Exclusive: EU to fine Lundbeck, others for blocking generic drugs

Mon Jun 3, 2013 11:21am EDT
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By Foo Yun Chee

BRUSSELS (Reuters) - A European regulator will fine Denmark's Lundbeck and eight other makers of generic drugs for limiting the supply of cheaper medicines, two people with knowledge of the matter said, its first sanction against "pay-for-delay" deals.

Following an inquiry launched in 2009, the European Union's anti-trust regulator will impose a "significant" fine on Lundbeck and lesser fines on Germany's Merck KGaA this month, the people said. Seven smaller drug firms will also be fined.

The sanctions underscore the determination of EU and U.S. regulators to break agreements that involve brand-name drug companies paying generic manufacturers not to deliver cheaper versions of their drugs to the market, a practice that ultimately harms consumers.

European regulators have estimated that consumers are paying up to 20 percent more for medicines in some cases. Generic versions typically cost a fraction of the price of original medicines in Western markets.

The pharmaceutical industry will be looking for guidance from the case as to what is lawful and what is not, said Koen Platteau, a partner at Brussels-based law firm Olswang.

"The Commission clearly wants to send out a message that in circumstances, this kind of agreement can be restrictive. This is the first case where they will set a precedent," he said.

The European Commission, the EU's antitrust regulator, can fine a company up to 10 percent of its global revenue for breaching competition laws. In the case of Lundbeck, which makes an anti-depressant drug and a treatment for Alzheimer's, that would be up to 240 million euros ($311.04 million).

The people Reuters spoke to did not give the precise size of the fines.   Continued...

The logo of drugs and chemicals group Merck is pictured at one of its branches in central German city of Darmstadt March 7, 2012. REUTERS/Alex Domanski