Out-Law / Your Daily Need-To-Know

AstraZeneca's patent abuse breaks Europe's antitrust rules

Out-Law News | 20 Jun 2005 | 1:53 pm | 2 min. read

In a landmark ruling, the European Commission has fined AstraZeneca €60 million for misusing the patent system and procedures for marketing drugs in order to block or delay the market entry of generic competitors to its ulcer drug Losec.

It is the first time that the Commission has used competition laws to combat patent abuse, according to reports.

The Commission began an investigation into the Anglo-Swedish pharmaceutical giant in 1999 after a generic competitor complained that the firm had breached European competition rules by blocking or delaying market access for generic versions of Losec, and by preventing parallel imports of the drug.

Last week the Commission found that AstraZeneca’s actions constituted serious abuses of its dominant market position, in breach of European competition rules, and fined the company €60 million (£40 million).

Losec, the pioneer of a new generation of medicines to treat stomach ulcers and other acid-related diseases, was initially patented in Europe in 1979, and was at one time the world’s best-selling prescription medicine.

However, between 1993 and 2000, according to the Commission, AstraZeneca gave misleading information to several national patent offices, resulting in the company gaining extended patent protection for Losec through what are known as supplementary protection certificates (SPCs).

SPCs are rights relating to medicinal products, and are designed to last for a maximum of five years. They have to be applied for separately in each state, and do not come into force until the patent in a particular product has expired.

The date on which the first EU state granted marketing approval to the patent is important in calculating the length of time permitted under any particular SPC and, according to the Commission, AstraZeneca is guilty of misleading patent offices in Belgium, Denmark, Germany, the Netherlands, Norway and the UK as to the date of first approval of the drug.

The Commission also considered allegations that AstraZeneca had misused rules and procedures applied by national medicines agencies when issuing market authorisations for medicines.

At the time, generic products could only be marketed, and parallel importers only obtain import licenses, in national markets if there was an existing reference market authorisation for the original corresponding product.

Last week the Commission found that AstraZeneca had selectively deregistered market authorisations for Losec capsules in Denmark, Norway and Sweden with the intent of blocking or delaying entry by generic firms and parallel traders.

“I fully support the need for innovative products to enjoy strong intellectual property protection so that companies can recoup their R & D expenditure and be rewarded for their innovative efforts,” said Competition Commissioner Neelie Kroes. “However, it is not for a dominant company but for the legislator to decide which period of protection is adequate.”

“Misleading regulators to gain longer protection acts as a disincentive to innovate and is a serious infringement of EU competition rules,” she added.

AstraZeneca is to appeal. According to Sir Tom McKillop, chief executive of AstraZeneca:

"AstraZeneca has not made misrepresentations or behaved inappropriately. 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."