Innovation represents a significant part of the budget of businesses both by its cost and by the time it requires. Fortunately, intellectual property makes it possible to counterbalance these effects by ensuring appropriate recovery and protection. The relationship between intellectual property law and competition law is an area of strong interest to the competition Authority. In the pharmaceutical field, generics are the main focus of anticompetitive practices performed by laboratories. These companies specialized in the production and marketing of generic drugs, made possible once the patent on the molecule is expired, are usually targeted as they can reverse the trend in a market monopoly.
Anti-competitive risks are found throughout the development of the generic drug: practices seeking to transgress the obtainment of a marketing authorization, excessive price, parallel imports, and restriction of penetration of the market by the practice of predatory prices, pay for delay, denigration, etc. Some anti-competitive strategies are constantly evolving and are the subject of recent decisions of the French Cour de cassation.
Confirming previous decisions made by the French competition Authority, the French Supreme Court rendered two decisions concerning the denigration practice which consists of publicly discrediting using false or erroneous information.
The first decision of the Cour de cassation, commercial chamber, of October 18, 2016 (15-10.384) concerned the company Sanofi-Aventis which, marketing its own clopidogrel generic (Clopidogrel Wintop), denigrated the competing generic (PLAVIX). Seized by the generic drug producer Teva, the competition Authority estimated in May 2013 that Sanofi implemented “a comprehensive and structured communication strategy aimed at influencing physicians and pharmacists to stop the generic substitution mechanism” of Plavix. The French Cour de cassation then considered that Sanofi’s “dominant position” and its homemade generic had the effect of “limiting the entry of its competitors into the French market”.
In a second decision of January 1, 2017 No. 15-17.134 concerning the Schering-Plough company and Subutex, the French Supreme Court confirms a decision of the competition Authority of December 18, 2013 and the decision of the Appeal Court of Paris of March 25, 2015, n° 2014/03330 on practices aiming to delay the entry of generic drugs into the market.
It was the distributor’s duty to warn all health care professionals about generic products and to then grant fidelity rebates on the manufacturer’s products, so as to create inventories of several months of products. The competition Authority sanctioned the distributor and the pharmaceutical laboratory on the basis of article L420 of the French Commercial Code and article 101 TEEC. The Appeal Court then confirmed this decision by adding that “the development of a strategy aiming to delay the arrival of generic drugs on the market, which, after the end of their patents, can restore competition hitherto non-existent, constitutes a practice of a particular economic harmfulness”.
The laboratory, which challenged the decision of the Appeal Court before the French Cour de cassation, was reproaching to the judges of not being interested in the economic and legal context of the agreement, claiming that mere participation in the planning of denigration operations cannot be considered as harmful.
But the French Cour de cassation confirms the position of the Appeal Court which characterized anti-competitive practices: of “the content of the agreement, the objectives it intended to achieve and the elements of the economic and legal context in which it was inserting itself” so that it “may have noted that the agreement between the companies Reckitt and Schering-Plough had an anti-competitive object, no matter if the company Reckitt did not proceed to the practice of denigration […]”.
In addition to confirming the definition of denigration, the French Supreme Court offers two interesting criteria of analysis, namely: the nature of the information provided, by the method of the indices beam (is this objective or verified?) and the expected effect of this type of information on the relevant market (namely: discouraging health professionals from prescribing generic denigration).
Denigration therefore seems to become a danger zone for companies practicing it.
- Abusing the exploitation of patents
Some patent strategies are abusive. They go like this:
- The cluster patent, which consists of filing “barrage patents”, often unfounded, in order to give a feeling of doubt about the possibility of entering the market.
- The ambush patent, which consists of a company participating in the elaboration of a technological standard while not revealing the patent incorporating it, in order to maintain its monopoly situation and to charge higher royalties.
These two anti-competitive practices are also being closely monitored by the competition authorities.
- Abusive acquisition of technologies
Competition and intellectual property law also overlap with technology transfer agreements which, most of the time, have ameliorative effects (diffusion, improvement, etc.). But these transfer agreements are fully subject to the competition law and even benefit from an exemption regulation by category. The agreement will then be considered anti-competitive if it has the effect of delaying the entry into the market of a generic drug.
In order to estimate whether a technology transfer agreement is anti-competitive, the Commission was able to ask the following questions in order to convict the Servier company: has the acquisition of technology delayed the entry of the generic Competitor into the market? Was the purchased technology qualified and was it a source of competition? And finally, did it effectively eliminate competition from the market?
- The practice of excessive prices
Finally, the practice of excessive prices is also a way of hindering the competition of generics. For this purpose, in the Aspen Pharma case (October 14th, 2016), the Italian Competition Authority condemned the company Aspen Pharma to a fine of 5 million euros for having threatened the Italian Medicines Agency that they will stop delivering treatments against cancer if the latter does not increase the price of drugs.
The European Commission thus seized the case and opened an investigation “due to concerns over excessive tariff practices to which Aspen Pharma had been engaged in relation to five drugs against cancer. The Commission will examine whether this company abused a dominant position on the market, in contravention of the EU’s competition rules”.
- The “pay for delay” case
The aim of the pay for delay agreements is to delay the entry of the generics into the market so that the company holding the expired patent still retains a little of its monopoly, in exchange, as its name implies, of financial compensation. The Court of the European Union had the opportunity to take a decision for the first time recently, thus confirming the previous analysis of the European Commission of June 19, 2013. In the present case, the Lundbeck company agreed on 6 agreements with 4 generics to delay the entry of the citalopram generic into the market. The Court thus noted that the agreements in question are akin to “market exclusion agreements, which are among the most serious restrictions on competition [§ 435]” and that the Commission has accordingly properly considered them as a restriction by object, thus confirming the ban on pay for delay agreements.
The recent jurisprudential advances in competition and intellectual property in the pharmaceutical sector therefore call for caution for companies. It is necessary to examine the good practices to be implemented in order to avoid falling under the condemnation of anti-competitive practices. This also goes through a good knowledge of the permitted or prohibited clauses in the various contracts entered into by the company with its competitors.
We can help you to develop strategies in accordance with the practice of the competition Authority, the jurisprudence and legislation in the field of competition law, while allowing your intellectual property rights to be valued at its best.