Feeling fine? Europe enriched by AstraZeneca's millions

AstraZeneca might try
taking a couple of these ...

The IPKat suspects that the appellant had already braced itself for the impact of today's judgment of the Court of Justice of the European Union (CJEU) in Case C-457/10 P AstraZeneca v Commission long before it came out.  The writing was on the wall when the Advocate General's Opinion (briefly noted by the IPKat here) made it plain that the task of overturning the General Court's mammoth 920-paragraph ruling would be somewhere between unattainable and impossible.  New readers will find the background to today's decision and its legal grounds in the following Curia press release:

The Court dismisses the appeal of the AstraZeneca group, which abused its dominant position by preventing the marketing of generic products replicating Losec

AstraZeneca AB and AstraZeneca plc belong to a pharmaceutical group (‘AZ’) which is active worldwide in the sector of the invention, development and marketing of pharmaceutical products.

One of the main products marketed by AZ is known as ‘Losec’ (a treatment for ulcers). By decision of 15 June 2005 the Commission imposed a fine of €60 million on those companies for having committed two abuses of a dominant position.

First, the Commission found that AZ had made deliberately misleading representations to the patent offices of certain Member States. Those representations sought to obtain or maintain supplementary protection certificates for Losec, granting an extension of the protection under the patent, to which AZ was not entitled or to which it was entitled for a shorter duration, in order to keep manufacturers of generic products away from the market [deliberate misrepresentations are always likely to end in tears, and findings of fact are generally way beyond challenge by the time an appeal has reached the CJEU].

Secondly, AZ was penalised for having submitted requests for deregistration of the marketing authorisations for Losec capsules in Denmark, Sweden and Norway in order to delay or make more difficult the marketing of generic medicinal products, and to prevent parallel imports of Losec [this was a case of 'playing the system': even if it wasn't the most sportsmanlike way of doing business, it wasn't conduct that was clearly unlawful at the time]. 

AstraZeneca plc and AstraZeneca AB brought an action before the General Court for annulment of the Commission’s decision.

Heartburn, yes; heartbreak, no

By a judgment of 1 July 2010, the General Court rejected most of the arguments put forward by AZ. However, it annulled in part the Commission’s decision so far as concerns the finding of the second abuse. The General Court held that, although the Commission had proved that the deregistration of the marketing authorisations for Losec capsules in Denmark, Sweden and Norway were such as to delay the entry to the market of generic medicinal products in those three countries and, furthermore, to prevent parallel imports of Losec in Sweden, the Commission had not proved that that latter effect had been produced in Denmark and in Norway. The General Court therefore reduced the amount of the fine imposed jointly and severally on AstraZeneca AB and AstraZeneca plc to €40.25 million and fixed the fine imposed on AstraZeneca AB at €12.25 million.

AstraZeneca AB and AstraZeneca plc lodged an appeal before the Court of Justice to have that judgment of the General Court set aside.

By today’s judgment, the Court rejects the arguments advanced by the two companies, concerning, inter alia, errors of law allegedly made by the General Court in respect of the assessment of two abuses and the determination of the amount of the fines.

As regards, in particular, the first abuse of a dominant position concerning supplementary protection certificates, the Court observes that EU law prohibits a dominant undertaking from eliminating a competitor and thereby strengthening its position by using methods other than those which come within the scope of competition on the merits.

The Court concludes on this issue that the General Court was fully entitled to hold that AZ’s consistent and linear conduct, which was characterised by the notification to the patent offices of misleading representations and the lack of transparency by which AZ deliberately attempted to lead the patent offices and judicial authorities into error in order to keep for as long as possible its monopoly on the medicinal products market, was a breach of competition on the merits and therefore an abuse of a dominant position. 

So far as concerns the second abuse of a dominant position, the Court has held that the deregistration of the marketing authorisations, without objective justification and after the expiry of the exclusive right granted by EU law, with the aim of hindering the introduction of generic products and parallel imports, also does not come within the scope of competition on the merits.

In respect of the fine imposed on the companies, the Court is of the opinion that the General Court did not err in law in concluding, inter alia, that, in the absence of mitigating circumstances or special circumstances, the abuses must be characterised as serious infringements, and consequently the amount of the fine cannot be reduced for those reasons".

The Kat and his
investment kitty ...

This Kat doubts that this decision will do much to shake the fabric of the innovative side of the pharma industry, since it was widely predicted; the deterrent effect of the original Commission decision to proceed against AstraZeneca is quite apparent.  What it does to is to remind investors that their money will generally be safer if they invest in generic manufacturers and importers, which take far less risk in R&D and which can respond to established and predictable market demand when deciding in which products they wish to trade, and to what extent.  Another advantage of backing the generics is that they are unlikely to find themselves in trouble with the Commission for eliminating competition, so long as they play by the fairly pro-generic rules which have been established for their benefit.

Merpel just wants to know what happens to the money. A total of €54.5 million buys an awful lot of katfood. Will it be pumped into research and development of fresh pharma products, she asks?