Italy: Consiglio di Stato reinstates original Pfizer Xalatan order

While much of the content of this weblog addresses the technical issues relating to securing an SPC, the scope of the blog extends beyond those issues, covering the economic and commercial dimensions of SPCs, how they are deployed strategically by their owners and how they fare when measured against the yardstick of competition law.

In this context The SPC Blog welcomes the following contribution from Gian Paolo Di Santo (Partner NS Head of the I.P./I.T. Department of law firm Pavia e Ansaldo, Milan).  Gian Paolo is not one of our regular contributors, which makes his contribution all the more welcome to us.  This is what he writes:

In this case, somehow breaking a tradition which sees Italian “old school” lawyers (as I am) who are a bit reticent on contributing to blogs actually discussing their cases on a open stage, I write to report the news that the Consiglio di Stato (i.e. the final decisional body of administrative courts in Italy) has annulled the decision issued by the TAR Latium (i.e. the first instance administrative Court which has jurisdiction over antitrust decisions of the Italian Competition Authority, 'ICA') on the matter concerning the abuse of dominant position put in place inter alia through a misuse of patent/SPC rights in Italy by Pfizer in relation to the Xalatan product. Accordingly, the original order of the ICA which fined Pfizer over 10 million Euros is now final and binding. 

For the time being only the ruling-- allowing the ICA and Assogenerici’s appeal -- is available, while the reasoning for the decision will be published within a few months (and – if it is of any interest – I will be keen to provide readers with better information as soon as they are published) [yes, please, says The SPC Blog. Meanwhile, the ruling can be read here or downloaded here]. However I wanted to be the first to provide you with this information, mainly to avoid the impression that such an important decision is rapidly labelled as the decision of an Italian body which “does not understand of IP”, as I have seen that many commentators did in the past when commenting on this matter. 

It is the first time in Italy in which the misuse of patent law in the pharmaceutical field has been carefully scrutinised in order to assess an abuse of dominant position. The only precedent known to me in Europe had so far been the AstraZeneca case (CJEU decision of December 6, 2012 in case C-457/10P), but this Italian Pfizer case potentially appears even more interesting, as it might give some hints on how competition law may help to tackle unfair practices such as the implementation of the so-called “patent thickets” and “evergreening” policies by the originators, which are practices that had been denounced by the European Commission in its inquiry on the pharmaceutical sector which was concluded on July 8, 2009.

Latanoprost

Some commentators asserted that the decision of the TAR Latium, annulling ICA’s decision, was correct because Pfizer had not actually broken any patent rule, since the strategy they implemented, characterized in particular by the indication of a divisional patent as a basic patent to file a request for SPC, was in accordance with the applicable legislation which allows the filing of divisional applications. It is reasonable, however (awaiting the written reasoning of the decision, expected in the coming months), to think that the Council of State has determined that the object of the ICA’s investigation, and the reasons of the consequent sanction, were not founded on the legality of Pfizer’s conduct under a civil or administrative profile, but rather on the complex strategy put in place by Pfizer in relation to the active principle latanoprost, the verification of its legality under the typical profile of competition law (on the merits), and in particular  the  possible breach of the prohibition of abuse of dominant position set out in Article 102 TFEU.

In other words, the central point of the issue appeared to be that, under antitrust law, the subject in a dominant position cannot engage in conduct that could be perfectly legitimate if performed by a subject that is not in a dominant position. The ICA considered that Pfizer’s overall strategy was unjustifiable unless it was interpreted as having solely an exclusionary intent and purpose. This had nothing to do with the competition on the merits that in the patent/pharmaceutical field should be characterized by making innovative products available to the public.

Pfizer’s defence, in a nutshell, was that all the acts put in place by that company (request of – several – divisional patents all covering the same identical product, request of an SPC using as “basic patent” the last possible of those patents, starting of an aggressive enforcement campaign after the grant of the divisional patent and SPC against the genericists which had prepared themselves to launch after the expiry of the parent patent protecting the active principle as such) were lawful under an IP point of view.

In my opinion one of the central aspects of all this issue is that

" ... in 2002 the situation was crystallised with the expiry of the patent protection expected in Italy in September 2009 (by virtue of the lack of a SPC on the main patent in our country). Accordingly, the generic companies legitimately came to expect they could enter the Italian market on that date. This reliance was frustrated by the exclusionary strategy of Pfizer which applied for the divisional patent exclusively to obtain the SPC to align the expiry of patent protection for Xalatan in Italy with the rest of Europe” (ICA decision, § 197). 

And also Pfizer – as it clearly emerged from the inspection – had already in mind that the LOE (loss of exclusivity) would have taken place in Italy before than in the rest of Europe.

The ICA therefore assessed that the divisional patent had been unlawfully exploited, seeking protection for an active ingredient already protected by a granted and fully valid parent patent and whose related medicinal product had already been authorized since many years, with the sole purpose of using such a divisional patent as a vehicle for the request for an SPC in Italy. Such behaviour was aimed at preventing entrance into the market of competitors at the time of parent patent’s expiry, thus remedying the original "oversight" regarding the application for an SPC, filed for in all other European countries. To confirm the exclusionary nature of Pfizer’s behaviour, the ICA deemed particularly suspicious the fact that no new drug had been placed on the market on the basis of the new EP '168 patent, and that no technological development was achieved in this patent. 

Xalatan was in fact realized, from the moment when it was first placed on the market in the late ‘90s, in Italy and in all other countries where the parent patent EP '417 was extended, with characteristics of dosage and amount of active ingredient per drop (which was the key element of EP '168, applied for only in 2002) that remained unchanged over time. In addition, and this was even more significant to confirm suspicion, the divisional EP '168 was curiously filed only in Italy, hence adopting a different strategy with respect to what had been done with EP '417, which had instead been validated in all European countries.

Apart from the obvious professional joy that I feel after a long battle that lasted over four years, my personal and intimate feeling is that the ICA order of January 2012  as well as the decision of the Consiglio di Stato, as soon as it is published, should be read with careful consideration as it is an occasion to somehow rethink a bit the relation between patent law and competition law.