Pharmaceutical IP and competition law in UK (England and Wales): overview

A Q&A guide to pharmaceutical IP and competition law in UK (England and Wales) .

The Q&A gives a high level overview of key issues including patents, trade marks, competition law, patent licensing, generic entry, abuse of dominance and parallel imports.

For information on pharmaceutical pricing and state funding, manufacturing, marketing, clinical trials, advertising, labelling, and product recall and liability, visit Medicinal product regulation and product liability in the UK (England and Wales): overview.

The Q&A is part of the global guide to Life Sciences law. For a full list of jurisdictional Q&As visit www.practicallaw.com/lifesciences-guide.

Huw Evans, Peter Scott, Ian Giles, Susanna Rogers, Pam Taak, Maria Georgiou and Farah Mukaddam, Norton Rose Fulbright LLP
Contents

Patents

1. What are the legal conditions to obtain a patent and which legislation applies? Which products, substances and processes can be protected by patents and what types cannot be patent protected?

Conditions and legislation

Both products and methods (or processes) are patentable. A patent can be granted for an invention if the invention is new, it involves an inventive step, and it is capable of industrial application. However, the following are excluded from patentability (section 1(1) and (2), Patents Act 1977):

  • A discovery, scientific theory or mathematical method.

  • A literary, dramatic, musical or artistic work or any other aesthetic creation whatsoever.

  • A scheme, rule or method for performing a mental act, playing a game or doing business, or a program for a computer.

  • The presentation of information.

Scope of protection

A patent will not be granted for an invention the commercial exploitation of which would be contrary to public policy or morality (section 1(3), Patents Act 1977) (see below).

A patent will not be granted for the invention of a method of treatment of the human or animal body by surgery or therapy, or a method of diagnosis practised on the human or animal body. However, an invention consisting of a substance or composition for use in any such methods is in principle patentable (section 4A(1) and (2), Patents Act 1977).

Additionally, new uses of known substances or compositions are also patentable in principle (section 4A(3) and (4), Patents Act 1977), which are sometimes referred to as second medical uses.

The scope of some of the above restrictions is given further clarity in Directive 98/44/EC (also known as the Biotech Directive). The UK has implemented the key provisions of the Biotech Directive. In particular, Schedule A2 of the Patents Act 1977 contains the following provisions:

  • An invention will not be considered unpatentable solely on the ground that it concerns a product consisting of or containing biological material; or a process by which biological material is produced, processed or used.

  • Biological material which is isolated from its natural environment or produced by means of a technical process may be the subject of an invention even if it previously occurred in nature.

  • The following are not patentable inventions:

    • the human body, at the various stages of its formation and development, and the simple discovery of one of its elements, including the sequence or partial sequence of a gene;

    • processes for cloning human beings;

    • processes for modifying the germ line genetic identity of human beings;

    • uses of human embryos for industrial or commercial purposes;

    • processes for modifying the genetic identity of animals which are likely to cause them suffering without any substantial medical benefit to man or animal, and also animals resulting from such processes;

    • any variety of animal or plant or any essentially biological process for the production of animals or plants, not being a micro-biological or other technical process or the product of such a process.

  • Inventions which concern plants or animals may be patentable if the technical feasibility of the invention is not confined to a particular plant or animal variety.

  • An element isolated from the human body or otherwise produced by means of a technical process, including the sequence or partial sequence of a gene, can be a patentable invention, even if the structure of that element is identical to that of a natural element.

 
2. How is a patent obtained?

Application and guidance

Patents are granted by the UK Intellectual Property Office (UKIPO). A UK patent (EP(UK)) can also be granted through the centralised procedure at the European Patent Office. Further information and guidance can be found at www.gov.uk/apply-for-a-patent.

For a general guide, see www.gov.uk/government/publications/patents-application-guide.

The fees/costs are typically several hundred pounds sterling (as opposed to several thousand for European patents). Renewal fees are also of a similar amount (see www.gov.uk/renew-patent).

Process and timing

Patents can take a few years to grant (for example, three or four years), but it depends on the workload of the UKIPO. A number of factors can affect timings, for example the strength of the prior art, the examiner's objections (if any), and whether proceedings have been accelerated on request. Typical stages include:

  • Filing and formalities examination.

  • Search and search report.

  • Publication of the patent application (normally with the search report: 18 months after the date of filing or the priority date).

  • Substantive examination.

  • Dealing with examiner's objections.

  • Grant of patent.

 
3. How long does patent protection typically last? Can monopoly rights be extended by other means?

Duration and renewal

Patent protection lasts for 20 years from the filing date of the application (section 25, Patents Act 1977), but to remain in force it must be renewed on the fourth anniversary of the filing date, and every year after that.

Extending protection

It is possible to extend the protection of a substance or composition, which is the subject of a marketing authorisation, provided the requirements of Regulation (EC) 469/2009 concerning the supplementary protection certificate (SPC) for medicinal products (for pharmaceutical products) are met. The purpose of the SPC system is to compensate partially for the erosion of effective patent protection due to the lengthy regulatory process leading to the grant of a marketing authorisation.

