Olswang EU competition law bulletin - Life science focus

United Kingdom

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

In this bulletin we provide an update on recent EU competition law activity in the life science sector. In particular, we provide an overview of recent developments in ongoing competition law cases around Europe and some insights into the European Commission's decision in the pay-for-delay case against Lundbeck and several generic producers following publication of the non-confidential version of that decision.

Investigations around the EU

Italy: The Chairman of the Italian Competition Authority, Giovanni Pitruzzella, provided an interesting insight into a number of the authority's investigations the pharmaceutical sector at a King's College London lecture last month (see "Antitrust as a cure for pharmaceutical competition: remarks from the Italian experience"). While Mr Pitruzella's talk focussed on the completed cases of Ratiopharm/Pfizer (see Xalatan) and Roche-Novartis (see Avastin/Lucentis) and the lessons learned by the Italian authority in those cases, he also mentioned the following three pipeline cases:

  • The investigation into an alleged abuse of dominance on the market for cholic acid by Industria Chimica Emiliana and its subsidiary Prodotti Chimici e Alimentari (see here);
  • Potential anticompetitive restrictions in agreements between Novartis Farma and Italfarmaco relating to the supply of tumor drug octreotide acetate. The companies have put forward commitments to address the alleged unlawful conduct, in particular, amendments to contract terms to prevent anticompetitive information exchange and market sharing. It is understood that a decision is expected by the end of March 2015; and
  • The case mentioned in our December update (see here) relating to an alleged abuse of a dominant position by Aspen in respect of the pricing of its cancer drugs, Alkeran, Leukeran, Purinethol and Tioguanina (see here).

The Avastin/Lucentis case has been picked up by consumer groups in other EU Member States, including Belgium, Spain, Portugal as well as in France where inspections were carried out by the French competition authority in April 2014. The case in Italy saw Roche and Novartis fined a total of €182.5m for agreeing to restrict sales of the cheaper Avastin, in favour of the more expensive product, Lucentis. The fines were upheld by the Italian administrative court and a further appeal is pending. The European Commission is also gathering more information in order to assess whether action at an EU level is appropriate following a complaint by BEUC.

France: The Paris Court of Appeal recently upheld a €40.6m fine levied on Sanofi-Aventis by the French Competition Authority in 2013. The fine was imposed in relation to conduct which limited the entry of generic versions of the drug, Plavix, which treats serious cardiovascular diseases. In another Paris Court of Appeal case, Genentech Inc. v. Hoechst GmbH, the European Court of Justice recently announced that it will respond to a question referred to it on whether EU competition law precludes payment of royalties on a patent licensing agreement after the invalidation of the patent.

Spain: The Spanish Competition and Markets Authority ("CNMC") is investigating alleged anticompetitive restrictions on parallel imports in certain of Pfizer's supply contracts. This case stems from a 2005 complaint lodged by Spain Pharma which the now-extinct Comisión Nacional de Competencia ("CNC") decided not to follow up due to a lack of evidence. However, the CNC's decision was appealed and in December 2014 the Spanish Supreme Court issued a judgment finding that Pfizer's supply agreements could prevent goods from being exported to other EU Member States. Consequently, the CNMC has initiated formal proceedings and has 18 months in which to issue a decision.

Switzerland: The Swiss Competition Authority has opened an investigation into GE Medical Systems (Switzerland) AG in relation to potential obstruction of parallel and direct imports of ultrasound equipment (see here).

UK: the UK Competition and Markets Authority is due to issue its paroxetine decision in Spring 2015. The case is believed to involve pay-for-delay agreements between GlaxoSmithKline, Alpharma, Generics UK and Norton Healthcare (see here).

Other: a Russian court has dismissed an appeal by Teva in respect of a fine imposed by the Russian Competition Authority ("FAS"). In December 2013 FAS found that Teva had abused its position of dominance by refusing to supply its multiple sclerosis drug, Copaxone, to Biotek. FAS issued a number of warnings to Teva and issued a fine in October 2014 for failing to enter into a contract with Biotek. Teva appealed the FAS decision and was successful at first instance in establishing that Russia's antitrust laws should not apply to products protected by patents. However, the 9th Arbitration appeal Court reversed that decision, effectively imposing an obligation on dominant firms to license their patents. This was upheld by the Federal Arbitration Court earlier this month (see here).

European Commission - publication of decisions in pay-for-delay (or "reverse settlement agreement") cases

In January the Commission finally published the public version of its decision in the Lundbeck pay-for-delay case (see here). Much has been written about this case already (not least by Olswang) but it is still worth noting a few key areas for consideration by pharma companies entering into settlement agreements:

  • Arrangements involving payments from an innovator to a generic can be categorised as agreements which, by their very nature, are restrictive of competition. A key question is whether there is a payment which incentivises the generic not to compete.
  • In this case the Commission made certain assumptions about the generic business model in their assessment of generics as potential competitors of the originator. In particular, it was assumed that the generics had the means to enter and remain on the market (because they have access to ostensibly non-infringing product, Marketing Authorisations in places, etc) despite the existence of Lundbeck's process patent which had not been invalidated. The Commission contends that it looked purely at the strength of the potential competition and makes no judgment on the strength of the patent in its assessment.
  • There was no reciprocal commitment that Lundbeck would refrain from bringing infringement proceedings after the expiry of agreements with the generic firms. As a result the Commission took the view that the agreements merely postponed the issue of potential generic market entry - they were not aimed at resolving or terminating any underlying patent dispute.

The Commission has also indicated that the public version of its decision in the perindopril case will be available soon. In the related follow-on damages claim against Les Laboratoires Servier brought by the health authorities in England, Wales, Scotland and Northern Ireland, a UK court has ordered the confidential version of the Commission's decision be disclosed to the claimants' advisors.