On 25 July 2012, the European Commission announced that it had sent a formal Statement of Objections ("SO") to Danish pharmaceutical company Lundbeck over its conclusion of so-called "pay-for-delay" agreements with four generic producers of citalopram, a antidepressant medicine.
In its SO, the Commission alleges that Lundbeck concluded agreements with generic producers of citalopram to prevent the entry of generic versions of the medicine on the market, contrary to Article 101 TFEU. In theory, entry on the market of generic versions of citalopram should have been possible when some of Lundbeck's citalopram patents expired. However, due to agreements between Lundbeck and the four generic producers, the latter subsequently abstained from entering the market altogether. According to the Commission, the agreements consisted, amongst others, in direct payments from Lundbeck to the generic producers, as well as the purchase of the stock of generic citalopram for destruction or guaranteed profits in a distribution agreement.
Also concerned by the SO are A.L. Industrier, Alpharma, Arrow, Generics UK, Merck KGaA, Ranbaxy, Resolution Chemicals and Xellia Pharmaceuticals, which were part of the generic groups which concluded the agreements.
This latest development follows the Commission's formal opening of an investigation against Lundbeck in 2010 (see VBB on Competition Law, Volume 2010, No. 1, available at www.vbb.com). The company has already reacted to the Commission's announcement, stating that it vigorously opposes any allegation of wrongdoing and that it does not believe its agreements violated European competition law.
In a similar case, also concerning "pay-for-delay" agreements between pharmaceutical companies and their generic producer competitors, the Commission has been conducting since 2009 an investigation against the French pharmaceutical company, Les Laboratories Servier in the market for perindopril, a cardio-vascular medicine (see VBB on Competition Law, Volume 2009, No. 7, available at www.vbb.com). On 30 July 2012, the Commission announced that it had issued a Statement of Objections against Servier and several of its generic competitors as well. The Commission objected to Servier's acquisition of "scarce competing technologies to produce perindopril". According to the Commission, Servier also "unduly protected its market exclusivity by inducing its generic challengers to conclude patent settlements". The Commission thus found breaches of Articles 101 and 102 TFEU.
Both the Lundbeck and Servier investigations echo the findings of the Commission's 2009 pharmaceutical sector inquiry in which a number of alleged competition problems had been identified, including delays to generic medicine entry onto the market (see VBB on Competition Law, Volume 2009, No. 7, available at www.vbb.com). In its final version of the sector inquiry, the Commission signalled that it would follow closely developments in the pharmaceutical sector, particularly with regards to patent settlement agreements that involve what it refers to as a "value transfer". Other Commission investigations are ongoing in the sector against Cephalon and Teva (see VBB on Competition Law, Volume 2011, No. 4, available at www.vbb.com), and Johnson & Johnson and Novartis (see VBB on Competition Law, Volume 2011, No. 11, available at www.vbb.com).
Finally, the Commission published on 25 July 2012 its third patent settlement monitoring report. Of particular interest to the Commission is the identification of the potentially problematic and anti-competitive patent settlement agreements, and in particular those that limit or delay generic entry in exchange for payment or other types of benefits from originator to generic companies. The latest report finds that, while the total annual number of concluded settlements has risen sharply by 500% to 120 compared to the findings of the 2009 sector inquiry (which reported 24 such settlements per year) most of these seem to be unproblematic and not anti-competitive. In fact, the proportion of these potentially problematic settlements has even stabilised to 11% compared to 22% reported at the time of the 2009 sector inquiry.
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