The European Commission has imposed fines totalling 427.7 million euros on the French drugmaker Servier and five generics producers, after finding that they had concluded a series of deals all aimed at protecting Servier’s best-selling blood pressure drug, perindopril, from price competition by generics in the European Union (EU).
Through a technology acquisition and a series of patent settlements with the generics firms – Niche/Unichem, Matrix (now part of Mylan), Teva, Krka and Lupin – Servier implemented a strategy to exclude competitors and delay the entry of cheaper generic versions of the drug, to the detriment of public budgets and patients in breach of EU antitrust rules, it says.
While it is legitimate and desirable to apply for patents - including process patents - to enforce them, to transfer technologies and settle litigation, Servier misused these 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, says the Commission.
At least five times between 2005 and 2007, the generics firms agreed to abstain from competing in exchange for a share of Servier’s “rent,” it finds. In total, cash payments from Servier to the firms amounted to several tens of millions of euros, and it offered one firm a license for seven national markets - in return, the company agreed to “sacrifice” all other EU markets and stop efforts to launch its perindopril there.
Such behaviour violates EU antitrust rules that prohibit the abuse of a dominant market position - Article 102 of the Treaty on the Functioning of the European Union (TFEU) - and each of the settlements between Servier and its generic competitors was also an anticompetitive agreement prohibited by Article 101 of the TFEU, it adds.
“Servier had a strategy to systematically buy out any competitive threats to make sure that they stayed out of the market – such behaviour is clearly anti-competitive and abusive,” said Commission vice-president and competition policy head Joaquin Almunia.
“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,” he said, and called on drugmakers to “focus their efforts on innovating and competing.”
However, the European Generic medicines Association (EGA) notes that while the facts of the case remain confidential, it is concerned at the Commission’s general policy regarding competition law investigations on patent settlements in the pharmaceutical sector; there are insufficient grounds to imply that such settlements with value transfers are per se problematic and restrict competition.
EGA urges the Commission to assess such settlements “pursuant to a fully-fledged effects-based analysis,” and to conduct a full impact assessment of the long-term implications of its current policy on early generic entry