Generic product entry in EU markets

Patent issues: the current position 

The creation of a strategy for launching a
generic version of a medicinal product in
the European Union (EU) is a skilled task,
requiring not just knowledge of the commercial
landscape of distributors, payment systems
and patient prejudices, but also the legal
and regulatory landscapes. The legal context
has always been fraught, with the companies
which originate drugs investing significant
time and money in a portfolio of patents
restricting a new drug’s unauthorized use in
a range of different ways: new formulations,
indications, chiral forms, dosage regimes and
routes of administration have all been subject
to patent rights. 

The validity of such ‘secondary’ patents,
however, is frequently open to challenge.
Relative to the difficulty of identifying a
new active ingredient and a first therapeutic
application, identifying alternative forms
or uses is considerably less demanding, and
so the likelihood of requiring a real inventive
step which would justify a new patent is
lower. Over time, the generic pharmaceutical
companies have grown increasingly adept
at ‘clearing the way’ for product launch by
revoking secondary patents in one or more
key markets. Nevertheless, the application
of a threshold legal test to an almost infinite
range of possible technical developments
is not a trivial undertaking. New questions
arise, as illustrated by the 2014 decision of
the German Supreme Court in Kollagenase I
and II [1]. This concerned the use of the
known enzyme collagenase in the treatment
of Dupuytren’s disease, for which it was also
already known. Nevertheless, a patent was
applied for claiming a particular therapeutic
process, in particular the therapeutic direction
to keep the affected hand immobilized
for several hours after the injection. The
Supreme Court confirmed that this could
in principle be sufficient to make a patentable
new application of collagenase, provided
the therapeutic instructions are aimed to
strengthen, accelerate or improve the effects
of the substance. 

Such decisions are made only after very
careful scrutiny not only of the technical
context, but also of the nuances of national
patent law. Hence, the European landscape
for generic product entry is made the more
complex by the fact that although patents can
be granted centrally for the whole EU by the
European Patent Office, the validity of those
patents remains the exclusive jurisdiction of
the national courts of the individual Member
States – which do not always agree with
each other. A striking example was the series
of decisions over Novartis’ dosage patent for
rivastigmine for a transdermal Alzheimer’s
treatment. Novartis sued Alvogen for infringing
the patent in a number of countries, and
in Austria, Belgium, Denmark, Italy and
Spain succeeded in obtaining a preliminary
injunction (that is, an injunction to prohibit
Alvogen from selling prior to full trial). In
Germany and the Netherlands, however,
Novartis’ request was refused. Holding that an injunction was inappropriate because there was a
non-negligible chance the patent would be invalidated
because matter had been added during prosecution, in
breach of the European Patent Convention, the Dutch
Court of Appeal noted the inconsistent decisions of the
majority group of national courts but nonetheless did
not consider its own decision could be criticized. As it
pointed out, as a result of differences in national procedure
the invalidity argument had simply not been
considered in those countries [2].

Patent issues: the new regime 

This potential for inconsistent outcomes even over a
single patent and a single allegedly infringing product
has been the driving force behind the introduction of a
single, unified patent court (UPC) to have jurisdiction
in patent infringement and validity decisions for the
whole of the EU. After many years of intermittent negotiations,
in December 2012 a political agreement was
reached under which a UPC would be established for all
EU member states with the exception of Spain (which
rejected the proposal). Two years of intense activity have
followed with the object of getting the new court up and
running by 2015, but despite the strong political will
behind the project the practical difficulties of implementation
have not yet been surmounted. IT systems are not
yet in place, the Rules of Procedure have not been finalized
(although this is expected very shortly), nor have the
new court’s judges yet been appointed let alone trained.
The UK is ahead of many other potential participants in
having earmarked premises to house its Division of the
UPC, but it is of course impossible to open the doors
until all of the other Divisions are also ready to hear
cases. Although the official target for opening has been
pushed back only until 2016, it may be more realistic to
expect the new system to start in earnest only in 2017.

