“Les génériques dangereuses”: denigration and other recent pharma sector competition issues in France

31.01.2014

Last year the French Competition Authority (FCA) issued a decision fining Sanofi-Aventis for abusing a dominant position in relation to its Plavix product. Sanofi-Aventis was found to have denigrated generic competitors of Plavix in its communications with doctors and pharmacists, and was fined €40.6M.
December 2013 and January 2014 saw further activity by the FCA in the pharma sector. First, in December the FCA published the results of its 10-month sector inquiry concerning the distribution of medicines, as well as fining Schering-Plough €15.3 for its conduct in relation to Subutex (buprenorphine), a drug used to treat opioid addiction, again for denigration tactics vis-à-vis generic competitors. If there was any doubt about the importance that the FCA attributes to the marketing of branded drugs and the effect it believes it can have on generic uptake/public expenditure, the launch in January of a further inquiry into denigration by Janssens-Cilag (in relation to its Durogesic product) laid that to rest.
The results of the sector inquiry were published on 19 December. The inquiry related specifically to the distribution of medicines “en ville”, i.e. the equivalent of the UK’s primary care channel. Rather than seeking a radical reorganisation of the distribution chain, the FCA’s opinion suggests that the sector should undergo a “progressive and limited adaptation” to align itself with “new methods of commercialisation and consumers’ expectations in terms of price and service levels”. This adaptation should take place throughout the distribution chain with the aim of stimulating both upstream innovation and downstream price competition (in part by relaxing laws as to where certain ‘over-the counter’ products can be sold), as well as the buyer power of intermediaries vis-à-vis pharmaceutical companies. The beneficial downward pricing pressure created by inward parallel trade was also noted.
The FCA opinion is open about the impact of constraints upon health budgets, and the price benefit of generics and, potentially biosimilars. It does, however, seek to allay concerns that its intervention represents yet another attack on the innovative industry. For example, in answer to the criticism that excessive concern about reducing the drug budget now could damage future innovation, the opinion suggests – not entirely convincingly – that in saving money now, more can be made available for funding new innovative products. The opinion also recognises the right of pharmaceutical companies to defend their IP rights and to “defend the quality of the reference product compared with generics”. Nevertheless, it acknowledges that there is a narrow line between legitimate defence of products, and potentially unlawful attacks against competing generics. Stepping over this line represents, according to the FCA, an attack on innovation throughout the distribution channel.
Schering-Plough, like Sanofi-Aventis before it, was held to have stepped over the wrong side of this line. The FCA held that Schering-Plough had disparaged Arrow’s generic drug in its sales pitches, as well as granting pharmacists unjustified discounts to prompt them to stock up on Subutex instead of generic alternatives. Schering-Plough (together with head licensor Reckitt Benckiser – among other things, the case is a salutary reminder about the possibility of licensor-licensee collusion) was held to have developed a plan to raise a number of health-related concerns about Arrow’s generic product. This included questioning its bioequivalence, the safety of the excipients used, and even suggesting that the product was more liable to be trafficked than the originators. The plan developed by Schering-Plough also involved the saturation of pharmacists prior to generic entry with its own product, achieved by the offer of discounts for bulk purchases, as well as beneficial credit terms.
Denigration cases of the type seen in France are probably less likely to be brought in the UK – indeed, the FCA opinion following the sector inquiry notes that they are a particularly French phenomenon. Higher levels of generic substitution in the UK, achieved through methods such as ScriptSwitch, mean that the impact of negative promotion is likely to be limited. Indeed, it is common for product promotion to cease when generics enter, unless the company has a related second generation product. However, as has been seen from the UK’s Gaviscon case (in relation to which follow-on damages actions are currently ongoing), activities undertaken prior to generic entry which are designed to eliminate or significantly slow generic penetration are liable to be held to be anti-competitive.
Post-AstraZeneca (which is specifically invoked in the FCA’s sector inquiry opinion), innovators must continue to be more careful than ever when interacting with others in the supply chain in the EU. National competition authorities appear ready to stretch the concept of ‘abuse’ to remedy a number of perceived problems in the pharma supply chain, however they arise and whether or not they fall within the limits of the existing case law. As well as the recent activity in France, it is understood that the OFT is currently looking at an issue involving the supply of medicines in the UK. No details are yet in the public domain, but the interest of competition authorities across Europe in the pharmaceutical sector appears likely to continue for some time

Sophie Lawrance

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