[Ip-health] EU: AstraZeneca misused patent rules

[James Love]

http://www.nytimes.com/2003/08/01/business/worldbusiness/01PATE.html

Bloomberg News
Mario Monti, Europe's competition commissioner, said the case focused on
the misuse of rules.


AstraZeneca Is Accused of Misusing Patent Rules
By PAUL MELLER

RUSSELS, July 31 =97 The European Commission accused AstraZeneca of
misusing European drug patent and marketing rules to protect its
blockbuster ulcer treatment from generic equivalents, Europe's
competition regulator said today.

Mario Monti, the competition commissioner, said in a statement today
that the antitrust case centered on "suspected misuses of governmental
systems and procedures which have the effect of blocking or delaying
entry to the market of cheaper medicines."

AstraZeneca, a British-Swedish company, vigorously denied any wrongdoing.

"AstraZeneca's policy is to comply with all applicable laws, including
competition laws, and this policy is taken very seriously by the company
and its employees," the company said in a statement, adding that it did
not anticipate any "material exposure" to arise as a result of the
commission's accusation, which came in the form of a lawsuit.

By the late 1990's, the ulcer treatment, Losec, which is sold in the
United States under the name Prilosec, had grown into one of the
biggest-selling prescription drugs of all time. Despite a rise in sales
of generic equivalents of Losec, AstraZeneca expects its ulcer treatment
to generate sales of $1.2 billion this year in Europe, about a quarter
of the drug's worldwide sales.

Complaints from two makers of generic drugs prompted the commission to
conduct surprise raids on AstraZeneca's premises in London and
Sodertalje, Sweden, in February 2000.

After nearly three and a half years, the commission reached the
preliminary conclusion that the company misinformed national drug patent
authorities within the European Union about the date of registration of
Losec in order to qualify for a five-year extension of its exclusivity
rights, the commission said in a statement.

A system arose in 1992 that allowed drug companies to apply
retroactively for extensions on the exclusivity of their patents of up
to five years. Germany, Finland, Denmark and Norway, where the system
applied, said any drug first marketed from 1988 qualified for the extension=
.

The commission said AstraZeneca claimed to have introduced Losec in
1988, when it had in fact introduced it in 1987. Its sales of Losec in
Denmark and Finland benefited from an extended exclusivity period. Court
cases in Germany and Norway, however, quashed any extension of Losec's
patent rights in those countries.

The commission also concluded that AstraZeneca switched Losec from
capsule to tablet form in order to further hamper generic competitors
from bringing copies to market. When it scrapped Losec capsules, it also
unregistered the capsule form for the drug. In order to obtain marketing
permission, generic drug producers and parallel importers had to drop
their work on the capsule and start over copying the new tablet form.
The changeover took rivals more time, delaying the arrival of a cheap
generic version, the commission said.

The commission declined to estimate the amount of money AstraZeneca may
have gained as a result of its behavior.

The antitrust case is the first to question patent abuse in Europe,
according to the commission, which emphasized that the lawsuit did not
question the need for drug patents.

"This is not about the use or enforcement of patent rights, which are
necessary and even indispensable to foster a competitive European
research-based pharmaceutical industry," Mr. Monti said.

But he added that if the commission confirmed AstraZeneca abused patent
and marketing rules, the offense would be serious because it would have
made ulcer treatment artificially more costly to patients and health
systems.

In theory, the commission can fine a company up to 10 percent of annual
global sales, but most antitrust fines are much smaller. Analysts were
hard-pressed to estimate how much AstraZeneca would be fined if it were
found guilty, as this is the first time a company has been accused of
breaching patent rules and because of the technical nature of the case.