European Commission Enforcement Actions in Pharma Sector

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1. Statement of objections sent to Lundbeck and several generic competitors allegedly hindering generic entry

Lundbeck and several pharmaceutical companies received the statement of objections in the investigation concerning the best-selling antidepressant citalopram, in the context of the allegations of entering into agreements which may have hindered the entry of generic citalopram into markets in the European Economic Area.

The European Commission’s preliminary view is that the companies concluded these agreements when generic entry became in principle possible, because certain of Lundbeck’s citalopram patents had expired.

The agreements foresaw substantial value transfers from Lundbeck to its four generic competitors, who subsequently abstained from entering the market with generic citalopram.

Lundbeck’s value transfers to the generic competitors included direct payments as well as other forms such as purchase of generic citalopram stock for guaranteed profits in a distribution agreement.

This behaviour, if established, would infringe Article 101 of the Treaty on the Functioning of the European Union (TFEU) that prohibits anticompetitive business practices.

The investigation was initiated following the European Commission’s pharma sector competition inquiry conducted in 2009, which has revealed that competition between originator companies and generic companies is one of the main areas where markets do not work as well as they should.

2. Investigation against Les Laboratoires Servier and a number of generic pharmaceutical companies

The European Commission is planning to take further steps in the coming days in the investigation concerning the cardio-vascular medicine perindopril, whereby Les Laboratoires Servier are suspected for breaches of EU rules on restrictice business practices (Article 101 TFEU) and on abuse of a dominant market position (Article 102 TFEU).

In this case, Servier and several generic competitors are suspected of entering into agreements which may have hindered the entry of generic perindopril into markets in the EU. In the context of this investigation, the Commission is also looking at the unilateral behaviour of Servier.

In addition to the Lundbeck and Servier cases, the Commission has other ongoing antitrust investigations in the pharmaceutical sector. It has opened proceedings against Cephalon and Teva and Johnson & Johnson, Novartis and Sandoz for possible violations of EU competition rules, including practices involving generic companies.

3. Patent Settlement Monitoring 

On 25th July 2012, the European Commission published its third patent settlement monitoring report. The continuous monitoring of patent settlements in the pharmaceutical sector had been recommended by the European Commission in its final report of the sector inquiry conducted in 2009.

The aim was to identify potentially problematic settlements from an antitrust perspective, in particular those that limit generic entry against payment from an originator to a generic company. The proportion of such potentially problematic settlements has stabilised at a low level of 11% vis-à-vis 21% in the findings of the sector inquiry.

At the same time the total annual number of concluded settlements has increased by 500% to 120 compared to the findings of the sector inquiry. Most of them appear to be unproblematic from an antitrust perspective. This shows that the European Commission’s action has not hindered companies from concluding settlements, infirming fears expressed by certain stakeholders in that respect.

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