Danish pharmaceutical company, Lundbeck, is shocked at how the EU Commission has suddenly decided to interpret well-known settlement deals, as both Danish competition authorities and the commission itself have previously taken no issue with these agreements.
How can you be so much in disagreement over something so relatively simple?
“Yes, that’s what’s so surprising. They looked at these deals at the time – that is, both the Danish competition authorities and the EU Commission. You can simply read them to see what they cover, how much money has been paid, etc. There is nothing new here. They had the full basis for making a decision at the time, and they didn’t find any cause to start a case. Now, years later, they are looking at the exact same basis, and they have completely changed their minds. So excuse me for looking like a big question mark. Honestly – I don’t understand it,” Mette Carlstedt, VP for legal affairs in Lundbeck, says in an interview with Medwatch.
The case against Lundbeck dates all the way back to 2002, when the company struck deals with a range of generics manufacturers who were otherwise poised to enter the market for antidepressants with generic copies of Lundbeck’s Cipramil. The deals meant that the generics manufacturers were handed a wad of money in exchange for not conflicting with Lundbeck’s patents. The total amount of these transfers was DKK 498m (USD 88m).
According to Lundbeck, the purpose of the deals was to ensure that four generics companies respected Lundbeck’s patents on antidepressant citalopram (Cipramil). It specifically pertained to three so-called process patents for the manufacturing of citalopram. The EU Commission claims that Lundbeck has delayed market entrance of generic copies of the then high-grossing anti-depression drug, thus avoiding competition.
Lundbeck calls it an outright lie, as the deals, according to the pharma company, were struck with the sole purpose of preventing the generics manufacturers from gaining a head start and entering the market with illegal copies. According to Lundbeck, it would pay off for the generics companies to violate the patents, as they would be able to usurp massive market shares before Lundbeck would be able to put a halt to the illegal sales. And the risk would be very low, because the compensation for originator companies does not measure up to lost earnings, Lundbeck adds. So the DKK 498m is to be seen as a payment to generics companies for not violating valid patents.
How likely is it – in your assessment - that the court will rule in your favour?
“You will never convince a lawyer to put a percentage on that. But in my opinion there is absolutely no doubt that at the time when we made the deals, it was perfectly legal. Now, the EU Commission wants to make it illegal. I am totally convinced that we end up not having to pay a fine. I believe that from the bottom of my heart, because you cannot change the rules retrospectively in this way, and then pull out a criminal sanction, which is the case here,” says Mette Carlstedt.
The case is expected to last for two to three years, initially. No matter the outcome, Mette Carlstedt expects the case to go on to appeal trials. It means it could easily be up to six years before the case is finally over for Lundbeck. And the appeal trials could influence the size of the fine.
“We find it absolutely unlikely that we run the risk of an even higher fine. Theoretically, it could happen. It is difficult to imagine that they would hand us an even bigger fine,” the legal director says with reference to the historic size of the fine, which makes a potential increase of the highly unlikely.
Mette Carlstedt is not the only one who sees it that way. Søren Løntoft Hansen, analyst in Sydbank, also tells Medwatch that the fine – no matter how you look at it – is in the high end of the scale.
- translated by Martin Havtorn Petersen
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