1 annex Webinar 5 Nov 20 Medicines for Europe Whitepaper Anatomy of a Failure to Launch Nov 2020 FINAL pdf 3.pdf

Ref. Ares(2020)6393201 - 05/11/2020
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MEDICINES FOR EUROPE
ANATOMY OF A FAILURE TO LAUNCH: A REVIEW OF BARRIERS TO GENERIC AND
BIOSIMILAR MARKET ENTRY AND THE USE OF COMPETITION LAW AS A REMEDY

Foreword: this paper was sponsored by Medicines for Europe and Accord Healthcare

ANATOMY OF A FAILURE TO LAUNCH: A REVIEW OF BARRIERS TO GENERIC AND
BIOSIMILAR MARKET ENTRY AND THE USE OF COMPETITION LAW AS A REMEDY



Anatomy of a Failure to Launch:
a review of barriers to generic and biosimilar market
entry and the use of competition law as a remedy

AUTHORS

▪  Robert Vidal
Partner
▪  Catherine Drew
Partner
▪  Belinda Lavin
Solicitor
▪  Becky Ellis
Solicitor
▪  Ewan Bruce
Solicitor

CONTRIBUTORS

▪  Legal Affairs Committee of Medicines for Europe
(coordinated by Sergio Napolitano, General Counsel &
External Relations Director, Medicines for Europe)

MEDICINES FOR EUROPE – NOVEMBER 2020

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ANATOMY OF A FAILURE TO LAUNCH: A REVIEW OF BARRIERS TO GENERIC AND
BIOSIMILAR MARKET ENTRY AND THE USE OF COMPETITION LAW AS A REMEDY

1.
INTRODUCTION
1.1
The purpose of this whitepaper is to examine the evolution of specific barriers to generic
and  biosimilar  market  entry  in  the  European  Union  ("EU")  over  the  last  decade  with
consideration of the application of competition law as a potential remedy1.
1.2
It  provides  an  updated  overview  of  some  of  the  strategies  used  to  delay  generic  and
biosimilar entry2 such as:
1.2.1
the  use  of  patent  thickets,  secondary  patents  and  so  called  'evergreening'
strategies;
1.2.2
the exploitation of the divisional patent system;
1.2.3
the concept of patent linkage, including:
(a)
what  patent  linkage  is  and  how  the  issue  of  patent  linkage  is
compounded  due  to  the  number  of  secondary  patents  granted  to
companies; and
(b)
the misuse or misdirection of the medicines regulatory framework to,
for  example,  link  marketing  authorisation  grant  to  patent  expiry  or
activities  taken  directly  against  competent  authorities  seeking  to
restrain their activities.
1.2.4
the use of 'product hopping' strategies;
1.2.5
the use of predatory pricing strategies; and
1.2.6
the use of misleading statements designed to inhibit competition.
1.3
Section  9  sets  out  our  conclusions  concerning  generic  and  biosimilar  entry  into  the
European market and provides some recommendations designed to address some of
the findings.
2.
BACKGROUND
2.1
The  European  Commission  (the  "Commission")  launched  a  pharmaceutical  sector
inquiry (the "Inquiry") on 15 January 2008 which addressed some obstacles to market
entry for prescription medicines for human use. The Inquiry was undertaken as part of
the Commission's initiatives "aimed at providing European patients with safe, effective
and affordable medicines", whilst at the same time stimulating research, innovation and
competitiveness in the sector. The launch of the Inquiry followed closely behind a 2008
paper by Medicines for Europe (then the European Generic Medicines Association) (the
"2008 Paper"), which also considered patent-related barriers to market entry for generic
medicines.
2.2
The Commission's final report, published in July 2009, (the "2009 Report") confirmed
the use of various strategies designed to delay the market entry of generic medicines
and retain exclusivity for an extended period. For example, such practices included the
generation of patent thickets (where there are multiple, overlapping patents that cover
a  product)  and  intervention  in  national  approval  procedures  for  generic  medicines.  It

1 Medicines for Europe has consulted with its members in order to elicit some examples of these strategies in action. This
has been a useful exercise in order to help understand the prevalence of some of these strategies. We have included a
few of the examples in this whitepaper in order to provide some practical illustrations of the strategies discussed. These
examples  are  based  on  the  information  provided  by  members  of  Medicines  for  Europe,  which  contain  only  limited
information and are designed solely to aid understanding.
2  This  whitepaper  is  not  exhaustive  and  does  not  cover  all  issues  that  may  effectively  act  as  barriers  to  generic  and
biosimilar market entry, for example vexatious litigation or misrepresentation. Where an issue is no t discussed, it should
not be interpreted that the issue does not act as a barrier to generic and biosimilar entry.

