Sir Tom McKillop, Chief Executive AstraZeneca. The group employs over 64,000 people worldwide: 58% in Europe, 29% in the Americas and 13% in the rest of the world.

The European Commission has fined Anglo-Swedish group AstraZeneca €60 million for misusing the patent system and the procedures for marketing pharmaceuticals to block or delay market entry for generic competitors to its ulcer drug Losec.

AstraZeneca announced today that it does not accept the European Commission’s decision that it infringed Article 82 EC during the marketing of Losec (omeprazole) in the 1990s, and will appeal the decision to fine the company 60 million Euros to the Courts.

The Commission has decided that AstraZeneca’s actions constitute serious abuses of its dominant market position in violation of EC and EEA competition rules.

Competition Commissioner Neelie Kroes commented: “I fully support the need for innovative products to enjoy strong intellectual property 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 AstraZeneca kept Losec prices artificially high. Moreover, competition from generic products after a patent has expired itself encourages innovation in pharmaceuticals.”

EU Competition Commissioner Neelie Kroes

From 1993 to 2000 AstraZeneca infringed EC and EEA competition rules by blocking or delaying market access for generic versions of Losec and preventing parallel imports of Losec. AstraZeneca did this by:

• giving misleading information to several national patent offices in the EEA resulting in AstraZeneca gaining extended patent protection for Losec through so-called supplementary protection certificates (SPCs). In this specific case, the patent offices essentially relied on information supplied by AZ and they were not obliged – as in normal patent assessments – to consider whether the products were innovative. AZ’s misleading conduct amounted to an abuse in Belgium, Denmark, Germany, the Netherlands, Norway and the United Kingdom.

  

• misusing rules and procedures applied by the national medicines agencies which issue market authorisations for medicines by selectively deregistering the market authorisations for Losec capsules in Denmark, Norway and Sweden with the intent of blocking or delaying entry by generic firms and parallel traders. At the time, generic products could only be marketed and parallel importers only obtain import licenses if there was an existing reference market authorisation for the original corresponding product (Losec). The purpose of a market authorisation is the right to sell a medicine and not to exclude competitors. Unlike patents, SPCs and data exclusivity, market authorisations are not intended to reward innovation and the finding of an abuse cannot therefore affect incentives to innovate. Subsequent changes in the applicable EU legislation have made it impossible to repeat this specific conduct.

Losec pioneered a new generation of medicines to treat stomach ulcers and other acid-related diseases – so-called proton pump inhibitors. Losec initially received patent protection in Europe in 1979. During part of this period, Losec was the world’s best-selling prescription medicine.

The Commission’s decision does not prohibit AstraZeneca’s dominant position on the proton pump inhibitor market but the company’s abuse of that position. The fine takes into account that some features of the abuses can be considered as novel.

AstraZeneca Responds:

AstraZeneca announced today that it does not accept the European Commission’s decision that it infringed Article 82 EC during the marketing of Losec (omeprazole) in the 1990s, and will appeal the decision to fine the company 60 million Euros to the Courts.

In AstraZeneca’s view, the analysis by the Commission in reaching this decision does not take into account the substantial evidence submitted by the company with regard to the use of Losec as just one of the treatments available for treatment of stomach acid disorders.

AstraZeneca contends that it acted in good faith and did not make misleading misrepresentations to Patent Offices or Courts to obtain supplementary protection certificates (SPCs) for Losec. Indeed this matter was so unclear that it was ultimately decided by the European Court of Justice after several years of legal argument. The Court’s judgment recognised the difficulty in interpretation of the SPC Regulation and had no criticism of the Company.

In addition, AstraZeneca will argue in its appeal against the decision that amongst other matters:

• companies are entirely within their rights to withdraw products; to introduce new products; and to deal with product registrations as may be necessary. In this case the new Losec (MUPS) tablet formulation in fact offers benefits over the previous formulation. Moreover the Commission fails to recognise that in any event generic companies could have obtained their own registrations of omeprazole on the basis of the extensive published literature already available at that time. 
  
•  The Commission has failed to analyse properly the crucial issue of relevant market and the definition of dominance in the pharmaceutical industry. The Commission’s interpretation in this case could mean that any innovative product may be considered dominant retrospectively and hence subject to the ‘special responsibility’ of a dominant company. This could impose unnecessary additional burdens which will adversely affect industry competitiveness, contrary to the express aspirations of the Commission in particular in relation to the ‘Lisbon’ agenda.

This is a technically and legally complex case and AstraZeneca fundamentally disagrees with DG Competition’s findings. AstraZeneca will challenge the Commission’s decision and appeal the case because of the important negative impact on future competitiveness that this narrow analysis of dominance will have on innovative industry in Europe.

Sir Tom McKillop, Chief Executive of AstraZeneca, said: “AstraZeneca has not made misrepresentations or behaved inappropriately. We believe that a proper evaluation on appeal of all the facts and legal position will confirm that the Commission’s analysis is fundamentally flawed”.