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From Antitrust Law Daily, June 19, 2013

European Commission Fines Drug Companies over “Pay-for-Delay”Agreements

By Jeffrey May, J.D.

Danish pharmaceutical company Lundbeck A/S and four groups of generic drug companies have been fined a total of more than €145 million by the European Commission (EC) for agreeing in 2002 to delay the market entry of cheaper generic versions of Lundbeck's best-selling antidepressant citalopram. According to the EC's announcement released today, the generic producers entered into agreements with Lundbeck not to enter the market in return for substantial payments and other inducements from Lundbeck amounting to tens of millions of euros.

Lundbeck was fined €93,766 000. The company issued a statement today, pledging to appeal the decision. Lundbeck went on to say that the patent settlement agreements were all reviewed by external antitrust experts, as well as by both the EC and the Danish Competition Authorities “who publically stated that it could not be rendered probable that the agreements were restricting competition.”

Also fined for their roles in the challenged agreements were four groups of drug companies:

Merck KGaA: €21,411,000 (of which €7.766,843 jointly and severally with Generics [UK] Limited, which is now part of Mylan);

Arrow Group ApS (now part of Actavis): €9,975,000 (of which €9,360,000 jointly and severally with Arrow Generics Limited and of that €9,360,000, €823,735 jointly and severally with Resolution Chemicals Limited);

Zoetis Products LLC (formerly Alpharma) and Xellia Pharmaceuticals ApS (jointly and severally €10,530,000); and

Ranbaxy Laboratories Limited and Ranbaxy (UK) Limited (€10,323,000).

EC Vice President Almunia's statement. In a separate statement, Joaquin Almunia, the EC Vice President responsible for Competition Policy, said that “Lundbeck did not prevent market entry by successfully enforcing its patent rights; rather, it simply paid other companies so that they would not compete.”

He added that these “pay-for-delay” deals constitute severe infringements of EU competition law. Saying the EC was “in good company in this approach,” Almunia pointed to the U.S. Supreme Court's recent decision in FTC v Actavis, Inc., which held these types of agreements subject to antitrust scrutiny.

“We have other investigations ongoing and more decisions in this field are likely before the end of my mandate,” Almunia warned.

Background. The EC announced the opening of its formal investigation to determine whether Lundbeck's unilateral behavior and agreements hindered the entry of generic citalopram in January 2010. In July 2012, the EC sent a statement of objections to Lundbeck, offering the EC's preliminary view that the agreements with the four generic firms could have infringed Article 101 of the Treaty on the Functioning of the European Union (TFEU).

MainStory: TopStory Antitrust

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