EU Commission sends Statement of Objections to Lundbeck

The European Commission has informed the Danish pharmaceutical company Lundbeck of its objections regarding so-called ‘pay for delay’ agreements concluded with four generic competitors aimed at preventing the market entry of generic versions of the blockbuster antidepressant citalopram.

The Statement of Objections is also addressed to Merck KGaA, Generics UK, Arrow, Resolution Chemicals, Xellia Pharmaceuticals, Alpharma, A.L. Industrier and Ranbaxy, which belonged to the generic groups that concluded the agreements. The sending of a Statement of Objections does not prejudge the final outcome of the investigation.

In its Statement of Objections, the Commission takes the preliminary view that Lundbeck concluded agreements with generic companies to prevent the market entry of competing generic versions of citalopram. Generic entry became in principle possible when certain of Lundbeck's citalopram patents had expired.

But the companies entered into agreements that foresaw substantial value transfers from Lundbeck to its four generic competitors, who subsequently abstained from entering the market with generic citalopram. The value transfers included direct payments from Lundbeck to the generic competitors as well as other forms, such as the purchase of generic citalopram stock for destruction or guaranteed profits in a distribution agreement.

This behaviour, if established, would infringe Article 101 of the Treaty on the Functioning of the European Union that prohibits restrictive business practices. At this point, the Commission considers that the practices may have caused substantial consumer harm because they may have delayed the entry of generic medicine for up to two years, resulting in the prices for citalopram remaining high.

The Commission opened formal antitrust proceedings against Lundbeck in 2010. A Statement of Objections is a formal step in Commission investigations into suspected violations of EU antitrust rules. The Commission informs the parties concerned in writing of the objections raised against them and the companies can examine the documents on the Commission’s investigation file, reply in writing and request an oral hearing to present their comments on the case before representatives of the Commission and national competition authorities.

If, after the parties have exercised their rights of defence, the Commission concludes that there is sufficient evidence of an infringement, it can issue a decision prohibiting the conduct and impose a fine of up to 10% of a company's annual worldwide turnover.

Lundbeck has rejected the Commission’s objections and believes that the group’s business practices are consistent with all relevant national and EU competition legislation. ‘Lundbeck’s policy is to comply with all applicable laws, including Competition Laws, and this policy is taken very seriously by the company and its employees,’ said Mette Carlstedt, senior vice president, Corporate Legal at Lundbeck.

Lundbeck will now carefully review the Statement of Objections and the European Commission’s preliminary findings, and will then submit a reply to the Statement of Objections to address the concerns that have been raised. The company says it is co-operating fully in the Commission’s investigation.