On 11 and 12 February the UK Supreme Court heard the appeal brought by Kymab against the judgment of the Court of Appeal which found Regeneron’s European Patents (UK) No 1 360 287 and its divisional EP (UK) No 2 264 163 valid and infringed, reversing the invalidity finding of the first instance court (see our analysis of the first instance judgment here). The Supreme Court hearing can be viewed here.
On 30 January 2020 the European Court of Justice (“ECJ”) clarified for the first time the criteria governing whether so-called “pay-for-delay” agreements entered into between originator and generic pharmaceutical companies fall foul of EU competition law rules. Such agreements are a form of patent dispute settlement, whereby in return for a value transfer, a generic manufacturer acknowledges the patent of the originator pharmaceutical company, and agrees to refrain from marketing its generic version of the drug in question for a specified period of time. Pay-for-delay agreements have been in the spotlight of the European Commission (“EC”) and national competition authorities for over a decade.
In line with the non-binding Opinion delivered by Advocate-General Kokott on 22 January 2020, the ECJ held that such agreements may constitute “by object” infringements of the prohibition on anti-competitive agreements (such that a competition regulator is not required to prove effects on the market) or “by effect” infringements, and may also amount to an abuse of a dominant position.
The ECJ had been asked to provide guidance on this issue by the UK Competition Appeal Tribunal (“CAT”), by way of a reference for a preliminary ruling in the UK Paroxetine case. That case involves an appeal by GlaxoSmithKline (“GSK”) and five generics against a 2016 decision of the UK Competition and Markets Authority (“CMA”) imposing fines totalling £45 million on the basis that such pay-for-delay agreements infringed competition law.
Why is the ECJ’s judgment important?
The ECJ’s judgment is expected to have significant implications for both ongoing and future cases in the pharmaceutical sector:
- The ECJ has sent a clear message to both originator and generic companies that once a generic has demonstrated a clear intention to market a rival version of an originator drug, it is likely to be considered a “potential competitor” of the originator (and thus any patent settlement between the originator and that generic involving a value transfer is likely to attract antitrust scrutiny).
- The ECJ held that patent settlement agreements can be lawful. In particular, the existence of a value transfer (pecuniary or not) is not, by itself, sufficient to classify the agreement as a restriction of competition by object. This is because such value transfer may be justified taking into account the parties’ legitimate objectives (e.g. if it constitutes compensation for the generic’s litigation costs). However, the ECJ considered that where the value transfer by the originator to the generic cannot have any explanation other than the commercial interest of both parties not to compete on the merits, the agreement at issue will constitute a restriction of competition “by object” (i.e. it will be anticompetitive by its very nature). Therefore, although patent settlement agreements between originators and generics are not automatically anti-competitive, it appears that agreements with large value transfers from the originator to the generic(s) in exchange for a delay in market entry are highly likely to be deemed to be an “object” infringement in most cases. Pharmaceutical companies wishing to argue otherwise are likely to face an uphill struggle (although the ECJ has left the door open in very limited circumstances).
- Further, the judgment indicates the approach the ECJ is likely to take in pending appeals against EC infringement decisions in two other pay-for-delay cases: Lundbeck (citalopram) and Servier (perindopril).
- It also seems likely to encourage both the EC and national competition authorities to aggressively pursue more pay-for-delay cases in the future. Indeed, Commissioner Vestager commented to journalists that the judgment “looks very promising on first reading, and in that of course we feel very much encouraged because we find these cases important”. Similarly, the CMA has welcomed the judgment, noting that it “has clarified a number of important questions and will help competition authorities, including the CMA, in their work to tackle this harmful behaviour by pharmaceutical companies”.
Click here to read our full briefing.
This post was first published on our Competition Notes blog.
As those with an interest in patents will be aware, the Unified Patent Court is still not a reality. The final ratification of the Unified Patent Court Agreement (“UPCA”) required for the agreement to come into effect, is that of Germany (over 13 states having ratified including the UK and France, which, along with Germany, were the three states which were required to have ratified along with at least ten more, before the UPCA could come into force – see here for ratification details). Without the UPC established to enforce them, unitary patents cannot be granted. Germany’s ratification has yet to be received.
The outcome is still awaited of the constitutional case objecting to a ratification of the UPCA by Germany, which was listed to be decided in 2019. In a recent interview, Judge Huber of the German Federal Constitutional Court (which is the court due to decide the case) denied that the delay had anything to do with Brexit, rather that other important cases were also waiting to be decided and took precedence. He suggested that the case might be decided in the early part of 2020.
