This decision has been long-awaited – the EC first outlined its provisional case in a Statement of Objections against Teva over two years ago. As we noted at the time, this is the first instance of the EC investigating in full whether divisional patent strategies can give rise to an antitrust infringement, and the decision will carry more weight than the settlement which the EC previously brokered in a case in 2011. The decision also continues a trend, in recent years, of the EC’s commitment to antitrust enforcement in the pharmaceutical sector, and to not shying away from novel theories of harm.
Teva’s post-basic patent strategy
The EC decision relates to steps taken by Teva after the basic patent protecting the active ingredient in Copaxone (glatiramer acetate), its blockbuster medicine, expired in 2015.
As sales decreased after the expiration of the basic patent, Teva responded by introducing a three-times-per-week regimen version of the drug with a new dosage (40mg/ml instead of 20 mg/ml daily). According to the EC, Teva also filed and withdrew various divisional patents covering the manufacturing process for glatiramer acetate and its dosing, and enforced them by seeking preliminary injunctions before withdrawing the patents when it seemed that they were likely to be revoked. Teva also challenged the grant by national authorities of marketing authorisations of generic versions of Copaxone.
Teva’s litigation campaign was accompanied by public communications targeting key healthcare stakeholders which called into question a rival product’s safety, efficacy and therapeutic equivalence with Copaxone.
In the EC’s view, these actions were taken with the overall objective of delaying competition and artificially prolonging the exclusivity of Teva’s medicine by hindering the market entry of competing, cheaper medicines.
The EC’s first decision finding that ‘playing the divisionals game’ can infringe antitrust rules
The EC’s public statements emphasize that the EC’s concern is not with the legitimate grant and enforcement of patent rights. Upon the adoption of the Teva decision, Executive Vice President Vestager, who is nearing the end of her ten-year tenure in charge of EU competition policy and has overseen several major enforcement actions in the pharma industry, noted that:
“Patent rights are essential to incentivize innovation and play a crucial role in the competitive process. But we found that Teva disrupted the patent process and delayed a final decision on the validity of its patent claims. By doing so, Teva undermined the objectives of the patent system, which is to provide legal certainty and to protect genuine innovation.”
The EC found that, in this case, Teva had:
- Filed multiple divisional patent applications in a staggered way, creating what the EC described as a “web of secondary patents”.
- Enforced these patents against competitors to obtain interim injunctions.
- When the patents seemed likely to be revoked, strategically withdrawn them to avoid a formal invalidity ruling, which could have had a ‘domino effect’ that would have threatened their other divisional patents.
In the EC’s view, Teva did this to repeatedly force competitors to start new lengthy legal challenges and, in doing so, “artificially” prolong uncertainty that could hinder new entry. The EC notes that all of the divisional patents concerned have now been annulled.
Although the EC’s decision may have its roots in previous decisions relating to the misuse of patent procedures (as we noted in our previous post), there is no doubt that this theory of harm is novel and will attract the attention of many originators who are seeking to manage divisional patent application strategies.
Another European antitrust decision on ‘disparagement’ in the pharma sector
The EC found that, alongside its patent strategy, Teva implemented a “systematic disparagement campaign” targeting key stakeholders, including doctors and national decision-makers, for the pricing and reimbursement of medicines.
Teva’s campaign, according to the EC, spread “misleading” information about a competing generic product, casting doubt on its safety, efficacy and therapeutic equivalence with Teva’s product. This happened despite the fact that relevant health authorities had approved that competitor medicine, and had confirmed its safety, efficacy and therapeutic equivalence with Teva’s product.
The EC’s disparagement finding is not novel but is notable in the very significant recent enforcement trend that it continues. We reported on the EC settling its first disparagement investigation against Vifor, earlier this year . There have also been a number of EU Member State investigations and sanctions, and the U.K. also recently opened its first disparagement investigation (also into Vifor).
Implications for pharmaceutical companies
The Teva decision illustrates that the pharmaceutical sector remains an enforcement priority for the EC. There are no indications that this enforcement focus will change with new EC leadership. The EC’s full decision is not available yet and so we only have a high-level summary of its findings. When the full decision is published, we can expect more detail, particularly on the line that the EC has drawn between legitimate divisional patent strategy and abuse of dominance although it will likely be a number of years before the true picture becomes clear following the conclusion of the appeal that Teva has said it will file. However, there are a few conclusions that can be drawn from the Teva decision and other recent pharmaceutical decisions for companies in the sector.
Pharmaceutical companies must be vigilant in the patent strategies that they adopt which aim to extend exclusivity beyond the expiry of a basic patent protecting a pharmaceutical or otherwise could be argued as being an attempt to hinder competition rather than to protect innovation. This includes, but is not limited to, the type of conduct engaged in by Teva with respect to their divisional patents, the provision of misleading information in applying for supplementary protection certificates as in the AstraZeneca case or the acquisition of patents that are not used for the undertaking’s own product innovation as was the subject of a recent investigation by the Swiss COMCO and EC. Moreover, the abuse of dominance through ‘disparagement campaigns’ remains an issue of competition law enforcement that pharmaceutical companies should keep firmly on their radar. They should consider this carefully when drafting public marketing campaigns as well as internal documents.
