On 27th February 2014, the Italian Competition Authority (“ICA”) imposed over €180 million of fines on F.Hoffmann-La Roche Ltd. (“Roche”) and Novartis AG (“Novartis”) along with their Italian subsidiaries for violating Article 101 TFEU, the prohibition against anti-competitive agreements and concerted practices.
The ICA found Roche and Novartis jointly liable for colluding in order to impede the commercialisation of the cheap ophthalmic drug named Avastin, and to increase the sales of their much more expenses drug named Lucentis.
Avastin and Lucentis are two drugs used to treat some serious vascular eyesight conditions. Avastin had first been used to treat some forms of cancer and it was subsequently used off-label to treat the eyesight conditions. As a result, in the market for ophthalmic drugs, Avastin and Lucentis became interchangeable.
The ICA held that Roche and Novartis tried to create an artificial distinction between the above drugs advising doctors and health services against using Avastin in the ophthalmic market. This strategy was aimed at impeding the off-label use of Aventis nothwithstanding independent comparatives studies sustained the equivalence of the two drugs in treating ophthalmic diseases.
The ICA found that the above mentioned anti-competitive agreement would be justified by the economic relationship between Roche and Novartis. In fact, Novartis would increase its profits from directly selling Lucentis and Roche, in turn, would benefit from the royalties for developing it, which was invented by Genentech Inc. (“Genentech”) a company controlled by Roche. In addition, Novartis holds a 30% shareholding in Roche.
In light of the above, the ICA held that such conduct falls within the prohibition in Article 101 TFEU as the agreement between Roche and Novartis allowed the said companies to allocate markets and fix prices, two serious restrictions of competition.
It is worth noting that Genentech was not found liable for the said infringement although it was the producer of Lucentis. This shows us that the ICA, following the lead of the European Commission, focuses its attention on who has the real power to decide the anti-competitive behaviour rather than the undertaking executing it.
In our view, the ICA’s decision is welcome in so far as it can help make the pharmaceutical sector more competitive and provide Italian healthcare sector with high cost savings. In particular, it has been estimated that the said anti-competitive agreement caused the Italian National Health Service to pay over €45 million of additional costs in 2012. It is hoped that many more sanctions of this kind may come in the near future for similar wrongdoing.