Once the UPC system is established, London will
become even more important as a forum for life sciences
disputes. In respect of patents falling within
categories A (human necessities) and C (chemistry,
metallurgy) of the International Patent Classification
established by the World Intellectual Property Organisation,
London will be the Division with jurisdiction
over actions for revocation or declarations of noninfringement
(in the absence of an existing infringement
action), and also infringement actions where the defendant
does not have an EU presence. Given the high
proportion of pharmaceutical and biotechnology patents
owned by non-EU entities, this is likely to lead to
a significant number of cases being heard in London.

Regulatory strategies 

In the meantime, generic entry strategy must continue
to focus on the status of patents, and any associated
Supplementary Protection Certificates, in each
of the national markets of interest. Where secondary
patents relate to new indications for an existing
medicinal product, it may be possible to limit the risk
of being found to infringe, and therefore injuncted,
by carving out the new indication from the scope
of the product information covered by the marketing
authorization. This may not be a panacea, however,
if the reality is that off-label prescribing is more
likely than not, and that a reasonable generic pharmaceutical
manufacturer would be aware of that; if
so, the manufacturer may be considered a contributory
infringer through supplying the product in the
knowledge, or with reason to believe, that it will be
used to infringe. This precise fact scenario has so far
been tested in the English courts only at a preliminary
hearing in 2014, where the judge surprisingly
refused to grant Warner-Lambert an injunction to
prevent Actavis from selling pregabalin despite the
subsistence of a patent over the use of the compound
for treating nerve pain and has instead ordered the
National Health Service to publish guidance for prescribers
on the uses to which Actavis’ product should
be put. However, this decision is under appeal. In a
2010 case concerning a mechanical patent the Court
of Apeal held the manufacturer liable on essentially
the same analysis (Grimme v Scott) [3].

Patent settlements: traps for the unwary 

The economic inefficiency of multiple parallel patent
actions is obviously undesirable, so that in many cases
the parties ultimately settle once the strength of their
respective cases has been sufficiently tested. Such agreements
need very careful consideration, however, in view
of the European Commission’s ongoing monitoring of
all settlement agreements in the pharmaceutical sector.
In common with the US Federal Trade Commission,
the European Commission is highly suspicious of ‘pay
for delay’ deals under which a generic company stays
out of the market in return for a payment from the
originator, and the European Commission has generalized
this to include any form of value transfer, including
arrangements that extend beyond the territorial
reach of patent protection, the duration of the patent
(and any extension) or its proper scope. In its December
2014 Fifth Report on patent settlement agreements [4],
the Commission highlighted licences that include nochallenge
clauses, delay market entry until after patent
expiry, or set the conditions on which a generic can
sell its own product as agreements which limit generic
entry and are potential anticompetitive. Arrangements
where the generic functions solely as a distributor of
the originator’s product, or sources its active from the
originator, are similarly suspect. Indeed, in a dispute between Genentech and Hoechst and Sanofi-Aventis,
the Paris Court of Appeal has recently asked the Court
of Justice of the European Union to rule as to whether
even awards stipulated by an independent arbitrator
after fully (and hotly) contested proceedings may be
void for breach of competition rules. [5]

Conclusion 

In summary, to be successful a strategy for bringing
a new generic version of a pharmaceutical or biotech
product to the European markets must be thought
through considerably in advance of any expected
launch date, in order to select the most appropriate
regulatory approach, identify potentially challenge-able
patents and ensure that all necessary agreements are
drafted so as to survive any later scrutiny by a sceptical
Commission. Only then can a business be confident
that the time, cost and technical skill invested
in developing, marketing and distributing the product
will not be wasted.

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References 

1 Kollagenase I and II GRUR 461 + 462. (2014). 

2 Novartis AG v. Alvogen IPCO SARL and Focus Farma B.V.,
District Court The Hague, 23 December 2013, Case No.
C/09/452370 / KG ZA 13–1160. 

3 [2010] EWCA Civ 1110. 

4 Fifth report on Patent Settlement Agreement.
http://ec.europa.eu/competition/sectors/pharmaceuticals 

5 Cour d’appel de Paris, 23 September 2014,
Docket No 12/21810.