Warner-Lambert Company, LLC v Actavis Group PTC EHF & Ors

On 21 January 2015 I dismissed an application by Warner-Lambert for an interim injunction in this matter, holding that, on the basis of the evidence and arguments then before the court, Warner-Lambert’s infringement claim did not raise a serious issue to be tried and that, even if it did, the balance of the risk of the injustice favoured refusal of the relief sought. The background to the matter and the reasons for those conclusions are set out in full in my judgment of that date ([2015] EWHC 72 (Pat)), which I shall take as read.

Under the heading “The best solution to the problem”, I stated:

“73.

As I understand the evidence and arguments before me, it is more or less common ground between all concerned that the best solution to the problem which arises in this case is to try to ensure that prescribing doctors prescribe pregabalin for the treatment of pain by reference to the brand name Lyrica rather than by reference to the generic name pregabalin. That will ensure that pharmacists only dispense Lyrica when presented with prescriptions for pregabalin which are (at least so far as the prescriber is concerned) for pain without requiring the pharmacist to know the indication for which pregabalin has been prescribed.

74.

As I hope I have made clear, it does not lie within the power of either Warner-Lambert or Actavis to ensure that this happens. It depends ultimately on the behaviour of the prescribers. The prescribers can be, and are already being, influenced in a number of ways, in particular by the NICE guidance and by communications via the CCGs (and Welsh Health Boards). Warner-Lambert is understandably concerned that this is not enough, and that what is required is for two further things to happen. Actavis agree that these steps are desirable.

75.

First and most importantly, Warner-Lambert contends that prescribers should be given clear guidance that, in this situation (and other future situations like it), the proper course is to prescribe by reference to the brand name for the patented indication and by reference to the generic name for non-patented indications. Counsel for the Department of Health informed me that the Department is not a position to issue such guidance. Under the National Health Service Act 2006, the Secretary of State is under a duty to promote the autonomy of NHS England and may only intervene if NHS England is guilty of a significant failure properly to discharge its functions. The Department does not consider that a failure by NHS England to issue guidance with regard to the relevance of the Patent to the prescribing of pregabalin would constitute such a failure. The Department notes, however, that NHS England may consider it appropriate to issue such guidance. If NHS England were to do so, the Department would not consider that inappropriate. I presume that the position is much the same with regard to NHS Wales. Clearly, it is a matter for NHS England and NHS Wales to decide whether or not to issue such guidance, but for my part I would encourage them to consider doing so as a matter of urgency.

76.

Secondly, Warner-Lambert contends that prescription software suppliers should alter their software to make it easier for doctors to prescribe pregabalin by brand name for treating pain. Again, I would encourage them to do so. This is less important, however, since the existing software does permit Lyrica to be prescribed.

77.

Before proceeding further, it is necessary to emphasise two points. The first is that Warner-Lambert is not seeking any order against Actavis which will make either of the two things described above happen. The second is that, if those things do happen sufficiently quickly, the relief which Warner-Lambert seeks against Actavis on this application will become unnecessary. It follows that, in deciding whether to grant Warner-Lambert the relief it seeks, I need take into account the prospects of those steps being taken by those responsible. I consider that there is a reasonable prospect of NHS England and NHS Wales issuing guidance in the near future, but a lower prospect of software suppliers modifying their software quickly. ”

On 6 February 2015 I granted Warner-Lambert permission to amend its Particulars of Infringement to plead a case of subjective intention on the part of Actavis, dismissed an application by Actavis to strike out, alternatively for summary dismissal of, Warner-Lambert’s claim for infringement of the Patent under section 60(1)(c) of the Patents Act 1977 and granted Actavis summary judgment dismissing Warner-Lambert’s claim under section 60(2) of the 1977 Act. Again, I shall take my judgments of that date ([2015] EWHC 223 (Pat) and [2015] EWHC 249 (Pat)) as read.

In the first of those judgments, I quoted a paragraph from the Minutes of a Meeting of the North of Tyne Area Prescribing Committee on 13 January 2015 and commented at [5] that “in my view [this] emphasises the desirability of NHS England (and NHS Wales) issuing guidance on this subject.”

Since 6 February 2015 further evidence has emerged of concern and inconsistency amongst Clinical Commissioning Groups (“CCGs”) as to what course they should be adopting in the present circumstances. It is not necessary for present purposes to set this evidence out.