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further noted that other factors, such as the regulatory background, may also play a role
in creating delay.
2.3
Since  2009  there  has  been  commentary  from  EU  institutions  on  the  importance  of
generic  medicines  entering  the  market,  from  the  perspective  of  improved  patient
outcomes  in  the  EU3.  With  this  background,  this  whitepaper  considers  the  extent  to
which the issues identified in the 2008 Paper and 2009 Report have been addressed. It
also  considers  whether  in the  subsequent  eleven  years  any  new  potential  barriers to
market  entry  for  medicinal  products  have  arisen  and  what  steps  could  be  taken  to
eliminate  such  barriers  and  deliver  prompt  patient  access  to  generic  and  biosimilar
medicines in Europe.
2.4
The Pharmaceutical Sector
2.5
In 2016, the total retail spend on pharmaceuticals in the EU (excluding hospital care)
was more than EUR 210 billion, a 5% increase since 20104. In 2017, the EU spent 9.6%
of  its  GDP  on  healthcare  -  pharmaceuticals  account  for  approximately  20%  of  that
expenditure5. These significant levels of expenditure, combined with the crucial need to
provide patients with access to affordable medicines, indicates the vital role played by
companies responsible for the timely provision of generic and biosimilar medicines. The
importance of this issue has only been emphasised by the Covid-19 crisis.
2.6
Generic and biosimilar products are those products that can enter the market upon loss
of  exclusivity  of  the  innovator  product,  be  it  patent  or  regulatory  exclusivity  expiry.
Generic and biosimilar medicines play a fundamental role in promoting pharmaceutical
innovation and, by introducing competition, ensuring the affordability, sustainability and
accessibility  of  healthcare  systems  in  the  EU. Generic  and  biosimilar  pharmaceutical
products are fundamental to the reduction of healthcare expenditure in the EU. Generic
competition  can  lower  the  cost  of  off-patent  products  by  up  to  66%6  and  biosimilar
competition can lower the cost of off-patent products by up to 30%7. In 2014, generic
products led to estimated savings of €100 bil ion in the EU8. Obstacles that prevent or
delay  generic  and  biosimilar  entry  will  therefore  have  significant  ramifications  on  the
cost and accessibility of healthcare in the EU.
2.7
The patent system and regulatory framework
2.8
The  Inquiry  focussed  on  the  behaviour  of  undertakings,  but  also  acknowledged  that
other  factors  may  play  a  role  in  creating  obstacles  to  market  entry.  The  2008  Paper
addressed two such factors – the regulatory and patent system.
2.9
The patent system is designed to foster innovation and provide compensation (through
the provision of a time-limited monopoly) to companies and individuals for the research
and  development  costs  associated  with  developing  patentable  inventions.  This  is
particularly important for pharmaceutical innovation – as at 2012, the cost of research

3 See, for example: European Council, Council conclusions on strengthening the balance in the pharmaceutical systems
in the EU and its Member States (17 June 2016), paras. 14, 19 and 47
[https://www.consilium.europa.eu/en/press/press-releases/2016/06/17/epsco-conclusions-balance-pharmaceutical-
system/]; and European Parliament, Resolution of 2 March 2017 on EU options for improving access to medicines
2016/2057(INI)) (2 March 2017), para. 21 [https://www.europarl.europa.eu/doceo/document/TA-8-2017-0061_EN.html]
4 European Commission, Organisation for Economic Co-operation and Development, Health at a Glance: Europe 2018,
State of Health in the EU Cycle (2018), p.140
[https://ec.europa.eu/health/sites/health/files/state/docs/2018_healthatglance_rep_en.pdf ]
5 Ibid, p. 46
6 Ferrario et al, Strategies to achieve fairer prices for generic and biosimilar medicines, BMJ, (13 January 2020) p. 1
7 Deloitte, 2018 Global life sciences outlook, p. 5
[https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Life-Sciences-Health-Care/gx-lshc-ls-outlook-
2018.pdf]
8 IMS Institute for Healthcare Informatics, The Role of Generic Medicines in Sustaining Healthcare Systems: A
European Perspective (June 2015), pp. 5 and 8 [https://www.medicinesforeurope.com/wp-
content/uploads/2016/03/IMS_Health_2015_-_The_Role_of_Generic_Medicines_in_Sustaining_Healthcare_Systems_-
_A_European_Perspective.pdf]

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and development of a new drug was estimated to be USD 1.9 billion9. This is investment
which may partially be recouped during the 20 year patent monopoly.
2.10
Prior  to  a  medicinal  product  being  marketed  and  sold  in  the  EU,  a  marketing
authorisation  ("MA")  must  be  obtained.  For  new  active  substances,  this  requires  the
submission of full pharmacological, toxicological and clinical data. The time required to
collate such data often results in a delay between the grant of a patent protecting the
product and the grant of the marketing approval for that medicinal product.
2.11
In recognition of this delay, where a European Patent protects a medicinal product, up
to  an  additional  five  years  of  exclusivity  may  be  obtained  through  nationally  granted
Supplementary  Protection  Certificates  ("SPCs").  SPCs  are  intended  to  compensate
patent holders for time that elapses between the grant of a patent and the grant of the
regulatory approval referred to above.
2.12
When  operating  as  intended,  the  patent  system  allows  originators  to  recoup  their
research  and  development  expenditure  and  often  to  generate  a  significant  profit.
Generic  entrants  may then  enter  the  market,  providing  more  affordable  medicines  to
patients, following the creation of competition. The granting of a temporary monopoly
right  excluding  competition  represents  a  carefully  balanced  trade-off  designed  to
incentivise very significant investments in innovation to the benefit of patients.
2.13
Evidence  suggests  that  the  patent  system  is  being  exploited  to  artificially  extend  the
duration  of  the  monopoly  beyond  the  period  for  which  it  was  originally  designed.  For
example, through the exploitation of patent thickets, secondary patents and exploitation
of  the  divisional  patent  filing  system.  Patent thickets  comprise  a  multitude  of  patents
which may overlap and protect different aspects of the same product10, meaning that
those  seeking  to  bring  a  generic  or  biosimilar  product  to  market  must  navigate  a
congested patent landscape, requiring investment of considerable time and expense.
2.14
Secondary patents are those that follow on from patents covering a new compound itself
(so-called  primary  or  basic  patents).  Secondary  patents  can  claim,  for  example,  new
formulations of a product or use of the product for new treatments. Naturally, innovations
in relation to known products may be patentable; however, there is often a perception
that  secondary  patents  are  more  likely  to  be  held  to  be  invalid  than  primary  product
patents.
2.15
The European Patent Office's ("EPO") 2019 Quality Report (the "2019 Quality Report")
found  that  the  percentage  of  patents  granted  by  examiners  which  were  found  to  be
compliant with legal requirements was 76.9%. This demonstrates a marked decrease
from 2017 and 2016 levels respectively (and only a marginal increase on 2018 levels),
as demonstrated by Figure 13 from the 2019 Quality Report, copied below. Whilst low
quality  patents  may  be  more  susceptible  to  revocation,  invalidating  the  patent  still
requires investment of often considerable time and resource. If those investments are
not  made,  generic  or  biosimilar  product  entry  will  be  delayed.  This  is  particularly
problematic  in  the  pharmaceutical  sector,  considering  the  resultant  impact  on  patient
access to affordable medicines and the financial cost to healthcare payers of delaying
generic and biosimilar entry.