A SPC can extend the protection of a patented active ingredient, or combination of active ingredients, present in a pharmaceutical or plant protection product after the expiry of the patent. A SPC does not extend the term of the patent, but protects a product which falls within the scope of the patent and which is the subject of a marketing authorisation.

A SPC expires 15 years from the date of the first marketing authorisation in the EEA, or five years after expiry of the patent, whichever is earlier. SPCs are granted by the UKIPO in the UK.

A further extension of six months may additionally be available if an agreed Paediatric Investigation Plan (PIP) is completed and the marketing authorisation is updated with the data from the PIP. The formalities of Regulation (EC) 1901/2006 on medicinal products for paediatric use (Paediatric Medicinal Products Regulation) (for paediatric extensions) must be complied with.

Like SPCs, paediatric extensions are granted in the UK by the UKIPO.

 
4. How can a patent be revoked?

A patent can be revoked by the courts (UK High Court or Intellectual Property Enterprise Court) or by the UKIPO.

The grounds for revocation include the following:

  • The invention is not a patentable invention.

  • The patent was granted to a person who was not entitled to be granted that patent (this ground is only open to the person truly entitled, and provided an application to revoke is brought within two years of grant).

  • The specification of the patent does not disclose the invention clearly enough and completely enough for it to be performed by a person skilled in the art.

  • The matter disclosed in the specification of the patent extends beyond that disclosed in the application for the patent as filed.

  • The protection conferred by the patent has been extended by an amendment which should not have been allowed.

In very limited circumstances, the UKIPO can revoke a patent of its own initiative, but not without giving the patentee the opportunity to respond.

 
5. How is a patent infringed? How is a claim for patent infringement made and what remedies are available?

Conditions for infringement

A person infringes a patent for an invention if, while the patent is in force, he does any of the following things in the UK in relation to the invention without the consent of the proprietor of the patent (section 60(1), Patents Act 1977):

  • Where the invention is a product, he makes, disposes of, offers to dispose of, uses or imports the product or keeps it whether for disposal or otherwise.

  • Where the invention is a process, he uses the process or he offers it for use in the UK when he knows, or it is obvious to a reasonable person in the circumstances, that its use there without the consent of the proprietor would be an infringement of the patent.

  • Where the invention is a process, he disposes of, offers to dispose of, uses or imports any product obtained directly by means of that process or keeps any such product whether for disposal or otherwise.

A person (other than the proprietor of the patent) also infringes a patent for an invention if, while the patent is in force and without the consent of the proprietor, he supplies or offers to supply in the UK a person (other than a licensee or other person entitled to work the invention) with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect in the UK (section 60(2), Patents Act 1977).

Acts are not infringing acts if (among others things) (section 60(5), Patents Act 1977):

  • It is done privately and for purposes which are not commercial.

  • It is done for experimental purposes relating to the subject-matter of the invention.

  • It consists of the extemporaneous preparation in a pharmacy of a medicine for an individual in accordance with a prescription given by a registered medical or dental practitioner, or consists of dealing with a medicine so prepared.

  • It consists of an act done in conducting a study, test or trial which is necessary for and is conducted with a view to a marketing authorisation application.

Claim and remedies

Relief can be obtained by application to the court (High Court or Intellectual Property Enterprise Court).

Remedies include:

  • Preliminary or interim relief.

  • An injunction or interdict restraining the defendant or defender from any apprehended act of infringement.

  • An order for delivery up or destruction.

  • Damages.

  • An account of the profits.

  • A declaration that the patent is valid and has been infringed.

 
6. Are there non-patent barriers to competition to protect medicinal products?

A period of exclusivity is available for medicinal products in the UK under the EU's 8+2+1 formula, contained in Article 10.1 of the Code for Human Medicines Directive:

  • For the first eight years after issue of the first marketing authorisation for a product, the originator company's pre-clinical and clinical data cannot be referenced in a (generic) marketing authorisation application, for the same medicinal product (regulatory data protection). However, regulatory data protection is not a true exclusivity because it does not prevent another company (a competitor) from generating its own pre-clinical and clinical data in support of a marketing authorisation application for the same medicinal product.

  • For an additional two years, a generic company cannot market a generic version of the medicinal product (although the generic company can progress its application for a marketing authorisation, relying on the originator company's data, to be in a position to launch at the end of the two year marketing protection period).

  • An additional one year of marketing protection can be obtained where a new indication is registered for the same medicinal product during the eight year protection period, which brings significant clinical benefit over existing therapies. However if the new indication is a paediatric indication which brings significant clinical benefit over existing therapies, it is not possible to also benefit from the six month SPC extension for conducting paediatric studies (see Question 3). The company will need to decide which of the two rewards is the most valuable.

