The case concerns the Danish Pharmaceutical company Lundbeck's anti-depressant citalopram drug. Lundbeck's compound patent for citalopram had expired by 2002, but it also held a crystallisation patent that protected citalopram when produced using a crystallisation process. Lundbeck concluded a series of settlement agreements with four generic manufacturers (Alpharma, Arrow, Generics UK and Ranbaxy), and these agreements were the subject of the General Court's analysis. Under these agreements, Lundbeck made substantial payments to each of the generic companies, and the generic companies agreed not to enter the citalopram market for a defined period. The Commission's decision had found that the concluded agreements harmed patients and health care systems, in that they allowed Lundbeck to keep the price of its blockbuster drug citalopram artificially high, in breach of Article 101 of the TFEU.
Never one to sit on the fence, Sir Robin kicked off proceedings by labelling the decision a rotten case, and invited Ronit Kreisberger and Ben Rayment to take the floor in the debate.
One key issue is that the Commission declined to perform any analysis of economic effects in its decision - it only assessed the object of the settlement agreements. The audience was reminded that where an agreement has an anti-competitive object, the Commission is not put to proof on the effects of that agreement. This promotes legal certainty, and has a deterrence effect. So far so good. But did the settlement agreements deserve to be assessed on an object basis only?
As a threshold issue, article 101 is not triggered unless the parties to the agreements are actual or potential competitors. The generic companies maintained that they were not potential competitors: they could not launch a generic form of citalopram because they were prohibited from doing so by Lundbeck's crystallisation patent. This was rejected by the General Court on the basis that the patent was not an insurmountable barrier to entry due to the presence of a number of factors, which included the following: the parties' internal documents suggested that the patent might be 'weak', litigation was unlikely even if the generics had launched, and the generics' investments were substantial which provided evidence of their intentions to develop and launch generic citalopram. The General Court stated that the generic manufacturers could have developed citalopram using alternative processes [Merpel wonders whether these were really practical alternatives, given that the generic companies would have relied on Lundbeck's data to obtain marketing authorisation from the regulator]. This essentially involves a 'counter-factual' assessment. Is such an assessment appropriate for an abbreviated 'object' inquiry? Where does this leave pharmaceutical companies in circumstances where some but not all of these factors are present? [There is no right under competition law to launch an infringing product, says Merpel!].
The General Court appeared according to some participants to proceed on the basis that because some patents will fall when subjected to revocation actions, all patent settlement agreements should be treated as presumptively unlawful.
|IPKat: getting her claws out|
Following judgment, Lundbeck issued a press release expressing disappointment with the General Court's conclusions, and strongly disagreeing with the judgment. Lundbeck is considering an appeal to the European Court of Justice. The Commission's press release can be found here.
A further report on the second case discussed at this seminar, R (Roche Registration Ltd) v Secretary of State for Health, will be posted on this blog in due course.