Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC fines Servier, generic drug makers €427M for curbing entry of blood pressure drug, (Jul 9, 2014)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) has announced today the imposition of fines totaling €427.7 million on the French pharmaceutical company Les Laboratoires Servier and five generic drug manufacturers—Niche Generics Ltd., Matrix Laboratories Ltd., Teva Pharmaceutical Industries Ltd., Krka d.d., and Lupin Ltd.—for concluding a series of agreements aimed at protecting Servier's bestselling blood pressure medicine, perindopril, from price competition by generics in the European Union (EU).

Through a technology acquisition and a series of patent settlements with generic rivals, Servier implemented a strategy to exclude competitors and delay the entry of cheaper generic medicines to the detriment of public budgets and patients in breach of EU antitrust rules. The Commission based its fines on its 2006 Guidelines and took into account the duration of each infringement and its gravity in setting the level of the fines.

Perindopril is a blood pressure control medicine, and Servier held significant market power in the market for the perindopril molecule. Although Servier's patent for the perindopril molecule expired in 2003, generic competitors continued to face a number of secondary patents relating to processes and form.

Generic companies sought access to patent-free products or challenged Servier's patents that they believed were unduly blocking them. However, in 2004 Servier acquired the most advanced one, forcing a number of generic projects to stop and therefore delaying their entry.

Generic producers challenged Servier's patents in the courts. However, between 2005 and 2007, virtually each time a generic company came close to entering the market, Servier and the company in question settled the challenge. In each case, the generic companies agreed to abstain from competing in exchange for cash payments.

It is legitimate to apply for patents, to enforce them, to transfer technologies, and to settle litigation, the EC observed. However, in the Commission’s view, Servier misused such legitimate tools by shutting out a competing technology and buying out a number of competitors that had developed cheaper medicines, to avoid competing on their own merits. The EC determined that such behavior violated EU antitrust rules that prohibit the abuse of a dominant market position.

The EC's decision follows the Statement of Objections sent to the parties in July 2012 and the opening of the formal investigation in July 2009.

“Servier had a strategy to systematically buy out any competitive threats to make sure that they stayed out of the market. Such behavior is clearly anti-competitive and abusive,” said Joaquín Almunia, Commission Vice-President, in charge of competition policy. “Competitors cannot agree to share markets or market rents instead of competing, even when these agreements are in the form of patent settlements. Such practices directly harm patients, national health systems and taxpayers. Pharmaceutical companies should focus their efforts on innovating and competing rather than attempting to extract extra rents from patients.”

Companies: Les Laboratoires Servier; Niche Generics Ltd.; Matrix Laboratories Ltd.; Teva Pharmaceutical Industries Ltd.; Krka d.d.; Lupin Ltd.

News: Antitrust