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EU Regulators Charge Lundbeck Inc. (LUN.CO), Others Over Generics


7/25/2012 7:07:27 AM

Brussels, 25 July 2012 -- The European Commission has informed the Danish pharmaceutical company Lundbeck of its objections regarding agreements concluded with four generic competitors concerning citalopram, a blockbuster antidepressant. The Commission is of the preliminary view that the agreements aimed at preventing the market entry of cheaper generic medicines, in violation of EU antitrust rules. The Statement of Objections is also addressed to Merck KGaA, Generics UK, Arrow, Resolution Chemicals, Xellia Pharmaceuticals, Alpharma, A.L. Industrier and Ranbaxy, which belonged to the generic groups that concluded the agreements. The sending of a Statement of Objections does not prejudge the final outcome of the investigation.

In its Statement of Objections, the Commission takes the preliminary view that Lundbeck concluded agreements with generic companies to prevent the market entry of competing generic versions of its best-selling medicine citalopram. Generic entry became in principle possible when certain of Lundbeck's citalopram patents had expired. But the companies entered into agreements that foresaw substantial value transfers from Lundbeck to its four generic competitors, who subsequently abstained from entering the market with generic citalopram. The value transfers included direct payments from Lundbeck to the generic competitors and also occurred in other forms, such as the purchase of generic citalopram stock for destruction or guaranteed profits in a distribution agreement.

This behaviour, if established, would infringe Article 101 of the Treaty on the Functioning of the European Union (TFEU) that prohibits restrictive business practices. At this point, the Commission considers that the practices may have caused substantial consumer harm. This is because they may have delayed the entry of generic medicine for up to two years and the prices for citalopram remained high as a result.

Together with the Servier investigation (see MEMO/09/322), this is the first case dealing with so called "pay for delay" agreements.

Background

The Commission opened formal antitrust proceedings against Lundbeck in 2010 (see IP/10/8).

The Commission's competition inquiry into the pharmaceutical sector indicated a number of structural issues and problems in companies' practices that potentially led to distortions of competition and delays to the entry of new, innovative as well as cheaper generic medicines into the EU market (see IP/09/1098 and MEMO/09/321). In its final report the Commission made a number of recommendations to address these general problems. It emphasised, in particular, the importance of stronger competition law enforcement with regard to patent settlements.

Today's Statement of Objections is an important step in addressing the competition issues highlighted in the final report of the sector inquiry (see also MEMO/12/593).

A Statement of Objections is a formal step in Commission investigations into suspected violations of EU antitrust rules. The Commission informs the parties concerned in writing of the objections raised against them and the companies can examine the documents on the Commission’s investigation file, reply in writing and request an oral hearing to present their comments on the case before representatives of the Commission and national competition authorities.

The duration of antitrust investigations varies according to the complexity of the case, the number of markets and companies involved and whether they cooperate with the Commission.

If, after the parties have exercised their rights of defence, the Commission concludes that there is sufficient evidence of an infringement, it can issue a decision prohibiting the conduct and impose a fine of up to 10% of a company's annual worldwide turnover.

Contacts :

Antoine Colombani (+32 2 297 45 13)

Marisa Gonzalez Iglesias (+32 2 295 19 25)


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