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Supplier of compounding pharmacies is liable for patent infringement

September 28, 2018

The São Paulo State Court of Appeals established on August 27, 2018 that suppliers of active pharmaceutical ingredients (APIs) for compounding pharmacies are liable for patent. The case was filed by Lundbeck against a local supplier (Idealfarma) claiming infringement of a patent covering vortioxetine. Idealfarma had been supplying several compounding pharmacies around Brazil.

The case discussed the applicability of the exception of patent infringement provided in art. 43, III of the Brazilian Patent Statute. The Statute establishes that the preparation of a medicine – and the medicine prepared – according to a medical prescription for individual cases, made by a qualified professional, would be exempted from patent infringement.

Lundbeck argued that art. 43, III does not apply to suppliers of APIs to compounding pharmacies. Lundbeck obtained a favorable ruling against the defendant to stop providing vortioxetine API.

The court granted an ex parte preliminary injunction to order Idealfarma to refrain from “using, manufacturing, exporting, offering for sale, selling, importing, keeping in stock” the API. Three months after filing the case, the district court granted a permanent injunction and awarded damages for the acts of infringement prior to the filing of the case. The Sao Paulo State Court of Appeals confirmed the district court decision, establishing liability for suppliers of infringing APIs in Brazil. The court accepted the arguments presented by Lundbeck attorneys* during the oral hearing.

According to the appellate court, only compounding pharmacies, and not their suppliers, are exempt from patent infringement. Further, the rule of law established a need for (i) medical prescription; (ii) for individual cases; and (iii) execution by a qualified professional.

Thus, according to the court: “an unauthorized party may not, at once, prepare a large quantity of a patented pharmaceutical, as the preparation itself is conditioned to a specific need of an individual in possession of a prescription”; and “the plaintiff presented several invoices demonstrating large scale sales from the defendant to other companies, demonstrating the complete absence of the requirements of the exemption of art. 43, III of the Patent Statute, as well as the clear intent to commercially exploit the patented substance, reason why I rule in favor of the plaintiff”.

The decision enforcing the patent covering vortioxetine is a leading case in the compounding pharmacies market. Before the lawsuit, suppliers tried to use the same rationale behind the patent infringement exception for compounding pharmacies to safeguard their business.

Lundbeck was represented by Felipe Mesquita and Otto Licks from Licks Attorneys.