The next working day, AZ successfully obtained permission to appeal from the Court of Appeal the judge’s refusal and prevented Glenmark’s product from being sold by wholesalers to their customers pending the substantive appeal hearing. The appeal hearing has been listed on an expedited basis for April 9, 2025. The appeal decision will be of substantial relevance to the ability of pharmaceutical companies to obtain interim injunctions in the U.K. in the future.
Background
AZ sells Forxiga® and is the proprietor of SPC/GB13/021 protecting dapagliflozin, which is based on AZ’s now expired compound patent. This SPC is due to expire in May 2028. AZ also owns an SPC relating to a combination of dapagliflozin with metformin based on the same compound patent, which also expires in May 2028.
In December 2023, Glenmark commenced proceedings seeking to invalidate AZ’s SPCs on the basis that the basic compound patent is invalid. Similar invalidity proceedings had also been commenced around the same time by Viatris and Teva, ostensibly to clear the way for their own generic versions of dapagliflozin. The trial of these proceedings was heard from March 10–20, 2025, also by Michael Tappin KC, who has reserved judgment.
On February 20, 2025, Glenmark notified AZ that it intended to launch a generic dapagliflozin product in the U.K. on March 17, 2025. In response AZ issued and served an application seeking an interim injunction to prevent Glenmark from launching pending the Form of Order hearing in the validity proceedings. AZ’s application was heard on March 27, 2025.
Timing of Glenmark’s intended generic launch
During the validity proceedings, Glenmark had not indicated that there was any commercial urgency in its claim, and AZ criticized Glenmark for the timing of its notification of intended launch, which was during the build up to trial, and of its proposed launch date, which was during trial. AZ said that Glenmark’s timings had caused disruption to its trial preparations.
The judge accepted Glenmark’s evidence responding to these criticisms, which explained its uncertainty as to when it would be ready to launch in the U.K. It was only on February 20, 2025 that Glenmark became aware it could launch as early as March 17, 2025, and Glenmark told AZ on the same day it found out. The judge noted in his judgment that Glenmark's intended launch date and notification to AZ thereof did not have any impact on his decision. Pending a decision on AZ’s interim injunction application, which was heard and decided on March 28, 2025, Glenmark undertook not to launch its product and AZ provided a cross-undertaking as to damages.
In determining whether to grant AZ an interim injunction, the judge followed the well-established American Cyanamid guidelines, which require consideration of whether (1) there is a serious issue to be tried; (2) & (3) damages would be an adequate remedy for each of AZ and Glenmark; and (4) where the balance of convenience lies. The judge noted what had been said in case law such as Neurim v Generics [2020] EWCA Civ 793 to the effect that damages should be adequate; they need not be perfect, and the line between adequacy and inadequacy is imprecise. In terms of earlier cases, he pointed out paragraph 23 where Floyd LJ had said in Neurim: “Comparisons with other cases…usually reveal differences on the facts which render them unhelpful” and “Whether a price spiral will occur in the period until trial in any given case is intensely fact sensitive”.
1. Both sides accepted there was a serious question to be tried on validity. Glenmark conceded that the sale of its product would infringe the SPC.
Before embarking on the remaining American Cyanamid stages, the judge noted that the relief AZ sought must condition the assessment of whether damages would be an adequate remedy for granting or refusing that relief. AZ had applied for an injunction pending the conclusion of the Form of Order hearing following the trial judgment in the validity proceedings or further order of the court. The judge was not in a position, however, to say when he expected to hand down his validity judgment, when the Form of Order hearing would take place, and the final relief he would grant (which included even whether a final injunction would be granted pending appeal if the SPC was found valid). AZ also had not confirmed that it would seek an injunction pending appeal if the SPC was held invalid at first instance and emphasized that AZ was only seeking an injunction until the Form of Order hearing.
He therefore adopted the parties’ estimate that such a hearing would take place between one and three months from Glenmark’s planned March 17, 2025 launch date and proceeded on the basis that the only issue was whether an interim injunction should be granted for the duration of that period (in other words, what could be described as a relatively short ‘holding the ring’ injunction). The judge was only concerned, therefore, with damage that flows from events in this period up to the Form of Order hearing, whether that damage manifests in that period or afterwards. AZ expressly agreed with this approach.
The dapagliflozin market
The judge then addressed the existing state of the dapagliflozin market and what is likely to happen should an injunction be granted or refused:
- Current state of the market: The majority of prescriptions for Forxiga® are written by GPs and dispensed in community pharmacies. Approximately 90% of prescriptions are by INN with only about 10% being by brand name.
