European regulator fines Ranbaxy and 8 others for blocking generic drugs

The European antitrust regulator today fined nine pharmaceutical companies including Ranbaxy a total of €146 million ($195 million) for blocking the supply of a cheaper anti-depressant drug to the market.

The European Commission (EC) has fined Germany's Merck KGaA, Denmark's Lundbeck, India's largest generic drugmaker Ranbaxy, Arrow (now part of Actavis), Resolution Chemicals, Xellia Pharmaceuticals, Alpharma (now a unit of Zoetis) and A.L. Industrier.

Lundbeck was awarded the highest fine of €93.8 million, while the second-largest fine of €21.4 million was given to Merck KGaA and Ranbaxy €10.3 million.

The German drugmaker was fined an additional €7.77 million jointly with its former subsidiary Generics UK, which is now owned by US generic drugmaker Mylan.

The EC said that in 2002, Lundbeck agreed with Alpharma, Merck KGaA/Generics UK, Arrow and Ranbaxy to delay the entry of cheaper generic versions of its branded blockbuster antidepressant drug Citalopram into the market.

It said that these agreements violated EU antitrust rules that prohibit anticompetitive agreements.

Citalopram is a blockbuster antidepressant medicine and was Lundbeck's best-selling product at the time. After Lundbeck's basic patent for the citalopram molecule had expired, it only held a number of related process patents which provided a more limited protection.

Generic drug makers could produce cheaper versions of citalopram and one of them had actually started selling its own generic version while several others had made serious preparations to do so, said the Brussels-based regulator.

Generic competition usually drives down prices significantly and bring large cost benefits to patients. The prices of generic citalopram dropped on average by 90 per cent in the UK compared to Lundbeck's previous price level.

But instead of competing, the EC alleges that generic producers agreed with Lundbeck not to enter the market in return for substantial payments and other inducements amounting to tens of millions of euros.

The EC vice-president, Joaquín Almunia, said, "It is unacceptable that a company pays off its competitors to stay out of its market and delay the entry of cheaper medicines. Agreements of this type directly harm patients and national health systems, which are already under tight budgetary constraints. The Commission will not tolerate such anticompetitive practices."