AstraZeneca and Hoyng avert damages payment to health insurer Menzis

The Court of Appeal of The Hague has found AstraZeneca not guilty of enforcing an invalid patent against generic drug companies in the Netherlands. Overturning a first-instance decision, the court ruled that it is not unlawful for a patent holder to maintain an invalid patent if unaware that a court could invalidate the patent. As such, AstraZeneca is no longer obliged to compensate third-party health insurer Menzis.

For Menzis, the decision is a blow in its quest to gain damages from pharmaceutical company AstraZeneca in the Netherlands. This is in contrast to a District Court of The Hague decision, which it handed down in 2020. It is also the first such claim made by a health insurance company.

Menzis on the market

AstraZeneca developed a drug, which contains active ingredient quetiapine, to treat schizophrenia and bipolar disorder. The company markets the drug in tablet form under the brand name Seroquel. Until 2007, an initial patent EP 240 228 protected quetiapine as an active ingredient, with SPC 980022 based on this patent granted in the Netherlands to cover a new formulation.

In 2002, the European Patent Office granted EP 0 907 364 to cover a delayed-release formulation of quetiapine, known as Seroquel XR. AstraZeneca obtained a Dutch marketing authorisation for this in 2007, meaning the company could market the drug in various quantities in the Netherlands.

However, once the original SPC expired in 2012, multiple generic formulations of the drug appeared on the market. In response, a finding on validity by the District Court of The Hague allowed AstraZeneca to enforce EP 364 against generic drug manufacturer Sandoz. But in 2014, the Court of Appeal of The Hague rejected the first-instance decision. Instead, it annulled the Dutch part of the patent for lack of inventive step with retroactive effect.

AstraZeneca finds second success

However, prior to the nullification and following the initial finding of validity, AstraZeneca had invoked the patent against competitor Sandoz in the Netherlands. As such, third-party health insurer Menzis argued that AstraZeneca acted unlawfully. This is because, when AstraZeneca enforced the patent, an injunction against generics meant the insurer had to reimburse costs. Menzis also had to distribute the more expensive drug version to patients.

Following this, the company said that the enforcement unjustly enriched AstraZeneca. In 2020, the District Court of The Hague upheld that AstraZeneca must compensate Menzis on the grounds of unjust enrichment. The judgment meant no other generics drugs could enter the market.

Pathway is clearer

Willem Hoyng

However, the Court of Appeal has now overturned this decision. Based on a previous Supreme Court case, it decided that AstraZeneca did not act unlawfully in the time between the two validity decisions.

It also decided the company did not benefit from unjust enrichment. As such, now Menzis must pay the cost of proceedings.

It seems likely that Menzis will appeal to the Supreme Court. The news is important for life science patent holders, since the decision may provide a clearer  path for pharmaceutical innovation while maintaining competition against generic drug companies.

However, it could also compromise the ability of third parties to gain compensation in the future.

Parties for damages

Interestingly, the UK High Court nullified the UK part of EP 364 in 2012, during parallel proceedings for lack of inventive step. The UK Court of Appeal also upheld the judgment. However, in the Netherlands, the patent survived first-instance nullity proceedings.

In the UK, a similar point of issue is currently being debated between Warner Lambert and Actavis/Mylan, following a 2018 Supreme Court decision concerning pregabalin.

Market-leading firm Hoyng ROKH Monegier acted for client AstraZeneca, with name partner Willem Hoyng leading the team. Karlijn Teuben, partner and Supreme Court advocate from Dutch law firm Pels Rijcken, represented Menzis. The firm is not a patent firm, and usually provides legal guidance for issues involving the Dutch state.

In this case, however, the firm worked on the side of the health insurer.

For AstraZeneca
Hoyng ROKH Monegier (Amsterdam): Willem Hoyng (partner)

For Menzis
Pels Rijcken (Amsterdam): Karlijn Teuben (partner)

Court of Appeal of The Hague, the Netherlands
M. Bonneur, Peter Blok, Constant van Nispen; J. Pinckaers (justice of the court)