How the European Commission’s recent antitrust decisions affect the pharmaceutical sector
It is safe to say that patenting strategies and patentee’s communication regarding competitors’ products are on the EU Commission’s radar. In July 2024, the EU Commission caused global pharmaceutical company Vifor to commit to adapting its communication regarding its competitor Pharmacosmos’ high-dose intravenous iron medicine Monofer in order to dispel competition concerns expressed by the EU Commission relating to a potential disparagement by Vifor (case no. AT.40577). Further, following an investigation which began in October, 2022, the EU Commission in October, 2024, imposed a EUR 462.6 million fine on global pharmaceutical company Teva for misusing its dominant market position in its patent filing and communication strategy concerning its multiple sclerosis drug Copaxone (case no. AT.40588).
Patent filing strategy alerts the EU Commission
The EU Commission’s most recent decision has put the spotlight on a patent filing strategy which legal practitioners in the field of generic drugs are most familiar with, namely the so-called divisional game. So far, its use by patentees has mostly been accepted as a sometimes burdensome – where impacting a party faced with numerous divisional patents –, but permissible strategic use of the existing patent system. The situation is novel in that a competition authority – and not just any – has now taken an interest in this practice.
Background
The impending expiry of patent protection for a drug is the green light for generic manufacturers to enter the market.
From the patentee’s/the originator’s point of view, the market entry of generic products is a less favorable occurrence as the availability of rival products tends to decrease the purchase price achievable for the relevant drug. The interest in maximizing its return on investment, in particular the significant costs involved in researching and developing drugs, explains the originator’s interest in maintaining market exclusivity. On the other hand, generic market entry may be welcomed by the public healthcare system, which is governed by the principle of economic efficiency. Under the ‘aut idem’ principle in pharmacy law, a pharmacist can replace the medicinal product prescribed by a physician (e.g. the original drug) with a generic product, provided that is has the same active ingredient, has market authorization for the indication and has the same or an interchangeable pharmaceutical form. Naturally, the reimbursing health insurance provider favors the lower priced medication, often securing generic prices through rebate agreements. In short, market entry of generic drugs significantly impacts an originator’s profit margin.
Originators’ strategies for safeguarding market exclusivity include the use of the patent system to maximize protection of the invention(s) underlying their medicinal product. With the relevance of their product’s economic success in mind, originators are often willing to allocate a generous budget to filing and enforcing their patents. The strategic use of the patent system is referred to as the ‘divisional game’. More recently, some originators have added a further move, which, described in the most neutral way possible, pertains to the originator informing customers of the generic product’s alleged ineptitude to serve as a sufficient replacement of the original product.
This conduct becomes relevant to the EU Commission where it touches on TFEU Article 102, which prohibits the abuse of a dominant position that may affect trade within the EU and prevent or restrict competition.
The issue
Divisional game
In an attempt to maintain market exclusivity for a particular drug, originators may opt to make the most of the patent protection safeguarding such market exclusivity. This involves seeking patent protection not only for the active ingredient – often the parent patent –, but also for different aspects of the invention such as the drug manufacture, a dosage regimen or a specific medical use of the active ingredient, often by filing divisional patents. By subsequently filing of divisional patents, patent protection – and thereby market exclusivity – can be sought for a time period exceeding the term of the parent patent. Granted patents are relied on to seek (preliminary) injunctions against generic competitors.
The strategy becomes a ‘divisional game’ when, in case of a threatening revocation of the patent relied on for a preliminary injunction, the originator withdraws the patent before a written decision is issued. This prevents the respective patent office from issuing a written opinion on the (lack of) validity of the patent – an opinion which could impact the outcome of validity proceedings sought against other patent family members. At this stage, the opposing generics have already made costly investments into their defence, i.e. attacking the patent’s validity. This has significant impact, as the originator can jump to the next divisional patent to block the generic from entering the market, while the generic company is usually financially unable to attack the validity of all patents potentially relevant to the specific drug.
Information campaign
Both in the Vifor and Teva cases, the EU Commission took issue with the content of the information campaigns conducted by the originators. More specifically, the manner in which the originators went about spreading (misleading) information on safety, efficacy and therapeutic equivalence, among other aspects, to healthcare professionals and national decision-makers for pricing and reimbursement of medicines, earned their conduct the title of a ‘disparagement campaign’. This weighed particularly heavy in the Teva case, where the safety, efficacy and therapeutic equivalence of the competing product had already been confirmed by the relevant health authorities.
TW comment
To answer the opening question: the game is far from over.
The EU Commission has made it clear that it will not stand for disparagement campaigns by parties abusing their dominant position. The information available in the Vifor and Teva cases provides for certain guidelines to be adhered to when originators make statements about a competitor’s product.
Regarding the divisional game, the impending publication of the Teva decision will hopefully provide detailed guidance on the specific conduct it deems anti-competitive. This will affect future patent filing and enforcement strategies. However, it should be noted that the EU Commission has not held the divisional game alone to be contrary to competition law. When paired with disparagement tactics, however, it can amount to conduct deemed anti-competitive and sanctionable by the EU Commission. Thus, the open questions remains whether, and under which circumstances, playing the divisional game alone ¬– without the accompanying move of a disparagement campaign – will be viewed as anti-competitive by the EU Commission.
