5 September 2012

Generic Drug May Not Be Included In G-Standard Before Expiration Of Patent

Kennedy van der Laan


Kennedy van der Laan
The Dutch Supreme Court has ruled in legal proceedings between Glaxo and Pharmachemie, in which the question was whether a generic drug may already be included in the so-called G-Standard before the expiry of the patent of the original drug.
Netherlands Intellectual Property
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Supreme Court, 22 June 2012 LJN: BW4006

The Dutch Supreme Court has ruled in legal proceedings between Glaxo and Pharmachemie, in which the question was whether a generic drug may already be included in the so-called G-Standard before the expiry of the patent of the original drug. The Supreme Court has upheld the earlier judgment of the Court of Appeal: such an announcement is to be considered as 'offering' the drug, and therefore constitutes an infringement of the patent.

Glaxo was holder of a European patent of − at the time − a new medical indication for a tetrahydrocarbazolone derivative, namely as a medicine against sickness and vomiting. In anticipation of the expiry of that patent – on 24 June 2006 – Pharmachemie applied for a market authorization for Ondansetron, with an active ingredient as described in Glaxo's patent. Next, Pharmachemie had the drug included in the G-Standard, the generally used database for pharmaceutical products published by Z-Index, a subsidiary of the Dutch professional association for pharmacists KNMP. Publication took place on 16 May 2006 and concerned the G-Standard of June 2006. A price was not mentioned. Furthermore, at the request of Pharmachemie Z-Index sent a letter to all users of the G-Standard, with, inter alia, the following text: 'The patent of the original product expires (...) only in the course of June 2006. In connection therewith the firm mentioned has expressly indicated that it will not be trading Ondansetron before 25 June 2006.'

According to Glaxo, this publication is an infringement of its still valid patent, because the Dutch Patent Act prohibits, inter alia, the offering of a product obtained with a patented process (Section 53 (1) of the Dutch Patent Act). According to the Court, however, there was no question of offering but only of a preparatory act to deliver, necessary to facilitate trade immediately after the expiration date of the patent.

In the appeal proceedings the Court of Appeal reached a different opinion. According to legal history, offering as meant in the Dutch Patent Act must be interpreted broadly. Publication in the G-Standard is the means to inform the various market parties that a generic version of a certain drug will be launched. There is a real chance that users of the G-Standard, when prescribing and/or ordering drugs, will also be led by the knowledge that within the near future a generic version of a drug with the same active ingredient will be marketed. It is important in this respect that generic drugs are generally known to be considerably cheaper (according to Pharmachemie: approximately 40%) than specialties. Thus, the publication influences the market behavior with regard to the drug. Under these circumstances the publication of the generic Ondansetron in the G-Standard should be regarded as the offering of it. This is not altered by the sending of the Taxe letter. This letter precisely confirms the expectation that a generic version of the drug will be marketed.

Pharmachemie also argued that because of such a judgment the term of validity of Glaxo's patent would be improperly extended. After all, if an anticipating publication in the G-Standard is not allowed, it will become impossible to trade the generic version immediately after the expiration of the patent. The Court of Appeal recognized that the latter is a consequence of its judgment, but that did not change its opinion. The circumstance that third parties such as Pharmachemie would be disadvantaged by the mode of operation of Z-Index may not, in the opinion of the Court of Appeal, lead to a different interpretation of the law. The Court of Appeal therefore ruled that there was patent infringement in the period from 16 May to 24 June 2006 and ordered Pharmachemie to pay the loss of turnover volume suffered by Glaxo.

This opinion has now been upheld by the Supreme Court in its judgment of 22 June 2012. The Supreme Court used few words to deal with the matter. It does not follow from the law, nor from case law or literature, that there is only offering in the event of a statement aimed at a concrete transaction, or in other words that the offeror of a generic drug could already communicate prior to the expiration of the patent concerned that it will market a generic version within the near future. Offering should be interpreted broadly; the Court of Appeal could therefore assume that having Ondanstron included in the G-Standard constitutes patent infringement.

The conclusion of the Advocate-General – with the same purport – provides more insight into the underlying thoughts. A patent offers the holder the exclusive right to exploit his invention commercially during the patent term. Therefore the law allows him to prohibit various third-party acts that may obstruct this commercial exploitation. Such prohibitions also include the mere offering, leaving aside the actual delivery; after all, by the (mere) offer of competitive products the potential customer will be distracted, the impression will be created that there are more alternatives available, and thus the market position of the patent holder will be weakened. This also applies to offers made during the term of the patent aimed at the sale and delivery after expiry of that patent; this way the monopoly position of the patent holder will be undermined in the final stage of his patent. The Advocate-General stated that pursuant to this interpretation it may actually become impossible to start the sale of the generic alternative immediately after the expiration of the patent, but this is no reason to affect the rights of the patent holder during the term of the patent.

First published in the Kennedy Van der Laan newsletter - July 2012

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