IP AND COMPETITION

patent in the EPO, as well as the UK validity challenge. In addition, Lupin assigned certain patent rights relating to perindopril to Servier and received a cash payment of €20 million.

Further deals were done between Servier and other generic companies, and these are also referred to (in anonymised form) in the October 2008 judgment of the English Court. Te main terms of one of these other deals were concluded in June 2006. Pursuant to this latter deal, a generic company agreed not to challenge Servier’s patent in the UK and not to import or sell generic perindopril, while Servier agreed to provide quantities of perindopril at a guaranteed margin (subject to a floor price) to the company, so that it could sell an ‘authorised generic’, but Servier also had an option to pay liquidated damages instead of actually effecting supply. Tis effectively gave Servier the right to exclude its generic competitor from the market. Tis right was obtained by Servier agreeing to pay the generic company £5 million and a further £500,000 per month, for each month of non-supply to the generic. Servier exercised its option not to supply in August 2006 and continued to do so during the litigation. All told, Servier apparently paid this particular generic company approximately £10 million to stay out of the market.

The end of the party

Apotex was the only generic company to see its validity challenge through to the end. In July 2007, a judgment of the English Patents Court was handed down in Apotex’s favour, invalidating the patent in the UK. Tree generic companies promptly entered the UK market, even though an appeal by Servier continued for several more months, finally ending in May 2008 with a rejection of Servier’s appeal and some damning comments in Lord Justice Jacob’s judgment:

“It is the court’s job to see that try-ons such as the present patent get nowhere. Te only sanction (apart, perhaps, from competition law which thus far has had nothing or virtually nothing to say about unmeritorious patents) may, under the English litigation system, lie in an award of costs on the higher (indemnity) scale if the patent is defended unreasonably.”

Te graph (courtesy of Wavedata Ltd: www. wavedata.co.uk) show that the price of Servier’s Coversyl® remained relatively constant in the UK until the first three generic entrants to the market in July 2007 (the date of the first instance Patents Court decision). Te three generics then competed away the price until the final appeal decision in 2008. Tereaſter, more generic companies entered the fray and the price dropped further to between approximately £2 and £3 per pack (depending on the strength).

Perindopril average prices

12 10

8

6

4

2

0

Month

Perindopril Tabs 2mg 28 Perindopril Tabs 2mg 30

Perindopril Tabs 4mg 28 Perindopril Tabs 4mg 30

One can appreciate from the graphic that the UK public interest was arguably not served in the period up to July 2007. On one view, until that point in time, the price of Coversyl® was kept higher than it should have been, by virtue of a patent that was later shown to have been invalid and a litigation-and-settlement strategy by Servier (based on that patent) that kept fierce generic competition at bay in the UK market.

On another view—and in Servier’s defence—the patent in question had been upheld aſter an opposition proceeding in the EPO. Servier was then entitled to rely on the patent rights that it had obtained and to defend the generic challenges to its patent.

Conclusions

Prior to the sector inquiry and the commission’s individual investigations, it was well known that contractual clauses granting exclusivity and other restrictions on a company’s ability to compete have been sensitive topics for European competition regulators, particularly in agreements where the contracting parties have significant market shares. In the specific context of patent settlement agreements, the commission is concerned that they are concluded privately—without proper regard for consumer interest—and it seems determined to test the boundaries of competition law to ensure that consumer welfare is ultimately respected. Although the commission has drawn no conclusions in its final report on individual cases, the series of ongoing investigations demonstrate its view that if companies ‘misuse’ the patent system and cause harm to consumers,

16 World Intellectual Property Review March/April 2010

Perindopril Tabs 8mg 28 Perindopril Tabs 8mg 30

competition law can be used to restore the competitive process. However, until the commission starts concluding its investigations and issuing some decisions (which go on to be tested in the European courts), the full extent of the ‘reach’ of competition law into the realm of patent settlement agreements remains unknown. Tis is a debate that continues to unfold and those involved in the European pharma sector should keep a careful watching brief on developments.

duncancurley@innovatelegal.co.uk

Duncan Curley

Dr Duncan Curley is the founder and director of the boutique IP law practice, Innovate Legal, based in London. Curley’s experience consists predominantly of dispute resolution and patent litigation in the pharmaceutical sector. He is

the author of Extending Rewards for Innovative

Drug Development, a report on supplementary protection certificates published by the Intellectual Property Institute.

www.worldipreview.com

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