Court of Appeal overturns English Patents Court and grants interim injunction to prevent 'at risk' generic launch

The Court of Appeal recently overturned a Patents Court decision in AstraZeneca v Glenmark Pharmaceuticals, and granted AstraZeneca an interim injunction against Glenmark for a short period until the form of order (FOO) hearing following a trial relating to the validity of an AstraZeneca patent and associated supplementary protection certificates (SPCs).

The Court of Appeal's decision provides useful guidance with respect to "at risk" launches in the pharmaceutical patent litigation context, highlighting policy principles that unpin the "clearing the way" doctrine. The Court of Appeal confirmed that it is proper for the court to take into account when considering the balance of risk of injustice and deciding whether to preserve the status quo that the generic could have cleared the path for its launch by bringing revocation proceedings sufficiently far in advance.

If validity proceedings are not started far enough in advance to get a judgment without expedition, then it is incumbent upon the party seeking to clear the path to apply for expedition, which involves giving the court a good reason for granting it. Glenmark failed to give a commercial reason for listing the trial earlier and its conduct was criticised by the Court of Appeal. The court provided a reminder that "it is important that parties should behave in a manner which is conducive to an orderly resolution of disputes of this kind, and not attempt to gain a commercial advantage by disrupting such orderly resolution."

Background

AstraZeneca holds an SPC for dapagliflozin and a further SPC relating to a combination of dapagliflozin with another active ingredient, metformin. Dapagliflozin is used to treat type 2 diabetes, heart failure and chronic kidney disease and is marketed in the UK as Forxiga.

Glenmark and other generic companies commenced proceedings to revoke AstraZeneca's SPCs on the basis that the patent on which they were based was invalid. The underlying patent itself expired on 14 May 2023 with the SPCs (including paediatric extension) expiring in May 2028. The trial on the validity of the patent and associated SPCs was held from 10 March to 20 March before Michael Tappin KC and, as is usual, judgment was reserved. Glenmark and the other generics had sought to list the trial in January but no commercial reason was given to expedite the trial and there was no evidence at the time of a planned launch in February or March.

However, Glenmark subsequently provided notification that it was ready to and intended to launch its generic dapagliflozin product in the UK on 17 March, and in response AstraZeneca sought an interim injunction to prevent launch pending hand down of the trial judgment and the FOO hearing for the main invalidity proceedings.

Patents Court decision

The Patents Court applied the well-known American Cyanamid guidelines to determine whether an interim injunction was appropriate. It concluded that AstraZeneca's damages could be calculated with reasonable accuracy, and the balance of convenience favoured refusing the injunction.

Adequacy of damages – AstraZeneca

In concluding that damages would be an adequate remedy for AstraZeneca, the Patents Court considered whether, if Glenmark was permitted to launch, other generics would also enter the market before the FOO hearing and what impact this would have on the market.

AstraZeneca pointed to the fact that at least 10 other generics had marketing authorisations for products containing dapagliflozin and so, if Glenmark was permitted to launch, it would expect other generics to launch rapidly, causing substantial and irreversible price depression.

The first instance judge concluded that there was "a real risk that one or more generic companies will enter the UK market following Glenmark and before the form of order hearing though that entry may not be immediate." However, he also found that generic competition is not necessarily accompanied by significant generic price depression, at least in the "at risk" situation. He held that it was impossible to estimate the likelihood of there being a drop in generic prices over the period before the FOO hearing, though he could not rule out such a risk.

Importantly, the judge found that there was no evidence that AstraZeneca would be likely to change its list price to wholesalers in response to a single or multiple generic entrants in the period between the hearing of the interim injunction application and the FOO hearing. There was also no evidence that if AstraZeneca did change its list price, it would not be able to reverse that without obstacle.

The first instance judge therefore concluded that AstraZeneca's damages could be calculated with a reasonably high degree of accuracy.

Adequacy of damages – Glenmark

Conversely, the first instance judge concluded that any loss caused to Glenmark was more uncertain. If an injunction was granted, Glenmark would lose its first-mover advantage: by the time any injunction was lifted, multiple other generics would be ready to launch.

Balance of convenience

The Patents Court therefore determined that the balance of risk of injustice favoured refusing the injunction. The judge also rejected AstraZeneca's argument that Glenmark failed to clear the path in time, noting that Glenmark had asked for a January 2025 trial back in January 2024.

Court of Appeal decision

The Court of Appeal, with the sole judgment from Arnold LJ, reversed the Patents Court's decision and granted AstraZeneca's application for an interim injunction until the conclusion of the FOO hearing. The Court of Appeal found that the balance of the risk of injustice favoured the grant of the injunction sought.

New evidence

Of particular importance to the Court of Appeal's decision was new evidence relied on by AstraZeneca, which had not been available at the time of the first instance decision and which it said vitiated the assessment made by the judge.

The Court of Appeal held that the new evidence established that multiple generic entrants were ready to launch ahead of the FOO hearing, rather than there simply being a risk of this happening. The timescale in which this was likely to happen was faster than the first instance judge had anticipated and the likelihood of a downward price spiral was greater than previously assessed.

The new evidence included market analysis and expert testimony indicating the likely impact of multiple generic entrants on dapagliflozin pricing and AstraZeneca's market share. It demonstrated a higher risk of substantial and irreversible price depression.

The Court of Appeal considered that the new evidence altered the factual matrix such that it would be appropriate to interfere with the Patents Court's conclusions more readily than in normal circumstances.

Adequacy of damages – AstraZeneca

The Court of Appeal disagreed with the Patents Court's conclusion that AstraZeneca's damages could be calculated with a reasonably high degree of accuracy. The court emphasised that the potential market disruption and irreversible price depression caused by multiple generic entrants could not be adequately compensated by damages.

The entry of multiple generics would likely lead to substantial and irreversible price erosion, significantly impacting AstraZeneca's market position and pricing strategy. Arnold LJ observed that there have been very few cases over the past quarter of a century where a patentee has cut its prices due to generic competition following refusal of an interim injunction and has been able raise them again after it has won at trial.

Adequacy of damages – Glenmark

Arnold LJ agreed with the Patents Court that damages would also not be an adequate remedy for Glenmark (and for the NHS).

Balance of convenience and status quo

As the Court of Appeal found that as it was not possible to form a reliable view as to which side was more at risk of receiving an inadequate remedy in damages, and given the shortness of the period in question (in the region of one to three months), it would be prudent to preserve the status quo pending the FOO hearing.

It also held that the Patents Court had been wrong to give weight to Glenmark's application for expedition of the validity trial as a basis for failing to clear the path in the usual way because no proper reasons had been give for expedition.

Osborne Clarke comment

Although the Patents Court initially refused to grant AstraZeneca an interim injunction, the Court of Appeal reversed this decision, granting the interim injunction and preventing Glenmark's early launch of dapagliflozin. This decision underscores the fact-sensitive nature of interim relief decisions in circumstances involving generic launches, with Arnold LJ noting that these decisions are typically made with limited information and in rapidly changing situations.

The Court of Appeal's decision highlights the importance of maintaining the status quo until the validity judgment is handed down. If the court is in doubt as to the adequacy of damages for both parties then it should take into account "all relevant factors in deciding what course is least likely to cause irremediable prejudice to one party or other". In this case, maintaining the status quo emerged as a decisive factor, particularly due to the short time period at play.

The fact sensitive nature of these decisions was emphasised by the Court of Appeal's confirmation that its decision to grant interim relief would not dictate the outcome of any application that may be made by AstraZeneca for a further injunction following the FOO hearing, which will depend on the circumstances at that stage.