9  Mestre-Ferrandiz,  J.,  Sussex,  J.  and  Towse,  A.,  The  R&D  Cost  of  a  New  Medicine,  Office  of  Health  Economics
(December 2012), pp. 3 and 6
10 The patents comprising such thickets may also be used to obtain multiple SPCs covering the same medicinal product.

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ANATOMY OF A FAILURE TO LAUNCH: A REVIEW OF BARRIERS TO GENERIC AND
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2.16
The issue of low quality patents is further exacerbated by the very lengthy timelines of
both the grant procedure and subsequent revocation actions either before the EPO or
national courts. Both may be used as strategic tools to create and prolong uncertainty
for third parties. According to the 2019 Quality Report, by the end of 2019, 95% of all
patent grants were delivered in approximately seven years of filing (although it should
be  noted  that  the  report  does  not  provide  data  for  pharmaceutical  patents).  The
timelines for pharmaceutical patents can be much longer. There are examples where
the  final  decision  of  the Technical  Board  of  Appeal  has  been  provided  more  than  16
years after filing. Even after the EPO communicates its intention to grant a patent, the
applicant may request further processing of the application multiple times, which again
delays  grant  and  continues  uncertainty  for  generic  and  biosimilar  companies.11  Such
lengthy  timelines  for  the  grant  and  subsequent  revocation  of  invalid  patents  serve  to
extend  the  uncertainty  for  those  seeking  to  bring  generic  or  biosimilar  products  to
market.
2.17
Regardless  of  the  quality  of  the  patent  granted  and  the  likelihood  of  it  subsequently
being found to be invalid, patentees are motivated to seek preliminary injunctive relief,
restraining the entry of generic or biosimilar competitors to the market.  This is because
in some markets there is no obligation to provide a cross-undertaking to compensate
the competitor for the time they were wrongly held off the market by the injunction; or in
the jurisdictions in which damages would ultimately be payable by the patentee to the
competitor, the disparity in profit margins for the two means that unless damages are
awarded on a restitutionary basis, the incentive to the patentee in keeping a generic or
biosimilar competitor off the market until the patent is ultimately invalidated far exceeds
the financial burden which a damages award would likely impose upon the patentee.   In
considering damage suffered in the scenario of an injunction being granted to restrain
generic or biosimilar entry until the patent is ultimately invalidated, it would be remiss
not to acknowledge the financial burden suffered by the healthcare payers – for example
in the current Warner-Lambert Company LLC v Actavis Group PTC EHF et al litigation
before  the  Patents  Court  in England  &  Wales,  the  NHS  in  England,  Wales,  Northern
Ireland and Scotland are claiming up to £788.4 million in damages suffered as a result
of  the  orders  made  by  the  Court  in  light  of  the  actions  taken  by  Warner-Lambert  to
enforce a patent which ultimately was found to be invalid.
2.18
In  France,  the  practice  of  the  Court  awarding  provisional  damages,  together  with  a
preliminary  injunction,  is  liable  to  discourage  generic  and  biosimilar  entrants  to  the
market, even where their assessment is that the blocking patent will ultimately be found
invalid.  In one case, provisional damages of over €4 mil ion were awarded against a
generic  manufacturer,  following  grant  of  a  preliminary  injunction.   This  was  so,
notwithstanding  the  Court  of  Appeal  ultimately  quashing  the  injunction  (and  nullifying

11 See, for example, the EPO files of EP2792349 A2 and EP3093012 A1 where five communications stating the EPO's
intention to grant were communicated but the applicant requested further processing, and EP2965751 A1, where two
communications stating the EPO's intention to grant were communicated but the applicant requested further processing.

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the award) after finding that the SPC on which the action was based was likely to be
invalid12. In other cases, provisional damages awards against generics have been much
higher,  for  example  €28  mil ion13  and  over  €13  million14.  In  contrast  quantum  of
damages awards to generics, in cases where preliminary injunctions have been wrongly
granted, is likely to be lower in one example damages in the sum of €3.5 million was
awarded to the generic15.
2.19
The granting of SPCs may also be exploited to create barriers to market entry for generic
or  biosimilar  competitors.  A  member  of  Medicines  for  Europe  noted  that  "an  area  of
abuse is the manipulation of the SPC system by applying for multiple SPCs for the same
product. These SPCs are subject to many national litigations and referrals to the CJEU
and in effect create a thicket of unmerited claimed protections which must be litigated
for a generic to launch". Multiple SPCs may be granted for the same product or based
upon  the  same  marketing  authorisation.  The  Court  of Justice  of the  European  Union
("CJEU") recently provided some clarity in confirming that SPCs may not be granted in
the case of a new medical use for an existing product16; however, uncertainty remains
over whether there are some instances where multiple SPCs may nevertheless still be
granted. In addition, there is often little by way of published information regarding the
SPC grant process, which can create uncertainty for generic and biosimilar companies
until the SPC is actually granted.
2.20
A further means to extend the duration of the monopoly relating to a product arises in
the  context  of  medicines  for  use  in  the  paediatric  population.  If  the  requisite
requirements  are  satisfied,  a  paediatric  extension  may  be  granted,  which  entitles  the
SPC holder to an additional six months of exclusivity. In order to be granted a paediatric
extension, a PIP (being a research and development programme aimed at generating
the data to determine the conditions in which a product may be authorised to treat the
paediatric population) must be agreed with the EMA. Whilst studies under the relevant
PIP are carried out, competitors will not know whether the paediatric extension will be
granted and thus will not have certainty as to the final expiration date of the SPC.  Yet
further uncertainty may be created in relation to orphan medicinal products (being those
products  indicated  to  treat  rare  conditions  for  which  the  patient  population  is  small),
where  an  additional  two  years  of  orphan  market  exclusivity  may  be  obtained  upon
completion of the paediatric studies.  In respect of orphan medicinal products protected
by an SPC, a practice has developed of abandoning orphan designations and "electing"
for a six month extension to the SPC.  Which reward the rights holder will elect for is not
clear until that election is made, thereby continuing uncertainty for competitors.
2.21
This  whitepaper  elaborates  further  on  the  potential  flaws  within  the  European  patent
system; potential misuse of the same and linkage of the European patent system with
the  regulatory  approval  processes.    As  observed  by  one  member  of  Medicines  for
Europe,  patent  thickets  and  secondary  patent  applications  "lead  to  legal  uncertainty,
oppositions with the EPO which take too long and sometimes even a number of parallel
national litigations"  all of which incur significant time and expense and will ultimately
delay generic and biosimilar product entry.  Whilst not examined in detail, we note that
the  additional  topics  touched  on  above  also  create  uncertainty  and  delay  in  market
entry.

