Regulators in both the U.S. and the U.K. have been cracking down on pay-for-delay deals in recent months, with the issue going before the U.S. Supreme Court in March. Now, it seems, EU regulators will join them. The EU's anti-trust regulator is set to fine 9 generic drugmakers for accepting money to keep their low-cost products off the market.
According to unnamed officials quoted by Reuters, this month the European Commission will impose "significant" fines on Denmark's Lundbeck and lesser fines on 8 other drug companies. The move follows an inquiry that began in 2009. The commission reserves the right to fine a company up to 10% of its global revenue for a breach of EU antitrust law, which in the case of Lundbeck would be up to 240 million euros ($314 million), Reuters says. Merck KGaA, along with generics makers Ranbaxy Laboratories, Generics UK, Arrow, Resolution Chemicals, Xellia Pharmaceuticals, Alpharma and A.L. Industrier, is expected to be hit as well.
While a Lundbeck spokesman told Reuters the company hadn't been notified of a fine, it wouldn't be a shock if the EU Commission did take the company to task. While Big Pharma has defended the practice of paying off generics makers to drop their challenges as a legitimate patent protection tactic, European regulators have estimated consumers are paying up to 20% more for medicines, Reuters says. It's for that reason that the backlash against these deals has been heating up; in April, the U.K.'s Office of Fair Trade accused GlaxoSmithKline ($GSK) of pay-for-delay on a years-old deal already passed over by the European Commission.
This all plays out even as the Supreme Court is reviewing the practice in the U.S. The court has taken up the matter in the form of FTC v. Actavis, a suit involving the AndroGel patent settlement between Actavis ($ACT) and Solvay Pharmaceuticals. The fight finally landed with the top court after more than a decade in which the Federal Trade Commission pursued drugmakers with red flags and lawsuits.
The court heard the case in March, and justices' questions suggested their opinions on its legality fell somewhere between the FTC's stance that pay-for-delay settlements are inherently anti-competitive and drugmakers' argument that they're just regular cash settlements to avoid litigation. SCOTUS is expected to reach a decision by the end of the month.
- read the Reuters story