Certain reference products approved before the end of October 2005 retain the single period of ten years regulatory data protection, from the date of first authorisation in the EU. For orphan medicines (that is, those which treat rare diseases), the originator company is granted ten years of market exclusivity per therapeutic indication granted for a designated condition. Orphan exclusivity is more akin to a true exclusivity because it prevents the regulatory authorities from granting a marketing authorisation or even accepting a marketing authorisation application in respect of a similar medicinal product for the same therapeutic indication, regardless of whether independent data has been generated. The ten year period of orphan market exclusivity may be reduced to six years if it is shown at the end of the fifth year that the criteria for orphan designation (as set out in the Orphan Regulation) are no longer met.

The UK also implements:

  • Article 10.5 of the Code for Human Medicines Directive (one year for new indications for established medicines, where authorisation is based on significant new studies).

  • Article 74(a) of the Code for Human Medicines Directive (one year for data required to change classification, for example, prescription only medicine to pharmacy medicine).

 

Trade marks

7. What are the legal conditions to obtain a trade mark and which legislation applies? What cannot be registered as a trade mark and can a medicinal brand be registered as a trade mark?

Conditions and legislation

Legislation. The relevant legislation governing UK trade mark law is the Trade Marks Act 1994, which implements Directive 2008/95/EC relating to the approximation of national trade mark laws throughout the EU.

Conditions for registration. Medicinal brands, like other brands, can be registered as UK trade marks if they meet certain pre-requisite conditions, unless a specific ground of refusal exists.

The conditions are that (section 1(1), Trade Marks Act 1994):

  • There is a sign.

  • Which is capable of being represented graphically.

  • Which is capable of distinguishing the goods or services of one undertaking from the goods and services of another undertaking.

The grounds for refusal are split into two categories:

  • The absolute grounds of refusal, which relate to the inherent qualities of the sign.

  • The relative grounds of refusal, which relate to conflicts with earlier trade mark rights owned by third parties.

Under the absolute grounds of refusal, the following will be refused UK trade mark registration (section 3, Trade Marks Act 1994):

  • Signs which are devoid of distinctive character, exclusively descriptive, or commonly or customarily used in the current language or in the relevant trade (unless it can be shown that, before the date of application for registration, the sign has acquired a distinctive character as a result of the use made of it).

  • Signs which consist exclusively of a shape which results from the nature of the goods, is necessary to obtain a technical result, or which gives substantial value to the goods.

  • Signs which are deceptive or contrary to public policy or morality.

  • Signs contrary to any enactment or rule of UK or EU law.

  • Signs which are specifically protected emblems.

  • Signs which are the subject of an application for registration made in bad faith.

Under the relative grounds of refusal, the following will be refused UK trade mark registration (section 5, Trade Marks Act 1994):

  • Signs which are identical to an earlier trade mark registered for identical goods or services.

  • Signs which are identical or similar to an earlier trade mark registered for identical or similar goods or services, and where there is a likelihood of confusion with the earlier mark.

  • Signs which are identical or similar to an earlier trade mark, where the earlier trade mark has a reputation in the UK and the use of the later mark without due cause would take unfair advantage of, or be detrimental to, the distinctive character or repute of the earlier trade mark.

  • Signs which if used in the UK would be liable to be prevented due to any rule of law (in particular, passing off) or an earlier right (in particular, copyright, design right or unregistered designs).

Scope of protection

In addition to meeting the legal conditions under the Trade Marks Act 1994 set out above, invented medicinal brand names must comply with the regulatory guidelines set out in the:

  • MHRA Guideline for the Naming of Medicinal Products and Braille Requirements for Name on Label.

  • EMA Guideline on the acceptability of names for human medicinal products processed through the centralised procedure.

The MHRA and EMA guidelines provide that invented medicinal brand names should:

  • Not be liable to confusion with the common name or the name of any other medicinal product.

  • Not be misleading as to the therapeutic effects, composition or safety of the product.

  • Not convey a promotional message with respect to the therapeutic, pharmaceutical characteristics or the composition of the product.

  • Not comprise wholly of initial letters (acronyms), code numbers or include punctuation marks.

  • Not be derived from or incorporate a World Health Organisation generic stem.

  • Avoid qualification/abbreviations by single letters or numbers.

  • Not include umbrella segments if their use is likely to result in safety or efficacy concerns resulting from confusion between products sharing the same umbrella segment.

  • Not be offensive or have an inappropriate connotation in any of the official EU languages.

 
8. How is a trade mark registered?

Application and guidance

Applications to register UK trade marks must be filed at the UK Intellectual Property Office (UK IPO) either online or by post to Newport. A community trade mark which is a unitary trade mark right across the EU (and so covering the UK) can be applied for in the Office for Harmonization in the Internal Market.

The IPO's website provides detailed guidance on the application procedure and the applicable fees. See www.gov.uk/how-to-register-a-trade-mark.

If the application is made online, the relevant form can be accessed at www.ipo.gov.uk/tm3-online/CompleterTypeQuestion/Edit. The relevant fees payable are GB£170 to register a trade mark in one class, with each additional class costing GB£50.

If the application is being made by post, an official application form must be completed (Form TM3) and be accompanied by the appropriate application fee. The relevant fees payable are GB£200 to register a trade mark in one class, with each additional class costing GB£50.