It is generally thought that the German court is likely to reject the objector’s case, but only once this is determined can the German government make a decision on whether to ratify the UPCA. Indications are that all administrative preparation to ratify had been made in readiness, however the issue of Brexit is also key, in governmental terms at least. In July 2019, in a response to a Brief Enquiry, the Federal Government stated that the consequences of Brexit were as yet unknown (and by implication were delaying ratification), but also reasserted the current Federal Government’s commitment to the unitary patent and UPC project.
For more on the Unified Patent Court (UPC) and unitary patent (UP) system, see our UPC hub here: www.hsf.com/upc
Jeremy Corbyn, Leader of the Labour Party, recently announced a report entitled “Medicines For the Many: Public Health before Private Profit”, which sets out a proposed set of policies on access to medicines in the UK, which are reflected in the Labour Party’s manifesto launched last week. An accompanying press release described the report as “a radical programme of reforms to make life-changing drugs available at affordable prices and create a health innovation system that will put public health before private profit”. In this article, we summarise key aspects of the proposed policies, consider the relevant legal background and analyse potential implications for companies operating in the life sciences sector, with a particular focus on issues relating to intellectual property. We also touch on the potential for companies which may be affected by the Labour Party’s proposed changes to the sector, to look to public law and human rights related avenues of challenge, as well as to investment treaties, to mitigate risk. Continue reading
On 5 September 2019, the Ninth Chamber of the CJEU refused a request for referral in relation to the interpretation of Article 3(b) of Regulation (EC) No 469/2009 of the European Parliament and of the Council of 6 May 2009 concerning the supplementary protection certificate for medicinal products (‘SPC Regulation‘).
In its order, the CJEU held that this request for a preliminary ruling was manifestly inadmissible a under Article 52(3) of the Rules of Procedure of the Court of Justice, as the question referred was hypothetical for the purposes of the dispute in the main proceedings.
The referral request was made by High Court of Justice (England and Wales) in proceedings  EWHC 388 (Pat) between Eli Lilly and Genentech. The referral was concerned with whether the SPC regulation should preclude SPC applications based on third-party marketing authorisations (‘MAs‘), which is where a patent holder seeks to obtain an SPC for a product without the consent of the unrelated third party that has developed that product and obtained the necessary a MA for it.
This issue is not a new one, and was previously referred to in Eli Lilly v HGS (C-493/12). Although it was not being pursued as a standalone ground, the CJEU decision observed in this case that if an SPC were granted to the patent holder, even though he was not the holder of the MA granted for the medicinal product developed from the specifications of the patent, and had therefore not made any investment in research relating to that aspect of his original invention, that would undermine the objective of the SPC Regulation. In a similar vein, in Gilead v Teva (C-121/17; a case that did not concern grant of SPCs based on third-party MAs) the CJEU held in paragraph 50 of its decision that when applying Article 3(a) of the SPC Regulation no account should be taken of research which took place after the filing date or priority date of the basic patent, as this would enable the SPC holder to unduly to enjoy protection for those unknown results.
The refusal of the reference means that disappointingly, the rather important question of SPC applications based on third-party MAs remains unanswered. Nevertheless, it is likely that there will be a further reference on this issue in the future, perhaps from one of the other national courts where the dispute between Eli Lilly and Genentech remains live, or from the Court of Appeal in the UK (should this happen before Brexit).
The referral request was made by the UK High Court in proceedings which related to Genentech’s patent EP (UK) 1 641 822, entitled ‘IL 17A/F heterologous peptides and therapeutic uses thereof’ (the ‘Basic Patent’) and Eli Lilly’s MA for their product ‘ixekizumab’ marketed under the brand name ‘Taltz’.
Genentech contended that the formulation for ixekizumab fell within the scope of the Basic Patent, and applied for an SPC on the basis of the Basic Patent and Eli Lilly’s MA for ixekizumab.
Eli Lilly in turn contended that two grounds precluded the grant of the SPC: 1) the SPC application at issue did not comply with Article 3(a) of the SPC regulation, since the formulation for ixekizumab was not protected by the Basic Patent; and 2) the application did not comply with either Article 2 or Article 3(b) and (d) of the SPC Regulation, because the MA for ixekizumab is not a relevant MA, since it is owned by a third party and was relied upon without that party’s consent.
By the time the referring decision as handed down, the Basic Patent had already been held to be invalid in parallel proceedings. Nevertheless, Mr Justice Arnold considered it necessary to make a referral to the CJEU on whether the SPC Regulation should preclude SPC applications based on third-party MAs. Various factors played a role in making the referral:
- Even though the Basic Patent had been held to be invalid in parallel proceedings, it may be maintained on appeal;
- Because of Brexit, it is highly probable that the Court of Appeal will cease to have jurisdiction to refer a question for a preliminary ruling to the Court of Justice, so it was considered necessary that the High Court refer such a question now;
- As of the date of the reference decision, Eli Lilly and Genentech were in dispute on this issue not only in the United Kingdom but also in other Member States;
- This issue had arisen in other previous cases.