12  MSD  v  Mylan,  Tribunal  de  grande  instance  de  Paris,  7  March  2019,  Docket  №  17/14664,  following  the  grant  of  a
preliminary  injunction  and  Cour  d'appel  de  Paris,  14  February  2020,  Docket  №  19/06114,  upon  the  rejection  of  the
preliminary injunction and nullifying of the award.
13 Eli Lilly v Fresenius Kabi, Tribunal judiciaire de Paris, 11 September 2020, Docket № 17/10421, fol owing a finding of
infringement on the merits.
14  Novartis  v  Teva,  Tribunal  de  grande  instance  de  Paris,  7  June  2018,  Docket  №  16/15196,  fol owing  the  grant  of  a
preliminary injunction.
15 Biogaran v. Laboratoires Negma, Cour d’appel de Paris, 31 January 2014, Docket № 12/05485, following the wrongful
grant of a preliminary injunction.
16 Santen SAS v Directeur général de l’Institut national de la propriété industriel e, Case C-673/18

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2.22
Concern about generic and biosimilar market entry in the EU institutions
2.23
Intellectual  property  rights  and  competition  law  both  share  the  common  goal  of
promoting innovation and consumer welfare and are expected to act in concert. Article
8(2)  of  TRIPS17  specifically  recognises  the  role  of  competition  law  where  intellectual
rights  may  be  subject  to  abuse:  “Appropriate  measures,  provided  that  they  are
consistent with the provisions of this Agreement, may be needed to prevent the abuse
of  intellectual  property  rights  by  rightholders  or  the  resort  to  practices  which
unreasonably restrain trade or adversely affect the international transfer of technology.”
2.24
The 2009 Report examined various barriers to generic market entry and the potential
for competition law to address some of the concerns that had been identified. In 2016,
the  European  Council  called  on  the  Commission  to  "continue  and  where  possible
intensify… the monitoring, development and investigation - in cooperation with national
competition authorities in the European Competition Network (ECN) - of potential cases
of  market  abuse,  excessive  pricing  as  well  as  other  market  restrictions  specifically
relevant to the pharmaceutical companies operating within the EU"18.
2.25
Also in 2016, the European Parliament's Committee on Legal Affairs voted for a motion
to remind the Committee on the Environment, Public Health and Food Safety that "the
Pharmaceutical Sector Inquiry Report carried out by the Commission in 2009 indicated
that…  some  companies’  abusive  practices  in  connection  with  patent  claims  have
contributed to delays in the market entry of generic medicines and should be avoided"19.
2.26
The  Committee  on  Legal  Affairs  voted  to  request  that  the  Committee  on  the
Environment, Public Health and Food Safety adopt the following requests into a motion
for a resolution that the EPO and Member States only grant patents on health products
"that strictly fulfil the patentability requirements of novelty, inventive step and industrial
applicability as enshrined in the European Patent Convention, and should pay particular
attention to 'evergreening' [of patents]".20
2.27
These motions and the view of the European Council outlined above were both cited by
the  European  Parliament  in  its  March  2017  Resolution  on  EU  options  for  improving
access to medicines (the "2017 Resolution"), which stated inter alia that the European
Parliament "deplores the litigation cases aiming to delay generic entry" and finds "that
biosimilar  medicines  enable  increased  competition,  reduced  prices  and  savings  for
healthcare systems".21
2.28
In May 2018, the Commission released a report on a study22 considering the ‘effective
protection  period’  which  best  incentivises  innovators.  The  report  confirmed  the
significant  benefits  of  generic  competition,  including  the  reduction  in  the  cost  of  a
treatment after the expiry of an originator's protection23.
2.29
A further report, entitled Competition Enforcement in the Pharmaceutical Sector, was
published  by  the  Commission  in  January  2019  (the  "2019  Report")24.  This  report
reviews  how  the  Commission  and  national  competition  authorities  have  enforced

17 The Agreement on Trade-Related Aspects of Intellectual Property Rights
18 European Council, Council conclusions on strengthening the balance in the pharmaceutical systems in the EU and its
Member States (17 June 2017), para. 48 [https://www.consilium.europa.eu/en/press/press-
releases/2016/06/17/epsco-conclusions-balance-pharmaceutical-system/]
19 European Parliament, Committee on Legal Affairs, Opinion of the Committee on Legal Affairs for the Committee on
the Environment, Public Health and Food Safety on EU options for improving access to medicines (2016/2057(INI))
(18 November 2020), para. 4 [https://www.europarl.europa.eu/doceo/document/A-8-2017-0040_EN.html#title4]
20 Ibid, para. 10
21 European Parliament, Resolution of 2 March 2017 on EU options for improving access to medicines 2016/2057(INI))
(2 March 2017), para. 21 [https://www.europarl.europa.eu/doceo/document/TA-8-2017-0061_EN.html]
22  European  Commission  &  Copenhagen  Economics,  Final  Report:  Study  on  the  economic  impact  of  supplementary
protection
certificates,
pharmaceutical
incentives
and
rewards
in
Europe
(May
2018)
[https://ec.europa.eu/health/sites/health/files/human-use/docs/pharmaceuticals_incentives_study_en.pdf]
23 Ibid p. 159 [https://ec.europa.eu/health/sites/health/files/human-use/docs/pharmaceuticals_incentives_study_en.pdf]
24 European Commission, DG Comp, Report from the Commission to the Council and the European Parliament:
Competition Enforcement in the Pharmaceutical Sector (2009 – 2017), (2019)

