The European Commission on Wednesday fined nine drugmakers a total of 146 million euros ($196 million) for entering deals that delayed the entry of generic versions of Lundbeck's antidepressant Celexa (citalopram). "Agreements of this type directly harm patients and national health systems, which are already under tight budgetary constraints," remarked EU competition commissioner Joaquin Almunia.
The regulator imposed a fine of 93.8 million euros ($125.7 million) on Lundbeck, claiming that the drugmaker entered agreements with eight other companies that "violated EU antitrust rules that prohibit anticompetitive agreements." According to the Commission, "the generic producers agreed with Lundbeck in 2002 not to enter the market in return for substantial payments and other inducements." The regulator said Lundbeck "paid significant lump sums, purchased generics' stock for the sole purpose of destroying it, and offered guaranteed profits in a distribution agreement."
Almunia remarked "it is unacceptable that a company pays off its competitors to stay out of its market and delay the entry of cheaper medicines." In response, Lundbeck said that it "strongly disagrees" with the decision and indicated that it "intends to appeal" the fine. The company noted that "patent settlement agreements are efficiency enhancing and legitimate when there are bona fide grounds for dispute," adding that in 2004, the deals were reviewed by both the European Commission and the Danish Competition Authorities, which determined that "it could not be rendered probable that the agreements were restricting competition."
The other companies involved include Merck KGaA, which was fined 21.4 million euros ($28.7 million), of which it will share a 7.8 million-euro ($10.5 million) penalty with Mylan's Generics UK unit. Merck spokesman Gangolf Schrimpf said the drugmaker is considering an appeal. In addition, the Commission fined Ranbaxy 10.3 million euros ($13.8 million), while Zoetis Products and Xellia Pharmaceuticals were jointly fined 10.5 million euros ($14.1 million). AL Industrier was held jointly liable with the latter two companies for 43,216 euros ($57,915) of that amount. Ranbaxy said the Commission "misunderstood the facts" in the case and plans to appeal to the EU General Court. Further, Actavis' Arrow unit was fined 10 million euros ($13.4 million), of which Resolution Chemicals is jointly held liable for 823,735 euros ($1.1 million).
The Commission has been investigating the pharmaceutical industry after publishing its first report into the sector in 2009, and sent statements of objections to Servier and Teva last year over possible delays for generic drugs. The EU antitrust regulator has also sought information from companies including GlaxoSmithKline, while in January, Johnson & Johnson and Novartis were sent complaints over such deals that may have hampered the sale of generic versions of the pain drug fentanyl in the Netherlands.
Almunia remarked that the regulator is "continuously monitoring" settlements in the pharmaceutical industry, adding that "three more cases of similar practices are under formal investigation." Deutsche Bank analyst Tim Race noted that the Lundbeck case sets a precedent for EU regulatory handling of such offences, suggesting "this is the first case of likely many for which we will see fines imposed."
Earlier this week, the US Supreme Court ruled 5-3 that drugmakers entering pay-for-delay deals surrounding generic medicines can be sued, allowing the Federal Trade Commission to pursue such cases. For related analysis, read ViewPoints: Score draw in FTC/Industry face-off on 'pay-for-delay' deals.
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