Additionally, since October 2009 it has been possible to make an application for registration of UK trade marks under an online early assistance scheme, RightStart. Under the RightStart scheme the UK IPO will assess the application, advise on whether the application meets the rules for registration and issue an examination report. The costs of filing an application for registration under the RightStart scheme are GB£100 up front plus a further GB£100 if the applicant decides to proceed with registration, with each additional class costing GB£50.

All fees paid are non-refundable and do not guarantee registration of the trade mark.

In the alternative to registering a UK trade mark directly at the UK IPO, it is possible to make an international application under the Madrid Agreement Concerning the International Registration of Marks (Madrid Agreement) or the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks 1989 (Madrid Protocol) and designate the UK.

Such applications are processed by the World Intellectual Property Office (WIPO). WIPO's website provides detailed guidance on the application procedure and the applicable fees. See www.wipo.int/madrid/en.

Process and timing

The process for registering a UK trade mark is as follows:

  • Once an application has been properly filed, the UK IPO will issue an official filing receipt.

  • Within 20 days of proper filing of the application, the UK IPO will conduct a substantive examination of the application to check that the application meets the registrability criteria under section 1 of the Trade Marks Act 1994, and whether there are any absolute and/or relative grounds on which registration may be refused, and send the applicant an examination report detailing any objections to registration.

  • On receiving the report, the applicant has two months to resolve any problems.

  • Once any problems are resolved or if there are no objections to the application, the application will be published in the Trade Marks Journal and the proprietors of any earlier marks will be notified of the application (if they have opted-in for such service).

  • Oppositions can be filed within two months of the date of the advertisement by interested parties. The opposition period can be extended to three months on request.

  • If no oppositions are filed, the application will proceed to registration and a certificate of registration will be issued, typically within five to six months of filing.

 
9. How long does trade mark protection typically last?

A UK trade mark registration will last for ten years and can be renewed indefinitely, subject to payment of a renewal fee (sections 42 and 43, Trade Marks Act 1994).

A trade mark can be renewed in the six month period prior to expiry and in the six month period after expiry. To renew, an application must be filed at the UK IPO either online or by post to Newport and a renewal fee must be paid.

If the application for renewal is being made online, the relevant form can be accessed at www.ipo.gov.uk/tm11r-online/MarkNumber. If the application for renewal is being made by post, an official application form must be completed (Form T11).

The relevant renewal fees payable are GB£200 for renewal in one class, with each additional class costing GB£50. A further GB£50 is payable if the application for renewal is made in the six months after expiry.

 
10. How can a trade mark be revoked?

A UK trade mark can be declared invalid or revoked by the UK IPO or the English courts on the application of a third party. This can be through stand-alone proceedings or by a counter-claim in trade mark infringement proceedings.

The key difference between revocation and invalidation is that invalidation removes the trade mark from the register with retrospective effect (as if it had never been registered). Revocation removes the trade mark from the register from the date of the application for revocation (unless the UK IPO or court is satisfied that the grounds for revocation existed at any earlier date).

Invalidity

A trade mark can be declared invalid if the trade mark has been registered contrary to (section 47, Trade Marks Act 1994):

  • The absolute grounds of refusal under section 3 of the Trade Marks Act 1994 (see Question 7), unless it can be shown specifically with reference to trade marks contrary to section 3 (1)(b),(c) or (d) of the Trade Marks Act 1994 that the trade mark has acquired distinctiveness through use.

  • The relative grounds of refusal under section 5 of the Trade Marks Act 1994 (see Question 7), unless the proprietor of the earlier trade mark or right has consented to the registration.

A trade mark cannot be declared invalid on relative grounds if the proprietor of an earlier trade mark or right has acquiesced in the use of the later trade mark for a period of five years, unless the later trade mark registration was applied for in bad faith (section 48, Trade Marks Act 1994).

Any person can apply to invalidate the trade mark on absolute grounds. However, only a proprietor or a licensee of a trade mark published on or after 1 October 2007 can apply to invalidate a trade mark on relative grounds (although any person can apply prior to that date). The Registrar of Trade Marks can also apply to a court to invalidate a trade mark where it was registered by the proprietor in bad faith.

It is possible to partially invalidate a trade mark (in relation to only some of the goods or services covered by the trade mark registration).

Revocation

A trade mark can be revoked on the following grounds (section 46, Trade Marks Act 1994):

  • There has been no genuine use of the trade mark in the UK, by the proprietor or with his consent, in relation to the goods or services for which it is registered for a continuous five year period and there are no proper reasons for the non-use.

  • Due to the proprietor's acts or inactivity, the trade mark has become a common name in the trade for a product or service for which it is registered.

  • Due to the proprietor's use of the trade mark or the way it has been used with the proprietor's consent, it is liable to mislead the public, particularly as to the nature, quality or geographical origin of the goods or services.

As with invalidation, a trade mark can be partially revoked (in relation to only some of the goods or services covered by the trade mark registration).

