Balancing Intellectual Property Rights and Anti-Trust Rules in the Pharmaceutical Sector

1. Janson Baugniet IPRs vs. ANTI-TRUST RULES: IS THERE A SENSIBLE MIDDLE GROUND?- The case of the Pharmaceutical sector27 June 2006 - Hôtel Amigo (Brussels) STOCKHOLM NETWORK Manuel Campolini mc@janson-baugniet.be

2. PHARMA : EU IPRs / COMPETITION KEY FEATURES • a) R&D investment (800 millions $ = average per product) • b) Price control • c) IPRs • d) Patients want the best product • Janson Baugniet

3. PHARMA : EU IPRs / COMPETITION KEY ISSUES • a) Strong product competition through innovation • b) Parallel trade • c) Generic competition • Janson Baugniet

4. PHARMA : EU IPRs / COMPETITION PARALLEL TRADE • a) CONCERTED PRACTICES (Art. 81 EC) • - Bayer Adalat – off-patented product (i) i.Parallel trade of ADALAT from Spain/France (low price countries) into the UK (high price country). • ii. Controlled supply in France and in Spain • iii. Commission => breach of Art. 81 • Janson Baugniet

5. PHARMA : EU IPRs / COMPETITION PARALLEL TRADE • a) CONCERTED PRACTICES (Art. 81 EC) • - Bayer Adalat – off-patented product (ii) • CFI => the Commission has failed to demonstrate • the existence of an agreement. • => Commission’s conviction that parallel imports • will bring about harmonization of the medici- • nal product price is devoid of all foundation. • IPR is not decisive • Janson Baugniet

6. PHARMA : EU IPRs / COMPETITION PARALLEL TRADE • b)ABUSE OF A DOMINANT POSITION (Art. 82 EC) • - Syfait v. GSK – patented products (i) • GSK refuses to meet wholesaler’s orders in full, to • limit parallel trade. • GSK is in a dominant position • Breach of Art. 82 ? . • Janson Baugniet

7. PHARMA : EU IPRs / COMPETITION PARALLEL TRADE • b)ABUSE OF A DOMINANT POSITION (Art. 82 EC) • - Syfait v. GSK - patented products (ii) Advocate General: unique characteristics of the pharmaceutical industry, i.e. => States’ intervention in the pricing of products, => Consequences for innovation, • => Absence of benefit for the consumers, etc. • Role of IPR? • Outcome and recent development. . • Janson Baugniet

8. PHARMA : EU IPRs /COMPETITION COMMISSION v. ASTRA ZENECA (Losec) ABUSE OF A DOMINANT POSITION (Article 82 EC) • AstraZeneca wasfined for 1. “giving misleading information to several national patent offices … resulting in AstraZenecagaining extended patent protection for Losec through so-called … SPCs” 2.“misusing rules and procedures applied by national medicines agencies … by selectively deregistering the market authorisations for for Losec capsules in Denmark, Norway and Sweden with the intent of blocking or delaying entry by generic firms and parallel traders.” • The issue relates to IPRs, i.e. SPC & Data Exclusivity. Janson Baugniet

9. PHARMA : EU IPRs / COMPETITION COMMISSION v. ASTRA ZENECA (Losec) a) THE PRODUCT - LOSEC (omeprazole) • - First PPI (1987) + others PPIs launched years later. • -One of the 90s’ most ‘successful’ product. • - Superior therapeutic effectiveness. • - In 2000, Nexium (esomeprazole) • Janson Baugniet

10. PHARMA : EU IPRs / COMPETITION COMMISSION v. ASTRA ZENECA (Losec) • b) DEREGISTRATION – PARALLEL IMPORT - Capsule v/ Tablet - The capsule form was withdrawn (deregistration) from several high priced countries (e.g. Sweden and Denmark) • - On 1rst September 1998 the Swedish authority decided • that Paranova’s parallel import licence for Losec capsules • was no longer valid. • - On 8 May 2003, ECJ decision. • Janson Baugniet

11. PHARMA : EU IPRs / COMPETITION COMMISSION v. ASTRA ZENECA (Losec) • b) DEREGISTRATION – GENERIC ENTRY • - Expiry of Data Exclusivity for Losec capsule and • Generics UK submitted an abridged application. • - 30 November 1998 : approval granted but challenged • - 16 October 2003 : ECJ judgment • Janson Baugniet

12. PHARMA : EU IPRs / COMPETITION COMMISSION v. ASTRA ZENECA (Losec) • c) SPC - GENERIC ENTRY (i) • - SPC = IPR, which starts when patent expires. • - How does it work? • => max 5 years from patent expiry. • => max 15 years from first authorisation to • place the product in an EU country. • - Transitional measures, e.g. • => Germany – SPC limited to products • authorised after 01/01/88 • Janson Baugniet

13. PHARMA : EU IPRs / COMPETITION COMMISSION v. ASTRA ZENECA (Losec) • c) SPC - GENERIC ENTRY (ii) • - 1987: first approval on the basis of a scientific dossier • - 1988: first publication of the price/reimbursement • - SPC granted by the German patent office (1988) • =>4 years extension up toMarch 2003 • - In the late 90s: German SPC challenged. • - 11th December 2003 : ECJ judgment. • Janson Baugniet

14. PHARMA : EU IPRs / COMPETITION DOMINANCE • Does IPR lead to dominance and special responsibility? • Commission= Losec is dominant • - Other products did not exercise a significant competitive • constraint. • AZ= Losec is not dominant • - Just one of the treatments available. • - The Commission’s interpretation => any innovative product • may be considered dominant retrospectively. It could have • adverse effects on industry competitiveness, contrary to the • express aspirations of the Commission in relation to the • ‘Lisbon’ agenda. • Janson Baugniet

15. PHARMA : EU IPRs / COMPETITION ABUSE (i) - Commission => AZ conduct was abusive • a) Internal documentation • b) The sequence of actions • c) Behaviour towards patent offices and Courts, etc. • Janson Baugniet

16. PHARMA : EU IPRs / COMPETITION ABUSE (ii) - AZ => No abuse • a) Good faith. b) Alternative solution existed for the registration of the generic product. c) Freedom for an operator to withdraw its product. • d) Patient benefits. • Janson Baugniet

17. PHARMA : EU IPRs / COMPETITION ABUSE (iii) Competition Commissioner Neelie Kroes: • “I fully support the need for innovative products to enjoy strong • IP protection so that companies can recoup their R&D • expenditure and be rewarded for their innovative efforts. • 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. • Health care systems throughout Europe rely on generic drugs • to keep costs down. Patients benefit from lower prices. • By preventing generic competition AZ kept Losec prices artifi- • cially high. Moreover, competition from generic products after • a patent has expired itself encourages innovation in pharma- • ceuticals. » • Janson Baugniet

18. PHARMA : EU IPRs / COMPETITION FINAL REMARKS • CONFLICT OR COEXISTENCE (+ societal benefit) ? • IS THE SUBJECT MATTER OF IPRs AT STAKE ? • COULD THE SOLUTION BE FOUND IN IP LAW ? • WHAT IMPACT ON LIFE-CYCLE MANAGEMENT STRATEGY ? • WHAT IMPACT ON PRODUCT DEVELOPMENT AND INNOVATION ? • Janson Baugniet