On 19 December 2013, the French Competition Authority (FCA) imposed a fine of € 15.3 million on pharmaceutical company Schering-Plough for defaming a generic drug that competes with its brand name Subutex drug and for granting unjustified price cuts to pharmacies in breach of Article 102 TFEU.
In 1997, Schering-Plough acquired the exclusive marketing rights of Subutex, which is used to treat the dependence of drug addicts, from its manufacturer Reckitt Benckiser. In 2006, the generic pharmaceutical company Arrow brought proceedings before the FCA following difficulties in entering the market, alleging that Schering-Plough had abused its dominant position.
In its decision, the FCA found that Schering-Plough and Reckitt Benckiser carried out a two-prong strategy between mid-February and May 2006 aimed at delaying and discouraging the market entry of generics by questioning the medical equivalence of the generic drugs. First, the pharmaceutical companies conducted a communication campaign aimed at doctors and pharmacists shedding doubts on the efficiency and the safety of the products of generic competitors. Second, the FCA found that Schering-Plough granted pharmacists illegal rebates with no objective justification, the aim of which was to prevent their supply of generics by saturating their stocks. The rates of the rebates also exceeded the maximum legal cap, and the payment conditions were found to be abnormally favorable.
The FCA also found that Schering-Plough took improper measures to influence both doctors and pharmacists to stop the generic substitution process by, for example, convincing doctors to insert the indication "non-substitutable" in their prescription of Subutex to their patients, or encouraging pharmacists not to substitute Subutex for the generic when the prescription did not require it.
The FCA fined Schering-Plough a total amount of € 15.3 million and Reckitt Benckiser € 318,000 for conducting the defamatory campaign and for granting the illegal rebates to pharmacists. Schering-Plough's parent company, Merck & Co, was fined € 414,000 for operating the illegal cartel.
This is the second time the FCA has fined a pharmaceutical company for orchestrating a defamatory campaign aimed at delaying the market entry of a generic. In May 2013, Sanofi-Aventis was fined over € 40 million on the same grounds (see VBB on Competition Law, Volume 2013, No. 5, available at www.vbb.com). The lower fine imposed on Schering-Plough appears to reflect the fact that it did not contest the FCA's statement of objections.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.