 
11. How is a trade mark infringed? How is a claim for trade mark infringement made and what remedies are available?

Conditions

A UK trade mark is infringed if a person uses in the course of trade, without the proprietor's consent, a sign which is (section 10(1) to (3), Trade Marks Act 1994):

  • Identical to the trade mark in relation to goods or services which are identical to those for which the trade mark is registered.

  • Identical or similar to the trade mark in relation to identical or similar goods or services to those for which the trade mark is registered, and there is a likelihood of confusion, including a likelihood of association, with the registered trade mark on the part of the public.

  • Identical or similar to the trade mark in relation to goods or services which are not similar to those for which the trade mark is registered, where the trade mark has a reputation in the UK and where use of the sign, without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark.

A person uses a sign by doing the following (section 10(4), Trade Marks Act 1994):

  • Affixing it to goods or packaging.

  • Offering or exposing goods for sale, putting them on the market or stocking them for that purpose, under the sign.

  • Offering or supplying services under the sign.

  • Importing or exporting goods under the sign.

  • Using the sign on business papers or in advertising.

Claim and remedies

A claim for infringement of a UK trade mark can be made to the English courts.

Prior to issuing and serving a claim, the trade mark proprietor should send a cease and desist letter to the allegedly infringing party in accordance with English pre-action conduct rules.

The remedies available in an action for trade mark infringement are (sections 15 to 19, Trade Marks Act 1994):

  • An injunction restraining infringement (interim or final).

  • Damages for infringement or an account of the profit made by the infringing party from using the infringing sign.

  • An order for erasure of the infringing sign.

  • An order for delivery up or destruction of infringing goods.

There are also criminal sanctions which can apply in certain specific circumstances (for example, counterfeit goods), whereby prison sentences and/or fines on conviction can be imposed on the infringing party (section 92, Trade Marks Act 1994).

 
12. Outline the regulatory powers and enforcement action against counterfeiting in the pharmaceutical sector.

The MHRA Enforcement Group, in conjunction with the Police and HM Customs and Revenue, are responsible for investigating the trade in falsified and counterfeit medicines. Falsified medicines are products which fail to comply with EU pharmaceuticals legislation and may contain falsified or sub-standard ingredients, or the wrong (or no) content of active substance. Medicines are described as counterfeit if intellectual property rights have been infringed, for example, by unauthorised use of trade marks.

The enforcement agencies have a wide range of statutory powers to investigate such matters, which are contained in the Human Medicines Regulations 2012, the Police and Criminal Evidence Act 1984 and related legislation. These include the right to:

  • Search premises.

  • Inspect and copy documents.

  • Seize and sample products.

  • Interview witnesses.

The manufacture, distribution and supply of falsified medicines are criminal offences. Under the Human Medicines Regulations 2012 (which implement Directive 2011/62/EU on the prevention of entry into the legal supply chain of falsified medicinal products), it is an offence to manufacture, distribute, act as a wholesale dealer, or broker the supply of medicines which do not have a marketing authorisation (or similar registration), subject to certain limited exceptions. Breach of these requirements is punishable with a fine of up to GB£5,000 per offence if the case is dealt with summarily by a Magistrates Court. If the matter is tried on indictment in a Crown Court, an unlimited fine can be imposed and/or imprisonment for a term of up to two years.

Manufacturers, wholesale dealers and brokers also have obligations to inform the MHRA and the marketing authorisation holder if they receive products which they know or suspect to be falsified. Additional obligations apply to importers, manufacturers or distributors of active substances.

Cases of counterfeiting can be prosecuted under the Trade Marks Act 1994. The unauthorised use of a trade mark carries a maximum sentence of ten years imprisonment and/or an unlimited fine.

In addition, proceedings can be brought under the Proceeds of Crime Act 2002 (POCA) to seek the confiscation or recovery of the proceeds of crime. The supply of falsified or counterfeit medicines often also involves allegations of money laundering, and such offences carry a maximum sentence under POCA of 14 years imprisonment and/or an unlimited fine. Civil injunctions can also be obtained to prevent the supply of falsified or counterfeit medicines and to require the delivery up of such products.

For information on pharmaceutical pricing and state funding, manufacturing, marketing, clinical trials, advertising, labelling, and product recall and liability, visit Medicinal product regulation and product liability in the UK (England and Wales): overview.

IP and competition law issues

 
13. Briefly outline the competition law framework in your jurisdiction and how it impacts on the pharmaceutical sector. In particular, the competition authorities and their regulatory powers, key legislation, whether pharmaceutical investigations are common, key recent activity and case law.

The UK competition rules are contained generally within two statutes: the Competition Act 1998 (CA 1998) and the Enterprise Act 2002 (EA 2002). The CA 1998 contains two main prohibitions:

  • Chapter I (section 2, CA 1998) prohibits any agreement or concerted practice which has the object or effect of preventing, restricting or distorting competition, unless an exemption from the prohibition applies. Where the agreement or concerted practice also affects trade between member states of the EU, it may also be prohibited by Article 101 of the Treaty on the Functioning of the European Union (TFEU). A restriction which infringes the prohibition is void and unenforceable.

