EU Magistrate Backs $105M Fine for Pay-for-Delay Deals

LUXEMBOURG (CN) — An adviser to the European Union’s top court said Thursday it should reject a pharmaceutical company’s challenge to a penalty for paying to delay the sale of generic drugs, finding such deals violate EU competition rules.  

The advisory opinion of European Court of Justice Advocate General Juliane Kokott recommends that the court uphold a 94 million euro ($105 million) fine against Danish pharmaceutical company Lundbeck for paying drug manufacturers to keep generic versions of the blockbuster antidepressant citalopram off the market. 

“A literal reading of [Article 101 of the Treaty on the Functioning of the European Union] makes it quite clear that agreements between competitors aimed at excluding some of them from the market are unlawful,” Kokott wrote in her nonbinding opinion for the Luxembourg-based court. 

According to Kokott, the potentially competitive nature of the relationship between Lundbeck and the generic drug companies means such deals violate EU competition regulations.

“The fact that a generic manufacturer does not yet have [a marketing authorization] for its product in a given state does not preclude the existence of potential competition,” she wrote.

Lundbeck argued in its appeal that the companies it paid were not competitors, but both the European General Court and Kokott disagreed. 

The pharmaceutical company, which reported revenues of 17 million kroner ($2.5 billion) in 2019, already lost a challenge to the fine in the EU’s lower court in 2016. The company did not respond to a request for comment. 

The European Commission, the EU’s executive body, fined the Copenhagen-based company, together with eight other drug manufacturers, a total of 146 million euros ($195.5 million) in 2013 for keeping cheaper generics off the market as their patents were expiring.

“Agreements of this type directly harm patients and national health systems, which are already under tight budgetary constraints,” then-competition commissioner Joaquin Almunia said in a statement at the time.

The EU estimates these pay-to-delay deals drive up the costs of medications by 20%. Lundbeck primarily produces drugs that treat central nervous system disorders, including depression, schizophrenia and Alzheimer's disease. 

Thursday’s advisory opinion is the second from Kokott this year to slam pharmaceutical deals. In January, she held that deals between GlaxoSmithKline and competitors to keep generic versions of the antidepressant paroxetine off the market “may constitute a restriction of competition” and recommended upholding the 37.6 million pound ($54.4 million) fine against the British pharmaceutical company. 

The Court of Justice is not required to follow the recommendations in advisory opinions but it does in a majority of cases. A final ruling is expected in the coming months.

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