Australia: Italy: New developments in the "Pfizer saga" A recent judgment provides further guidance on the interaction between antitrust law and patent law in the pharmaceutical sector

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The Italian Supreme Administrative Court's recent judgment in the Pfizer case, which upheld a decision by the Italian Competition Authority (ICA) finding Pfizer in breach of Article 102 of the Treaty on the Functioning of the European Union (TFEU), represents a key development concerning the interaction between antitrust law and patent law in the pharmaceutical sector, as well as a very peculiar use of the notion of "abuse of rights" as a special "genus" of abuse of dominant position. The Supreme Administrative Court overturned the decision by the TAR Lazio (i.e. the Italian administrative court of first instance with jurisdiction over antitrust cases), which had annulled the ICA's decision.

After summarizing the relevant factual background, we sketch out the key features of the ICA's decision as well as those of the two administrative judgments, and provide some concluding remarks.

Factual Background

The "Pfizer saga" started in 1989, when Pharmacia (a company acquired in 2003 by the Pfizer group) filed a patent request to the European Patent Office (EPO) for a number of active ingredients, including latanoprost (i.e. the active ingredient used for Xalatan, an analogue to prostaglandins used to treat glaucoma). As a result, patent EP417 was granted in 1994 with an original expiry date of 6 September 2009.

In 1994, patent EP417 was validated in a number of European States, including Italy, where Pharmacia marketed Xalatan for the first time in 1997. At that time, Xalatan was the first analogue to prostaglandins and the first specialty to be used for the treatment of glaucoma as an alternative to beta blockers, demonstrating an improved level of tolerance and safety.

In the course of 1997, Pharmacia applied for a supplementary protection certificate (SPC) in several EU Member States to extend the duration of its patent EP417 until 11 July 2011, so as to be compensated for the time needed to obtain regulatory marketing approval. However, no SPC application was filed in Italy (as well as in Spain and Luxembourg), where the duration of patent EP417 remained limited to 6 September 2009. As a result, the duration of patent EP417 differed among EU Member States, and in those countries where no SPC was applied for, generics could enter the market as of September 2009.

Furthermore, in 2002 Pharmacia filed a divisional patent request (DPR) to the EPO concerning patent EP417. From a competition perspective, in light of the characteristics of Xalatan, when Pharmacia submitted such request to the EPO, it was essentially a monopolist on the market for the production and marketing of medicines analogous to prostaglandins. In 2009, the Pfizer group held a market share of about 60 per cent on the Italian market for medicines analogous to prostaglandins.

The divisional patent EP168 was granted in 2009 with the same duration as the parent patent EP417. However, on the basis of the divisional patent EP168, Pfizer, the legal successor of Pharmacia, applied for an SPC in Italy and was thus able to extend its patent protection until July 2011.

In October 2010, the EPO annulled Pfizer's divisional patent EP168. However, the effects of the EPO's decision were suspended pending Pfizer's appeal against the decision. In January 2011, Pfizer applied for a further extension of the duration of the SPC in order to carry out paediatric trials, thus extending its patent-coverage until January 2012. In May 2012, the EPO Board of Appeal confirmed the validity of Pfizer's divisional patent EP168.

The ICA's decision

By a decision dated 11 January 2012,1 the ICA imposed on Pfizer Italia S.r.l., Pfizer Health A.B. and Pfizer Inc. (together, Pfizer) a fine of € 10.6 million for abuse of a dominant position in breach of Article 102 TFEU.

The investigation was prompted by two complaints filed by Ratiopharm Italia S.r.l. (a generics manufacturer) and the European Generic Medicines Association, alleging that Pfizer was abusing administrative procedures to artificially extend patent protection for the glaucoma drug Xalatan, so as to prevent, or delay, market entry for generic products based on the same active ingredient.

