Global Report: Big Disadvantage

Astrazeneca has been fined € 60 million for a violation of the European Union's antitrust laws. The European Commission (EC) accused the company of using its market dominance to abuse the patent system, with the aim of preventing generic competition for its anti-ulcer drug, Losec (omeprazole)—marketed in the United States as Prilosec—thus keeping prices artificially high.

Sarah Houlton

AstraZeneca is currently preparing the documentation required for an appeal, according to a company spokesperson. Initially, the Court of First Instance will hear the case. The losing side will then have the right to appeal to the European Court of Justice.

The EC believes that AstraZeneca misled regulators to extend Losec's patent protection in two ways. First, it claims the company hid the date of the drug's first marketing authorization from national patent offices in Belgium, Denmark, Germany, the Netherlands, and Norway when applying for supplementary protection certificates (SPCs).

These SPCs extend a drug's basic patent protection for up to five years, to take into account the time that may have lapsed between the filing of a patent application and the granting of marketing authorization. A product like Losec, which was already on sale when the SPC legislation came into force, could gain this extra protection only if the first EU marketing authorization was granted after certain cut-off dates. In this case, the patent offices relied essentially on information that AstraZeneca had supplied; there was no need for them to consider whether the products were innovative.

Secondly, the EC says AstraZeneca abused its dominant position in the market by selectively deregistering the market authorizations for Losec capsules in Denmark, Norway, and Sweden. The EC claims this was done to block or delay competition from generics companies and parallel traders.

Generics companies can use an abridged procedure to speed up approval of their products if there is a reference product of the same type of formulation already on the market. AstraZeneca's withdrawal of the capsules meant there was no longer a reference product in these states. Similarly, parallel traders could obtain an import license only if there was an existing reference-market authorization. The legislation has since been changed so that such a strategy is now impossible. It is now sufficient for a product with the same active ingredient to be marketed; it no longer has to be in the same dosage form.

The company says the EC is wrong, that it made no misleading representations to patent offices or courts, having acted in good faith over the SPCs. "AstraZeneca has not made misrepresentations or behaved inappropriately," says CEO Sir Tom McKillop. "We believe that a proper evaluation on appeal of all the facts and legal position will confirm that the Commission's analysis is fundamentally flawed."

AstraZeneca also believes that it is perfectly within its rights to withdraw products, and there was no reason why the withdrawal of the capsule formulation should affect the generics companies. The company says competitors could have obtained their own registration for the product on the basis of the extensive amount of information published in the scientific literature.

Much of the case hangs on the issue of market dominance. AstraZeneca believes that the EC's definition of dominance is far too narrow, leaving almost any company that launches an innovative product at risk of being deemed dominant. In this case, AstraZeneca claims the EC failed to take into account the other competitive products in the marketplace, notably, other proton pump inhibitors and H2 inhibitors, such as Zantac.

But Christian Bahr, a competition partner at international law firm Lovells, claims there doesn't have to be a direct causal link between the dominant position and fraudulent behavior for the EC to act. "I see this as a landmark case for the industry, which shows the EC is putting much more effort and focus on patent infringement or misuse," Bahr says.

Bahr adds that the €60-million fine is further proof that the Commission is following the lead of the US Free Trade Commission, which has made judgements in the past regarding fraudulently listing patent information in the Orange Book, in attempts to block generic market entry.

Sarah Houlton, PhD, is Pharmaceutical Executive's global correspondent. She can be reached at sarah@owlmedia.co.uk