Spain: Obtaining marketing authorisation and setting a price for a generic before patent/SPC expiration would be considered an unfair competition act

16 October 2012

Teresa Mercadal

There are two recent Court Orders issued by the Commercial Courts of Barcelona ordering preliminary injunctions (PIs) against generic companies based on unfair competition acts.

Firstly, Commercial Court No 5 ordered PIs against a generic company, KRKA D.D NOVO (KRKA), on 30 July 2012 because a generic of montelukast from this company obtained price for the Spanish Price and Reimbursement System some months before the expiration of the supplementary protection certificate (SPC) 9800023 that protects this active ingredient and KRKA did not request the suspension of the marketing authorization. During the hearing on the PIs, KRKA assured that it would not introduce its generic of montelukast into the market until the expiration of SPC9800023. In light of the foregoing, the court held that KRKA’s behaviour did not constitute a patent (SPC) infringement but an unfair competition act because it hindered the normal development of the innovator’s commercialization due to the creation of a homogeneous cluster on montelukast.

In addition, on 1 August 2012 Commercial Court No 1 of Barcelona issued ex parte PIs against TEVA on the basis that it had obtained a marketing authorization (MA) for atomoxetine. Unlike the montelukast case, in this case the court did not only find an unfair competition act, but also prima facie patent infringement.

In order to understand the court’s reasoning the following provisions from the Spanish Medicines Law should be noted:

(1) After the MA procurement, the procedure to obtain a price for the Spanish Price and Reimbursement System can be initiated ex officio. Notwithstanding the foregoing, in any case, the MA’s holder may request the stay of this procedure;

(2) The Health Ministry creates homogeneous clusters of drugs. Each homogeneous cluster includes the financed drugs with the same active ingredient(s) with regard to dosage, content, pharmaceutical form and administration route and that can be interchanged  (Additional Provision 14th of the Spanish Drugs Act 29/2006 [hereinafter, SDA]). In the list of homogeneous clusters, the sale price of each drug is shown. In order to prepare this list, laboratories notify the price that they will put to each of their financed drugs to the corresponding authority. To simplify, we can say that, in general, pharmacies shall dispense to customers the drug of the lowest price of each homogeneous cluster (Articles 85.4 and 86.5 SDA). It is also important to note that when a homogenous cluster only includes the innovator and its licenses, this fact is highlighted in the list of homogeneous clusters.

In the montelukast case, given the existence of the montelukast generic with a fixed financed price, a homogeneous cluster of montelukast was created including the montelukast generic, although this drug was not in fact on the market. The court explained that it was informed that if KRKA had applied for the suspension of the montelukast generic marketing authorization, the generic would not have been included in the homogeneous cluster. In light of the foregoing, the court concluded that the lack of request for suspension of the marketing authorization constituted an unfair competition act. Further, the court held the creation of a homogeneous cluster including a generic that was not in the market would generate confusion. The court stressed that the confusion was obvious for pharmacists, who dispense the drug with the lowest price in the corresponding homogeneous cluster. The court also referred to the fact that doctors and patients would get confused because the generic drug with the lowest price included in the homogeneous cluster was not in fact in the market. Consequently, the court concluded that KRKA’s behaviour prima facie seemed to constitute an unfair competition act. In this regard, the main preliminary injunction that has been ordered against KRKA is to apply with the suspension of its montelukast generic marketing authorization until 31 December 2012, i.e., almost two months before the expiration date for SPC9800023 (25 February 2013). This would give KRKA some time to restore the marketing authorization of montelukast generic before the expiration of SPC9800023.

In the atomoxetine case, the procedure to obtain price for the Spanish Price and Reimbursement System would be initiated ex officio at any time and TEVA did not respond to two requirements from LILLY regarding the potential patent infringement and unfair competition act that would take place. This silence was interpreted by the court as bad faith from TEVA. Therefore, one important aspect of the PI ordered requires TEVA to take any necessary steps to avoid the creation of a homogeneous cluster on atomoxetine, e.g. by filing a price offer to the Ministry or requesting the maintenance of the procedure to obtain a price for the Spanish Price and Reimbursement System if it has been already initiated. In order to understand why the court based its decision not only in the unfair competition act, but also in a patent infringement, the following three facts should be born in mind:

(i) The patent/SPC rights on atomoxetine expire in almost seven yeas and, due to the sunset clause, the MA on the atomoxetine generic TEVA would lapse before the patent/SPC expiration if it is not used during the time when the patent/SPC rights will be in force;

(ii) The Spanish MA on the TEVA atomoxetine generic was not requested to be used for the procurement of a MA in other EU Member States through the Mutual Recognition Procedure, as the Spanish MA proceeds from an Slovak one; an

(iii) LILLY sent two requirements to TEVA regarding the potential infringement and TEVA did not answer either.

Akin to these cases, there is a precedent regarding the active ingredient donepezil. In the donepezil case, MYLAN had obtained a financed price for a generic of donepezil three years before donepezil’s SPC expiration without requesting the suspension of the marketing authorization of the generic. Ex parte PIs were granted, although MYLAN had confirmed that it would not introduce its donepezil generic into the market until donepezil’s SPC expiration. After a hearing, the court maintained the PIs against MYLAN which were also confirmed by the Court of Appeal in Barcelona (Court Order issued by the Commercial Court No 5 of Barcelona on 29 December 2009 and confirmed by the 15th Division of the Court of Appeal of Barcelona through a Court Order on 20 January 2011). There is also a first instance judgment on this case issued by the Commercial Court of Barcelona No. 5 on 16 November 2010, where MYLAN was absolved of patent infringement but condemned for performing an unfair competition act. As in the amotexine case, maintaining the MA of the generic did not make sense as the MA would expire before the SPC’s expiration in application of the sunset clause.

Other cases on the EU and National Life Sciences developments newsletter for October 2012