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antitrust and merger rules in the pharmaceutical sector from 2009 to 2017, in response
to concerns by the European Council and Parliament that anti-competitive behaviours
may compromise patients' access to affordable and innovative medicines. The report
noted that national competition authorities adopted 29 antitrust decisions in the years
following the 2009 Report, with total fines imposed exceeding EUR 1 billion.
2.30
Recently, on 4 June 2020, the Commission began a consultation to inform a 'roadmap'
for  building  an  EU  Pharmaceutical  Strategy  for  timely  patient  access  to  affordable
medicines.  This  seeks  to  build  a  holistic,  patient-centred,  forward-looking  EU
Pharmaceutical Strategy which covers the whole life-cycle of pharmaceutical products
from  scientific  discovery  to  authorisation  and  patient  access,  creating  "synergies  with
relevant  EU  policies,  such  as  in  the  areas  of  research  and  innovation,  industry,
competition, environment and chemicals. Coherence will be kept with EU clinical trials
and medical devices legislation"25. This again highlights the role that the EU envisages
for  competition  law  in  promoting  improved  generic  and  biosimilar  access  to  the
pharmaceuticals market.
2.31
Whilst it is evident that competition law can be a powerful tool to seek to promote prompt
access  to  the  market  for  generic  and  biosimilar  pharmaceutical  products,  this
whitepaper  evaluates  the  extent  to  which,  despite  the  concerns  articulated  by  EU
institutions  listed  above,  obstacles  to  generic  and  biosimilar  entry  still  exist  in  the
pharmaceutical sector and the further role that competition law can play in overcoming
such obstacles.
3.
USE OF ‘PATENT THICKETS’ TO DISCOURAGE COMPETITION
3.1
As described above, patentees are known to file multiple 'follow-on' patent applications
to further extend a product's patent protection. This is done in the hope that at least one
of the numerous 'follow-on' patent applications will be granted and survive a litigation
challenge. The consequence of this is that oftentimes an extensive 'thicket' of patents
is  formed  around  a  pharmaceutical  product,  which  may  act  as  a  barrier  to  entry.
Attempting  to  clear  the  way  when  faced  with  multiple  patents  across  multiple
jurisdictions is an extremely expensive and time consuming process even if all of the
'follow-on' patents are considered to be relatively weak. The various patents constituting
such a 'thicket' may cover the following aspects of a product:
3.1.1
the  active  pharmaceutical  substance  itself  (typically  the  first  patent(s)
granted)26;
3.1.2
a polymorph (or hydrated) form of the active substance;
3.1.3
a simple salt of the active pharmaceutical substance;
3.1.4
an isomeric form of the API;
3.1.5
a substantially pure form of the API;
3.1.6
an impurity inherent in an already disclosed process of making the compound;
3.1.7
formulations, whether in solution or in solid form;
3.1.8
concentrations in dosage forms;

25 European Commission, Communication: Pharmaceuticals – safe and affordable medicines (new EU strategy) (2 June
2020) [https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12421-Pharmaceutical-Strategy-Timely-
patient-access-to-affordable-medicines]
26 This may be a very specific claim to just one molecule, or the particular molecule might be disclosed only as part of a
broader family.

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3.1.9
the  use  of  the  product  in  particular  patient  groups,  or  dose  adjustments
relating to the same;
3.1.10
methods of manufacture and analytical methods;
3.1.11
the use of a product in a method of diagnosis; and/or
3.1.12
second medical use patents (particularly if in a related field to that disclosed
in the first patent, or a variation of that dosage regime).
3.2
Each granted patent must be revoked if a competitor is to bring its product to market
without risk that will incur significant financial and time burden.
3.3
Patent thickets, and the low quality and questionably innovative nature of the patents
they  are  constituted  of,  were  identified  as  a  barrier  to  generic  access  in  the  2008
Paper27,  which  addressed  a  number  of  examples  of  this  type  of  abuse  including  the
medicinal  products  citalopram,  SSRIs,  combinations  comprising  hydrochlorathiazide
and perindopril. The Commission also raised the proliferation of patent thickets as an
issue in the 2009 Report, finding that "individual blockbuster medicines [in the EU] are
protected by up to 1,300 patents and/or pending patent applications… certain [of these]
patent filings occur very late in the life cycle of a medicine"28.
3.4
Notwithstanding  these  findings,  the  2019  Report  noted  that  this  form  of  activity
continues  to  take  place  in  the  market29.  It  cited  the  recent  example  of  the  dispute
between Boehringer and Almirall30 which demonstrated that the issue of patent thickets
persisted in the years after the findings in the 2009 Report were published:
Boehringer and Almirall (COPD)
3.4.1
In 2011, the Commission closed an antitrust investigation into allegations by
Almirall that Boehringer had filed for several unmeritorious patents over three
types  of  combination  of  active  substances  with  a  new  active  substance
developed  by  Almirall  for  treating  chronic  obstructive  pulmonary  disease
(COPD). Almirall alleged that these patents would delay/block the entry of its
competing medicines. However, ultimately, the parties reached a settlement
agreement, allowing the Commission to end its pursuit of the case.
3.5
The strategic use of patent thickets continues today. For example, an on-body injector,
which  is  used  to  administer  a  product  to  reduce  the  risk  of  infection  in  patients,  is
protected by at least 40 patent families relating to the device. The practice of creating a
'thicket'  of  patents  around  devices  is  particularly  problematic  in  the  biosimilar  space,
where  it  is  difficult  for  biosimilar  companies  to  switch  between  devices.  Such  patent
thickets,  therefore,  create  uncertainty  and  may  prevent  biosimilar  companies  from
launching their products.
3.6
A  further  example  of  a  constructed  patent  thicket  concerns  a  treatment for  idiopathic
pulmonary fibrosis, which is protected by 6 different patent families, most of them related
to different dosage regimes linked to safety issues indicated in the product labelling of
the  reference  medicinal  product.  Some  of  the  divisional  patents  within  the  different
families have been invalidated at the EPO, but the parent patents are currently still in

