Supreme Court judgment
On the accession of former Eastern Bloc countries to the European Union in 2004, the so-called Specific Mechanism was introduced to avoid shortages of key medicines in the new member states by preventing systematic re-export as a result of significant differences in prices. This objective was to be achieved through the introduction of an exception to the rule of consumption allowing a patent or supplementary protection certificate (SPC) holder to prevent the parallel import of pharmaceuticals marketed in the new member states on the basis of rights held in the member state of import.
After the accession of the new member states, the Paediatric Extension Regulation (1901/2006) was introduced. Its introduction generated the following questions:
- Does the Specific Mechanism apply to an extension of an SPC under the Paediatric Extension Regulation?
- If so, does it apply to all strengths of pharmaceutical covered by the SPC?
According to a Danish Supreme Court ruling of April 8 2016, the short answer to both questions is yes.
The parties in the case were Merck Sharp & Dohme (MSD) and Orifarm. Orifarm parallel imported three different strengths of Singulair into Denmark from Poland, where it had been put on the market by MSD. The import and marketing took place after the expiry of the ordinary term of MSD's SPC, but before the expiry of the extended term granted under the Paediatric Extension Regulation.
Orifarm argued that the Specific Mechanism could not cover the paediatric extension of the SPC and that the extension of the right therefore could not form the basis for preventing Orifarm's import of Singulair from Poland. Orifarm also argued that the paediatric extension of the SPC could not be relied on in the context of the Specific Mechanism to prevent the import and sale of pharmaceuticals that are not indicated for children (in this case Singulair 10 micrograms).
MSD argued that an extended SPC enjoys the same scope of protection as a non-extended SPC, as it is the same SPC but its validity period has simply been extended. Against Orifarm's second argument, MSD submitted that:
- the SPC Regulation (1768/92) does not distinguish between SPCs and extended SPCs;
- the SPC protects the active ingredient regardless of the strength used in the end product; and
- an extended SPC is granted even if the paediatric investigation plan fails to result in the authorisation of a paediatric indication.
Against liability for damages, Orifarm argued that, as a result of a complex EU legal basis and an unsolved legal position, it had acted in good faith.
The Supreme Court found that the Specific Mechanism's aim is to prevent the systematic re-export of pharmaceutical products sold at different prices in EU member states to countries with higher prices for those products.
The protection against parallel imports must thus apply for the entire duration of the SPC, including any extension under the Paediatric Extension Regulation. The Supreme Court found no basis for the claim that the Paediatric Extension Regulation did not apply in relation to the Specific Mechanism.
Further, the Supreme Court emphasised that the extension of an SPC also applies where completion of the agreed paediatric investigation plan fails to lead to authorisation for use of the pharmaceutical product by children. As a result, the Supreme Court upheld the Maritime and Commercial High Court's judgment.
Finally, the Supreme Court found that Orifarm had negligently infringed MSD's patent rights and was therefore liable to pay damages to MSD.
Orifarm had requested that the case be referred to the European Court of Justice, but this was denied.(1)
The judgment confirms the enforceability of the Specific Mechanism against the parallel import of pharmaceuticals from new EU member states, even if the extended SPC is based on the Paediatric Extension Regulation.
Due to the Specific Mechanism's original purpose (ie, to prevent the systematic re-export of pharmaceuticals), the Supreme Court's conclusion and reasoning seem logical and come as no surprise.
However, the decision leaves some relevant questions unanswered regarding the interpretation of the Specific Mechanism. For example, Orifarm argued before the Maritime and Commercial High Court that MSD had been able to obtain an SPC in Poland for Singulair and therefore it was possible for MSD to obtain an extension of that SPC when applying for an extension in Denmark. This submission was based on an interpretation of the transitional provision in the SPC Regulation that allows patent holders to apply for SPCs in Poland on the basis of marketing authorisations issued prior to accession to the European Union. This issue was not clarified, as Orifarm withdrew its submission before the Supreme Court, recognising that MSD could not have obtained an SPC.
At least one other case regarding the interpretation of the Specific Mechanism is pending before the Danish courts.
For further information on this topic please contact Jeppe Brinck-Jensen or Kamilla Kelm Demant at Accura Advokatpartnerselskab by telephone (+45 3945 2800) or email ([email protected] or [email protected]). The Accura Advokatpartnerselskab website can be accessed at www.accura.eu.
(1) The full judgment (in Danish) can be found here.