Warner-Lambert/Actavis – Competition Law Insights

02.02.2015

Competition lawyers could be forgiven for raising a quizzical eyebrow at the judgment handed down by the Arnold J in Warner-Lambert/Actavis on 21 January 2015. His final words, in a judgment which otherwise dealt with a claim for interim relief on a second medical use patent, were as follows: “…had I concluded both that there was a serious issue to be tried and that the balance of the risk of injustice otherwise favoured the grant of the relief sought by Warner-Lambert, I would not have refused such relief on competition law grounds” [138].

By this statement Arnold J suggests that competition law would not have been a bar to the award of injunctive relief for Warner-Lambert (WL) against Actavis and that it may therefore not be an abuse of dominance for a dominant company to impose the relief sought on a potential infringer in the circumstances of the case.

This leaves us guessing whether the relief would not have been refused: i) either because WL was not dominant or, ii) if WL were considered dominant, whether WL’s behaviour would not have been classed as an abuse, or iii) if WL were considered to have abused its dominance, whether such abuse was actually objectively justified.

This was an application by WL for interim relief against Actavis, a producer of a generic form of the molecule pregabalin for which WL until recently held a patent. This gave WL exclusivity in relation to all three different therapeutic indications: i) pain relief, ii) epilepsy and iii) generalised anxiety disorder (GAD). However the patent expired in 2013 and a supplementary protection certificate lapsed for non-payment of fees, leaving W-L with only a second medical use patent (in the “Swiss-type”) which provides exclusivity for the use of pregabalin only for the treatment of pain relief (under the Trade Mark “Lyrica”). The interim relief sought by WL would have required Actavis to place additional labelling on its product, and to take a number of further steps, to ensure that it was not prescribed for the treatment of pain relief in the period before the trial at which the validity of WL’s second medical use patent will be considered.

WL claimed that Actavis’ drug would be likely to infringe its patent as pharmacists rarely know what therapeutic use the prescription is for and may therefore end up dispensing Actavis’ drug “Lecaent” for pain relief. This is because:

• the vast majority of doctor’s prescriptions do not state the therapeutic indication for which the drug has been prescribed,
• prescription software usually searches for generic versions of the originally patented drug to save costs and GPs are encouraged to prescribe using the generic name of the drug rather than a particular brand name,
• the generic version of the drug is cheaper than the patentee’s product, so pharmacists have an incentive to prescribe the generic drug where they receive generic prescriptions (which account for the bulk of prescriptions), and some of these will end up being prescribed for pain relief,
• there is also a high level of off-label prescribing (this occurs where the doctor knows that although a compound should be used for the therapeutic indication on the box, it can also be used for other therapeutic indications and prescribes this drug for this second use even if prescribing it might infringe the patent).
WL therefore sought an injunction to prevent this happening.

Leaving aside the questions of market definition, dominance and abuse, the key point to note about this judgment from a competition perspective is that we can surmise that Arnold J considered that even if WL was dominant and had abused that dominance, it was objectively justified in its actions to assert its intellectual property rights against Actavis. After all, it is arguably a fundamental right of pharmaceutical companies to be able to defend their intellectual property rights. However, it is also common ground that when assertion of these rights goes beyond competition on the merits, where the exclusion of competition (and particularly the exclusion of new entry by generic brands) goes too far, then such behaviour will be likely to be viewed as anticompetitive.

Of course, the normal weighing of factors involved in whether interim relief should be granted also takes into account considerations such as the proportionality of the relief sought, which is perhaps not so different a consideration from the competition issue referred to here. In this case, Arnold J rejected the claim for interim relief on the implicit basis that it would be disproportionate to do so:

[137] “In my judgment, granting the relief sought by Warner-Lambert would create a greater risk of injustice than refusing it. In my view, wrongly granting the relief is more likely to cause Actavis substantial unquantifiable harm than wrongly refusing it is likely to cause Warner-Lambert substantial unquantifiable harm. Taking into account the other factors considered above, including the likely efficacy of the measure, I consider that the balance is firmly tipped against ordering Actavis to put a notice on its packaging. In the case of the contractual terms, I consider that the balance is more evenly weighted, but still comes down in favour of refusing relief.”

What Arnold J may therefore have been saying was that whether or not WL was dominant or had abused his dominance was immaterial because, on the facts of this case, WL had a right to assert its patent rights and had its assertion of those rights been proportionate to its aim, Arnold J would have helped WL achieve this by imposing the relief sought on Actavis.

Perhaps the most interesting part of the judgment is not so much the ruling on the interim relief, but Arnold J’s comments on the possible scope of any final relief, if the patent were upheld. Arnold J noted that even if WL were successful at trial, it would be “very unlikely” [121] to obtain any relief which would wholly exclude the prescription of pregabalin for pain relief. This is in stark contrast to the recent judgment in Novartis AG and Sun Pharmaceutical Industries BV in which the Hague Court of Appeal granted an interim injunction sought by the holder of a secondary use Swiss style patent against a generic manufacturer wishing to market a drug for a use not covered by the Swiss-style patent.

Warner-Lambert/Actavis is not the first case in which competition law arguments have been raised in the second medical use context (we are aware of at least one in the UK, although there has been no ruling on this subject to date). The competition concern is the risk of spill-over effects from the grant of an injunction, compliance with which may be impossible except by also stopping lawful activities. The approach of Arnold J suggests that the standard relief of a final injunction may not in fact be available in the second medical use context – which in turn suggests that there is no breach left by patent law for competition law to fill. However, it may be a while before we competition lawyers can be sure that we can leave this arena for good!

Sophie Lawrance

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