the Indemnity Agreement, dated as of
December 1, 1999, between the Executive and the Company (the "Indemnification
Agreement").

THE EXECUTIVE UNDERSTANDS AND ACKNOWLEDGES THAT HE HAS BEEN ADVISED TO SEEK THE
ADVICE OF AN ATTORNEY, IF HE SO CHOOSES, PRIOR TO SIGNING THIS RELEASE AND THAT
TO THE EXTENT DESCRIBED HEREIN HE IS GIVING UP CERTAIN LEGAL CLAIMS HE HAS
AGAINST THE COMPANY AND ITS CURRENT, FORMER OR FUTURE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, REPRESENTATIVES, LEGAL PREDECESSORS AND SUCCESSORS BY SIGNING
THIS RELEASE. THE EXECUTIVE FURTHER UNDERSTANDS THAT HE MAY HAVE 21 DAYS TO
CONSIDER THIS AGREEMENT, THAT HE MAY REVOKE IT AT ANY TIME DURING THE SEVEN DAYS
AFTER HE SIGNS IT, AND THAT IT WILL NOT BECOME EFFECTIVE UNTIL THE 7-DAY
REVOCATION PERIOD HAS PASSED. THE EXECUTIVE FULLY UNDERSTANDS HIS RIGHTS TO TAKE
21 DAYS TO CONSIDER SIGNING THIS RELEASE AND, AFTER HAVING SUFFICIENT TIME TO
CONSIDER HIS OPTIONS, HE HEREBY WAIVES HIS RIGHT TO TAKE THE FULL 21-DAY PERIOD.
THE EXECUTIVE ACKNOWLEDGES THAT HE IS SIGNING THIS RELEASE KNOWINGLY, WILLINGLY
AND VOLUNTARILY IN EXCHANGE FOR THE CONSIDERATION DESCRIBED IN PARAGRAPHS 1, 2,
5 AND 7 HEREIN.

         10. NON-COMPETE. While employed by the Company and for a period of
thirty-six (36) months after the Employment Termination Date (the "Non-Compete
Period"), the Executive shall not, directly or indirectly, whether as principal,
agent, shareholder (except as set forth below) or in any other capacity, whether
or not compensation is received, engage or participate in any activity for, be
employed by, assist or have an equity interest in (other than as a passive
investor of no more than ten percent (10%) with no involvement in the management
or conduct of the affairs of business of such entity) any business or other
entity which is or plans to develop, manufacture, market or sell any transdermal





                                       3
<PAGE>   4



or transmucosal pharmaceutical product or any other pharmaceutical product that
is designed to compete with any product that is manufactured, marketed or sold
by the Company, its subsidiaries or Affiliates (as defined herein) or that is in
Active Development (as defined herein) by, the Company, its subsidiaries or
Affiliates, all as of the Employment Termination Date. A product shall be deemed
to be in "Active Development" by the Company if it is a Tier I, Tier II or Tier
III product, as such terms are currently defined by the Company, as of the
Employment Termination Date, unless the Company no longer designates such
product as a Tier I, Tier II or Tier III product after the Employment
Termination Date. The Executive agrees to notify the Company in writing prior to
becoming involved in any manner that may be deemed to be a breach of the
covenant contained herein and to provide a description to the Company of the
business conducted or proposed to be conducted by such business or entity. The
Company's failure to respond to the Executive within 15 days after receiving any
such notice shall be deemed to constitute the Company's consent to the
Executive's involvement in such business or entity. The Executive acknowledges
that the provisions of this Section 10 are reasonably necessary for the purposes
of protecting the Company's legitimate business interests and goodwill. It is
accordingly the intention of the parties that this Section 10 be enforceable to
the fullest extent permissible under applicable law. The Executive agrees,
however, that in the event any restriction or limitation of this Section 10, or
any portion thereof, shall be declared or held to be invalid or unenforceable by
a court of competent jurisdiction, then such restriction or limitation shall be
deemed amended to substitute or modify it, as either or both may be necessary,
to render it valid and enforceable. For purposes of this Agreement, "Affiliate"
means any person which controls, is controlled by or is under common control
with the Company. The term "control" means the ownership, directly or
indirectly, or the power to direct the voting or disposition, of 50 percent or
more of the voting stock or equity interests of the subject entity or person.
Vivelle Ventures LLC shall be deemed to be an Affiliate of the Company.

