The Secretary of State for Health v Servier Laboratories Ltd

Hearing dates: 7 and 8 June 2023

Approved Judgment

This judgment was handed down remotely at 10.30am on 03 July 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

This appeal concerns perindopril, a medicinal product which was developed and manufactured by the Servier group of companies, of which the defendants (to which I shall refer collectively as “Servier”) are members. Perindopril is an angiotensin-converting enzyme (“ACE”) inhibitor (“ACEI”) used in the treatment of cardiovascular conditions such as hypertension. Servier marketed perindopril under the name “Coversyl”.

Servier began to supply Coversyl in the UK in about 1990. At that stage, Coversyl was protected by European patents with a UK designation and a supplementary protection certificate that was due to expire on 21 June 2003. On 6 July 2001 Servier applied to the European Patent Office (“the EPO”) for a patent in respect of the alpha crystalline form of the tert-butylamine salt of perindopril, and the patent was granted on 4 February 2004: EP No 1 296 947 (“the 947 Patent”). Opposition proceedings followed which were the subject of a hearing before the Opposition Division of the EPO on 27 July 2006, but the patent was upheld.

On the strength of the 947 Patent, Servier obtained interim injunctions against companies wishing to enter the UK market with generic perindopril. On 11 July 2007, however, Pumfrey J held that the 947 Patent was invalid, and his decision was upheld by the Court of Appeal on 9 May 2008: see Les Laboratoires Servier v Apotex Inc[2007] EWHC 1538 (Pat) and [2008] EWCA Civ 445. Those decisions applied only to the UK designation of the patent, but an appeal was pending before the EPO Technical Board of Appeal and, on 6 May 2009, the Board of Appeal determined that the European patent should be revoked.

The claims before us were issued in 2011 and 2012 by, respectively, health authorities for England (“the English Claimants”), those for Scotland and Northern Ireland (“the Scottish/NI Claimants”) and those for Wales (“the Welsh Claimants”). They allege breaches by Servier of competition law. As Roth J (“the Judge”) explained in paragraph 9 of the judgment under appeal (“the Judgment”):

“The present proceedings allege a series of infringements of both EU and UK competition law. In particular, it is alleged that Servier entered into a series of agreements with generic manufacturers and suppliers not to enter the market with a generic version of perindopril and/or to withdraw their challenges to Servier's patent; and that those agreements constituted an infringement of Art 101 of the Treaty on the Functioning of the European Union (‘TFEU’) and/or the equivalent s. 2 of the Competition Act 1998 (‘CA’), and also an abuse of a dominant position which Servier held in the UK, and therefore an infringement of Art 102 TFEU and/or the equivalent s. 18 CA. Moreover, the claims allege that LLS [i.e. Les Laboratoires Servier SAS, the third defendant] obtained the grant of the 947 Patent, and further successfully defended it in opposition proceedings, by misleading or dishonest misrepresentations made to the EPO; and that LLS and SLL [i.e. Servier Laboratories Limited, the first defendant] further repeated or relied on those misrepresentations in obtaining interim relief in the English courts. That alleged conduct, which is expressly pleaded as constituting deceit, is said to be a separate abuse of Servier's dominant position and thus contrary to Art 102 TFEU and/or s. 18 CA. Further and alternative grounds of abuse are alleged on the basis that the conduct of LLS and/or SLL by which they ‘obtained, defended and enforced’ the rights in relation to the 947 Patent was unreasonable or an abuse of process, and that Servier was ‘not transparent in its provision of relevant information to the EPO and courts’.”

The claims relate to the period between 2003 and 2009.

On 9 July 2014, the European Commission (“the Commission”) issued a decision (“the Commission Decision”) finding that Servier had contravened articles 101 and 102 of the Treaty on the Functioning of the European Union (“the TFEU”) and imposing fines: Case AT.39612 Perindopril (Servier). On 12 December 2018, the General Court of the European Union (“the General Court”) largely dismissed an appeal by Servier in relation to the article 101 infringement, but it allowed the appeal so far as it concerned the finding that Servier had been dominant on the relevant market and accordingly annulled the Commission Decision as regards infringement of article 102: Case T-691/14 Servier v Commission, EU:T:2018:922 (“the General Court Judgment”). Appeals by both the Commission and Servier against the General Court Judgment are pending before the Court of Justice of the EU.

The claimants' case is that, as a result of the anti-competitive agreements and abusive conduct which they allege, the price which they had to pay for perindopril was much higher than it would have been if generic suppliers had entered the UK market and, on that basis, they claim as damages the difference between what they paid and what they would have paid. Servier, however, denies infringement of either article 101 of the TFEU or section 2 of the Competition Act 1998 (“the 1998 Act”), further denies having held a dominant position for the purposes of article 102 of the TFEU or section 18 of the 1998 Act and contends that, even if it was dominant, its conduct did not amount to abuse.

When the proceedings pursued by the English Claimants were issued, the claimants included Strategic Health Authorities (“SHAs”) and Primary Care Trusts (“PCTs”) which had existed in England during the period relevant to the claim. Subsequently, those bodies were abolished and their rights of action vested in the first English Claimant, the Secretary of State for Health.

The “prescribing argument”

In October 2016, Servier was granted permission to amend its pleadings to allege that, were liability and causation established, damages should be reduced or extinguished because the claimants failed to mitigate their losses, for contributory negligence or because the losses were too remote. These defences, which have been referred to as the “prescribing argument”, proceed on the basis that the claimants should have taken all reasonable steps to encourage clinicians to opt for cheaper alternative ACEIs in place of perindopril when issuing prescriptions.

The prescribing argument is advanced as follows in Servier's re-re-amended defence to the claim by the English Claimants:

“ Failure to take all reasonable steps to encourage switching to cheaper ACE Inhibitors

83.B. The Claimants were aware or should have been aware that:

(a) Alternative ACE Inhibitors were available in generic form. In particular, generic launch of Enalapril took place in or around December 1999, Lisinopril in or around September 2002 and Ramipril in or around December 2003;

(b) ACE Inhibitors exert a ‘class effect’ and there was no clinical difference between Perindopril and the other ACE Inhibitors already available in generic form. NHS prescribers could therefore prescribe these ACE Inhibitors as an alternative to Perindopril; and

(c) The reimbursement prices of generic ACE inhibitors were significantly less than the reimbursement price of Perindopril during the relevant period.

83.C. In these circumstances, the Claimants should have taken all reasonable steps to encourage switching from the prescription of Perindopril to the prescription of cheaper alternative ACE Inhibitors in generic form. In particular, but without limitation, the Claimants should have:

(a) Removed Perindopril from the local formularies;

(b) Issued national guidance encouraging a switch from Perindopril to the prescription of cheaper alternative ACE Inhibitors in generic form;

(c) Issued local PCT guidance encouraging a switch from Perindopril to the prescription of cheaper alternative ACE Inhibitors in generic form, including through meetings with GPs, through newsletters and through meetings with individual PCT pharmacists or agents;

(d) Used the national Quality and Outcomes Framework to incentivise a switch from Perindopril to the prescription of cheaper alternative ACE Inhibitors in generic form. For example in 2004, GPs were...