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France: EUR444 million fine imposed on three pharma companies for abuse of a collective dominant position

by Bird & Bird
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In September 2020, the French Competition Authority imposed a EUR444 million fine on Novartis, Roche and Genentech for abusing their collective dominant position in the French market for the treatment of age-related macular degeneration.
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In September 2020, the French Competition Authority (FCA) imposed a EUR444 million fine on Novartis, Roche and Genentech for abusing their collective dominant position in the French market for the treatment of age-related macular degeneration (AMD).
According to the FCA’s findings, the three pharma companies engaged in practices consisting of disparaging a cheap drug used to treat AMD before health professionals, health authorities and the general public. This is the second largest fine imposed by the FCA in 2020, following the EUR1.1 billion fine imposed on Apple in March.
In September 2020, the French Competition Authority (FCA) imposed a EUR444 million fine on Novartis, Roche and Genentech for abusing their collective dominant position in the French market for the treatment of age-related macular degeneration (AMD).
According to the FCA’s findings, the three pharma companies engaged in practices consisting of disparaging a cheap drug used to treat AMD before health professionals, health authorities and the general public. This is the second largest fine imposed by the FCA in 2020, following the EUR1.1 billion fine imposed on Apple in March (see Legal update, Apple hit with record EUR1.1 billion fine by French Competition Authority).

Background

Treatments for age-related macular degeneration

Age-related macular degeneration (AMD) is a disease of the retina and the main cause of visual impairment in patients of 50 years old and more in several countries. Available AMD treatments are particularly expensive and the most commonly used drug in this respect is Lucentis, a medication marketed in France by Novartis since 2007.
Due to the particularly high cost of Lucentis, French doctors started to prescribe a cheaper drug for the treatment of AMD: Avastin, marketed by Genentech since 2005. Unlike Lucentis, Avastin does not have a marketing authorisation for the treatment of AMD, but, according to doctors' freedom of prescription, this does not make it illegal to prescribe/use Avastin to treat AMD.
Avastin’s cost of use is about thirty times lower than that of Lucentis given that several syringes can be manufactured with a single vial of Avastin. Despite this significant price difference, the FCA considered that Avastin and Lucentis belong to the same market since they are both used by ophthalmologists for the treatment of AMD.

Common interest of laboratories in favouring one drug over another

As part of its investigation, the FCA noted that there was a financial incentive for the three laboratories to follow a common line of conduct aimed at limiting the use of Avastin for the treatment of AMD and favouring that of Lucentis. This common interest derived from the following:
  • Genentech, the laboratory that owns both the Lucentis and the Avastin formulas and markets them in the USA, had granted a licence to Novartis and Roche for marketing respectively Lucentis and Avastin in the rest of the world.
  • There exist capitalistic links between these three laboratories: Roche owns 100% of Genentech since 2009 (60% before 2009), while Novartis has a non-controlling interest in Roche.
  • Because of the price differences between the two drugs, the use of Avastin (instead of Lucentis) to treat AMD was detrimental to each of the three companies involved:
    • To Novartis, as it markets Lucentis.
    • To Genentech, as it receives royalties from Lucentis sales (note that Genentech also receives royalties for Avastin, but at equivalent doses the royalties are lower for Avastin sales).
    • To Roche, as it owns Genentech and thus benefits from its profits.

Existence of a collective dominant position

The FCA considered Novartis, Roche and Genentech to be a collective entity because of the significant capitalistic and contractual relationships between them (in particular the licence agreements referred to above).
This collective entity held a quasi-monopolistic position in the AMD treatment market between 2008 and 2013 with a market share of approximately 96%. The market situation did however change from 2013 onwards when Bayer introduced a new drug – Eylea – which quickly captured a market share of nearly 36%.
This led the FCA to conclude that there was a collective dominant position held by Novartis, Roche and Genentech until November 2013.

Misleading and denigrating statements

The FCA considered that the three pharma companies involved used their collective dominant position to make disparaging and misleading statements about the use of Avastin in ophthalmology towards health professionals, health authorities and patients:
  • On the one hand, between March 2008 and November 2013, Novartis denigrated Avastin before various stakeholders in the healthcare sector, by exaggerating the risks associated with the use of Avastin for the treatment of AMD and insisting on the safety and tolerance of Lucentis for the same use. Novartis did not only refer to the objective differences between the two drugs but also made a selective and biased presentation of the available scientific studies, while emphasizing the issues of liability of healthcare professionals prescribing Avastin for the treatment of AMD.
  • On the other hand, between April 2008 and November 2013, Novartis, Roche and Genentech issued a misleading discourse before public and health authorities on the risks associated with the use of Avastin for the treatment of AMD, e.g. by delaying studies on Avastin requested by the authorities or elaborating an alarmist discourse on the risks of a health scandal if Avastin was officially recommended for use in the treatment of AMD.
  • As a consequence, these practices had the effect inter alia of (i) limiting Avastin's prescriptions for the treatment of AMD, (ii) maintaining Lucentis' price at a supra-competitive level, (iii) discouraging the public authorities from favouring greater use of Avastin for the treatment of AMD, thereby artificially reducing the competitive pressure of Avastin on Lucentis and (iv) preventing a reduction of Eylea's price, the latter having been set on the basis of Lucentis’ price.

Serious infringements heavily sanctioned

The FCA fined Novartis, Roche and Genentech EUR444 million (Novartis was fined EUR385 million alone) for their anti-competitive conducts, this being the largest collective sanction ever imposed by the FCA on pharmaceutical companies.
This is a major decision from both a financial and a public health perspective. The FCA found that the practices implemented were particularly serious since they occurred in the health sector where competition is limited. Moreover, given that Lucentis was reimbursed at 100% by the French social security system, the impact on the French public accounts would amount to several hundred million euros. In this respect, Isabelle de Silva (the FCA’s President) indicated that "it is not excluded that the French State might file a compensatory action.

Source

Florence Leroux and Elliot Costet, Bird & Bird LLP, emails [email protected] and [email protected]
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Resource ID w-028-1483
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Published on 02-Nov-2020
Resource Type Legal update: archive
Jurisdiction
  • France
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