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28 January 2014Patents

Generic KRKA to receive damages in Nexium case

The UK High Court has decided to award Slovenian generic pharmaceutical company KRKA damages after a preliminary injunction enforced against the company by AstraZeneca was discharged.

In a decision handed down on January 24, Justice Sales found that AstraZeneca’s injunction deprived KRKA and its marketing partner Consilient of an element of “first mover” advantage.

AstraZeneca holds a European patent covering heartburn drug Nexium’s active ingredient, esomeprazol, which is due to expire in May 2014. According to drugs.com, Nexium made $1.5 billion in sales during the third quarter of 2013.

From its launch in 2000 to 2011, Nexium was the only product of its kind on the market.

In 2010 AstraZeneca successfully obtained a preliminary injunction to keep KRKA from marketing a generic version of Nexium, Emozul, in the UK.

After a successful challenge to the patent by Ranbaxy, which also sought to launch its own Nexium generic, the preliminary injunction was discharged.

However, by the time KRKA was allowed to launch Emozul, the UK market had been “completely transformed” by the entry of Ranbaxy, Mylan and Teva’s generic versions of Nexium.

In fact, days after the Nexium patent was revoked in July 2011, AstraZeneca had launched a generic version in partnership with generic company Arrow.

In the judgment, Sales said that there is a wide divergence between the parties regarding the extent of the “first mover” advantage and its value.

“AstraZeneca says the damages to be awarded should be of the order of £6 million. The defendants say they should be of the order of £32 million,” he wrote.

Paul England, a senior associate at Taylor Wessing LLP in London, said Nexium is an important drug for AstraZeneca and a loss of market to a further competitor is “always going to be a commercial blow.”

However, he added: “In this case, several other companies have already reached the market with rival proton pump inhibitor drugs similar to Nexium, including AstraZeneca’s own product sold under the Arrow brand. AstraZeneca will therefore have had time to plan for this latest development.”

The decision is interesting because of Sales’ approach, he continued: “The judge, who is not normally associated with patent matters, assesses damages based on the prescription recommendations made by medicine managers in Primary Care Trusts, rather than the expert evidence of accountants.

“It may provide a model for assessing damages in similar cases and, indeed, could be raised as a reason why injunctive relief should not be awarded in the first place.”

Aaron Wood, an associate at Swindell & Pearson Ltd, said that AstraZeneca is now in a better commercial position in losing the case, than if it had never pursued it to begin with.

“Although they’ll have to pay some damages to KRKA, the amount they’ve probably made will be greater than the amount they’ll have to pay out,” he said.

AstraZeneca told LSIPR: “AstraZeneca is disappointed with aspects of the court’s decision. We are reviewing the decision and evaluating our legal options.”

KRKA said that it had no comment about the decision.

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