Pharmaceutical sector update

The latter half of 2013 proved to be an interesting period for the pharmaceutical sector from a competition law perspective. The European Commission has finally followed its controversial findings in its 2009 sector inquiry with a formal determination that certain types of patent settlement agreements containing transfers of value infringe competition law. As such, pharmaceutical companies will have to proceed with caution when attempting to settle any dispute using an agreement that contains a transfer in value until more light is shed on the issue by the EU’s General Court. The commission also announced that its annual monitoring exercise had revealed a decrease in the number of potentially anti-competitive agreements entered into by pharmaceutical companies. This article provides an update on recent developments as the commission continues with its campaign to expand the application of competition law in the sector.

In June 2013, the commission finally decided to issue a decision, after an almost unprecedented 10-year investigation, claiming that Lundbeck (the originator manufacturer of citalopram, a widely prescribed anti-depressant) had infringed competition law. Lundbeck had entered into a number of patent settlement agreements containing transfers of value with various generic manufacturers. Lundbeck was fined €93.8m (£57m), while the generic companies (Ranbaxy, Merck KGaA/Generics UK, Alpharma and Arrow) were given fines totalling €52.2m.

The commission alleged that the generic companies had delayed their entry into the citalopram market in return for payments and other incentives from Lundbeck (for example agreeing to distribute Lundbeck’s citalopram). The alleged effect of this, according to the commission, was that Lundbeck was able to maintain artificially high prices, which was harmful to consumers within the EU…

Click on the link below to read the rest of the Taylor Wessing briefing. 

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