Chemistree Homecare Ltd v Abbvie Ltd

For a prescription medicine, the relevant product-market customer is not the pharmacist acting as an intermediary. The inquiry focuses on the patient, prescriber and budget holder, whose choices determine whether therapeutic substitutes constrain the supplier. A patented or must-have medicine for a subgroup does not, without evidence of that subgroup’s market share and switching by marginal customers, constitute a market of its own. The claimant must provide an evidential foundation for dominance; unsupported theory cannot establish a serious issue to be tried. The appeal was dismissed.

Chemistree Homecare Ltd appealed against Roth J’s dismissal of its application for an interim mandatory injunction requiring Abbvie Ltd to supply Kaletra. Its underlying claim alleged abuse of a dominant position under Article 102 of the Treaty on the Functioning of the European Union and section 18 of the Competition Act 1998. The High Court held that CHL had no real prospect of establishing dominance or abuse and that damages would be an adequate remedy. The appeal challenged those conclusions, principally asking whether pharmacists were the relevant customers and whether Kaletra alone constituted the relevant product market.

Rimer LJ delivered the judgment, with which Lewison LJ and Treacy LJ agreed. The appeal was dismissed.

1. Relevant customer. In defining the product market for prescription medicines, the fact that pharmacists buy the product does not make them the relevant customers for competition analysis. Pharmacists act as intermediaries and buy to meet prescriptions. The relevant economic inquiry concerns the patient, prescribing doctor and budget holder, whose choices determine whether alternative medicines constrain the supplier. The pharmacist’s inability to substitute another product when dispensing a Kaletra prescription is therefore irrelevant.
2. Market definition. The SSNIP analysis asks whether sufficient customers would switch to available substitutes following a small but permanent price increase, so that the increase would be unprofitable. A patented medicine may theoretically constitute a market of its own, but that is rare because therapeutically equivalent medicines may constrain it. The existence of a cohort of patients for whom Kaletra is a must-have medicine does not itself establish a distinct market. The court required evidence of the proportion of purchases attributable to such patients and to therapy-naïve or otherwise marginal patients capable of switching.
3. Evidence and disposition. CHL’s case rested on evidentially unsupported theory. It had not provided the information necessary to assess the effect of a price increase or the extent of substitution. The burden lay on CHL to establish an evidential foundation for its assertion of dominance; it could not obtain interim relief speculatively in the hope that disclosure would later supply the missing evidence. The failure to establish a serious issue to be tried on dominance disposed of the appeal, and it was unnecessary to consider the grounds concerning abuse or adequacy of damages.

• Court of Appeal (Civil Division): In [2013] EWCA Civ 1338, the court dismissed CHL’s appeal.
• High Court of Justice, Chancery Division: Roth J dismissed with costs CHL’s application for an interim mandatory injunction in [2013] EWHC 264 (Ch).