Let us say your heat-sink is 70C in real life, so the die can get to 150C, 80C higher, on the data sheet there will be a de-rating figure so many W/degC, such that at 150 die temp (ambient) the useful power dissipation is zero. Let us say this figure is 4.0 W/degC in this case, the die temp is higher than the heatsink due to the Rj-c (junction-case) ~ .1 say, and the Rc-sink, say 0.1 again.
Let us assume Tsink = 70C, and we want 150W dissipation in the device:
We have 0.2 degC/watt thermal resistance junc to h-sink, 0.2 x 150watts = 30C, thus the die will be at 100C on a 70C h-sink. thus we have only 50C margin ( to 150C)
At 100C, 75C above 25C, the derating factor is (per above) 4 x 75 = 300 W from 500W = 200W allowable dissipation - so we have 50W margin, or we could let the h-sink temp rise above 70C...