On 22 January 2015 Pfizer wrote to the Respondent (which operates under the name NHS England, which is how I shall continue to refer to it) asking it promptly to issue guidance to CCGs. Following telephone conferences between representatives of Pfizer and representatives of NHS England on 23 January, 28 January, 4 February and 9 February 2015, on 10 February 2015 Sir Bruce Keogh, NHS England’s National Medical Director, wrote to Pfizer stating:

“… at present I do not think that the correct formulation of prescriptions for pregabalin is an issue on which we should express a view on behalf of NHS England, at least on a timescale that is likely to be material to the litigation under way.”

On 16 February 2015 Warner-Lambert’s solicitors wrote to NHS England stating that Warner-Lambert intended to make an application to the Court for an order requiring NHS England to issue guidance to CCGs. On 18 February 2015 NHS England’s solicitors wrote to Warner-Lambert’s solicitors stating, in summary, that (i) NHS England was an innocent bystander in the present dispute, (ii) NHS England was unwilling for various reasons to issue guidance of its own motion, but (iii) NHS England would not oppose an application by Warner-Lambert for an order requiring it to issue guidance provided certain conditions were met. On 20 February 2015 Warner-Lambert duly issued an application for such an order.

Before proceeding further, it is relevant to note certain other developments that have occurred since 6 February 2015. First, on 10 February 2015, Floyd LJ granted a renewed application by Warner-Lambert for permission to appeal against the refusal of an interim injunction for the reasons given in his judgment of that date [2015] EWCA Civ 90. It appears from that judgment at [17]-[19] that NHS England’s letter dated 10 February 2015 was a factor in the decision to grant permission to appeal. Secondly, on 9 February and 13 February 2015 respectively Warner-Lambert commenced proceedings for infringement of the Patent against Dr Reddy’s and Teva and launched applications for interim injunctions against those parties. Thirdly, on 12 February and 16 February 2015 respectively Dr Reddy’s and Actavis obtained marketing authorisations. Both launched their generic pregabalin products shortly after those dates. Consilient has also recently launched its generic pregabalin product. Teva has not yet obtained a marketing authorisation or launched a generic pregabalin product.

Warner-Lambert rightly served its application upon Actavis, Dr Reddy’s, Teva, Consilient, Mylan, Sandoz and the Department of Health as interested parties. None of the interested parties opposed an order being made in principle, but Actavis, Dr Reddy’s and Teva made comments via their respective solicitors on the terms both of the order and of the proposed guidance. With the exception of one point which I shall consider below, agreement was reached between all parties as to the terms of the order and of the guidance. (Despite this, counsel for Warner-Lambert in her submissions in reply requested an amendment to the terms of the guidance which was not agreed to by NHS England or the other parties. I declined to order this for the reasons advanced by counsel for NHS England.)

There are two other preliminary points to note. First, NHS England pointed out that, in order to be as effective as possible, any guidance needed to be issued not only to CCGs for transmission by them to GPs, but also to the NHS Business Services Authority for transmission to NHS pharmacy contractors. The NHS Business Services Authority agreed to do this if an order was made. Accordingly, this is reflected in the guidance.

Secondly, no application has been made by Warner-Lambert against NHS Wales since Professor Roger Walker, the Chief Pharmaceutical Officer of NHS Wales, informed Pfizer on 16 February 2015 that he intended to write to all Health Boards in Wales providing them with an update on the situation with regard to the Patent and giving his personal view on how they should act in this situation. Furthermore, it is Pfizer’s understanding that, if NHS England issues guidance as required by the order sought, NHS Wales will follow suit.

On 26 February 2015 I made an order in the terms annexed to this judgment for reasons to be given in writing subsequently. These are my reasons.

NHS England was established on 1 October 2012 as an executive non-departmental public body pursuant to the National Health Service Act 2006 as amended by the Health and Social Care Act 2012. With effect from 1 April 2013, NHS England has taken on many of the functions of the former Primary Care Trusts (“PCTs”) with regard to the commissioning of primary care health services, as well as some nationally-based functions previously undertaken by the Department of Health. The new arrangements comprise a single operating model for the commissioning of primary care services in England.

Among the duties imposed on NHS England by the 2006 Act is a duty to publish guidance for CCGs on the discharge of their commissioning functions. CCGs are statutory bodies responsible for commissioning a range of medical services in their respective areas of England. All providers of primary medical services in England (other than purely private providers) are required to be members of a CCG. There are 211 CCGs.