27 European Generic Medicines Association (now Medicines for Europe), Patent-related Barriers to Market Entry for
Generic Medicines in the European Union (May 2008), pp. 12-16 [http://www.ieis.org.tr/ieis/assets/media/EGA%20-
%20IP_Barriers_web.pdf]
28 European Commission, Final Report: Pharmaceutical Sector Inquiry (8 July 2009), p.201
[https://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/staff_working_paper_part1.pdf]
29 European Commission, Report from the Commission to the Council and the European Parliament: Competition
Enforcement in the Pharmaceutical Sector (2009-2017): European Competition Authorities Working Together for
Affordable and Innovative Medicines (2019), pp. 39-40
[https://ec.europa.eu/competition/sectors/pharmaceuticals/report2019/report_en.pdf]
30 Ibid.

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force. This patent landscape makes it very difficult for third parties to clear the way and
launch their own generic or biosimilar product.
4.
MISUSE OF THE DIVISIONAL PATENT SYSTEM
4.1
The EPO states that "the usual reason for filing a European divisional application is that
the parent application does not satisfy the requirements as to unity of invention… and
the applicant wishes to obtain a patent for all the inventions"31. Without the ability to file
divisionals,  an  applicant  whose  application  falls  foul  of  the  unity  of  invention
requirement32 would be precluded from obtaining patents over each separate invention
contained within the rejected application. Divisional applications, therefore, represent a
useful tool in obtaining protection for one's inventions.
4.2
Divisional patent applications are those which derive from an earlier patent application
with the earlier application referred to as the "parent". In relation to European Patents,
divisionals are provided for by Article 76 of the EPC, which makes clear that the subject
matter  of  any  divisional  application  cannot  extend  beyond  the  scope  of  the  earlier
application as filed. The advantage of divisional applications is that they are deemed to
have the same date of filing (and enjoy any right to priority) as the parent. As a result,
anything published between that filing/priority date and the date the applicant applies
for a divisional cannot be relied upon to invalidate that patent.
4.3
The divisional patent system may be exploited in order to create legal uncertainty for
third parties seeking to launch competitor products. A third party can only know what a
patent  protects  after  it  is  granted  and the  scope  of the  claims  is  finalised.  A  pending
patent  application  creates  uncertainty,  as  the  scope  of  the  claims  may  change
throughout the prosecution of a patent presenting an undefined blocking position. The
uncertainty this creates is compounded in scenarios where a patent thicket has been
generated and divisional applications are filed from numerous secondary patents. The
uncertainty manifests in the increased risk of patent infringement issues on launch of
the generic or biosimilar product, which can crystallise in either: (i) a litigation risk, which
can lead to proceedings being commenced in any and all national courts, which can be
costly  to  defend  against;  (ii)  having  the  launch  blocked  by  the  granting  of  an  interim
injunction following launch; or (iii) creating a risk for potential damages to be awarded
by a national court, even if the divisional patent is later revoked in national proceedings
or at the EPO (whether at the Opposition Division or at the Technical Board of Appeal).
4.4
Often  the  primary  patent  covering  the  product  per  se  has  expired  but  uncertainty
remains  due  to  pending  secondary  patents  and  their  divisional  applications  that  may
protect  specific  attributes  of  the  product,  such  as,  for  example,  specific  indications,
patient  groups  or  formulations.  Divisional  applications  may  be  filed  at  the  EPO  any
time33 whilst the earlier parent patent application is pending34. If the parent application
provides  basis,  divisional  applications  could  be  filed  after  competitors  have  lodged
applications for marketing authorisation for their products, or even launched the product
into the market; in this way, the divisional patents could encompass within their claims
the competitor product. The uncertainty this creates can present a significant barrier to
generic and biosimilar manufacturers seeking to bring their products to the market.
4.5
It  is  only  possible  for  an  opposition  before  the  EPO  or  a  revocation  action  before  a
national court to be brought once the patent has been granted, thus those looking to
market competitor products are forced to wait a significant period of time to obtain any
certainty as to whether their product infringes a patent35. Even where the parent patent

31 European Patent Office, European Patent Guide: How to get a European patent, section 5.8.001
32 I.e. In that the patent relates to more than one invention.
33 The rules were changed for a short period to require that divisional applications must be filed within 24 months of the
first communication by the EPO examining division in relation to the parent, which resulted in a significant increase in
the number of divisional applications filed.
34 Rule 36 (1) Implementing Regulations to the EPC.
35 In Germany,  nullity  proceedings cannot  be  brought before the  national courts  prior to  expiry of  the  EPO opposition
period following grant or where opposition proceedings are pending before the EPO. Due to the bifurcated nature of the

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is  invalidated  before  a  patent  office  or  court,  the  risk  remains  that  a  patent  covering
substantially  the  same  subject  matter  may  issue  from  a  related  pending  divisional
application replicating the legal uncertainty. A patentee can choose to maintain the legal
uncertainty by keeping a series of divisional patent applications pending for an extended
period of time. Every time one patent approaches grant, another may be published and
thus restarts the lengthy grant process creating an interminable version of legal 'Whack-
A-Mole', as demonstrated by the diagram below. For example, at the EPO, the grant of
a divisional application triggers a new opposition deadline (9 months) and a minimum
of  4  months  is  given  to  the  patentee  to  reply  to  a  notice  of  opposition.  Although
acceleration is possible, an opposition does not last less than 1.5 years not including
appeal timelines.  Currently, companies seeking to challenge a parent and its divisionals
have  no  means  to  oppose  these  in  one  action  at  the  EPO,  nor  to  seek  pre-emptive
declaratory relief before the EPO to seek to stem the flow of new divisional application
filings.

