The European Union's pushback on pay-for-delay arrangements among drugmakers is being tested today as its top court considers appeals from half a dozen drugmakers fined over deals with Denmark’s Lundbeck that authorities said were so cozy as to make them anticompetitive.
In 2013, the EU hit Lundbeck and a cadre of companies with fines totaling €146 million ($164 million) for working out agreements more than a decade earlier to hold off launching their copies of its blockbuster antidepressant, Celexa. Lundbeck, as the alleged mastermind of the deals, received the biggest hit, a fine of €93.8 million. Merck KGaA was fined €21.4 million, Ranbaxy, €10.3 million, Arrow Group, €9.9 million, and Alpharma, €10.5 million. Some other companies will share those fines.
Drugmakers have always claimed the agreements don’t hurt competition because the generics come on the market when the patents expire. The deals are just a settlement that provides generics makers an incentive to wait for that to happen and branded drugmakers some relief from litigation. But authorities in the U.S. and Europe have begged to differ.
Appeals to the EU action were filed by Lundbeck, Merck KGaA, Sun Pharmaceutical Industries (which bought Ranbaxy), Xellia Pharmaceuticals, Alpharma, Mylan ($MYL) subsidiary Generics U.K., Arrow Group and Arrow Generics.
The EU’s fines followed several years of aggressive action in the U.S. by the Federal Trade Commission (FTC) against pay-for-delay deals, which the industry fought vigorously. The matter ended before the U.S. Supreme Court which in 2013 ruled that while pay for delay deals are not automatically anticompetitive, the FTC and others can sue to challenge brand-name drugmakers' patent settlements with the generics producers. In the 5-3 vote, the top court shot down a lower court ruling that protected drugmakers from these challenges.
While such arrangements have not stopped, in the U.S. they have slowed considerably. A record of 40 deals were recorded in 2012, but they fell to 29 in 2013 and to 21 in 2014, the FTC reported earlier this year.
- here’s the court diary of the cases
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