EU Charges Drugmakers $195M for Delay Tactics
(CN) - Pharmaceutical companies face $195 million in fines for keeping generic drugs off the market, the European Commission said Wednesday.
Denmark-based Lundbeck, which makes the antidepressant citalopram, will pay $125 million for paying eight generic drug makers to delay releasing their versions of the drug after Lundbeck's patent expired. Citalopram is sold under the brand names Celexa and Cipramil.
Regulators found that, in 2002, Lundbeck gave the generic producers "payments and other inducements amounting to tens of millions of euros" to delay their versions of the antidepressant. The investigation uncovered internal documents referring to a "club" and "a pile of $$$" shared between the participants, according to a commission statement.
In addition to lump-sum payouts, Lundbeck also bought the generic stock - for the purpose of destroying it - and offered the other drugmakers guaranteed profits in a distribution agreement. These actions inflated the cost of citalopram years longer than consumers would have ordinarily faced, regulators said.
"It is unacceptable that a company pays off its competitors to stay out of its market and delay the entry of cheaper medicines," said Joaquin Almunia, commission vice president in charge of competition policy. "Agreements of this type directly harm patients and national health systems, which are already under tight budgetary constraints. The commission will not tolerate such anticompetitive practices."
While Lundbeck will pay the bulk of the $195 million fine, the generic companies involved will pay a combined $70 million for their efforts in the scheme. The companies include Merck, Generics Ltd, Arrow Group, Resolution Chemicals Ltd, Zoetis Products, Xellia Pharmaceuticals, A.L. Industrier and Ranbaxy Ltd.
In a similar case, the U.S. Supreme Court earlier this week revived a Federal Trade Commission claim that Solvay Pharmaceuticals paid generic drug companies millions to keep generic versions of its testosterone replacement gel off the market. The 11th Circuit had previously dismissed the FTC's claim, saying that Solvay's "reverse settlements" did not violate antitrust laws.
In reversing that dismissal, however, the high court said some pay-to-delay reverse settlements can stifle competition.
"A reverse payment, where large and unjustified, can bring with it the risk of significant anticompetitive effects; one who makes such a payment may be unable to explain and to justify it; such a firm or individual may well possess market power derived from the patent; a court, by examining the size of the payment, may well be able to assess its likely anticompetitive effects along with its potential justifications without litigating the validity of the patent; and parties may well find ways to settle patent disputes without the use of reverse payments," Justice Stephen Breyer wrote for the majority.