         11. NON-SOLICITATION. During the Non-Compete Period, the Executive
shall not, without the written consent of the Company, directly or indirectly,
for himself or for any other person, firm, corporation, partnership, association
or other entity, employ or enter into any contractual arrangement with any
employee or former employee of the Company, unless such employee or former
employee has not been employed by the Company for a period in excess of six
months, or attempt to induce any customer or supplier of the Company or any of
its subsidiaries or affiliates to terminate its relationship with such entity.

         12. RESIGNATION. The Executive hereby resigns effective as of June 1,
2001 the Executive's position as an officer of the Company.

         13. NON-DISPARAGEMENT. Each of the Executive and the Company agree that
he or it, as the case may be, will not criticize, disparage or defame the other
party or any of the people or organizations connected with him or it, which
would thereby cause material harm to the interests or reputation of the other
party and any of the organizations or people connected with them. Nothing in
this provision will prevent a party from (i) complying with compulsory legal
process or otherwise making disclosures in connection with litigation or




                                       4
<PAGE>   5



administrative proceedings, (ii) making such disclosures as are necessary to
obtain legal advice, (iii) making disclosures as are required by federal, state
or local regulatory authorities, (iv) making disclosures which by law are
required or cannot be prohibited, and (v) making disclosures in a capacity as a
member of the Board of Directors of the Company. For purposes of this provision,
the obligations of the Company shall only extend to the directors and officers
of the Company.

         14. COOPERATION. The Executive agrees to reasonably cooperate with the
Company, at times and places that are mutually convenient, with respect to all
matters arising during or related to the Executive's employment, including but
not limited to cooperation in connection with any governmental investigation,
litigation or regulatory or other proceeding which may have arisen or which may
arise following the signing of this Agreement. The Company shall pay for all of
the Executive's reasonable, documented expenses incurred as a result of
complying with this provision.

         15. NOMINATION AS DIRECTOR. The Company shall cause the nomination of
the Executive as a director of the Company at each of the Company's 2001 and
2002 annual meetings of shareholders. In the event that the Company does not
cause the nomination of the Executive as a director at either of such annual
meetings, then as of the termination date of the Executive's service on the
Board of Directors, all of the Executive's unvested stock options shall vest,
and, notwithstanding the terms of the Option Agreements or the Stock Option
Plans, all of the Executive's outstanding stock options shall continue to be
exercisable through the expiration dates as set forth on Exhibit A.

         16. TERMINATION FOR CAUSE. Notwithstanding anything contained to the
contrary in this Agreement, the Executive may be terminated by the Company for
Cause prior to the Employment Termination Date. As used in this Agreement,
"Cause" shall only mean (i) any material act or acts of personal dishonesty
taken by the Executive which is at the expense of the Company and reasonably
likely to bring significant disrepute to the Company, (ii) subject to the
following sentences, any violation by the Executive of the Executive's material
obligations under this Agreement which is demonstrably willful and deliberate on
the Executive's part and which is not remedied within ten business days after
receipt of written notice from the Company, (iii) the conviction of the
Executive for any criminal act which is a felony or a misdemeanor involving
moral turpitude, or (iv) a material breach of the Confidentiality and Invention
Agreement, dated as of January 27, 1987, between the Company and the Executive
(the "Confidentiality Agreement"). Upon any determination by the Company's Board
of Directors that Cause exists under clause (i), (ii) or (iii), the Company
shall cause a special meeting of the Board to be called and held at a time
mutually convenient to the Board and Executive, but in no event later than ten
(10) business days after Executive's receipt of the notice as set forth below.
Executive shall have the right to appear before such special meeting of the
Board with legal counsel of his choosing to refute any determination of Cause
specified in such notice, and any termination of Executive's employment by
reason of such Cause determination shall not be effective until Executive is
afforded such opportunity to appear and, if capable of being cured, cured within
a reasonable time. Any termination for Cause shall be made in writing to
Executive, which notice shall set forth in detail all acts or omissions upon
which the Company is relying for such termination. Upon any termination pursuant
to this Section 16, the Executive shall be entitled to be paid his base salary
to the date of termination and the Company shall have no further liability
hereunder (other than for reimbursement for reasonable business expenses
incurred prior to the date of termination).