Figure provided by Medicines for Europe.
4.6
Furthermore, a practice has developed whereby the divisional patent system is used to
frustrate the judicial and administrative procedures inherent in the patent system, thus
prolonging the life of patents that may not be able to stand up to judicial scrutiny. This
practice, often referred to as the 'divisional game' can involve:
4.6.1
Filing “cascades” of divisional patents, where each divisional patent is filed
at  different  time  periods,  most  often  just  before  the  grant  of  the  previous
member of the family (where often the differences between the claims of such
divisional patents are immaterial);
4.6.2
Defending  opposition  proceedings  in  respect  of  such  divisional  patents
(where  often  such  opposition  proceedings  can  take  between  3  and  6  years
from initiation of the opposition until final resolution by the Technical Board of
Appeal of the EPO);
4.6.3
Enforcing such patents in national courts, where such patents can be used
in  litigation  to  grant  preliminary  injunctions  against  generic  competitors  who
wish to launch at risk in the face of such patents;
4.6.4
Strategically withdrawing an earlier patent, just before the point at which
the earlier patent from the family is due to be considered by the Opposition
Division  or  Technical  Board  of  Appeal  of  the  EPO,  thereby  frustrating  the

German  system,  this  can  create  challenges  for  generic  and  biosimilar  companies  in  the  event  that  infringement
proceedings are brought against them.

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judicial process by shielding the patent family from judicial scrutiny36. Any new
opposition proceedings in respect of later filed divisional patents can then take
another 3 to 6 years from initiation of the opposition until final resolution by the
Technical Board of Appeal of the EPO.
4.7
It is worth noting that some national jurisdictions have adopted local rules designed to
prevent a patentee from filing 'cascades' of divisional patents as referred to above. A
common  solution to  prevent  late  filing  of  divisional  applications  is  to  simply  impose  a
deadline  for  the  filing  of  any  divisional  applications  that  is  not  dependent  on  the
pendency of the relevant parent patent or its divisionals37. This provides a reasonable
period of time for any divisional to be sought while limiting the potential for abuse. The
EPO attempted a similar approach when Rule 36 of the European Patent Convention
(which  governs  divisional  applications)  was  amended  in  2009  to  limit  the  time  period
within  which  a  divisional  application  could  be  filed  to  two  years  from  the  Examining
Division's first communication to the applicant (with limited exceptions). However, this
led to an initial influx of divisional applications that stretched the EPO's limited resources
and, after a consultation and some effective lobbying, the deadline was removed on 1
April 2014.
4.8
Some national courts (such as the UK and the Netherlands) have also tried to provide
certainty to generic and biosimilar companies in the form of what have become known
as  'Arrow  declarations'.  In  effect,  this  is  a  declaration from  the  court  that  a  particular
product or process was not new or was obvious at a specific point in time' for example,
at the priority date of a relevant patent. Such declarations are able to provide certainty
regardless of the number of divisionals filed or granted. However, this practice has been
of limited practical use. First, its value may be limited to the specific country in which the
declaration is sought. Secondly, when such a declaration is sought, the patent holder
may  simply  withdraw  the  national  designations  of  the  relevant  patents  and  divisional
applications and undertake not to designate future divisional applications in the relevant
country. Whilst this can provide certainty for that jurisdiction, it does not overcome the
uncertainty that generic and biosimilar companies face in other European jurisdictions.
4.9
Some countries such as Italy and Germany have a local concept of 'unfair competition'.
This  principle  of  law  is  designed  to  prevent  the  illegitimate  use  of  a  legitimate  right.
Again,  it  is  only  available  in  limited  jurisdictions  and  national  courts  have  only  been
prepared to use this concept in isolated cases38.
4.10
Previous examples
4.11
Misuse of the divisional system was identified as an ongoing issue in the 2008 Paper39.
Medicines  for  Europe  identified  examples  of  the  potentially  abusive  use  of  divisional
patents  in  relation  to  Alendronate  (Fosamax),  Budesonide/formoterol  fumarate
dihydrate (Symbicort) and Esomeprazole (Nexium).
4.12
The  2008  Paper  recommended  preventing  the  filing  of  divisional  patents  which  are
essentially  identical  to  the  parent  application  in  question,  on  the  basis  that  double-
patenting is prohibited under C-IV, 6.4 of the EPO's Guidelines for Examination.

36 Other instances may involve the applicant filing auxiliary claims that do not satisfy one of the requirements for the grant
of a European patent, in order to avoid a reasoned decision on other requirements for the grant of a European patent,
which may prejudice the validity of the whole family.
37 For example, in the UK, if an applicant receives notice of intention to grant the patent, a divisional application may be
filed within two months of the date of such notice. Where a notice has not been received, a divisional application must be
filed within three months before the expiry of the 'compliance date' of the parent application, being 4 years and 6 months
from the priority date/filing date of the parent patent or 12 months after the date on which the first substantive examination
report is sent to the  applicant (if  later).  The 'compliance period' for  a  divisional application is  the same  as that for the
parent, which prevents a 'cascade' of divisional applications being filed.
38 See, for example, the decision of the Munich District Court "Verbot des Fallenlassens von Patenten" on 24 February
2020 (O 1456/20) and the decision of the Consiglio di Stato in relation to latanprost on 12 February 2014 (693/214).
39 Medicines for Europe, Patent-related Barriers to Market Entry for Generic Medicines in the European Union (May
2008), p. 14 [http://www.ieis.org.tr/ieis/assets/media/EGA%20-%20IP_Barriers_web.pdf]

