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EC fines pharma companies €146m for generic Celexa delay

Lundbeck, Alpharma, Merck KGaA, Generics UK, Arrow and Ranbaxy all hit

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The European Commission (EC) this week fined Lundbeck and eight other pharmaceutical companies a total of €146m for their role in deals that  delayed the entry of generic versions of the big-selling antidepressant Celexa onto the market.

Celexa (citalopram) brand owner Lundbeck was subjected to the majority of the fine (almost €94m) with the remainder shared between several companies including Alpharma (now part of Zoetis), Merck KGaA, Generics UK (part of Mylan), Actavis unit Arrow and Ranbaxy.

Earlier speculation had suggested Lundbeck might have been fined as much as €240m as a result of the probe, which first got underway in 2010 as part of a broader investigation by the EC of pay-for-delay practices by the pharma industry that led to formal proceedings last year.

The EC's vice president in charge of competition policy, Joaquín Almunia, said that under EU antitrust laws it is "unacceptable that a company pays off its competitors to stay out of its market and delay the entry of cheaper medicines".

Celexa was Lundbeck's best-selling product for many years, accounting for the bulk of company turnover in the early years of the last decade. Sales of the drug outside the US (where it was sold under license by Forest Labs) reached 4.54bn Danish krone (around $530m) in 2001, and at the time it was expected that generics would start to flood the European market the following year.

However, the EC's investigation found that the Danish drugmaker had paid inducements to generic manufacturers - including cash sums and stock purchases - to keep their copycat versions off the market. It also offered guaranteed profits as part of distribution agreement, said the Commission.

Lundbeck insists that the conclusions drawn by the EC are wrong and that it will appeal the decision on the grounds that the patents covering Celexa were still in force at the time the offences were supposed to take place.

"Patent settlement agreements are efficiency enhancing and legitimate when there are bona fide grounds for dispute," said the company in a statement. "The agreements did not restrict competition in the market beyond the protection already offered by society via the patent rights Lundbeck already held and as has been confirmed by the European Patent Office (EPO)."

The role of existing patents in pay-for-delay was also at the heart of the US Supreme Court judgement earlier this week, which ruled that pay-for-delay deals were not unequivocally antitrust in nature, although they should be subject to federal scrutiny.

The European Federation of Pharmaceutical Industries and Associations (EFPIA) issued a strongly worded statement in support of Lundbeck and the generic manufacturers in the wake of the EC's decision, saying that patent settlement agreements "are a symptom of the failure of Europe's patent litigation system".

The EC's stance would weaken the protection afforded by patents and undermine confidence in the patent system itself, it added, calling once again for a mechanism to allow patent disputes to be resolved before generic entry. The trade body published a position paper spelling out its view that settlements are legitimate where there are bona fide grounds for dispute and the terms do not exceed the scope of the disputed patent.

"The EU patent system is still a mess," said Richard Bergström, EFPIA's director general.

"It is no surprise that companies settle to save legal fees and uncertainty [as] it is a recognised fact that the current intellectual property enforcement regime in Europe is fragmented and inefficient," he added.

21st June 2013

From: Sales, Regulatory

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