On July 25, 2012, the European Commission (the “Commission”) announced that it has sent a statement of objections (the “statement”) to Danish pharmaceutical company, Lundbeck, as part of its investigation into agreements concluded with four generic competitors concerning the antidepressant Citalopram.

The Commission launched formal proceedings against Lundbeck in 2010, following its pharmaceutical sector inquiry.

The statement outlines the Commission’s objections, stating that it is the Commission’s preliminary view that Lundbeck concluded agreements with generic competitors to prevent the entry to the market of competing generic versions of the drug.

It is alleged that Lundbeck entered into agreements, involving substantial value transfers, with generic manufacturers who subsequently abstained from entering their generic versions onto the market.

The Commission alleges that the “value transfers” included direct payments from Lundbeck to the generic competitors, the purchase of generic Citalopram stock for destruction and guaranteed profits in a distribution agreement.

The statement was also sent to Merck KGaA, Generics UK, Arrow, Resolution Chemicals, Xellia Pharmaceuticals, Alpharma, A.L. Industrier and Ranbaxy, the generic manufacturers with whom Lundbeck is said to have contracted.

The Commission considers that the behavior may have caused harm to consumers because it delayed the entry of cheaper generic versions of the drug for up to two years.

Following receipt of the statement, each addressee has the right to examine the Commission’s file, reply in writing and may also request an oral hearing. The Commission will consider all the evidence and arguments submitted before reaching its final decision.

If established this behavior would infringe Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) and could lead to a prohibition on the conduct and a fine of up to 10% of each infringing company’s annual worldwide turnover.

On the same day the Commission announced its third report on its monitoring of patent settlements in the pharmaceutical sector and stated that, in the coming days, it is planning to take further steps in its investigation into agreements between Les Laboratoires Servier (“Servier”) and generic competitors concerning the cardio-vascular drug Prindopril.

Read the Commission’s press release regarding Lundbeck.
Read the Commission’s press release regarding its third monitoring report and Servier.

Rod Lambert (rlambert@fulbright.com / +44 207 832 3606), a partner, and Nicola Birney (nbirney@fulbright.com / +44 207 832 3636), an associate, in the healthcare practice of Fulbright & Jaworski International LLP in London.