Warner-Lambert contends that this Court has jurisdiction to make the order sought pursuant to section 37(1) of the Senior Courts Act 1981 (or, more strictly, the power recognised by that provision), relying upon my judgment in Cartier International AG v British Sky Broadcasting Ltd [2014] EWHC 3354 (Ch), [2015] ETMR 1 at [96]-[110]. NHS England accepts, for the purposes of this application only, that the Court does have jurisdiction to make the order pursuant to section 37(1). Given that this is not in dispute, it is not necessary for me to say much about this point. I nevertheless wish to make two brief comments.

The first is that NHS England’s solicitors suggested in their letter dated 18 February 2015 that the present situation was “obviously comparable to Norwich Pharmacal”. In a letter dated 19 February 2015 Warner-Lambert’s solicitors agreed with this analogy, stating that Warner-Lambert’s position was that “NHS England is an innocent party who is mixed up in the wrongdoing of others”. Counsel for Warner-Lambert submitted that, once a party became aware that it was mixed up in the wrongdoing of others, it came under a duty, which the Court had jurisdiction to enforce pursuant to section 37(1), to take proportionate measures to prevent or reduce that wrongdoing. The obvious difficulty with this submission in the circumstances of the present case is that, if my previous judgments are correct, then it is not seriously arguable that Actavis are infringing the Patent (and I am not presently aware of any reason why Dr Reddy’s or Teva should stand in a different position). Counsel for Warner-Lambert relied on the principle that Norwich Pharmacal relief is available where disclosure is necessary in order for the applicant to determine whether a tort has in fact occurred: see P v T [1997] 1 WLR 1309. I have to say that I am very doubtful whether that principle is relevant in circumstances such as this. On the other hand, it is well established that Norwich Pharmacal relief is available where there is an arguable case of wrongdoing based on the evidence available at the time of the application. For present purposes I am prepared to assume that the equitable protective duty and duties analogous thereto can be enforced by injunction in parallel circumstances. Counsel for Warner-Lambert relied on the fact that, in my first judgment of 6 February 2015, I declined to strike out Warner-Lambert’s claim under section 60(1)(c), on the ground that this was a developing area of law and therefore the facts should be found before attempting definitively to decide what the law was, as being sufficient for this purpose. In addition, she relied on the fact that the Court of Appeal has now given permission to appeal against my order of 21 January 2015, and submitted that there is an analogy between the present situation and the situation where an injunction is sought pending appeal even though the patent has been held invalid at first instance, as to which see Novartis AG v Hospira UK Ltd [2013] EWCA Civ 583, [2014] 1 WLR 1264. For present purposes I would be prepared to accept that these factors, and in particular the second one, are sufficient.

The second comment is that counsel for Warner-Lambert also submitted that the Court had jurisdiction pursuant to section 37(1) to enforce a public law duty by injunction in private law proceedings, relying upon the decision of the Court of Appeal in Broadmoor Special Hospital Authority v Robinson [2000] QB 775. I would observe that, if there were a dispute as to the Court’s jurisdiction, this contention would require a close examination of NHS England’s duties under the 2006 Act. As it is, I do not need to consider that question.

Warner-Lambert contends that, by virtue of the 2006 Act and/or the provisions of the Framework Agreement between the Department of Health and NHS England dated 11 February 2014, NHS England has power to issue guidance to CCGs concerning the prescribing of pregabalin. NHS England accepts, again for the purposes of this application only, that it has such power. It is therefore not necessary for me to consider the provisions relied upon by Warner-Lambert.

NHS England does not oppose the making of the order sought by Warner-Lambert if the Court is satisfied that it is appropriate to make the order. For its part, Warner-Lambert accepts that the Court must be satisfied that it is appropriate to make the order. Warner-Lambert also accepts that this means that the Court must be satisfied that the order complies with the requirements laid down by Article 3 of European Parliament and Council Directive 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights (“the Enforcement Directive”), and in particular that the order is proportionate, does not create barriers to legitimate trade and contains safeguards against abuse. I agree with this. As I have observed in the context of website-blocking injunctions, where the wording of an order has been negotiated between professionally-represented parties, it may be presumed that the order is proportionate as between those parties; but it does not follow that it is proportionate as between those parties and other parties who are not present or represented before the Court. Where, as here, the proposed order affects other parties who are not present or represented, the Court should not simply rubber-stamp the order, but should satisfy itself as to the proportionality of the order, that it does not create barriers to legitimate trade and that it contains safeguards against abuse.

In assessing these questions, I have adopted essentially the same approach as I articulated in Cartier v B Sky B. I do not believe it is necessary for me to set out at length my reasons for concluding that the order is proportionate and will not create barriers to legitimate trade. In summary, they are as follows.