Within the context of the ICA proceedings, Pfizer had offered a number of commitments to allay the competitive concerns raised by the ICA in its decision opening the investigation. In particular, Pfizer had offered the following remedies:

  • To grant a free licence for non-exclusive use in Italy of the invention covered by patent EP168 (with the possibility for Pfizer to withdraw the licence in case of inappropriate use of the invention or damages to the patent or Pfizer's image);
  • To put an end to administrative and civil proceedings at that time pending with generics (e.g. by waiving administrative claims addressed to the Italian Agency for Drugs (AIFA) and some generics, as well as all claims brought in a number of other actions pending before the Courts of Rome and Milan);
  • To withdraw the request for a further patent extension for paediatric trials; and
  • To advertise on its website all the available alternatives to Xalatan, stressing the availability of less expensive, but equally effective, versions of Xalatan. In addition, Pfizer offered to adequately inform doctors and pharmacists in particular as to the drugs available on the market based on the same active ingredient.

Following a market test on 25 August 2011, the ICA rejected Pfizer's commitments as inadequate and found that Pfizer had infringed Article 102 TFEU.

The ICA found that Pfizer had abused administrative procedures by filing for a divisional patent in 2002 concerning the glaucoma drug Xalatan. As mentioned above, the divisional patent was granted in 2009, and enabled Pfizer to apply for an SPC in Italy on the basis of the divisional patent, even though the original SPC deadline under the parent patent had already expired in Italy.

While the conduct concerning the filing of a divisional patent played a key role in the finding of an abuse, the ICA considered that such conduct was part of a complex exclusionary strategy including the following elements:

  • Conduct aimed at artificially extending the patent protection for Xalatan
    • Applying for a divisional patent in 2002;
    • Validating the divisional patent EP168 only in some EU countries (amongst them, Italy) to request an SPC only in those countries, thus obtaining the same duration of the patent protection in all EU countries; and
    • Requesting a further patent-coverage extension until January 2012 to conduct paediatric trials.
  • Conduct directly aimed at hindering or delaying market entry for generics in Italy
    • Addressing AIFA in order to prevent the granting of marketing authorisations to generics manufacturers and their inclusion in the relevant transparency lists;
    • Sending formal legal notices to Xalatan generics manufacturers warning them not to market their products before the expiry of Pfizer's patent protection in July 2011; and
    • Bringing several legal actions (claiming significant damages) aimed at discouraging, making more expensive or hampering the marketing of generics.

In particular, in the ICA's view, this strategy had created a "situation of legal uncertainty" as to the possibility of marketing the generic version of Xalatan, to the detriment of generics' legitimate expectations to enter the market as of September 2009, and ultimately had (i) exacerbated market entry costs (in terms of planning and production) for generics manufacturers and (ii) delayed their entry.

As regards Pfizer's exclusionary intent, according to the ICA, evidence demonstrated that Pfizer (a) was fully aware that its conduct was aimed solely at delaying market access for generics manufacturers, in particular in light of the fact that no new product was marketed on the basis of the divisional patent, and (b) was afraid of losing market share and revenues to generic versions of Xalatan.

As a result of the investigation, the ICA concluded that Pfizer had abusively managed to delay – for a 7-month period – market entry for generics manufacturers and to maintain its monopolistic revenues arising from the patent after its expiry.

In addition, the ICA considered that the Italian healthcare system was damaged by Pfizer's conduct, given (i) the impossibility to have access to generics, and (ii) the payment of a higher price for Pfizer's branded product. The ICA quantified such damages as amounting to around €14 million.

The TAR Lazio's judgment

By a judgment issued on 3 September 2012, the TAR Lazio annulled the ICA's decision rejecting the commitments offered by Pfizer within the context of the proceedings and fining Pfizer for abuse of a dominant position.

As regards the ICA's decision rejecting the commitments offered by Pfizer, the TAR Lazio argued that the ICA had not taken into account the overall nature and substance of these commitments, which were indeed capable of addressing the competition concerns raised in the decision opening the investigation. Therefore, according to the TAR Lazio, the ICA's reasoning for rejecting these commitments was insufficient as well as logically flawed and procedurally incorrect.

