EC fines pharma companies
20.06.2013 - The European Commission has fined five pharma companies for delaying market entry of generic versions of the anti-depressant citalopram.
Danish drugmaker H.Lundbeck has to pay €93.8m, while the fine for German Merck KGaA/Generics is €21.4, its former subsidiary Generics UK pays €7.7m, while Arrow (now part of Zoetis), Alpharma (now part of Actavis), and Ranbaxy total € 52.2m in fines. According to investigations of the EC, in 2002, Lundbeck agreed with each of the generics makers to delay the market entry of cheaper versions of Lundbeck's branded citalopram, a blockbuster antidepressant.
"It is unacceptable that a company pays off its competitors to stay out of its market and delay the entry of cheaper medicines“, stressed Commission Vice-President Joaquín Almunia. „Agreements of this type directly harm patients and national health systems, which are already under tight budgetary constraints. The Commission will not tolerate such anti-competitive practices". “We are surprised and disappointed that the EC has reached this erroneous conclusion, which we totally disagree with, and it is therefore our intention to appeal,” stressed Lundbeck’s CEO Ulf Wiinberg. “It is wrong and extremely misleading to claim that these agreements have delayed the marketing of citalopram copies and thereby violated competition laws,” said Wiinberg. The agreements were meant to protect against patent infringements by the generic companies, he said. Ranbaxy stated that the Commission misunderstood the facts.
Citalopram was Lundbeck's best-selling product at the time. After Lundbeck's basic patent for the citalopram molecule had expired, it only held a number of related process patents which provided a more limited protection. Producers of cheaper, generic versions of citalopram therefore had the possibility to enter the market, which would have brought down the price for the medicine by approximately 90%. According to the Commission, the generic producers agreed with Lundbeck in 2002 not to enter the market in return for substantial payments and other inducements from Lundbeck amounting to tens of millions of euros.
Internal documents refer to a "club" being formed and "a pile of $$$" to be shared among the participants. Lundbeck paid significant lump sums, purchased generics' stock for the sole purpose of destroying it, and offered guaranteed profits in a distribution agreement. The agreements gave Lundbeck the certainty that the generics producers would stay out of the market for the duration of the agreements without giving the generic producers any guarantee of market entry thereafter. These agreements are very different from other settlements of patent disputes where generic companies are not simply paid off to stay out of the market.