Brussels, 09/07/2014 (Agence Europe) - On 9 July, the European Commission imposed fines totalling €427.7 million on the French pharmaceutical company Servier and five producers of generic medicines, namely Niche/Unichem, Matrix (now part of Mylan), Teva, Krka and Lupin, for signing a series of deals aimed at protecting Servier's best-selling blood pressure medicine, Perindopril, from price competition by generics in the EU.
“Through a technology acquisition and a series of patent settlements with generic rivals, Servier implemented a strategy to exclude competitors and delay the entry of cheaper generic medicine to the detriment of public budgets and patients in breach of EU antitrust rules”, explains the Commission.
“Servier had a strategy to systematically buy out any competitive threats to make sure that they stayed out of the market”, said EU Competition Commissioner Joaquin Almunia. He announced fines of nearly €331 for Servier. The fines on generic producers deemed to be complicit bring the total amount of fines to €427.7 million, of which nearly €14 million is levied on Niche/Unichem, €17 million on Matrix, €15.5 million on Teva, €10 million on Krka and €40 million on Lupin. Servier's patent for the perindopril molecule expired in 2003.
In order to enter the market and overcome the remaining obstacles, generic companies sought access to patent-free products or challenged Servier's patents that they believed were unduly blocking them. There were very few sources of non-protected technology. In 2004 Servier acquired the most advanced one, forcing a number of generic projects to stop and therefore delaying their entry. Servier recognised that this acquisition merely sought to “strengthen the defence mechanism” and the technology was never put to use. With this way to the market cut off, generic producers decided to challenge Servier's patents before courts. However, between 2005 and 2007, virtually every time a generic company came close to entering the market, Servier and the company in question settled the challenge. This was not an ordinary transaction where two parties decide to settle a patent claim out of court to save time and costs. Here, the generic companies agreed to abstain from competing in exchange for a share of Servier's rent. This happened at least five times between 2005 and 2007 and cost Servier several million euro.
In 2007, prices of generic perindopril dropped on average by 90% compared to Servier's previous price level in the UK. This occurred when the only remaining legal challenger in the UK obtained the annulment of Servier's then most important patent.
News of the decision leaked in the French media and EFPIA (the European Federation of Pharmaceutical Industries and Associations) expressed concern: “Given the economic and welfare interests at stake, competition authorities should be circumspect in assessing the lawfulness of patent settlements and promoting litigation”. (EL)