French drugmaker Servier loses appeal against EU fine for ‘pay for delay’ contracts

In a decisive ruling, the Luxembourg-based Court of Justice of the European Union on Thursday upheld a decision to impose a significant fine on French pharmaceutical company Servier for its anticompetitive “pay for delay” agreements to defer sales of generic versions of its hypertension drug perindopril.

Servier’s legal battle began in 2014, when the European Commission fined the company 331 million euros ($354 million), Reuters reported. That fine was also extended to several generic drugmakers involved in the deals, including Teva Unichem and its subsidiary Niche, Matrix (now Mylan Laboratories), Krka and Lupin. The deals, which took place between 2005 and 2007, were designed to delay the launch of cheaper generic drugs.

Antitrust regulators in both the European Union and the United States have long targeted such “pay for delay” arrangements, in which branded drug companies compensate generic drug makers for delaying the introduction of cheaper alternatives. These agreements are seen as harmful to competition and costly to consumers and healthcare systems.

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In 2018, a lower tribunal reduced Servier’s fine to €228 million, acknowledging some errors in the European Commission’s initial analysis. However, both Servier and the EU competition watchdog have appealed the decision.

In its latest ruling, the Court of Justice of the European Union sided with the Commission, upholding the fines imposed on Servier and the generic companies involved. The court confirmed that the agreements concluded by Servier and its partners aimed to exclude competition from the market and limit the entry of generic medicines, in breach of EU antitrust rules.

“The court dismissed the appeals of Lupine, Niche Generics, Unichem Laboratories, Matrix, Teva and Biogaran. It thus confirms the judgments of the Court, which ruled that the agreements concluded by Servier and Biogaran constitute market exclusion agreements and restrict competition,” the judges said.

In response to the ruling, the European Commission reiterated its position that Servier’s actions were intended to protect the lucrative perindopril market from generic competition in the EU. The pharmaceutical industry, however, has defended pay-for-delay arrangements as a way to avoid protracted and costly litigation.

Source: Reuters