Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC fines pharmaceutical companies €146M for pay-for-delay agreements, (Jan 20, 2015)

By Greg Hammond, J.D.

The European Commission has fined Danish pharmaceutical company Lundbeck A/S and four other generic drug companies over €146 million for agreeing in 2002 and 2003 to delay the market entry of generic versions of Lundbeck’s blockbuster antidepressant drug, citalopram. The EC published its decision today, detailing the pay-for-delay agreements, which violated Article 101 of the Treaty on the Functioning of the European Union and article 53 of the EEA Agreement.

At the time the six agreements at issue were reached, Lundbeck’s patents and data protection on the citalopram compound and the two original production processes had expired, and Lundbeck no longer had complete blocking power against generic production and sales of the antidepressant. Nevertheless, Lundbeck alleged that various generic companies infringed on one or more of its process patents. The companies then entered into agreements prohibiting the generic manufacturers from entering the citalopram market, in exchange for a "transfer of value" from Lundbeck. The amount of the value transferred depended on the expected turnover or profit the generic companies expected if they successfully entered the market. The EC noted that each of the agreements did not resolve any patent dispute, but only postponed the issues raised by the potential generic market entry.

As a result of the pay-for-delay agreements, the EC fined Lundbeck a total of €93,766,000. Merck KGaA was fined €21,411,000, of which Generics [UK] Ltd.—now part of Mylan—is jointly and severally liable for €7,766,843. Arrow Group ApS—now part of Actavis—was fined €9,975,000. Ranbaxy Laboratories Limited and Ranbaxy (UK) Limited are jointly and severally liable for €10,323,000. Zoetis Products LLC (formerly Alpharma) and Xellia Pharmaceuticals ApS are jointly and severally liable for €10,530,000.

The EC’s decision to fine the pharmaceutical companies for the anticompetitive agreements was originally made in June 2013. At that time, EC Vice President responsible for Competition Policy Joaquín Almunia stated in prepared remarks: "The practices we are sanctioning are simply unacceptable. By today’s decision we are confirming that these so-called ‘pay-for-delay’ deals constitute severe infringements of EU competition law. They may cause severe harm to patients and taxpayers and must be sanctioned accordingly."

Companies: Lundbeck A/S; Merck KGaA; Generics UK Ltd.; Arrow Group ApS; Ranbaxy Laboratories Limited; Ranbaxy UK Limited; Zoetis Products LLC; Xellia Pharmaceuticals ApS

News: Antitrust