If you have nothing nice to say…Teva fined heavily for abusive conduct
Dominant pharma companies had better watch their words. Moreover, they had better use the patent system wisely. Pharma company Teva was fined EUR 462.6 million for disparagement and ‘divisional gaming’ to delay market entry and hinder the uptake of a competing multiple sclerosis drug.
Where Vifor got off the hook with an elaborate rectification campaign to address the European Commission’s exclusionary disparagement concerns (see our May 2024 newsletter), Teva will need to pay up. But not without a fight: Teva seeks to challenge the Commission’s fining decision at the EU courts.
This is the first time the Commission has imposed a fine for these two types of conduct. Given the Commission’s unfazed scrutiny of the pharma sector, it may not be the last. Pharma companies should therefore think twice before bad-mouthing rivals or misusing the patent system.
Background
The Commission conducted dawn raids at Teva’s premises in October 2019. Interestingly, the Commission mentions to have relied on documentation from Teva’s in-house lawyers who were involved in “the design of its abusive strategy to protect Copaxone” to build its case. A helpful reminder that legal professional privilege under EU law does not protect in-house lawyer communications from disclosure.
In March 2021, a formal antitrust investigation was launched to assess whether Teva had abusively delayed the market entry of drugs competing with Copaxone, its blockbuster multiple sclerosis drug, through (i) exclusionary disparagement and (ii) the misuse of patent procedures. In October 2024, this led to the imposition of a EUR 462.6 million fine on Teva.
Disparagement
According to the Commission’s press release, Teva implemented a systematic disparagement campaign targeting healthcare professionals and public and private healthcare institutions to discredit a rival multiple sclerosis drug. The dissemination of misleading information on the “safety, efficacy and therapeutic equivalence” of the competing drug aimed to delay the market entry and hinder the uptake of the cheaper alternative.
This is – after the Vifor case (see our May 2024 newsletter) – the second case the Commission has pursued against a dominant company for abusively disparaging a competing drug. It is, however, the first case in which a fine was imposed and, according to Executive Vice-President Vestager, it sends a clear message to dominant pharmaceutical companies that disparagement campaigns to foreclose competing drugs will not be tolerated.
Divisonal gaming
A similar warning applies to dominant pharmaceutical companies for misusing the patent system, as this is also the first fine ever for the misuse of patent procedures through ‘divisional gaming’.
Teva’s primary patent covering the active ingredient for Copaxone expired in 2015. According to the Commission, Teva subsequently artificially extended Copaxone’s patent protection by filing and withdrawing multiple secondary (divisional) patent applications regarding dosage and manufacturing process with the European Patent Office. In doing so, Teva created “a web of secondary patents” and potentially blocked the entry of competing drugs.
Conclusion
There’s a first for everything: also for an EU antitrust fine imposed for abusive disparagement campaigns and divisional gaming.
More clarity on when and how this conduct constitutes an abuse will be available once the non-confidential version of the Commission decision is published. Even more guidance on the exact do’s and don’ts can likely be derived from the EU courts when ruling on Teva’s upcoming appeal.
For now, dominant pharma companies may want to double-check their communications on rival products and reconsider their use of the patent system.
