Antitrust Concerns
Drugmakers prompt fewer concerns in thwarting generics, EU says
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Drugmakers are provoking fewer antitrust concerns in their attempts to keep generic competitors off the market, a European Union probe into the industry showed.
The proportion of "potentially problematic" patent settlements between branded-drug makers and producers of lower- priced generic medicines more than halved, compared with the results of an earlier investigation, the European Commission said today. The amount of money involved in settlements also fell.
"Our report appears to show the sector's increased awareness of the potential competition concerns," said Joaquin Almunia, the EU competition commissioner. "But the commission will remain attentive to ensure that the sale of safe, affordable medicines is not delayed by unfair practices."
Antitrust regulators on both sides of the Atlantic are focusing on how the settlements might harm consumers. Companies use a variety of techniques to delay generics "for as long as possible," the EU said in a report last July. The commission in January followed up last year's report with an investigation by querying companies including AstraZeneca Plc, GlaxoSmithKline Plc and Sanofi-Aventis SA on all patent settlements made between July 1, 2008, and Dec. 31, 2009.
The earlier probe was started in 2008 by Almunia's predecessor Neelie Kroes to target unlawful tactics to keep cheaper copies of drugs off the market. It covered the period from January 2000 to June 2008.
The value of the settlements fell to less than 1 million euros ($1.25 million) from more than 200 million euros in the earlier investigation, which covered a longer period of time, the commission said today.
Misled Patent Officials
The EU's top court on July 1 upheld a 2005 decision by the commission that AstraZeneca misled patent officials and flouted antitrust rules to keep a generic competitor off the market.
The commission said today it would "frown at agreements that contain restrictions," explaining that problematic settlements "are those that limit generic entry and foresee a value transfer from originator to generic company."
"This is the closest we've come so far to a suggestion by the commission that such agreements are illegal," Christopher Thomas, a partner at law firm Hogan Lovells in Brussels, said in a telephone interview. "It gives a greater specificity about what exactly are problematic patent settlements."
The commission said "not all settlements" in the problematic category need to be probed immediately for potential antitrust breaches and that it will assess each case "on its merits."
While such clarification is useful, it's also "frustrating" because it confuses when a potentially problematic settlement becomes unlawful, said Thomas. "It's not enough for companies to know whether they'll be investigated, they want to know whether their conduct is lawful or not."
(Published by Bloomberg – July 5, 2010)