Keeping the above in mind, Mr Justice Arnold referred the following question to the CJEU:
Does [the SPC Regulation] preclude the grant of an SPC to the proprietor of a basic patent in respect of a product which is the subject of a marketing authorisation held by a third party without that party’s consent?
The CJEU’s order clarifies that the role of the CJEU is to aid with interpretation of such EU law as is necessary for national courts to give judgment in cases upon which they are called to adjudicate. A reference for a preliminary ruling made by a national court is to be rejected where it is obvious that the interpretation of EU law that is sought is unrelated to the actual facts of the main action or its object, or where the problem is hypothetical.
In considering whether the clarification or interpretation of EU law sought in the referral is necessary, the CJEU held that it is not sufficient to say that there may be an appeal down the line which may render the hypothetical scenario true. Neither is it of relevance that the same issue exists in proceedings in other jurisdictions, or may have been raised in previous proceedings – the existence of disputes in other Member States of the European Union or of previous disputes does not support the conclusion that the interpretation of EU law that is sought is necessary for the resolution of the dispute which the referring court is called upon to resolve.
The CJEU also clarified that the referring court could not pre-emptively request a reference pending Brexit, on the basis that the appeal court might subsequently lose its jurisdiction to refer the same question because of withdrawal from the European Union pursuant to Article 50 of the TFEU, and while EU law continues in full force in the UK.
Although the refusal of the CJEU to decide on the referral is disappointing, it is hoped that the question of SPC applications based on third-party MAs will not remained unanswered much longer, and that there will be a decision that clarifies this issue in the foreseeable future. Meanwhile, the CJEU’s order sheds light on some important issues like the CJEU’s approach to references in light of Brexit, which will no doubt inform litigation strategy in the coming months.
Herbert Smith Freehills has been lauded a ‘class act’, after it was ranked highly in the 2019 edition of World Trademark Review (WTR) 1000.
Now in its ninth year, the WTR 1000 highlights firms and individuals that are deemed outstanding in this area of practice.
Herbert Smith Freehills has been showcased in the research directory as being ‘a formidable force within the trademark sphere’ and a ‘prestigious commercial outfit’, after it was highlighted for having particularly strong trademark experience globally in WTR 1000. The firm’s practices in the UK, Australia, France and Italy were all highly ranked in the directory.
The publication singles out the firm for being “packed to the rafters with world-class talent that consistently exceeds the expectations of clients”.
WTR cites the “hands-on leadership” of Joel Smith, UK Head of IP as crucial to the side’s recent growth and success and goes on to highlight Joel as “a brilliant strategic thinker” flagging his work for major brands alongside much-praised Paris Partner Alexandra Neri on cross-border trade mark disputes.
Global Head of IP Mark Shillito is lauded as an “exquisite complex problem solver and litigator” and Laura Orlando has also been showcased, after she helped set up our growing Milan office in late 2017. She is flagged for her, “super pragmatic and business oriented” approach, which makes her one of the “best IP lawyers in Italy”.
Celia Davies, who heads Herbert Smith Freehills’ Trademarks prosecution group in Australia, is “a true leader in the trademark market”. Melbourne Partner Shaun McVicar has also been held up as possessing a “commercial and strategic outlook on litigation” which means that brands are in “good hands when he is on a case.” Partner Sue Gilchrist is also singled out as being a “top-flight litigator” and Kristin Stammer as an “eminent adviser with terrific technical trademark knowledge”.
In its write-up of the firm’s trade mark practice, WTR comments, “Herbert Smith Freehills isn’t about being the biggest in trademarks; it focuses, instead, on quality and adding strategic value for blue-chip international rights holders – and routinely surpasses expectations in both regards.”
As with previous editions, to arrive at the 2019 rankings, WTR undertook an exhaustive qualitative research project to identify the firms and individuals that are deemed outstanding in this critical area of practice. The publication says that when identifying the leading firms, factors such as depth of expertise, market presence and the level of work on which they are typically instructed were all taken into account, alongside positive peer and client feedback.
To view the full write-up, please visit: https://www.worldtrademarkreview.com/directories/wtr1000
The Advocate General of the CJEU proposed a narrow interpretation of Article 3(d) in the Opinion given yesterday in Abraxis Bioscience LLC v Comptroller General of Patents 13 December 2018, one that would marginalise the effect of the CJEU’s decision in Neurim (C-130/11). If followed by the CJEU, this position would be met with disappointment by the pharmaceutical industry, which continues to make significant investments in researching and developing formulations that improve efficacy and new uses of known products.