  • Chapter II (section 18, CA 1998) prohibits the abuse of a dominant market position which has or is capable of having an effect on trade within the UK. Such an abuse may also breach Article 102 of the TFEU to the extent that it affects trade between EU member states.

The EA 2002 contains a criminal cartel offence for individuals and sets out the UK merger control rules and the market studies and investigations regime.

Both the CA 1998 and the EA 2002 were amended by the Enterprise and Regulatory Reform Act 2013 (ERRA). The ERRA provided for the establishment of the Competition and Markets Authority (CMA) (www.gov.uk/government/organisations/competition-and-markets-authority). On 1 April 2014, the CMA took over the competition and certain consumer functions and powers from the two UK competition authorities in charge prior to this date, the Office of Fair Trading (OFT) and the Competition Commission.

The CMA has been given stronger powers of investigation where it suspects an infringement of the prohibitions. This includes a new power to require individuals connected to a business under investigation (for example, directors or employees) to answer questions (section 26A, CA 1998).

Under the EA 2002, an individual who is directly involved in the most serious types of anti-competitive agreement between businesses can face criminal prosecution (section 188, CA 1998). The ERRA removed the requirement that an accused individual must have acted dishonestly, meaning that mere participation in the anti-competitive practices is sufficient for committing the offence. However, to provide some protection against the tougher offence being applied too strictly, there are now a number of exclusions from, and defences against, the offence (sections 188A and 188B, CA 1998).

The CMA has wide powers under the EA 2002 to investigate markets where there are concerns that competition may not be operating effectively, including by reason of the relevant structure of the market (Part 4, EA 2002).

The ERRA preserved the UK's voluntary merger regime in which, unusually, in the global context, mergers can be completed without making a notification to, or receiving clearance from, the UK competition authorities. The CMA has jurisdiction to review any transaction where the target has a UK turnover in excess of GB£70 million, or the transaction leads to the creation or strengthening of a 25% share of supply for sale of any goods or services in the UK (or part of the UK). This test has been interpreted broadly, and the de minimis exemption for smaller transactions is very limited, meaning careful review is necessary in any acquisitions involving overlapping activities.

Pharmaceutical sector cases

The OFT, the predecessor to the CMA, imposed fines on pharmaceutical companies in three cases, each involving abuse of dominance contrary to the Chapter II prohibition and Article 102 of the TFEU, of:

  • GB£3.21 million on Napp Pharmaceuticals Holdings Limited in 2001 (reduced to GB£2.2 million on appeal) for abusive conduct concerning the supply of sustained relief morphine (SRM) tablets and capsules in the UK (including supplying hospitals at excessively low discount levels and targeting discounts, so that competitors' SRM products had difficulty competing).

  • GB£6.8 million on Genzyme Limited in 2003 (reduced to GB£3million on appeal) for abusive conduct (tying and margin squeeze abuses) in relation to the supply of drugs for the treatment of Gaucher disease (an enzyme deficiency disorder).

  • GB£10.175 million on Reckitt Benckiser in 2011 for withdrawing and de-listing its product "Gaviscon Original Liquid" from the NHS prescription channel after the product's patent had expired but before the publication of the generic name for the product and the introduction of an alternative product "Gaviscon Advance Liquid". The practice is known as "product hopping" or "product switching". Its purpose is to shift demand to the new patent protected product for which there are no generic alternatives, thereby limiting competition from other suppliers. Product switching is not anti-competitive on its own, so long as the old product is replaced with one that incorporates innovations that are valued by clinicians and patients alike. "Gaviscon Advance Liquid" did not do this, as was clear by the internal documents seized by the OFT, which showed that the withdrawal of "Gaviscon Original Liquid" was motivated by a desire to hinder competition in the relevant market. The fine would have been GB£12 million but was reduced following the company's decision to co-operate and admit the infringement.

The CMA has three ongoing cases in the pharmaceutical sector, involving concerns under both Chapter I (Article 101) and Chapter II (Article 102) (see Questions 15 and 16).

The CMA has not yet looked at any pharmaceutical market in a market study. The OFT conducted two pharmaceutical market studies in 2007:

  • A study into the Pharmaceutical Price Regulation Scheme (PPRS), which concluded that the introduction of profit and price controls were inappropriate, and recommended their replacement with patient-focused, value-based pricing.

  • A study into the distribution of medicines, which concluded that "direct to pharmacy" arrangements were unlikely to give rise to competition concerns. However, it did conclude that "direct to pharmacy" arrangements could lead to longer delivery/waiting times, that the future widespread use of exclusive agreements might lead to long-term competition concerns, and that it would monitor the situation. The OFT's findings were taken into account when the PPRS was renegotiated. As at the date of writing there has been no further action by the CMA on "direct to pharmacy" schemes.

The CMA has also assessed a number of mergers in the pharmaceutical sector. Recent mergers include:

  • Perrigo Company's acquisition of Omega Pharma Invest (the parties overlapped in analgesics, antacids, hay fever and allergy products, and sleeping aids).

  • ProStraken's acquisition of Archimedes (both companies supplied fast-acting fentanyl products in the UK, which are licensed for the management of breakthrough cancer pain).