- Whether other generics would enter the market before the Form of Order hearing: A key factual dispute between the parties was whether a Glenmark launch would trigger entry by other generics. In the judge’s view, there was a real risk that, should Glenmark launch before the Form of Order hearing, one or more generic companies would follow, although such subsequent entries may not be immediate. It was entirely conceivable that one or more generic companies, in particular Viatris and Teva, may have been planning to launch in the U.K. following the first instance validity judgment. Glenmark’s expert noted that that is what Sandoz, Teva, and Glenmark did in the case of apixaban, and, if true, such companies would be expected to accelerate launch plans in response to Glenmark launching first. According to AZ’s skeleton, a total of 12 generics including Glenmark had obtained MAs for dapagliflozin. Two generic MA holders had indicated to AZ that they may launch before the first instance judgment in the event that another generic launched and was not removed from the market.
- Whether there would be a price spiral if one or more generics launched before the Form of Order hearing: AZ accepted that if the court found conclusively that Glenmark was the only generic to launch, there is unlikely to be an unquantifiable downward price spiral before judgment. They argued this was not supported by the facts, however. AZ argued that should multiple generics launch, there would be an unquantifiable downward price spiral.
In the recent rivaroxaban case, there was immediate price competition upon generic launch leading to a price spiral. Glenmark argued, however, that in the rivaroxaban case, generics were only permitted to launch after the appeal judgment when launches would not be ‘at-risk’, which was a differentiator to the present case.
Based on the evidence submitted by the parties, the judge concluded that it is impossible to estimate the likelihood of a drop in generic prices over the period prior to the Form of Order hearing. The evidence explained that with ‘at-risk’ launches, there is still incentive for generics to keep prices higher. Any drop would depend on the number of generic entrants, the time of entry, and the volume of products they were able to supply to the market. Given that, the judge could not say that there was no real risk of a degree of generic price depression.
- How AZ would react to generic entry: The judge placed particular importance on how AZ would respond to any generic price depression. He agreed with the evidence submitted by Glenmark’s market expert that it is highly unlikely that AZ would decrease its list price. Several reasons were provided in support of this, including that the recent apixaban case provided a good example of an originator maintaining its list price while generics entered the market ‘at-risk’ and pending a final decision on patent validity. Furthermore, the judge commented that there was no evidence that AZ would be likely to change its actual price to wholesalers (through rebates) prior to the Form of Order hearing and that, if it did, it would not be able to reverse that change without obstacle.
- Whether there might be a Drug Tariff re-categorization following generic entry: Dapagliflozin is currently in Category C of the Drug Tariff. The judge concluded that there is no real prospect of a re-categorization before the Form of Order hearing.
2. Damages are an adequate remedy for AstraZeneca should the interim injunction be refused. AZ argued that the scenario presented to the court is of the kind that the Rivaroxaban1 and Neurim cases suggest need interim relief and that otherwise AZ’s losses would be unquantifiable.
The judge ultimately determined, however, that damages would be an adequate remedy to AZ and are calculable to a reasonably high degree of accuracy. In light of the judge’s determination that AZ would not reduce its list price in response to generic entry in the period before the Form of Order hearing, irrespective of the number of entrants, calculating AZ’s loss would be a matter of simple arithmetic. Glenmark accepted each of its sales would be a sale lost to AZ. On the face of it, therefore, the damage to AZ would be the number of packs sold by Glenmark multiplied by AZ’s profit margin. If AZ were to increase its offered rebates, the judge considered it possible to calculate the additional loss by multiplying the number of packs sold by the increased rebate on each pack.
AZ raised a concern as to whether Glenmark’s ‘limited assets’ would be able to cover the quantum of losses that AZ might suffer. It described Glenmark as a “comparatively small generic manufacturer in the U.K.” with net assets a fraction of the size of the value of the U.K. dapagliflozin market. The judge thought AZ should be entitled to security for these damages.
Glenmark sourced a ‘letter of comfort’ from its parent company, which was not able to provide a formal guarantee in time. Should AZ not accept this letter of comfort, Glenmark offered an undertaking to pay a sum per pack sold (corresponding to AZ’s profit margin) into a separate bank account pending the Form of Order hearing. The judge concluded that Glenmark should provide such an undertaking and on that basis damages would be an adequate remedy for AZ.
3. Damages would not be an adequate remedy for Glenmark should the interim injunction be granted. The judge found that damages on the cross-undertaking would not be an adequate remedy for Glenmark because of the difficulty in establishing the counterfactual with any degree of accuracy. Counsel for Glenmark persuaded the judge of this by reference to the judgment of Norris J in Servier v Apotex [2008] EWHC 2347 (Ch) that the difficulties in constructing the counterfactual manifests in a real risk of under-recovery by a party claiming on a cross-undertaking where there were multiple different possible counterfactuals. Furthermore, the Judge was persuaded that, if Glenmark was injuncted, it is likely to lose a first-mover advantage, which it may not have by the time of the Form of Order hearing and being the first mover allows a generic to retain market share even after further generics enter the market.
The judge opined that the quantification of the damages to Glenmark would be significantly more difficult than the assessment of the damages due to AZ if no injunction is granted, which can be done on the basis of known facts. He noted that substantial dispute can be expected when constructing the counterfactual, including about who might have entered the market and when, and the impact of Glenmark losing any first-mover advantage.