As regards the ICA's final decision fining Pfizer for abuse of dominance, the TAR Lazio (briefly) noted that Pfizer's alleged abuse actually consisted of various types of conduct adopted to protect the company's interests in patent, civil and administrative proceedings, and ruled no abuse could exist if (i) a dominant company's behaviour is lawful under patent, civil or administrative law, and (ii) there are no additional elements (quid pluris) demonstrating the exclusionary intent of the dominant company. Since the ICA had allegedly not demonstrated the additional elements, the finding of abuse was considered to be ill-grounded.

Furthermore, according to the TAR Lazio, the reasoning for the establishment of the abuse was based on the assumption that Pfizer's divisional patent EP168 had been annulled by a decision of the EPO, while in reality the latter was unenforceable due to a pending appeal lodged by Pfizer against it. Hence the ICA's reasoning was deemed factually incorrect on this point.

The Consiglio di Stato's judgment

By a judgment issued on 12 February 2014, the Consiglio di Stato overturned the TAR Lazio's judgment and reinstated the ICA's decision rejecting the commitments offered by Pfizer and fining the latter for an infringement of Article 102 TFEU.

As a preliminary remark, after upholding the ICA's definition of the relevant market as the Italian market for analogues to prostaglandins (with the exclusion of active ingredients belonging to other classes of drugs against glaucoma), the Consiglio di Stato pointed out that the core question of the appeal mainly pertained to the extent to which a dominant player – and more specifically a manufacturer of pharmaceutical specialties – may exercise its rights under patent law without infringing Article 102 TFEU.

With regard to the abuse, the Court considered that the exclusionary conduct attributed to Pfizer could essentially be identified as Pfizer's application for the divisional patent and the related SPC, without the following marketing of a new product. In this respect, the Court stressed that it was not contested that Pfizer had the right to file for a divisional patent on the basis of the initial patent EP417, so that such request was, in the abstract, legitimate; rather, the key legal question was how Pfizer had actually made use of its right to apply for a divisional patent.

In particular, in the Court's view, the fact that a divisional patent has the same duration as the parent patent bears no relevance in the assessment of an exclusionary intent. Indeed, it was the granting of the divisional patent that had allowed Pfizer to extend its patent protection until 2011 by requesting a new SPC in countries such as Italy, where an SPC had not been initially requested on the basis of the parent patent.

The fact that Pfizer knew that the SPC had the effect of extending Xalatan's patent protection was demonstrated in Pfizer's replies to the ICA, as well as by the warnings sent to generics manufacturers to prevent them from entering the market before 2011.

In addition, according to the Court, the issue of whether the divisional patent and the related SPC had been requested legitimately was not relevant to the dispute, since "the scope of the rules regarding inventions' legal protection (by means of patents) differs from the scope of the rules concerning the protection of competition".

In this sense, irrespective of whether Pfizer's conduct was legitimate under patent law, it amounted to an abuse of rights insofar as Pfizer exercised its right to file for a divisional patent for a purpose other than that for which such right was granted, i.e. a restriction of competition with the aim of delaying market entry by generics.

In particular, the Court recalled the following elements of the notion of "abuse of rights":

  • The existence of a right;
  • The possibility to make use of such right in a number of different and non-predetermined ways;
  • The fact that the actual exercise of the right, despite being formally compliant with the underlying rules establishing such right, might be challenged on the basis of legal or non-legal criteria;
  • The fact that as a result of such actual exercise, an unjustified disproportionate effect arises as between the benefit for the holder of the right and the sacrifice imposed onto the relevant counterparty; and
  • As a result of the above elements, the exercise of the right entails a distorted use of the right in order to achieve objectives differing from what was provided by the legislator.

In light of the above, the Court concluded that Pfizer's conduct caused the delay of generics' market entry without entailing a use of the active ingredient other than the one already protected by the parent patent. Therefore, the ICA was right in considering that Pfizer's aim was different from the one for which the right to file for a divisional patent was granted, inasmuch as Pfizer's only purpose was to delay the marketing of generics.

Pfizer's complex exclusionary strategy thus comprised:

  • The introduction of a climate of uncertainty as to the possibility of marketing generics as of the expiration of patent protection;
  • The fact that no new product was marketed following the granting of the divisional patent; and
  • The adoption of several specific actions in order to discourage generics from entering the market (e.g. sending warnings to generics manufacturers, contacting AIFA with the aim of preventing generics from being included within the transparency list, and submitting a request for further patent extension for paediatric trials).