The Patent is an intellectual property right which is to be protected in accordance with Article 17(2) of the Charter of Fundamental Rights of the European Union. The only other fundamental rights which appear to be engaged are the freedom to conduct business under Article 16 of the Charter of (i) generic pregabalin suppliers and (ii) pharmacists. The legitimate interests of the generic pregabalin suppliers are protected by the terms of the order, and in particular the cross-undertaking as to damages (as to which, see below). As for pharmacists, the guidance may well have the result that they are required to dispense Lyrica rather than generic pregabalin for treating pain, and thus make a lower profit on such dispensing, but that consequence is justified by the existence of the Patent (assuming it is valid). As a statutory corporation and public authority, NHS England does not itself appear to have a right under Article 16. Even if it does, all it is being required to do is to issue guidance at no cost to itself.

For the reasons given in my judgment of 21 January 2015, and in particular the passage quoted above, I consider that the issuing of guidance by NHS England is the most efficacious, dissuasive and cheapest solution to the problem which confronts Warner-Lambert. Furthermore, it is the least onerous solution in the sense that the only other alternative open to Warner-Lambert is to pursue its applications for interim relief against the generic suppliers. Even if successful, that solution would not only impose a greater burden on the generic suppliers, but also a greater cost on NHS England (or at least the Department of Health) to the extent that the generic suppliers are thereby kept out of part of the market for pregabalin for treating the non-patented indications.

I am also satisfied that the order contains appropriate safeguards, in particular the fact that it will cease to apply if the Patent is revoked or expires, the cross-undertaking in damages and the liberty to apply.

As mentioned above, there was one issue between the parties, which concerned the ambit of the cross-undertaking in damages to be given by Warner-Lambert contained in Schedule 3 to the order. Warner-Lambert was content to give a cross-undertaking in favour of NHS England and the Department of Health. Actavis, Teva and Dr Reddy’s requested that the benefit of the cross-undertaking should be extended to (i) the Actavis group of companies, (ii) the Teva group of companies and (iii) Dr Reddy’s respectively. Warner-Lambert resisted this. Neither Mylan nor Sandoz nor Consilient requested that the benefit of the cross-undertaking be extended to them, but Mylan reserved the right to apply for this in the future.

Paragraph 5.1A of Practice Direction 25A states:

“When the court makes an order for an injunction, it should consider whether to require an undertaking by the applicant to pay any damages sustained by a person other than the respondent, including another party to the proceedings or any other person who may suffer loss as a consequence of the order.”

The principles to be applied when addressing this question were considered by Birss J in Actavis Group PTC EHF v Boehringer Ingelheim Pharma GmBH & Co KG [2013] EWHC 2927 (Pat), where he said:

“32.

Paragraph 5.1A of the practice direction was, I believe, inserted into the practice direction following the judgment of the Court of Appeal in SmithKline Beecham v. Apotex [2006] EWCA Civ 658, in particular, I suspect, following what Jacob LJ said in paragraph 29 of that judgment. Since then, as far as I am aware and as far as counsel and the solicitors instructing them have been able to show me, there has been no case dealing with the principles to be applied in the application of paragraph 5.1A.

33.

In considering the matters which the Practice Direction requires, the court ultimately is undertaking the exercise of discretion with the aim of doing justice not just to the parties before the court, but generally. If a class can be identified at this stage for whom justice demands a cross-undertaking should cover before an injunction is ordered or an undertaking accepted, then the court should require the cross-undertaking to be drafted accordingly. For example, in the case of freezing orders, as I understand it, it is common practice and has been for many years that the cross-undertaking in question is drafted so as to extend to cover the expenses of persons, such as banks, which they might incur in complying with the order.

34.

However, it seems to me that for the court to exercise this discretion, it needs to know, in some way at least, who the relevant persons are. They do need to be identified at least in some suitable way and also the court needs to know what may be the nature of the potential loss or harm which is said may potentially arise.

35.

A cross-undertaking has been called the price of an injunction and, in the end, it seems to me that the person paying that price needs to know with reasonable certainty what it is. It could be, in a given case, that the price demanded would be too high. A party seeking an interim injunction, or accepting undertakings in lieu of an interim injunction, is entitled to be wary of an indeterminate and open-ended cross-undertaking in favour of persons unknown.

36.

There are two classes covered by the draft: other companies in the Actavis Group and customers or potential customers. I will deal with them separately.

37.

