Background

Caisse Nationale d’Assurance Maladie (“CNAM”, the State body in charge of covering the cost and reimbursing drugs to patients) following the imposition of a fine of €40.6 million on Sanofi by the French Competition Authority (“FCA”) on May 14, 2013 for having abused its dominant position on the market for the commercialization of its blockbuster drug Plavix and its generics.

At the time, the FCA found that Sanofi had launched its own generic and implemented a global disparagement campaign of other Plavix’s generics vis-à-vis healthcare professionals with the objective to delay competitors’ entry to the market. According to the FCA, in a context where knowledge of the regulatory framework and overall experience with generics was still limited, on the one hand, and healthcare professionals are generally risk adverse, on the other hand, Sanofi’s behavior successfully led to a low penetration rate of Plavix’s generics on the market and, consequently, increased the total expenditure for the CNAM. The FCA’s decision was then confirmed by two judgments, respectively of the Paris Court of Appeal on December 18, 2014 and the French Supreme Court on October 18, 2016.

Subsequently, in September 2017, the CNAM introduced a claim against Sanofi before the Commercial Court seeking €115 million in damages for the overcharge paid as a result of Sanofi’s alleged abuse of dominant position. Without being assessed on the merits, this claim was dismissed by the Commercial Court on the ground that it was time-barred.

CNAM’s ‘follow-on’ damages claim dismissed on procedural ground

Pursuant to Article 2224 of the French Civil Code, the limitation period to introduce a claim based on an infringement of competition law is five years from the day on which the victim became aware or ought to have known the anti-competitive practices that caused the alleged harm.

Sanofi argued in defense that the CNAM’s claim was time-barred since it was introduced more than five years after the latter became aware or ought to have known Sanofi’s practices that resulted in the alleged overcharge for which it sought compensation. In particular, according to Sanofi, the CNAM had knowledge of the facts at the very least as of May 17, 2010, when the FCA issued its interim measures decision (i) acknowledging the likelihood of an abusive conduct and, as a result, (ii) ordering that the investigation against Sanofi be pursued. Furthermore, Sanofi raised the fact that the CNAM, through formal oral hearings and responses to several requests for information, actively participated to the investigation of the FCA in 2010 and 2011.

The Commercial Court approved this reasoning, noting that the CNAM became aware of Sanofi’s practices, their anti-competitive nature and their effect on generics’ entry on the market at the latest on September 16, 2011, which corresponds to the date on which the CNAM provided to the FCA a quantification of the harm it considered having suffered as a result of Sanofi’s conduct. The Commercial Court rejected all the other arguments put forward by the CNAM.

Therefore, by introducing its claim only in September 2017 – six years after September 2011 – the CNAM’s action was time-barred.

Key points and takeaways:

  • This judgment is the first one issued by the Commercial Court in a ‘follow-on’ action launched by the CNAM against a pharmaceutical company.
  • Through this judgment, the Commercial Court recalls the traditional distinction between cartel cases and abuse of dominant cases with respect to the starting point of the five-year limitation period provided for in Article 2224 of the French Civil Code. While in cartel cases, in principle the FCA’s decision constitutes the starting point of the five-year limitation period, on account of the fact that cartels are generally secret and the victims unaware of the practices, by contrast, in cases of abuse of dominance, the starting point is fact specific and depends on the individual situation of the victim. Pharmaceutical firms sanctioned for an abusive conduct and later on targeted by a claim for damages must therefore carefully assess the moment at which the claimant ought to have become aware of the infringement.
  • Finally, although the Commercial Court did not assess the merits of the CNAM’s claim, this judgment sends a clear signal that pharmaceutical firms engaging in anti-competitive behavior are also exposed to a risk of subsequent private actions for damages not only from competitors but also from the French State.