Injunction based on market exclusivity – comments on recent Swedish case law

It is not uncommon for actors in the pharmaceutical industry to simultaneously have to engage in legal battles on several fronts. For example, intellectual property rights and, in particular, patents have to be taken into account, while the demands from regulatory authorities also have to be faced. However, although the concept of launch at risk is well known in the field of patent law, it is unusual for the “risk” in question to be understood as referring to the regulatory concept of market exclusivity. Nevertheless, the latter scenario has been subject to discussion in a recent case between a generics company (“the Company”) and the Swedish Medicinal Products Agency (“the Agency”). The case also sheds light on injunction as a sanction in a regulatory context.

Background
In June 2023, the Company was granted a market authorisation (“MA”) for its generic dimethyl fumarate product. The MA application was filed through the decentralised procedure, and hence the decision to grant was taken by the Agency.

The reference product was Tecfidera® – a product whose market exclusivity under Regulation 726/2004 has been thoroughly litigated on an EU level in the past couple of years. While those procedures will not be further described here, it may be concluded that at the point when the Company was granted the MA, the Commission had prolonged the market exclusivity for Tecfidera® until 2 February 2025.

In March 2024, the Agency became aware that the generic dimethyl fumarate product was listed as “being marketed” in the Swedish eHealth Agency’s register – that is, when the market exclusivity for Tecfidera® was still in force. After some correspondence with the Company, the Agency – later that same month – announced a decision, according to which the Company was injuncted from further sale of its product, with reference to the market exclusivity. The injunction was accompanied by a penalty payment of SEK 1 million for each calendar week during which the Company acted in breach of the injunction.

Unsurprisingly, the Company appealed the decision to the Administrative Court of Uppsala, which delivered its judgment on 24 September 2024, rejecting the appeal. The Court concluded that the injunction was justified and proportionate (or at least not disproportionate).

The case touched on a number of sub-issues concerning inter alia the effects of market exclusivity, the Agency’s examination of MA applications and the extent to which the Court (and the Agency) is bound by EU measures. A selection of these issues will be dealt with under separate headings below.

Was it accurate by the Agency to grant the MA in the first place?
One discussion point centred on whether the Agency – by issuing an injunction against an actor holding an MA – had changed its earlier decision to grant the MA. The Company argued that the injunction constituted a de facto change, which in turn could bring into play Swedish legal provisions on when favourable administrative rulings may be changed to the detriment of an individual party.

However, the Court found that the injunction did not in itself represent a restriction/modification of the decision to grant the MA. The Court referred to the Swedish Medicinal Products Act, stating that the Agency, when examining an MA application, must consider the product’s properties as a medicinal product with regard inter alia to quality and appropriateness. That examination does not take into account considerations as to whether any factor exists to prevent marketing for other reasons, such as the existence of market exclusivity in favour of another actor. Hence, a decision to grant an MA does not mean that all the conditions for actual marketing have been examined.

Thus, the Court held that the injunction issued by the Agency was not formally – or in practice – an amendment or revocation of the decision to grant the MA.

Although not explicitly stated in the reasons, it appears that the Court adhered to the procedural order of the examination (and approval) process as claimed by the Agency, which means that the Agency was right to grant the MA even though the market exclusivity for Tecfidera® was still in force. The Agency emphasised before the Court that it is the rules on data protection/exclusivity that prevent generic applications from being approved (or considered). Market exclusivity is not considered within the framework of the review of a generic application under the Swedish Medicinal Products Act. The Agency thus pointed out that the MA for the Company’s product was valid and in force. Consequently, there were no grounds to amend or revoke the decision to grant the MA. But, the Company’s marketing was in breach of the rules on market exclusivity – a protection for the exclusivity holder which, according to Agency, is otherwise generally respected by generics – which is why there were grounds for the Agency to order the injunction.

The legal effect of market exclusivity
The Company submitted that while the provision on market exclusivity in Regulation 726/2004 includes a right for the holder of market exclusivity, there is no corresponding obligation on anyone else not to sell medicinal products covered by market exclusivity. The fact that the Agency interpreted such an obligation in the provision thus meant in practice that the provision had some kind of intellectual property effect in favour of the holder – a finding for which there was no support, according to the Company.

The Company further argued that it is the MA requirement and the authorities’ examination of MA applications that represent the legal mechanism for maintaining the holder’s market exclusivity.

In that regard, the Court held as follows. The Swedish version of Article 14(1) of Regulation 726/2004 provides that medicinal products for human use authorised in accordance with the provisions of the Regulation are subject to an eight-year period of data protection and a ten-year “marketing authorisation”, the latter being renewable for up to a maximum of eleven years under certain conditions. However, other language versions contain terms other than ‘marketing authorisation’, including ‘marketing protection’ (English), ‘protection de la mise sur le marché’ (French), ‘Vermarktungsschutz’ (German), protección de la comercialización’ (Spanish) and “beschermingstermijn met betrekking tot het in de handel brengen” (Dutch). In the light of those terms, the Court concluded that what is meant by ‘ten-year marketing authorisation’ in the Swedish version is market protection, which cannot be understood in any other way than that it is intended to prevent other actors from marketing generic medicinal products with the protected product as reference product.

Should the Agency have refused to apply the Commission’s decision?
The Company submitted that the Commission’s implementing decision – in which Biogen was granted extended market exclusivity for Tecfidera® – was flawed in a number of respects and that the Agency should therefore have refused to apply the decision, having regard to Chapter 12, Section 10 of the Swedish Instrument of Government.

The Court stated that, in principle, national courts may be required to examine the validity of an EU measure (in this case, the Commission’s decision), but it is not competent to declare the invalidity of such a measure. The ECJ has exclusive jurisdiction to declare an act of the Union invalid (C-314/85 Foto-Frost, pp. 17 and 20). In order for a person to be able to rely, in proceedings before a national court, on the invalidity of an EU measure which constitutes the legal basis for a national decision concerning that person, he must have brought an action for annulment under Article 263 TFEU within the prescribed time period (here, the Court referred the ECJ’s judgment in C-135/16). However, this only applies if the person undoubtedly has standing to bring such annulment action.

The Court then proceeded to assess whether it was undoubted that the Company had standing within the meaning of Article 263 TFEU, and found that this was the case. On that basis, the Company was not entitled to challenge the validity of the Commission’s implementing decision. This also meant that the Court was bound by the legal force of the decision in relation to the Company when assessing the case, and had to assume that the decision was valid.

The Court also pointed out, albeit in a different context, that the fact that several actors had appealed to the ECJ against the Commission’s implementing decision did not mean that the decision was not applicable (Article 278 TFEU).

Final comments and conclusion
The scenario in the described case is unusual. As the Agency pointed out during the proceedings, the rules on market exclusivity are typically respected, but in the case at hand, the Company stated that there was no valid reason to respect the market exclusivity. Hence, the Agency, responsible for ensuring that the rules of Regulation 726/2004 are complied with, found itself forced to take action. Instead of revoking the MA, the Agency went for injunction, which is – according to the Administrative Court of Uppsala – not to be considered an amendment of the decision to grant the MA, but a separate sanction that is justified in cases where an MA has been granted on good grounds, but where the market exclusivity has not been respected.

The Company appealed to the Administrative Court of Appeal. However, and quite surprisingly, leave to appeal was not granted. Given the unusual circumstances and the importance of the matter, it would have been highly interesting to get a further review of the case.