As far as other companies in the group are concerned, I am told on instructions by Mr. Meade that the Actavis Group will be buying the API (that is to say, the raw chemical ingredients) in from third parties and will then manufacture the tablets and sell them. It seems to me that it is unreal for the patentee (the defendant) to say that they need to know precisely which companies in the Actavis Group will be undertaking these tasks. The tasks in question are clear. I can understand, as Mr. Meade submits, that when an injunction of this kind has to last for a significant period of time, it is quite possible that a group such as the Actavis Group will undertake restructurings in such a way that it would mean that although today the Actavis Group knows who exactly is going to sell the product, in future the chain of companies which might be involved will change. It would be extremely inconvenient, and ultimately pointless, to require companies in the position of Actavis in this case to keep coming back to court every time they may or may not be involved in any kind of restructuring in order to reorganise the companies for whom the cross-undertaking of benefit. The reason I say that is because the patentee in this case knows that this cross-undertaking is a cross-undertaking in favour of the group who is going to sell the product in question. The nature of the loss that the group would rely on in any claim on the cross-undertaking is not going to change during the course of the action and the pendency of this undertaking and cross-undertaking. Accordingly, it seems to me that the concept underlying the language proposed by Actavis in this case is a fair and proper one and the language proposed achieves the desired objective. I will accept the order proposed by Mr. Meade in so far as it relates to companies in the Actavis Group. I should emphasise that it does mean, in my judgment, that the cross-undertaking is now being granted for the benefit of those companies even though they may not be identified until after judgment.”

Counsel for Warner-Lambert submitted that Teva had no need of a cross-undertaking in damages because it had not said, and there was no evidence, that it had applied for a marketing authorisation for pregabalin, let alone that it intended to market pregabalin. This submission is inconsistent with Warner-Lambert’s infringement claim against Teva, which is premised on the basis that it may properly be inferred from what Teva has said and not said that it threatens and intends to market generic pregabalin. In any event, counsel for Teva expressly confirmed that his client had applied for a marketing authorisation. That being so, it is obvious that Teva is likely to wish to launch a generic pregabalin product as soon as it can. There is no reason to suppose that, unless and until the Patent is revoked, Teva intends to market pregabalin for the treatment of pain. Accordingly, it may be inferred that it intends to market pregabalin under a “skinny label”. It may also be inferred that, if the Patent were to be revoked, Teva would seek and obtain a full marketing authorisation and would market pregabalin for treating pain.

Counsel for Teva submitted that Teva should have the benefit of the cross-undertaking for two reasons. First, the effect of the order was intended to be, and was likely to be, that prescribers prescribed pregabalin for treating pain by reference to the brand name Lyrica rather than the generic name pregabalin. If prescribers did so, then pharmacists would be obliged to dispense Lyrica rather than generic pregabalin for treating pain. If it turned out that the Patent was invalid, however, then Teva should not have been prevented from making sales of generic pregabalin which pharmacists would otherwise have dispensed for the treatment of pain whether or not Teva would infringe the Patent if it was valid by selling the product under a skinny label.

Secondly, counsel for Teva submitted that, even if the Patent was valid, the possibility could not be excluded that the guidance would have the effect of Lyrica being prescribed and dispensed at the expense of generic pregabalin in circumstances which did not amount to infringement of the Patent. In my view this is improbable, but I agree that the possibility cannot be excluded.

I accept that, for both these reasons, the benefit of the cross-undertaking should be extended to Teva. Counsel for Teva also submitted that, for similar reasons to those in Actavis v Boehringer, the benefit should extend to all companies in the Teva group. Again I accept this.

Counsel for Actavis relied on the same reasons as counsel for Teva. Counsel for Warner-Lambert pointed out that Acatavis had agreed to send letters to prescribers and pharmacists (see my judgment of 21 January 2015 at [79]-[82]) without the benefit of a cross-undertaking. She submitted that Actavis would not suffer any damage as a result of the guidance being issued by NHS England which exceeded that which it had voluntarily assumed. This submission is flat contrary to the entire basis of the present application, which is that the letters sent to CCGs and pharmacists by both Warner-Lambert and Actavis have not been sufficiently effective and that the best solution is for NHS England to issue guidance as required by the order. Accordingly, I consider that the benefit of the cross-undertaking should extend to the Actavis group of companies.

Counsel for Warner-Lambert informed me that Dr Reddy’s had written similar letters to Actavis, again without the benefit of a cross-undertaking, and made the same submission as she had in relation to Actavis. My answer is the same.