On Monday 17 July, the European Commission sent a statement of objections to the pharmaceutical company Teva, amid concerns that a non-commercialisation agreement for a drug it had entered into with Cephalon may be incompatible with EU law.
Several years ago, Cephalon developed Modafinil, a drug to treat sleep disorders. Following the expiry of a number of patents, Teva developed and marketed a cheaper generic drug in the United Kingdom. Following a dispute between the two companies, an agreement was reached in 2005 to run until October 2012, whereby Teva undertook not to sell its products, in exchange for which Cephalon compensated it financially through a transfer of value. Subsequently, Cephalon Inc. became a subsidiary of Teva Pharmaceutical Industries Ltd. in October 2011.
According to the Commission, the transfer of value served as a significant 'pay-for-delay' inducement for Teva not to compete with Cephalon internationally and in the European Economic Area (EEA). This may have caused substantial harm to EU patients and healthcare budgets, through higher sales prices for Modafinil.
The two companies may now examine the objections in order to present their arguments. If the practice they are accused of is confirmed, it would constitute a breach of article 101 of the Treaty on the Functioning of the European Union (TFEU) that prohibits restrictive business practices.
This statement of objections echoes the Commission's decisions targeting Servier of 9 July 2014 (see EUROPE 11118) and Johnson & Johnson of 10 December 2013 (see EUROPE 10981) over similar practices. In those cases, the Commission handed down fines to the companies involved in these agreements. The stance taken by the institution against this kind of behaviour was upheld by the General Court of the EU on 8 September 2016 (see EUROPE 11619). (Original version in French by Lucas Tripoteau)