The EU commission has announced fines totalling 427.7 million euros to punish pay-for-delay arrangements relating to blood pressure drug, perindopril. The drug, a long-acting ACE inhibitor sold under the brand name Coversyl, was launched in the late 1980s and provided an important revenue stream for French pharmaceutical company Servier for many years.
With patent protection for the molecule itself expiring in 2003, Servier built up a family of secondary patents covering a crystalline form and production processes. Generic competitors began to look for ways around Servier’s secondary patents and to consider attacking them in court.
In 2004 Servier acquired a potentially competing technology, but did not put it to use.
Between 2005 and 2007 generic producers brought a series of challenges against Servier’s patents, but these were settled in a way that the commission has said were no ‘ordinary transactions’. Instead, generic companies received substantial payments in exchange for not entering the market. One agreement licensed a generic producer to supply 7 national markets on condition that it stayed out of the rest of the EU.
Servier continued to benefit from patent-protected prices, reportedly earning more than $1bn a year in 2005 and 2006. Then in 2007 the price of perindopril eventually fell sharply after the crystalline form patent was declared invalid in UK litigation brought by another generic company, Apotex.
The commission’s investigations began in 2008, with a series of dawn raids on companies across the EU. Formal investigations started in 2009, and in 2012 the commission made public its allegations against Servier and generics Niche/Unichem, Matrix (now part of Mylan), Teva, Kfka and Lupin. Its announcement last week of findings of anti-competitive behaviour brings an end to a five year investigation.
The commission acknowledged that ‘it is legitimate – and desirable – to apply for patents, including so-called ‘process’ patents, to enforce them, to transfer technologies and to settle litigation’. But Servier’s activities ‘misused these tools’ and amounted to abuse of a dominant position, and the settlement agreements it entered into were anti-competitive.
This announcement follows the fining in 2013 of Lundbeck and generic producers over pay-for-delay arrangements concerning the antidepressant citalopram, although the fines imposed in that case were much lower. That case is being appealed.
We commented recently on the introduction of the EU technology transfer block exemption regulation. The guidelines accompanying this regulation help to explain the EU’s position on patent settlement agreements. The fines imposed on Servier and the generic companies highlight the dangers of ignoring these rules.