European Commission fines Lundbeck for delaying market entry of generic medicines

Last 19 June, the European Commission (“EC”) imposed a fine of € 93,8 million on Danish pharmaceutical company Lundbeck, further than fines totalling € 52,2 million on several producers of generic medicines. The fines were imposed because Lundbeck had agreed with each of these companies to delay the market entry of their cheaper generic versions of Lundbeck’s branded citalopram, a blockbuster antidepressant, which violated EU antitrust rules that prohibit anticompetitive agreements (Article 101 of the Treaty on the Functioning of the European Union – “TFEU”).

As we explained here in our blog, following the EC’s 2009 competition inquiry into the pharmaceutical sector (available at http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry), on 25 July 2012 the EC sent to the parties a Statement of Objection whereby it took the preliminary view that Lundbeck concluded “pay-for-delay” agreements with the generic companies in issue to unlawfully prevent the market entry of competing generic versions of its best-selling medicine citalopram. In fact, according to the EC, generic entry had become in principle possible when certain of Lundbeck’s citalopram patents had expired. Nevertheless, the generic companies entered into agreements that foresaw substantial value transfers from Lundbeck to them, which subsequently abstained from entering the market with generic citalopram.

By the decision in issue, the EC confirms its preliminary view stating that this behaviour infringed Article 101 TFEU that prohibits restrictive business practices. In the EC’s opinion, such practices may have caused substantial consumer harm, because they unlawfully delayed the entry of generic medicine for up to two years and the prices for citalopram remained high as a result.

Lundbeck aready announced that it will appeal the decision, which it finds erroneous. In fact, in the company’s view, it does not take into consideration that citalopram was also protected by a process patent which was in force at the time when the agreements were entered into, and which would have been infringed by the generic companies had they launched their generic medicines on the market before its expiry. Thus, the agreements were not anticompetitive but they legitimately settled disputes grounded on Lundbeck’s valid patent.