General Court

AstraZeneca loses court appeal, has cartel fine cut

The European Union's second-highest court upheld a ruling that AstraZeneca Plc misled patent officials and flouted antitrust rules to keep a generic competitor off the market, while reducing the associated fine against the company.

The EU's General Court today cut the company’s fine from 60 million euros ($74 million) to 52.5 million euros. The court upheld the decision by the region's antitrust regulator that AstraZeneca, the U.K.'s second-largest drugmaker, had "abused its dominant position by preventing the marketing of generic products" of its Prilosec heartburn medicine.

Today's ruling may affect an ongoing EU probe into pharmaceutical companies' strategies to keep copies of medicines off the market. AstraZeneca, GlaxoSmithKline Plc and Sanofi- Aventis SA are among companies the Brussels-based European Commission has queried as part of its probe. Companies use a variety of techniques to delay generics, the EU said in a report last July.

"It's a very scary decision that will give a lot of uncertainty," said Maria Isabel Manley, an intellectual- property lawyer at Bristows law firm in London. The court "has denied pharmaceutical companies in a dominant position the right to enjoy commercial freedom in navigating the complex regulatory maze."

Market Abuse

AstraZeneca, based in London, had challenged the commission's June 2005 decision to fine it for market abuse and misleading patent authorities over Prilosec. The court overturned the commission’s finding that AstraZeneca breached EU rules by withdrawing market approvals for older versions of the medicine in Denmark and Norway, which prevented entry by generic producers and parallel importers.

"The company is disappointed that our position wasn't confirmed in full," AstraZeneca spokeswoman Sarah Lindgreen said in an interview. "Obviously, it's very complex and we need to review it in detail to comment further."

Today's is the first case in which the commission, the antitrust regulator for the 27 EU nations, accused a drugmaker of violating EU antitrust rules by misusing its dominant position to shut out rivals.

The commission welcomed the decision, spokeswoman Amelia Torres told reporters at a regular briefing in Brussels.

The decision shows that companies can't "misuse the patent system and the system of authorization of medicines," said Torres. Competition Commissioner Joaquin Almunia "is determined to use competition rules to fight" such behavior, she said.

'Precedent'

"This case is likely to be used as a precedent," said Nicola Dagg, an intellectual-property lawyer in London at Allen & Overy LLP. "While the specific activities set out in this judgment will form concrete examples of abusive behavior" where the commission will likely step in, "the difficulty lies in recognizing which activities will, in the future, be considered abusive."

The decision gives the commission and EU nations "a green flag to press on with cases against originators who are suspected of gaming the regulatory system to delay generic entry," said Lesley Ainsworth, a partner in EU and antitrust law at law firm Hogan Lovells LLP in London.

AstraZeneca was able to keep generic versions of its ulcer drug off the market between 1993 and 2000, the commission said after the six-year investigation that led to the court case.

Prilosec was the world’s best-selling drug in the late 1990s and the court upheld the commission’s ruling AstraZeneca blocked cheaper versions to keep prices high. AstraZeneca provided the patent offices in Belgium, Denmark, Germany, the Netherlands, Norway and the U.K. with incorrect data to extend patent protection on Prilosec, said the commission.

The case is T-321/05 AstraZeneca v Commission.

(Published by Bloomberg – July 1, 2010)

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