European Commission enforcement action in pharmaceutical sector following sector inquiry

Following its competition inquiry into the pharmaceutical sector of 2008/2009, the European Commission yesterday issued statements of objections against pharmaceutical companies in three major cases concerning the antidepressant citalopram (Lundbeck’s Cipramil), perindopril, a cardio-vascular drug marketed by Laboratoires Servier as Coversyl, and pain-killer fentanyl (Johnson & Johnson’s Duragesic).

In addition, the Commission's third report on its monitoring of patent settlements in the pharmaceutical sector confirmed that, while the overall number of concluded settlements has significantly increased, the proportion of settlements that may be problematic for competition has fallen substantially compared to the levels observed at the time of the sector inquiry.

One of the main findings of the sector inquiry was that competitive pressure from generic producers, once the primary patent of the originator medicine had expired, was not as strong as expected. The conclusion of the inquiry was that this could be partly the result of so-called pay-for-delay transactions. With such agreements, an originator company removes generic companies' incentives to compete - or to challenge the patent - by transferring value to the generic company.