‘Pay-for-Delay’ Drug Case Moves Forward

http://www.nytimes.com/2012/07/26/business/global/pay-for-delay-drug-case-moves-forward.html?_r=0

By EDWARD WYATT
Published: July 25, 2012

Antitrust regulators in the European Union brought their first enforcement action on Wednesday in so-called pay-for-delay drug cases, in which a maker of name-brand drug pays makers of generic ones to keep competing products off the market.

The European Commission told Lundbeck, a Danish drug company, that it thought the company’s agreements with generic companies violated antitrust laws by preventing the entry, for as long as two years, of competing generic versions of citalopram. An antidepressant, citalopram is one of Lundbeck’s biggest sellers.

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According to the commission, Lundbeck “may have caused substantial consumer harm” with direct payments to the generic drug makers, promises to buy the generic drug stocks for destruction and guaranteeing future profits in a distribution agreement.

¶ The company was able to charge higher prices for its name-brand drug than it would have if generic competitors had been on the market, the commission said, which was possible because of the expiration of certain Lundbeck patents.

¶ The other companies named in the Lundbeck case are Merck of Germany, Generics UK, Arrow, Resolution Chemicals, Xellia Pharmaceuticals, Alpharma, A. L. Industrier and Ranbaxy.

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In the United States, the Federal Trade Commission has also investigated numerous pay-for-delay deals among American drug companies, and has charged several with anticompetitive behavior. But the F.T.C. and private plaintiffs have had a harder time convincing higher courts in the United States that the deals should be punished.

¶ This month, for the first time in nearly a decade, a federal appeals court ruled that the payments to keep a generic drug off the market were anticompetitive on their face. Before that ruling, several appeals courts had said that such deals were legal as long as they did not exceed the scope of an unexpired patent on the name-brand drug.

¶ The European Commission also said it was conducting investigations into several American companies, including Cephalon, Teva, Johnson & Johnson, Novartis and Sandoz, for possible violations of competition rules.