The Court of Appeal in London has upheld a first-instance judgment, rejecting a request by Warner-Lambert to amend two so-called Points of Defence against generics manufacturer Dr Reddy's. The case, which involves skinny labelling for medications, is one of the UK's most complex patent cases involving damages, with a 25-day trial scheduled to begin on 6 November 2023.
20 February 2023 by Amy Sandys
The Court of Appeal has upheld a first-instance decision that pharmaceutical company Warner-Lambert may not amend two of its Points of Defence claims against generic drug manufacturer, Dr Reddy’s (case ID: CA-2022-000735) and the NHS Scotland. The decision comes amid a bitter dispute over damages, which emerged from a 2018 Supreme Court ruling between Warner-Lambert and various generic drug companies concerning the drug pregabalin. Now parties await the main trial on damages.
At the centre of the dispute lies EP 09 34 061 owned by Warner-Lambert, a subsidiary of global pharmaceutical company Pfizer. The patent originally protected the active ingredient pregabalin for the treatment of generalised anxiety disorder (GAD) and epilepsy. It expired in 2017, but Warner-Lambert had obtained a second medical use patent on pregabalin for neuropathic pain treatment, marketed under the brand name Lyrica.
In 2014, Actavis and Mylan launched proceedings against the Pfizer subsidiary, since the companies sought to launch a new generic pregabalin product after EP 061 expired. Actavis and Mylan’s skinny-label generic product Lecaent focused on the treatment of generalised anxiety disorder (GAD) and epilepsy. Warner-Lambert then counterclaimed for infringement against Actavis and sought an interim injunction.
The so-called skinny labelling allows generic drugs to be approved for non-patented indications, allowing them to enter the market before the brand-name drug’s patent for other indications expire. Since Lecaent excluded the indications of pain treatment, this allowed Actavis to market pregabalin as a generic product following the expiration of Warner-Lambert’s patent.
Then-High Court judge Richard Arnold refused the injunction, with a subsequent Court of Appeal case upholding the ruling against Warner-Lambert. The Pfizer subsidiary then challenged Actavis before the Supreme Court, which again dismissed Warner-Lambert’s claim on all three counts and invalidated the patent on the grounds of insufficiency. All proceedings between Warner-Lambert and other generic drug companies including Actavis, Mylan, Ranbaxy, Teva and Sandoz have since been settled. It has also concluded proceedings with Lloyds Pharmacy, a UK-based pharmacy group.
However, the fourth case involving Dr Reddy’s and the NHS Scotland trusts is ongoing, after Dr Reddy’s launched a generic pregabalin product under a skinny label and the brand name Alzain in 2015. On the other hand, the NHS Scotland is pursuing a ‘full label’ claim.
The parties are seeking damages from Warner-Lambert based on threats of infringement, and the cross-undertakings the latter party had made prior to the findings of invalidity. For the proceedings on the question of damages, Warner-Lambert now attempted to amend two of its Points of Defence claims against generic drug manufacturer, Dr Reddy’s. The first instance as well as the Court Appeal rejected this request.
With its two claim amendments, Warner-Lambert argued that it should not have to pay damages for lost sales of skinny-label pregabalin, which patients use for the treatment of inflammatory pain. It thus advanced two claim amendments, with the aim of minimising the potential damages payable:
First amendment: “Warner-Lambert contends that, to the extent any damage is said to have arisen from [the] sale and supply [of] pregabalin products which would have been used for or attributable to the treatment of any condition covered by the Inflammatory Pain Claims, such damage should be excluded from the final calculation of quantum.”
Second amendment: “Warner-Lambert contends that, to the extent that the pregabalin products sold and supplied by Dr Reddy’s would have been used for or attributable to the treatment of any condition covered by the Inflammatory Pain Claims, any profits said to have arisen from such sale and supply should be excluded from the final calculation of loss of profit.”
With regard to the second amendment, Warner-Lambert posited that it could benefit from the monopoly bestowed by the valid patent claims, even if the company could not allege claim infringement. The second claim centered on the argument that pharmacists dispensing skinny-label pregabalin for pain treatment were carrying out infringing acts, since the court did not invalidate these claims during the proceedings on the merits.
However, the Court of Appeal, led by presiding judge Richard Arnold, dismissed the second notion on the basis that the Supreme Court had previously ruled that the manufacturer, and not the pharmacists, carried out the claimed process. Furthermore, since pharmacists dispense medication on the instruction of a doctor, but tend to be unaware for which complaint they are dispensing, they cannot be implicated in any potential unlawful acts.
He also concluded that it would be an abuse of process to make amendments at this stage, given that the Supreme Court proceedings concluded in 2018.
Regarding the first claim, the Court of Appeal dismissed this on the basis that “no monopoly is conferred by a patent save that which results from the terms of the statute. Thus there is no monopoly in respect of acts which do not infringe the patent”. The hearing comes after almost ten years of litigation, which has led to the court preparing to hear one of the biggest patent damages claims in UK history.
Warner-Lambert fared better in a preliminary ‘common assumptions’ trial held in July 2021, which aims to guide its later assessment of damages claims. High Court judge Antony Zacaroli held that, when the courts assess the loss caused by any one order, it must assume that the other orders must be removed from the counterfactual, since there is a finite market for pregabalin.
The judge also held that the court should not assume that, retrospectively, the parties knew the patent was invalid. Such an assumption, he posited, violates the principle that compensation is limited to that which stems from the order. It would then confuse the compensatable consequences from the order with the consequences flowing from the patent and the non-compensatable litigation.
Following the trial, according to JUVE Patent sources, in 2022 the NHS trusts of England, Wales and Northern Ireland all settled with Warner-Lambert. On 6 November 2023, Dr Reddy’s, NHS Scotland and Warner-Lambert will take to the stand to hear the damages inquiry in full.
Previously, the London office of Allen & Overy was responsible for the case regarding pregabalin for Warner-Lambert, as well as Germany and France. Shortly before the Supreme Court proceedings in 2018, however, lead partner Nicola Dagg left Allen & Overy to begin a role at US firm’s Kirkland & Ellis’ then-new London office.
Dagg has retained Warner-Lambert as a client, with partner Jin Ooi also working alongside her. Previously, he had worked on the case as an associate while still at Allen & Overy.
Mishcon de Reya partner David Rose has a strong relationship with generic drug manufacturers, including Dr Reddy’s, which he has represented for around 15 years. Professional services firm RPC, which is based in the UK and Asia, took on the case for the NHS Scotland. Lawyer Catherine Percy, a commercial-dispute-resolution specialist, led the case. Although RPC is not a patent-specialist firm, according to her biography Percy has experience in property insurance, casualty claims and construction and property-related losses, as well as pharmaceutical and competition disputes.
Originally, the Government Legal Department represented the multiple other NHS trusts involved in the claim. However, since the entities settled their part of the case in late 2022, they had no involvement in the most recent Court of Appeal or High Court proceedings.
One Essex Court (London): Richard Boulton
Three New Square (London): Tim Austen
Kirkland & Ellis (London): Nicola Dagg, Jonathan Newman, Jin Ooi (partners); associates: Rory Clarke, Nischay Mall, Andrew Marks, Guy Buckle, Noémie Broussoux-Coutard
For Dr Reddy’s
11 South Square (London): Brian Nicholson, Christopher Hall
Mischon de Reya (London): David Rose (partner)
For NHS Scotland
Three New Square (London): Douglas Campbell, Daniel Selmi
RPC (London): Catherine Percy (partner)
UK Court of Appeal, London
Stephen Males (presiding judge), Richard Arnold, Christopher Nugee