 
14. Briefly outline the competition issues that can arise on the licensing of technology and patents in a pharmaceutical context.

There are no UK-specific competition laws covering technology licensing agreements. Technology transfer agreements are assessed in the UK under the same approach as adopted in the EU.

On 1 May 2014, a new Technology Transfer Block Exemption Regulation (TTBER) (Regulation (EU) No. 316/2014) entered into force. The TTBER defines certain categories of technology transfer agreement which do not raise competition concerns, by creating a safe harbour for licensing agreements concluded between companies that have limited market power and that respect certain conditions. Such agreements are deemed not to have an anti-competitive effect or (to the extent they have any) the positive effects are considered to outweigh the negative ones. Technology transfer agreements may, in some circumstances, foreclose access to technology, and so delay or prevent generic entry.

 
15. Are there competition issues associated with the generic entry of pharmaceuticals in your jurisdiction?

In recent years, there has been greater scrutiny of the anti-competitive effects of settled patent disputes, in particular agreements between originator and generic drug companies to forego or delay the entry of generics onto the market.

Patent settlement agreements that are likely to be challenged are those which contain a "value transfer" from the originator to the generic in return for certain restrictions on the generic company's entry. A "value transfer" can be in the form of a:

  • Direct monetary payment.

  • Distribution agreement.

  • Licence agreement.

  • Reimbursement of litigation costs.

In August 2011, the OFT opened an investigation into certain patent dispute settlement agreements between originator and generic companies relating to paroxetine. On 19 April 2013, it issued a statement of objections, and responsibility for the investigation passed to the CMA on 1 April 2014. On 21 October 2014, the CMA confirmed that it had issued a supplementary statement of objections. It anticipates reaching a decision on the final outcome (whether to close the case or proceed to an infringement decision) in 2015.

The delay of generic entry has also led to private damages claims. For example, the English Department of Health settled a GB£90 million lawsuit against Reckitt Benckiser following the CMA's decision in 2011 that Reckitt had infringed the competition rules by abusing its dominant position. The Scottish, Welsh and Northern Irish Health Authorities, which brought separate claims against Reckitt in the High Court, have also recently settled their respective claims. Under the terms of all settlements, Reckitt agreed to make payments to the Health Authorities without admission of liability.

In addition, the English Department of Health has brought a claim against Servier for damages in the region of GB£220million. Subsequently, the Scottish, Welsh and Northern Irish Health Authorities also brought proceedings against Servier for damages. In the meantime, the European Commission reached a decision (and imposed fines) in parallel proceedings against Servier (Case COMP/39.612 Servier).

 
16. Have abuse of dominance issues arisen in the pharmaceutical sector in your jurisdiction?

There are two ongoing investigations by the CMA which involve abuse of dominance issues:

  • An investigation into a suspected breach of Chapters I and II (Articles 101 and 102) concerning the price at which a pharmaceutical product is being sold in the UK. This case was initiated by the OFT in May 2013.

  • An investigation into a suspected breach of Chapter II (Article 102) which it initiated in June 2014. The CMA's first decision point as to whether to proceed with the investigation or to close it is expected in June 2015.

 
17. Have parallel imports of pharmaceuticals raised IP and competition law issues in your jurisdiction?

The position on parallel imports in the UK stems from EU law.

The cases in the UK fall into two categories:

  • Cases in which manufacturers or distributers of medicines seek to prevent parallel importers buying medicines abroad and rebranding them to match UK branding (so as to compete with the manufacturer in the UK).

  • Cases including those where a manufacturer refuses, in whole or in part, to supply a parallel importer, and the parallel importer claims this to be an abuse of the manufacturer's dominance.

A recent case in the Court of Appeal considered the case law in the first category. It was held that Doncaster Pharmaceuticals were entitled to re-package tropsium chloride as "Regurin", a trade marked product for which Speciality European Pharma had an exclusive licence to distribute it in the UK, as the re-branding went "no further than is necessary to overcome artificial barriers to effective market access" (Speciality European Pharma Ltd v. Doncaster Pharmaceuticals Group Ltd and Madaus GmbH [2015] EWCA Civ 54).

The second category of cases confirms that the general abuse of dominance case law on "refusal to supply" applies in the same way to pharmaceuticals as elsewhere in competition law. In another Court of Appeal case, it was held that Chemistree's application for an interim injunction was correctly rejected, as there was no evidence that Abbvie was dominant on the applicable product market (Chemistree Homecare Limited v. Abbvie Ltd [2013] EWCA Civ 1338). This is because there were a number of therapeutically equivalent products and there was no evidence that the relevant product (Kaletra) was a "must-have". The court also rejected Chemistree's argument that Abbvie's policy of not supplying wholesalers was abusive. Article 102 did not prevent a supplier adopting a particular manner of distributing its products. It would appear that, in the UK at least, a pharmaceutical company can adopt a policy of not making sales intended for wholesale.

 
18. Does a patent or trade mark licence and payment of royalties under it to a foreign licensor have to be approved or accepted by a government or regulatory body? How is such a licence made enforceable?

