On 23 January 2018, the European Court of Justice ("ECJ") gave its judgment in response to a preliminary ruling request from the Italian Council of State regarding illicit collusion between two pharmaceutical companies, F.Hoffmann-La Roche ("Roche") and Novartis AG ("Novartis").
The case concerns two drugs, Avastin and Lucentis, both of which were developed by Genentech Inc, a company belonging to the Roche group. Roche commercialised Avastin whereas Novartis was responsible for commercial exploitation of Lucentis pursuant to a licensing agreement. Both drugs were granted a market authorisation under the EU rules. Lucentis was authorised for the treatment of eye diseases whereas, Avastin was authorised only for the treatment of tumorous diseases, although it was also frequently used to treat eye diseases ("off-label" use) as its price was cheaper than Lucentis'.
On 27 February 2014, the Italian competition authority ("AGCM") imposed fines on both Roche and Novartis, on the ground that the two companies had concluded an agreement contrary to Article 101 TFEU, designed to achieve an artificial differentiation between Avastin and Lucentis. The AGCM found that Roche and Novartis disseminated concerns on the safety of the ophthalmic uses of Avastin among the medical community and the end-users thereby, in the AGCM's view, artificially differentiating two products in order to favour the commercial performance of Lucentis. As a result, Roche could benefit from collecting significant more royalties from the sales of Lucentis, while Novartis directly gained from the increased sales of Lucentis. The case was eventually appealed to the Italian Council of State who referred the case to the ECJ.
The ECJ ruled that, on the matter of market definition, a national competition authority may include in the relevant market, in addition to the medicinal products authorised for that treatment of diseases concerned, another medicinal product whose market authorisation does not cover that treatment but which is used for that purpose and is thus actually substitutable with the former, since the prescribing doctors are primarily guided by considerations of therapeutic appropriateness and the efficacy of medicines. The ECJ also noted that the AGCM was not precluded from finding Avastin belonged to the same market as Lucentis given the state of uncertainty surrounding the lawfulness of the repacking and off-label use of Avastin.
The ECJ concluded that the dissemination of allegedly misleading information relating to adverse reactions to the off-label use of Avastin does not fall outside of Article 101(1) on the ground that the arrangement is ancillary because the arrangement was designed to restrict the conduct of third parties and not the parties to the licencing agreement.
The ECJ further examined whether the arrangement would fall under a "by object" restriction. The ECJ decided that the information would be regarded misleading where the purpose of that information was to:
- confuse the competent authorities and have the adverse reactions mentioned in the summary of product characteristics so as to enable the market authorisation holder to launch a communication campaign aimed at the medical community with a view to exaggerating that perception artificially; and
- to emphasise, in a context of scientific uncertainty, the public perception of the risks associated with the off-label use of Avastin.
In those circumstances, given the characteristics of the medical products, the dissemination of such information will likely encourage doctors to refrain from prescribing that product, resulting in the expected reduction in demand for that type of use. Consequently, the ECJ concluded an arrangement that pursues those objectives was sufficiently harmful to competition to render an examination of its effects superfluous, and constitutes a restriction of competition "by object". The ECJ also pointed out that the fact two companies marketing competing pharmaceutical products collude with each other with a view to disseminating information specifically relating to the product marketed by only one of them might constitute evidence that the dissemination of information pursues objectives unrelated to pharmacovigilance.
Finally, the ECJ concluded that the arrangement could not be exempt under Article 101(3) given that it could not be regarded as indispensable to any customer benefits.
It is likely that this judgment will have a significant impact, in particular, on the pharmaceutical sector. Although this decision may be specific to the facts of the case, it makes it clear that disseminating misleading information may constitute a "by object" restriction of competition. Nonetheless, those working in the pharmaceutical sector should consider carefully before making public comments concerning the safety of their product and bear in mind that medicinal products used for treatment not covered in a market authorisation can form a relevant market where there is uncertainty as regards lawfulness of repackaging and "off-label" use.
With thanks to Akihiro Kudo of Ashurst for his contribution.