The judge discussed another layer of complexity, which was that AZ has patent applications for use of dapagliflozin in treatment of heart failure and chronic kidney disease. On any damages inquiry, AZ would reserve the right to contend that Glenmark's sales would have infringed such rights and no damages would be payable. For example, there would be a debate about the extent to which Glenmark's sales were for indications covered by these patent applications rather than for type 2 diabetes.
NHS
The judge considered a letter from the Department of Health and Social Care Anti-Fraud Unit representing the relevant health authorities of England, Scotland, Wales, and Northern Ireland. That letter made representations on the question of whether an interim injunction should be granted and proposed wording for the cross-undertaking to be given by AZ if an interim injunction was granted, which it said would better account for the realities of the structural makeup of the NHS. AZ offered a cross-undertaking in that form.
That letter also raised several issues from the NHS’s perspective of calculating damages recoverable by the NHS on a cross-undertaking. In attempting to enforce any cross-undertaking and in arriving at a sensible estimation of the loss suffered by the NHS, the NHS submitted that it tends to be in a relatively weaker position, “[AZ] and[Glenmark], as actual or potential suppliers of the drug, have first-hand knowledge of and/or access to more information regarding such issues than do NHS entities. The challenges posed by this asymmetry are liable to require the dedication of additional time and resources by NHS entities, and there is a real risk that it will be impossible or impractical for them to obtain a full measure of compensation for the damage they have in fact suffered.”
Glenmark argued that this problem would be increased if AZ were to come to a settlement with Glenmark on the basis that it would not be possible for the NHS to realistically enforce its claim against AZ. AZ argued that the NHS would be able to obtain third-party disclosure from Glenmark, but the judge concluded that would not be a substitute for evidence from Glenmark. In those circumstances, the judge concluded that damages on the cross-undertaking would also not be an adequate remedy for the NHS.
4. The balance of convenience laid against the grant of an injunction. Counsel for AZ directed the judge to what Birss LJ said in Neurim v Generics UK [2022] EWCA Civ 370 regarding the importance of maintaining the status quo. The judge noted, however, that the uncertainties in the present case of assessing damages under the cross-undertaking are significantly greater than those involved in assessing damages to AZ. Whilst maintenance of the status quo tends to favor the grant of an injunction if other factors are evenly balanced, the judge concluded that in this case, they are nowhere near evenly balanced.
Finally, the judge disagreed that Glenmark had failed to clear the way in time to launch its product now. Glenmark did ask for a January 2025 trial back in January 2024, and so the judge concluded that the fact that Glenmark was ready to launch shortly before the court managed to produce a judgment on the validity trial was not a factor of any significance in the balance of convenience.
Ultimately, the judge in refusing an interim injunction concluded that he was not doing anything unusual but rather applying the guidelines in American Cyanamid to the facts as they appeared to him from the evidence, doing the best he could on the material before him.
AZ appeal
On the first working day after AZ’s application for an interim injunction was refused, Lord Justice Arnold heard an application by AZ seeking permission to appeal Mr. Tappin KC’s judgment and concluded that AZ’s grounds of appeal are sufficiently arguable to meet the permission to appeal test, namely that AZ has a real as opposed to a fanciful prospect of success on appeal. During this hearing, there was reference to a letter from Teva’s solicitors received over the weekend, which appeared to indicate that Teva would be ready to launch immediately and which AZ argued demonstrated that there is likely to be rapid generic entry and a rapid price reduction leading to price depression.
In granting AZ permission to appeal, Lord Justice Arnold determined that the right way forward is to preserve the status quo, and he accepted a submission from Glenmark’s counsel that this should be done in the least prejudicial way to Glenmark possible.
During the permission to appeal hearing, Glenmark’s counsel informed the court that Glenmark had 175,000 packs of its generic product on lorries ready for transport to wholesalers, and that this should be considered in the context of the size of the market of ‘1 million plus packs per month’. Glenmark submitted that allowing them to send these lorries to wholesalers would not change the status quo, whilst at the same time allowing Glenmark to preserve any first mover advantage.
Lord Justice Arnold permitted these lorries to be sent, however, on the terms that such product would not be released for further sale or distribution, thereby minimizing any prejudice to AZ should the Court of Appeal decide to grant the interim injunction. Glenmark were required to give an undertaking in those terms, otherwise Lord Justice Arnold indicated he would have needed to put a temporary injunction in place.
Glenmark had initially sought for the 175,000 packs to be transported to wholesalers for release by the wholesalers, arguing that any damage would be readily calculable by multiplying the 175,000 packs by AZ’s profit margin. However, the court settled on Glenmark’s fall-back position that the product can be sent to its wholesalers but not released for further sale or distribution pending further order of the court.
Counsel for AZ confirmed that in order to hold the ring, they would seek injunctive relief against any other parties who try to launch prior to the time when the Court of Appeal is able to hear the appeal.
Footnote
1. Bayer Intellectual Property GmbH & Ors v Aspire Pharma & Ors [2024] FSR 23