Key recent developments in the United Kingdom and Europe relating to patents and the pharmaceutical sector
This issue reports on several ground-breaking decisions from the UK courts on second medical use patents and skinny labels, infringement by equivalents and the possibility of global FRAND licences for standard essential patents (SEPs). We also look at some significant decisions from the CJEU on SPCs and reimbursements in relation to medicinal products and a few developments at the European Patent Office. Finally, we provide our usual round-up of the latest UPC developments (this time from Italy) and Brexit-related developments relevant to the pharma sector. Continue reading
Novartis Farma S.p.A. v Italian Medicines Agency and Roche Italia S.p.A.
On 21 November 2018, the CJEU issued an important decision in Novartis Farma v Italian Medicines Agency and Roche Italia et al. (C-29/17). The case was referred to the CJEU by the Italian Council of State and regarded an Italian law that allows the national healthcare insurance system (NHS) to reimburse a medicinal product for a use not covered by its marketing authorisation (off-label use) in order to reduce expenditure, notwithstanding the existence and market availability of a valid therapeutic alternative.
The UK Government has today launched a consultation on the role of the Medicines and Healthcare products Regulatory Agency (MHRA) post-Brexit “seeking views on how the MHRA legislation and regulatory processes would have to be modified in the event of the UK not securing a deal with the EU after the UK’s exit, with no Implementation Period“. As the consultation closes at 11.45 pm on 1 November 2018, time is short for making a response.
Also today, the Government has released an overview of the UK’s relationship with the EU’s Horizon 2020 science and innovation funding programme including a link to the portal where those with current funding can submit data which will be used to guarantee funding post-Brexit.
- This consultation was promised in the no-deal technical notice on medicines, clinical trials and medical devices, discussed in our blog post of 29 August 2018. It is expressed to be set in the context of “the UK not securing a deal with the EU after the UK’s exit, with no Implementation Period“, i.e. a “cliff edge” no-deal scenario, with no transitional period. However, if the EU Withdrawal Agreement (which sets out the terms on which the UK leaves the EU and is currently being negotiated between the UK and the Commission) is concluded on the terms that have so far been declared as agreed between the negotiators, then there would be a period until the end of 2020 when the UK would still effectively be part of the EU, despite technically having exited at 11pm on 29 March 2019.
- A direct link to the consultation can be found here. More detail on the consultation, including the specific areas being covered, can be found in the Consultation Introduction. As the introduction to states, “the overall approach in no-deal is for the MHRA to be a stand-alone medicines and medical devices regulator, taking any decisions and carrying out any functions which are currently taken or carried out at EU-level. This would include decisions on Marketing Authorisation (MA) applications which are currently authorised through the Centralised Procedure, paediatric investigation plans and orphan status, as well as pharmacovigilance responsibilities“. The consultation also asks for comments on clinical trials issues.
- The introduction recommends that you read the Draft Statutory Instrument (SI) text, Impact Assessment and Consultation Annex before responding. The Draft SI text relates to statutory instruments that will be needed to update the Human Medicines Regulations 2012, the Medicines for Human Use (Clinical Trials) Regulations 2004, the Medicines (Products for Human Use) (Fees) Regulations 2016, and the Medical Devices Regulations 2002.
- Response to the consultation is in the form of an on-line survey. Each section of the survey is optional, so you can limit your response to the sections you are interested in.
Horizon 2020 funding
- Following on from the no-deal technical notice on Horizon 2020 funding which was issued with the other life sciences related notices in August (here), the UK Government has published an overview of the UK’s relationship with Horizon 2020, followed by a Q&A, which aims to clarify the UK’s eligibility to participate in Horizon 2020 – here. Current UK recipients of Horizon 2020 funding are invited to provide data about their projects on a portal managed by UK Research and Innovation (UKRI) (linked on the same page), so that the UKRI has the information it needs in order to underwrite the guaranteed payments if this becomes necessary.
- As we previously stated in our blog post: If there is ‘no deal’, the Government says it has taken steps to provide continued support for research and innovation currently being funded through this EU project fund. The Government will guarantee funding in most cases, for the full duration of the project, where the funding relates to successful bids submitted by UK participants before the UK exits the EU. Funding will only be for UK participants however. Where UK participants are leading consortia of non-UK parties and would normally be distributing the Horizon 2020 funds, the Government will seek to discuss with the EU Commission how best to address this. In it’s no-deal notice, the Government said it was considering what other measures may be necessary to support UK research and innovation in the event that the EU’s funding is no longer available. Looking beyond 2020, the notice said that “the UK remains committed to ongoing collaboration in research and innovation and wants to work with the EU on a mutually beneficial outcome“.