                                       5
<PAGE>   6



         17. ENTIRE AGREEMENT. Except as otherwise set forth below, this
Agreement contains the entire agreement between the Executive and the Company
and replaces all prior and contemporaneous agreements, communications and
understandings, whether written or oral, with respect to the Executive's
resignation, employment and termination and all related matters; provided that
in the event of a Change of Control of the Company (as defined in the Employment
Agreement (Change in Control), dated as of December 1, 1999, between the Company
and the Executive (the "Change in Control Agreement")) prior to the Employment
Termination Date, the provisions of the Change in Control Agreement shall
supersede the provisions of this Agreement and this Agreement shall be of no
further force or effect; and provided further that the Indemnification
Agreement, the Confidentiality and Invention Agreement, dated as of December 21,
1994 (the "Confidentiality Agreement"), and the Option Agreements shall continue
in full force and effect. In the event of any conflict between this Agreement
and the Confidentiality Agreement, the provisions of this Agreement shall
prevail.

         18. GOVERNING LAW. This Agreement will be governed by and interpreted
in accordance with the laws of the State of Florida without regard to choice of
law provisions.

         19. SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and replaced with a provision which is enforceable and comes
closest to the intent of the parties underlying the unenforceable provision.

         20. RELIEF. In the event of a breach of the provisions of this
Agreement by any party, in addition to any other rights that the other parties
may have under law or in equity, each party shall have the right to specific
performance and injunctive relief, it being acknowledged and agreed that money
damages will not provide an adequate remedy. Without limiting the generality of
the foregoing, in the event of a breach by the Executive of the provisions of
Section 10 or 11 hereof, the Executive shall reimburse the Company for the
payment made to the Executive under Section 7. Upon any determination by the
Company's Board of Directors that the Executive has breached the provisions of
Section 10 or 11, the Company shall provide written notice to the Executive,
which notice shall set forth in detail all acts or omissions upon which the
Company is claiming breach. The Executive shall then have fifteen (15) days in
which to cure such breach, failing which the payment made to the Executive under
Section 7 shall be immediately due and payable by the Executive to the Company.

         21. SUCCESSORS AND ASSIGNS. No party hereto may assign any of its
rights under this Agreement without the prior written consent of the other
party. This Agreement is binding on each of the parties' permitted assigns,
successors in interest, heirs, administrators and executors.

         22. NOTICES. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:



                                       6
<PAGE>   7


                  If to the Executive:         Steven Sablotsky
                                               c/o Noven Pharmaceuticals, Inc.
                                               11960 S.W. 144th Street
                                               Miami, Florida 33186

                  with a copy to:              Charles Modlin, Esq.
                                               Modlin Haftel & Nathan LLP
                                               777 Third Avenue
                                               13th Floor
                                               New York, NY 10017

                  If to the Company:           Noven Pharmaceuticals, Inc.
                                               11960 S.W. 144th Street
                                               Miami, Florida 33186
                                               Attention: General Counsel

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

         23. VOLUNTARY AGREEMENT. In signing this Agreement, the Executive gives
the Company assurance that the Executive has signed it voluntarily and with a
full understanding of its terms and that the Executive has had sufficient
opportunity to consider this Agreement and to consult with anyone of the
Executive's choosing before signing it. If the terms of this Agreement are
acceptable to the Executive, please sign and return it to the undersigned. At
the time the Executive signs and return this Agreement, it will take effect as a
legally-binding agreement between the Executive and the Company on the basis set
forth above.

Date Received by the Executive:  September 21, 2000

                                           NOVEN PHARMACEUTICALS, INC.

                                       By: /s/ ROBERT C. STRAUSS
                                           ------------------------------------
                                           ROBERT C. STRAUSS
                                           President and Chief Executive Officer

Accepted and Agreed:

By: /s/ STEVEN SABLOTSKY
   --------------------------
   STEVEN SABLOTSKY




                                       7
<PAGE>   8



                                    EXHIBIT A

The following table lists the stock options currently held by the Executive:
<TABLE>
<CAPTION>

------------------------- ---------------------- ----------------------- ---------------------- ----------------------
      DATE GRANTED              NUMBER OF               EXERCISE           VESTING SCHEDULE          EXPIRATION
                                 SHARES                  PRICE                                          DATE
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
<S>                              <C>                    <C>                       <C>                <C>
       12-13-1995                11,342                 $ 11.55                   (1)                12-13-2000
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
       12-09-1996                60,000                 $ 15.82                   (1)                12-09-2001
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
       1-12-1999                 50,000                 $ 6.188                   (1)                01-12-2004
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
       12-1-1999                 62,500                 $ 14.23                   (1)                 12-1-2004
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
</TABLE>

(1)      One third exercisable after year one.
         One third exercisable after year two.
         One third exercisable after year three.




                                       8