INNsight articles by Duncan Curley

The interim (or preliminary) injunction is a vitally important weapon in the armoury of the innovator companies, when faced with a generic launch and an alleged threat to infringe their patent estate.  A patentee will normally request an interim injunction as soon as it learns of an impending generic launch.  If it is granted, the interim injunction will generally last until after the full trial, ‘on the merits’.  While the interim injunction is in place, the innovator will usually continue to take full advantage of its market exclusivity. 

Across the EU, the English courts in particular have gained a reputation for being “pro-patentee” in relation to interim injunctions, with cases going back almost a decade to SmithKline Beecham v Generics (UK) (paroxetine) followed by SmithKline Beecham v Apotex (paroxetine), Les Laboratoires Servier v KRKA (perindopril) and Leo Pharma v Sandoz (calcipotriol).  There are certain factors that must be considered by the court, before an interim injunction will be granted.  One of these factors is referred to as the balance of inconvenience: the court has to weigh the likely injustice to a defendant of granting an injunction (which it later turns out should not have been granted) against the injustice of withholding an injunction from the patentee.  The issue usually boils down to the following question: which side is likely to suffer the most irreparable harm? 

Importantly, in the SmithKline Beecham v Generics case, the patentee managed to convince the English court that the damage that would be caused to the patentee by the temporary entry on to the UK market of a generic form of paroxetine would be unquantifiable.  The reasoning was as follows. SmithKline Beecham sold the drug Seroxat® and owned a UK patent that conferred an effective monopoly in respect of the API paroxetine.  The court decided that if it refused an injunction and allowed Generics (UK) to enter the market with a generic form of paroxetine, the price of the drug would likely collapse in a “price spiral”, causing “irreversible price depression”.  If no injunction was granted, the patentee would lose market share, a position from which it was unlikely to recover.  The amount lost to the patentee would - according to the judge in that case - be “very substantial sums indeed”, although “quite what they would be would be impossible to calculate”. 

Furthermore, the English court considered that Generics (UK) should have been proactive in taking action to remove any patent obstacles, before attempting to launch their product on to the UK market.  It decided that Generics (UK) should have “cleared the way”, by initiating a patent case before their generic product launch, either by asking the court to revoke the patent or by seeking a declaration of non-infringement.  In the SmithKline Beecham case, an interim injunction was granted, thereby preventing Generics (UK) from launching their paroxetine product until after the trial of the action had taken place and taking away from the generic company the all-important first-mover advantage in the UK market. 

Although the case of SmithKline Beecham v Generics (UK) did not constitute a binding precedent, almost all of the English injunction decisions in patent cases since then (and which have involved a potential generic entrant to the UK pharmaceutical market) have resulted in the grant of an interim injunction. The recurring themes in these decisions have been the so-called unquantifiable damage to the patentee (in the form of irreversible price depression) and the need for the generic company to clear the way with proactive legal steps.

Now - at last - a decision of the English court has gone the other way, in favour of a generic company.  In the recent case of Cephalon v Mylan, Cephalon sued Mylan for infringement of European patent nos. 0,731,698 B1 and 0,966,962 B1 (both patents having the same title, “Modafinil having defined particle size”).  Modafinil is an old API, having first been discovered in 1976.  The ‘698 patent records the discovery by Cephalon that the size of modafinil particles is important to the potency and safety profile of the drug.  Claim 1 of the ‘698 patent is to “A pharmaceutical composition comprising a substantially homogenous mixture of modafinil particles, wherein at least 95% of the cumulative total of modafinil particles in the said composition have a diameter of less than about 200 micrometres and said composition contains between about 50 milligrams and about 700 milligrams of said modafinil”.  Claim 2 of the ‘698 patent is to a composition in which the particles of modafinil have a median diameter of between about 2 micrometres and about 60 micrometres. 

The product Provigil® (containing the API modafinil) is presently sold in the UK through Cephalon’s UK distributor, Teva.  This arrangement was put in place following a settlement of US and UK patent litigation in 2005 between Cephalon and Teva.  The settlement contains a term that Teva will enter the market with its own generic modafinil product in October 2012.  Until then, Teva has an exclusive arrangement with Cephalon for modafinil in the UK and elsewhere.  However, on 4 September 2010, Mylan offered modafinil 100 mg tablets in the UK publication Chemist and Druggist.  Cephalon immediately sued Mylan for patent infringement and requested an interim injunction.  A hearing was held on 11 November 2010. 

First, the court had to decide whether Cephalon had an arguable case on the question of patent infringement, i.e. one that could not be dismissed as a “try on” and which needed to be considered at a full trial.  This is a relatively low threshold test for patentees.   Even so, the judge observed that the evidence put forward by Cephalon on the question of whether the particle size within the tablets marketed by Mylan was within the range claimed in the ‘698 patent was not convincing (in the judge’s words, it “falls a long way short”).   Nevertheless, he eventually concluded that Cephalon’s evidence “just about” cleared the relevant threshold.  The judge also declared that he was satisfied that there was an arguable case for the court to consider in relation to the validity of the patent.

It had been agreed that there should be an expedited trial ‘on the merits’, approximately 6-8 months after the hearing.  The critical part of the court’s analysis was therefore on the balance of convenience: who would be the more likely to suffer irreparable harm in the short intervening period, Cephalon (if the interim injunction was refused) or Mylan (if the injunction was granted)?  It is at this stage of its judgment that the English court marks a departure from trend in the previous line of cases. 

Cephalon contended that if Mylan was allowed to enter the market, Teva would terminate its exclusive distributorship for Provigil® pending the trial.  The judge thought that this was unlikely, because Teva would then potentially be left with nothing, if Cephalon subsequently won its patent case. Cephalon also argued that once prices had gone down because of market entry by Mylan (and potentially others), it would be hard to raise them again (irreversible price erosion) after a trial, because there would have been a change in customers’ mindset as to what a fair price for modafinil would be.  Furthermore, there would be an eventual change in the NHS drug pricing category for Provigil®, if generic competition was allowed on to the UK market.  This would then prevent prices from being raised back to pre-generic entry levels.

The judge was not persuaded that there would be irreversible price erosion.  A critical point on this issue was the evidence about the effect of parallel imports on the price of modafinil in the UK.  The court noted that in 2009 and 2010, parallel trade had accounted for 18% and 19% (respectively) of the total UK sales of modafinil.  Parallel importers offered discounts of up to 35% off the NHS price list to major pharmacy chains.  Cephalon stated in their evidence that they dealt with parallel imports by giving extra discounts to pharmacy chains from time to time.  The judge surmised that it was therefore possible for modafinil prices to be raised, even after they had been lowered temporarily, to compete with parallel imports.

Although Mylan had not sought to clear the way, the judge decided that this factor was not one that pointed inexorably towards an injunction.   He also thought that Mylan would be deprived of a unique market opportunity, if the interim injunction was granted.  The interim injunction was therefore refused.

Because the run of interim injunction cases has always been in the opposite direction, in favour of patentees, this decision has come as a surprise to those who monitor the English court’s decisions in the pharmaceutical sector.  There were a number of factors which – although they were not determinative – had clearly weighed on the judge’s mind in the Cephalon case, such as the apparent weakness of the patentee’s case on infringement.  Nonetheless, it is probably too soon to call the swing of the English legal pendulum back in favour of generics.