Financial Pitfalls Associated With An Interim Injunction

In AstraZeneca v KRKA, d.d. Novo Mesto and Consilient Health Ltd. ("KRKA"), the Mr Justice Sales of the UK High Court has considered the merits of arguments put forward when trying to recover damages following a cross-undertaking in respect of an interim injunction that was subsequently discharged.

Significantly, in awaiting damages in KRKA the Judge chose to rely on the evidence of medicine managers (experienced pharmacists employed by the National Health Service Primary Care Trusts) rather than that of expert economists when assessing the loss of "first mover" advantage.

Facts of the case

AstraZeneca owns a European (UK) patent that provides protection for Nexium®, which is the brand name for esomeprazole magnesium, a proton pump inhibitor that is used to treat a range of gastric conditions. Nexium® was launched in the UK in 2000 and was the only product of its kind on the market until 2011, during which period it commanded a high price.

In October 2010, AstraZeneca obtained an interim injunction in the UK that prevented KRKA from marketing Emozul®, a generic equivalent of Nexium®, in order to preserve the status quo pending a trial. KRKA claimed that Emozul® did not infringe AstraZeneca's patent.

At the time that AstraZeneca obtained its injunction against KRKA, the validity of AstraZeneca's patent for Nexium® was being challenged in the UK by Ranbaxy, who also sought to market a generic equivalent of Nexium® in the UK. A speedy trial concerning the issues of infringement found that Ranbaxy's product did not infringe AstraZeneca's patent.

Following the Ranbaxy judgment, AstraZeneca applied for the interim injunction against KRKA to be discharged because it recognised that its patent infringement claim could not succeed. The interim injunction against KRKA was finally discharged in July 2011.

Market activity

A number of generic equivalents of Nexium® were marketed in the UK following the Ranbaxy judgment: Ranbaxy marketed its equivalent in September 2011; Mylan in November 2011; and Teva in December 2011. AstraZeneca also teamed up with Arrow (another generics company) to sell a "branded generic" version of Nexium® in July 2011. The "branded generic" version was launched in the UK two days after the Ranbaxy judgment. AstraZeneca's market share for Nexium® fell following the arrival of several lower priced generic equivalents onto the marketplace.

Considerations for assessment of damages

In order to assess the damages payable by...