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EU fines drug firms for delaying generics

The EU commission has filed Danish Lundbeck and eight other pharmaceutical firms for paying off rivals to delay production of generics.

Photo. European Commissioner for Competition Joaquin Almunia during a press conference.

The EU commission reached a decision in the several years’ long trial on Danish pharmaceutical firm Lundbeck for blocking generic versions of antidepressant drug Citalopram. After Lundbeck’s patent on the blockbuster antidepressant drug expired, the company paid the other companies tens of millions of euros not to enter the market. European Union antitrust authorities now fines Danish pharmaceutical company Lundbeck and eight other pharmaceutical companies involved in the blockade a total 146 million Euros.

The case was speeded up as the European Commission had filed a report on the drug market, showing that patients had to pay 20 percent more for their medicines as a consequence of drug companies preventing less expensive generics entering the market. The so-called ‘pay for delay’ deal is based on pharmaceutical firms behind the original drugs paying the generic companies to stay away from the market and not releasing copies of the patents when the original drug has expired.

Danish Lundbeck is fined for paying the eight generic companies to keep the market free for Lundbeck’s antidepressant drug Citalopram. According to the Commission, Lundbeck also purchased generics’ stock “for the sole purchase of destroying it”. The company now gets the largest fine of 93.8 million Euros. Lundbeck has announced that they will appeal the sentence but has also earmarked money that will cover the fine. In a press release, the company states that it “strongly disagrees with the Commission’s decision. It asserts that any settlement agreements involving a transfer of value from an originator to a generic company is a restriction of competition and the value transfer reflects an understanding that the patent is invalid or weak. This approach is erroneous. There is no question about the validity of Lundbeck’s process patents at issue.” Furthermore, Lundbeck claims that they “acted transparently and in good faith in trying to protect our patents. Upon entering the agreements they were all reviewed by external anti-trust experts. The agreements were furthermore in 2004 reviewed by both the European Commission and the Danish Competition Authorities who publically stated that it could not be rendered probable that the agreements were restricting competition.”

“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,” said European Commissioner for Competition Joaquin Almunia in a statement.

The other companies fined by the European Commission were Arrow Group, Arrow Generics and Resolution Chemicals (9.98 million euros); Zoetis Products, Xellia Pharmaceuticals and A.L. Industrier (10.53 million euros); Ranbaxy Laboratories (BOM:500359) and Ranbaxy UK (10.32 million euros); for a total fine on generic drug makers amounting to 52.24 million euros.

The European Commission is currently dealing with two similar cases of violations of competition law: one concerns Israelian Tevas and French Servier, and the other Johnson and Johnson and Swiss Novartis.