The European Commission has imposed fines totalling €427.7 million on the French pharmaceutical company Servier and five producers of generic medicines for concluding a series of deals all aimed at protecting Servier's bestselling blood pressure medicine, perindopril, from price competition by generics in the EU.
Servier was found to have had a strategy of systematically buying out any competitive threats to make sure that they stayed out of the market. The Commission found that such behaviour was clearly anti-competitive and abusive. Servier’s overall strategy was found to be contrary to Article 102 of the Treaty on the Functioning of the European Union (TFEU), while the individual agreements with the generic manufacturers were contrary to Article 101 TFEU.
Perindopril is a blockbuster blood pressure control medicine and used to be Servier's best-selling product. The patent for the perindopril molecule expired, for the most part, in 2003. Generic competitors continued to face a number of so-called "secondary" patents relating to processes and form, but these provided a more limited protection.
In order to enter the market and overcome the remaining obstacles, generic companies sought access to patent-free products. 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.
Meanwhile, generic producers that challenged Servier's patents before courts sytematically settled their challenges and agreed to abstain from competing in exchange for cash payments amounting to several tens of millions of euros. The companies singled out for fines by the Commission were Niche/Unichem, Matrix (now part of Mylan), Teva, Krka and Lupin.
Servier arranged matters in such a way that it had certainty that the generic producers would stay out of the markets in question and it also effectively shut out competing technologies to avoid competing on their own merits.
Commission Investigation Closed
This case arose as part of a wider Commission investigation into the pharmaceuticals sector, especially in France. Experience shows that effective generic competition drives prices down significantly. The entry of generic medicines to the market dramatically reduces the prices of the medicine concerned and benefits patients and public budgets.
So-called "pay-for-delay" agreements limit generic entry in return for compensation paid by the originator company to the generic company. The Commission's inquiry into pharmaceuticals exposed a number of structural issues and practices that delay the entry of cheaper medicines into the market and emphasised the importance of strong competition law enforcement.
Potential for Damages Actions
Any person or firm affected by anti-competitive behaviour as described in this case may bring the matter before the courts of a Member State and seek damages. Damages actions have already been commenced in the United Kingdom, including by the UK Secretary of State for Health, concerning Servier's practices in the market for perindopril.
In cases before national courts, a Commission decision is binding proof that the behaviour took place and was illegal. Even though the Commission has fined the companies concerned, damages may be awarded without these being reduced on account of the Commission fine.
This case could potentially be used as a template for further actions by public authorities and private bodies who have suffered harm as a result of so-called “pay-for-delay” schemes and other practices which prevent generic medicines from getting to market in a timely fashion.