EU fines nine pharma companies for violating competition rules

The European Commission (EC) on June 19 imposed a fine of 146 million euro on nine pharmaceutical companies for delaying the market entry of cheaper generic versions of citalopram, a popular anti-depressant. Lundbeck, a Danish pharmaceutical company, which holds the patent for the drug, is to pay 93.8 million euro.

Ranbaxy, an Indian pharmaceutical company, which is one of the producers of the generic version of citalopram, has been fined 10.3 million euro. In a recent case last month Ranbaxy had agreed to pay $ 500 million to the US authorities   after pleading guilty to felony charges over violation of approved manufacturing norms at its two facilities in India.

Paying off competitors?

In 2002, Lundbeck made an agreement with generic manufacturers to delay the entry of the cheaper generic versions of citalopram in the market. These agreements were in violation of EU antitrust rules which prohibit anti-competitive agreements.

Joaquín Almunia, the EU antitrust competition commission’s vice-president in charge of competition policy, says, "It is unacceptable that a company pays off its competitors to stay out of its market and delay the entry of cheaper medicines. Agreements of this type directly harm patients and national health systems, which are already under tight budgetary constraints. The Commission will not tolerate such anticompetitive practices".

Citalopram was Lundbeck's best-selling product in 2002. After Lundbeck's basic patent for the citalopram molecule had expired that year, it only held a number of related process patents which provided a more limited protection. Producers of cheaper, generic versions of citalopram, therefore, had the opportunity to enter the market. One of these companies had actually started selling its own generic version of citalopram and several other manufacturers had made serious preparations to do so.

Prices of generic citalopram dropped on average by 90 per cent in the UK compared to Lundbeck's previous price level once widespread generic market entry took place following the discontinuation of the agreements. The EU press release also says that Lundbeck purchased generics' stock for the sole purpose of destroying it, and offered guaranteed profits in a distribution agreement to its counterparts.