There are no requirements for government or regulatory approval of a patent or trade mark licence.

However, the existence of such licences should be entered on the relevant register. Failure to register a licence within six months of it taking effect may potentially leave a licensee unable to recover from the infringer its costs of bringing an infringement claim.

For information on pharmaceutical pricing and state funding, manufacturing, marketing, clinical trials, advertising, labelling, and product recall and liability, visit Medicinal product regulation and product liability in the UK (England and Wales): overview.

The authors would like to thank Jamie Cooke (Associate) for his contribution to this article.

 

Online resources

UK legislation

W www.legislation.gov.uk

Description. Official website where original language text of the legislation referred to in this article can be obtained. The website is managed by The National Archives on behalf of the government. The original (as enacted) and revised versions of legislation are published by and under the authority of the Controller of HMSO and the Queen's Printer for Scotland.

EU legislation

W eur-lex.europa.eu

Description. Official website where the EU legislation referred to in this article can be obtained.



Contributor profiles

Huw Evans, Partner

Norton Rose Fulbright LLP

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Professional qualifications. Solicitor, qualified in England and Wales

Areas of practice. Life sciences; IP law; patents; litigation; regulatory; over 20 years' experience acting for clients in the pharmaceutical, life sciences and healthcare sectors.

Recent/notable cases. Acting for clients on both the enforcement and defence of infringement claims at all jurisdictional levels, including the High Court, Court of Appeal, European Court of Justice and the Patents County Court, as well as the trade mark registries at UKIPO and OHIM.

Professional associations/memberships. Member of the Chartered Institute of Patent Attorneys. Recognised by Legal 500 UK 2013 and ranked by Chambers 2013 and IAM 1000, who describe him as "very pragmatic" and who "brings a diverse range of experience to the practice".

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Professional qualifications. Solicitor Advocate, qualified in England and Wales

Areas of practice. Life sciences; IP law; patents; litigation; regulatory.

Non-professional qualifications. First-class degree in Natural Sciences, University of Cambridge; commendation award in the IP Law and Practice Diploma, University of Oxford.

Professional associations/memberships. Associate member of the Chartered Institute of Patent Attorneys.

Farah Mukaddam, Associate

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Professional qualifications. Solicitor Advocate, qualified in England and Wales

Areas of practice. Intellectual property; litigation; defamation; internet/online; data protection; acting for clients on a diverse portfolio of contentious and non-contentious intellectual property matters; secondment to the Research & Development team at GlaxoSmithKline, handling a range of clinical matters

Non-professional qualifications. IP Law and Practice Diploma, University of Oxford.

Peter Scott, Partner

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Professional qualifications. Solicitor Advocate, qualified in England and Wales

Areas of practice. Competition; litigation; regulatory; investigations. Specialises in all areas of contentious competition law work.

Recent/notable cases.

  • Experience of acting in a number of leading and high-profile competition law cases, including both stand-alone and follow-on claims before the High Court and the Competition Appeal Tribunal, appeals to the General Court and the Court of Justice in Luxembourg, and arbitration cases and investigations by the competition authorities.

  • Recognised in the leading legal directories, including Chambers where he is ranked in Band 1 for contentious competition, where "clients report that 'he is practical and commercial and has become a trusted adviser to our business'"; and in Legal 500: "a key figure, receiving plaudits for his 'strong analytical mind and calm approach'".

Ian Giles, Partner

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Professional qualifications. Solicitor, qualified in England and Wales

Areas of practice. Competition; regulatory; investigations; mergers; particular focus on the life sciences sector.

Recent/notable cases.

  • Leading the process to secure competition clearance on numerous global M&A transactions, including Thermo Fisher/Life Technologies (acting for Life), which was the largest global biotech deal in history at the time (2014).

  • Representing clients in cartel and market investigations before the UK and EU authorities across various industries, including consumer goods, transport and energy.

  • Described in the Legal 500 2014 guide to leading UK competition practitioners as "one to watch", and shortlisted for the Global Competition Review Lawyer of the Year (Under 40) for 2015.

Professional associations/memberships. Member of the City of London Law Society Competition Section.

Publications. Author of numerous competition law publications, including the UK chapter of the LBR Public Competition Enforcement Review, and the 2015 IFLR Global Merger Control guide.

Susanna Rogers, Senior Associate

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Professional qualifications. Solicitor Advocate, qualified in England and Wales

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Maria Georgiou, Associate

Norton Rose Fulbright LLP

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Professional qualifications. Solicitor Advocate, qualified in England and Wales

Areas of practice. Life sciences; competition; intellectual property; regulatory; litigation; investigations.

Recent / notable experience. Advising on issues at the interface between competition law and intellectual property rights in the life sciences sector. Advising pharmaceutical and biotech companies before the European Commission, the Court of Justice of the European Union, and the English High Court, Court of Appeal and Supreme Court, on substantive competition and regulatory law, and procedural issues. Secondment to a global pharmaceutical company advising on competition and regulatory issues.


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