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25th Jun 2017

EU fines pharma-giants €427mn in ‘pay for delay’ case

  • French pharma-giant Servier was among a string of firms fined over €400 million in the EU's largest 'pay for delay' case. (Photo: Grumpy-Puddin)

French pharmaceutical firm Servier will bear the brunt of a €427 million anti-trust fine in the largest ‘pay for delay’ case brought by the European Commission.

Speaking at a news conference on Wednesday (9 July), EU competition commissioner Joaquin Almunia said Servier was guilty of protecting its bestselling blood pressure drug, perindopril, from price competition by generics in the EU between 2005 and 2007.

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Perindopril generated more than $1 billion per year in sales for Servier, revenues which the company feared it would lose when its patent control over the drug’s molecule expired. Servier then bought the technology needed to develop an alternative version and made a series of patent settlements with companies trying to produce generic forms of the drug.

Servier now faces a €330 million fine, while Niche/Unichem, Matrix Teva, Krka and Lupin - all producers of generic medicines - face fines totalling €97 million.

Internal documents of one generic company acknowledged that it was being "bought out of perindopril," while another insisted that any settlement with Servier would have to be for a "pile of cash".

Describing the behaviour as a “serious breach” of the bloc’s competition rules, Almunia added that “’pay for delay’ is clearly not acceptable”.

For its part, Servier’s spokesperson Lucy Vincent described the ruling as “a bad sign” and indicated that the company plans to appeal. Servier had “acted in a transparent and legitimate way to defend its patents,” she said.

The case is the largest "pay for delay" case brought by the EU executive, where a company has paid off rival firms to prevent them producing cheaper generic versions of a drug.

Pharmaceutical firms use a variety of means including secondary patents and ‘pay for delay’ settlements to prevent rivals from producing generic version of their drugs at a fraction of the price.

But anti-trust regulators in the US and the EU are now investigating a series of similar cases.

Last November, the Commission fined Johnson & Johnson, Novartis, and Lundbeck for paying off their rivals in the EU’s first ‘pay for delay’ cases.

“A company tried hard to unduly prolong its exclusively … not thanks to its innovation and the strength of its patents but thanks to its deep pockets and the complicity of its rivals,” commented Almunia.

“Pharmaceuticals companies should focus their efforts on innovating rather than trying to extract extra rents for patients and taxpayers,” he added.

Opinion

Why are our medicines so expensive?

The EU should be promoting open innovation in upcoming trade talks with India and should work to bring down the prices of essential medicines, both abroad and within its borders.

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