The European Commission on Wednesday imposed fines on nine pharma companies, including Ranbaxy Laboratories, for delaying market entry of cheaper generic versions of Danish company Lundbeck's drug Citalopram, an antidepressant. Ranbaxy has been fined 10.32 million euros (over Rs 80 crore), while the total fine on all nine is 146 million euros.
In a statement issued following the European Commission's decision, Ranbaxy said it would appeal against the fine. "Ranbaxy is disappointed with the decision by the European Commission to rule its patent settlement agreement with Lundbeck, covering the molecule Citalopram, anti-competitive, and intends to appeal the decision in the General Court of the European Union," it says in a press release. "These events took place over 10 years ago, and the company considers that the Commission has misunderstood the facts and misapplied the law. It believes it has strong grounds of appeal."
The European Commission gives details in its own press release. It says it "has imposed a fine of 93.8 million euros on Danish pharmaceutical company Lundbeck and fines totalling 52.2 million euros on several producers of generic medicines. In 2002, Lundbeck agreed with each of these companies to delay the market entry of cheaper generic versions of Lundbeck's branded Citalopram, a blockbuster antidepressant. These agreements violated European Union antitrust rules that prohibit anti-competitive agreements. These generic companies were notably Alpharma (now part of Zoetis), Merck KGaA/Generics UK (Generics UK is now part of Mylan), Arrow (now part of Actavis), and Ranbaxy."
It quotes Commission Vice-President Joaquin Almunia, in charge of competition policy, saying: "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 anti-competitive practices".
Citalopram is a blockbuster antidepressant medicine and was Lundbeck's best-selling product at the time. After Lundbeck's basic patent for the molecule expired, it only held a number of related process patents which provided limited protection. Producers of cheaper, generic versions of Citalopram therefore could have entered the market. Indeed, one of them had actually started selling its own generic version of Citalopram and several other producers made serious preparations to do so.
"But instead of competing, the generic producers agreed with Lundbeck in 2002 not to enter the market in return for substantial payments and other inducements from Lundbeck amounting to tens of millions of euros," the release says.
Given its recent experience with the US Department of Justice which fined it $500 million, this is hardly the best of times for Ranbaxy to be hit by a EU fine. However, analysts also point out that it is not uncommon for innovators and generic companies to enter into settlements and in some cases it could happen if the generic company felt its patent challenge was not strong enough. It might prefer to settle. It need not be a 'pay-for-delay' in all cases.
Much will depend on what Ranbaxy puts forth as its defence.