* EU Commission acts against "pay-for-delay" deals
* EU seeking to cut Europe's drugs bill
* Regulatory action against Servier in coming days
* Merck, Ranbaxy, others also charged
By Foo Yun Chee
BRUSSELS, July 25 EU antitrust regulators
charged nine drug companies on Wednesday with blocking the entry
of cheaper generic medicines into the market, in a move that
could shave tens of billions of euros off the continent's drugs
The charges - against German drugmaker Merck KGaA,
Danish peer Lundbeck and seven other firms - are the
first by the EU watchdog against "pay-for-delay" - where
brand-name companies pay generic competitors to abstain from
putting their rival drugs on the market.
The European Commission said the tactic breached EU
antitrust rules, and warned French drugmaker Servier and several
generic rivals of further action in the coming days for a
similar offence, related to another medicine.
Following a high-profile inquiry into the sector in 2009,
the Commission said that such delays led to European consumers
paying 20 percent more for drugs, a large slice of the 214
billion euros ($259.44 billion) it estimated Europe spends on
Wednesday's move is a sign of EU Competition Commissioner
Joaquin Almunia's sensitivity to the impact of antitrust
enforcement on the wider European economy at a time of very low
growth or recession.
The Commission has been stepping up scrutiny of settlements
between drug companies in recent years over concerns some may
prevent consumers from obtaining lower-priced medicines.
COSTLY MEDICAL BILLS
Almunia's latest crackdown could have a significant impact
on EU governments' medical costs, said Nicolas Petit, a
professor at the University of Liege Law School.
"Generics firms help to bring down prices," said Petit. "It
makes sense to try to put pressure on companies to bring down
drug prices in a crisis and relieve national budgets from costly
Companies can be fined up to 10 percent of their turnover if
found guilty of breaching EU rules. Lundbeck reported 16 billion
Danish crowns ($2.60 billion) in revenues last year, while Merck
posted sales of 10.3 billion euros.
The Commission said Lundbeck's action together with four
generic competitors related to the antidepressant citalopram.
"The companies entered into agreements that foresaw
substantial value transfers from Lundbeck to its four generic
competitors, who subsequently abstained from entering the market
with generic citalopram," the Commission said in a statement.
"The value transfers included direct payments from Lundbeck
to the generic competitors and also occurred in other forms,
such as the purchase of generic citalopram stock for destruction
or guaranteed profits in a distribution agreement," it said.
"Lundbeck vigorously opposes any allegation of wrongdoing
and does not believe its practice has violated European
competition law," the Danish company responded in a statement.
A Merck spokesman said the company would analyse the
The EU watchdog also sent the "statement of objections" or
charge sheet to Generics UK, Arrow, Resolution Chemicals, Xellia
Pharmaceuticals, Alpharma, A.L. Industrier and Ranbaxy
Almunia said similar charges related to another medicine
would be sent to French drugmaker Servier and several generic
rivals in the coming days.
"Servier and several generic competitors entered into
agreements which may have hindered the entry of generic
perindopril into markets in the EU," the regulators said.