Moving on to the commitments offered by Pfizer within the context of the proceedings before the ICA, the Court upheld the ICA's decision rejecting such commitments on the basis of their inadequacy to allay the ICA's preliminary competitive concerns. In particular, in the Court's view, the commitments were not capable of bringing to an end Pfizer's abusive conduct, given that the patent would have expired in July 2011 and that Pfizer's conduct had already produced anticompetitive (and irreversible) effects.

In conclusion, the Consiglio di Stato noted that the ICA was right in considering that Pfizer's conduct – despite representing the legitimate exercise of rights provided by sectoral rules – could be characterised as an abuse of rights amounting to anticompetitive conduct. As mentioned above, in the Court's view, the fact that no new product was marketed following the granting of the divisional patent further confirmed the exclusionary nature of Pfizer's conduct.


The "Pfizer saga" is one of those cases that challenge and expand the outer boundaries of the concept of abuse of dominance, thus positioning the ICA at the forefront of innovation and development of EU antitrust rules at national level.

Some have argued that, with the Pfizer case, the ICA went considerably too far in its approach to the qualification of abusive conduct, especially if compared to the approach of the General Court and the Court of Justice in AstraZeneca.2 According to this view, whilst AstraZeneca provided misleading information to patent authorities, in the Pfizer case it appears that the mere reliance upon patent tools – such as divisional patents and SPCs – might in itself constitute an abuse of dominance if the conduct is based upon an abuse of rights.

In particular, according to this view, the evidence the ICA cited for Pfizer's exclusionary intent, namely that the divisional patent did not lead to the following marketing of any new product, disguises a misunderstanding of the very nature of divisional patents, which are not related to the introduction of new inventions, but merely serve procedural purposes (e.g. ensuring unity of invention).

Moreover, the fact that an originator requests an SPC in order to extend its patent protection and delay generics' entry, is a self-evident fact as this is the very purpose of an SPC. Hence, it is very difficult for an originator to demonstrate (in particular in terms of internal documentary evidence) the existence of a different purpose behind such request.

The Pfizer decision, far from identifying improper conduct going beyond the lawful use of patent rights, could thus be interpreted as treating as abusive a simple application for a divisional patent, the related SPC, in order to cure its failure to obtain an SPC under the parent patent. Should such conduct be interpreted as a sufficient indication of an abusive exclusionary intent, then the Pfizer case, especially after the Consiglio di Stato's judgment, would represent a critical expansion of the scope of Article 102 TFEU.

That said, other commentators share opposite views.3 If it is true that Pfizer had applied for a divisional patent and then for an SPC in order to cure the failure to obtain an SPC based on the parent patent, then it is also true that Pfizer had exercised its rights under patent law with the sole aim of obtaining something which, pursuant to the relevant regulation, was time-barred in Italy.

Following this line of reasoning, Pfizer's conduct not only represents the abuse of rights identified by the Consiglio di Stato, but appears also difficult to reconcile with the idea of "competition on the merits" endorsed in AstraZeneca. In this regard, it seems important to recall that AstraZeneca's provision of misleading information was deemed abusive not because it was illegitimate per se, but rather because it ran afoul of competition on the merits.

To conclude, the circumstance that conduct which is legitimate from a patent law perspective might well entail an antitrust infringement is not surprising: many contractual clauses which are perfectly sound from a civil law perspective might imply anticompetitive effects.

The notion of abuse of rights coupled with the settled principle of competition on the merits might thus offer a balanced interpretation of the "Pfizer saga".


1Decision no. 23194, in Bull. 2/2012.
2See T. Graf, Italian Competition Authority Challenges Patent Measures, in Kluwer Competition Law blog, 23 January 2012.
3See S. Grassani, Evolution or Revolution? The Italian Competition Authority and the Pfizer Decision: A Reply to Thomas Graf, in Kluwer Competition Law blog, 7 February 2012.

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