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4.13
The  Commission  also  condemned  the  proliferation  of  divisional  patents  in  the  2009
Report40. It noted that the "examination of divisional applications continues even if the
parent application is withdrawn or revoked, which can add to the legal uncertainty for
generic companies", adding that: "filing divisional applications for the same secondary
patent... can… be used strategical y to create further uncertainty and delays for new
entrants".41
4.14
Furthermore, the Commission's report revealed the extent of this problem at the time.
The Commission reported that it had received feedback from the industry showing that
"of  the  43  [originator  companies]…  addressed,  eleven…  declared  that  in  the  period
2000 to 2007 they had filed for divisional patent applications where the corresponding
parent  application  had  subsequently  been  refused  or  withdrawn"  The  Commission
elaborated, confirming that "the numbers of individual divisionals varied between 1 and
30"42.
4.15
Current, relevant examples
4.16
Despite the recommendations made by both Medicines for Europe and the Commission,
a multitude of divisional applications continue to be applied for and granted relating to
single medicinal products, to the detriment of potential generic entrants. Last year, the
2019 Report identified this as an ongoing issue a decade on from the 2009 Report.43
The Commission cited the following examples of such behaviour in the 2019 Report:
Pfizer (Xalatan)
4.16.1
In January 2011, the Italian national competition authority fined Pfizer €10.7
million for anticompetitive conduct. The original patent for Pfizer's glaucoma
drug Xalatan (EP 1 225 168) was set to expire in September 2009. Pfizer filed
for, and obtained, a divisional patent (EP 0 364 417) followed by an SPC and
paediatric extension. The Italian competition authority found evidence that the
sole purpose of the strategy was to delay the onset of generic competition in
the Italian market. Pfizer's strategy had successfully managed to extend the
duration of its monopoly by seven months until May 2010. This cost the Italian
Health service an additional €14 mil ion. The Italian Council of State confirmed
this decision on appeal in 2014.
Boehringer (COPD)
4.16.2
Also in 2011, the Commission closed an antitrust investigation into allegations
that German pharmaceutical company Boehringer Ingelheim ("Boehringer")
filed  for  unmeritorious  patents  regarding  new  treatments  for  chronic
obstructive  pulmonary  disease  (COPD).  As  part  of  its  strategy  in  this  case,
Boehringer  filed  a  number  of  divisional  patents,  which  it  did  not  assert  (but
could  in  theory  have  asserted  at  any  future  time).  This  allowed  any  patent
dispute to be prolonged beyond the period of time it would take for a decision
to  be  reached  on  the  basic  patent.  Please  see  further  details  of  this  at
paragraph 3.4.1 above.
4.17
Notwithstanding  the  above  two  cases,  activities  described  above  in  relation  to  the
misuse of the divisional patents system appear to have continued.  One Medicines for
Europe member noted that "[o]ne of the biggest barriers is the uncertainty caused by
the  abuse  of  the  divisional  patent  system  where,  post  generic  market  formation,

40 European Commission, Final Report: Pharmaceutical Sector Inquiry (8 July 2009), para. 275
[https://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/staff_working_paper_part1.pdf]
41 Ibid.
42 Ibid, para. 511
43 European Commission, Report from the Commission to the Council and the European Parliament: Competition
Enforcement in the Pharmaceutical Sector (2009-2017): European Competition Authorities Working Together for
Affordable and Innovative Medicines (2019)
[https://ec.europa.eu/competition/sectors/pharmaceuticals/report2019/report_en.pdf]

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originators design tailored retrospective patent claims targeting generic formulations".
Another stated "the abuse of the divisional patent system has indeed deteriorated over
the past years and it increases the length of oppositions. Often, nowadays, the patentee
lets the previous patent or patent application be deemed withdrawn and continues the
examination procedure with a second or third generation divisional with identical or very
similar claims."
4.18
The impact of exploitation of the divisional patent system is exacerbated by the  lengthy
timelines for grant of patents before the EPO, for example:
4.18.1
In 2004, a parent patent application was filed for the use of propylene glycol
in  liraglutide  formulations.  This  patent  was  not  granted  until  2017,  was
subsequently opposed and maintained in 2020, which decision is now under
appeal.
4.19
A member of Medicines for Europe has explained "[t]he abuse of the divisional patent
system has increased over the last decade. The focus of abuse is on secondary patents,
such as formulation patents, use patents or claims on particle size or crystalline forms
being  granted  and  leading  to  legal  disputes  that  delay  generic  and  biosimilar  launch.
This  can  also  be  seen  in  patents  covering  routine  clinical  studies,  adverse  effects  or
dose adjustments that cannot be carved-out from the SmPC.  Recently, we have seen
an  increase  in  the  number  of  parent  patents  being  abandoned  before  an  adverse
decision is made in appeal proceedings, sometimes even at the oral hearing itself, in
favour  of  divisionals  that  are  at  early  stage  of  examination  or  recently  granted.  This
prolongs the timelines for final decision and adds more uncertainty about the potential
launch date, sometimes leading to generic companies delaying or abandoning launch".
4.20
The practice of withdrawing patents just prior to a final decision on their validity, coupled
with  filing  a  divisional  patent  application  that  may  be  almost  identical  in  scope  of
protection to the parent, can extend the period of uncertainty for generic and biosimilar
competitors.  In  effect,  this  avoids  a  negative  judgment  while  resuscitating  the  parent
patent in an almost identical form in the divisional and starting the entire process again.
For example:
4.20.1
A therapeutic use patent was opposed by three parties, with an oral hearing
set for January 2020. The original patent was surrendered a few days prior to
the scheduled hearing. Deriving from the original patent, mention of grant of a
divisional patent was published in the patent bulletin in December 2019. For
this patent, the opposition period expires in September 2020, extending the
period of uncertainty for those seeking to bring competitor products to market.
4.20.2
In  relation  to  a  valuable  oncology  product,  for  which  numerous  divisional
patent applications had been filed, claiming various indications for the product,
a  parent  patent  was  withdrawn  by  the  patentee  just  prior  to  the  Board  of
Appeal  providing  its  decision  on the  appeal  of  a  decision  by  the  Opposition
Division to revoke the patent. The effect of this was that there was no written
decision as to the patentability or otherwise of the subject matter of the parent
patent,  which  may  have  been  useful  in  opposition  or  other  proceedings
concerning the divisional patents.
4.20.3
A  product  for  the  treatment  of  cancer,  for  which  the  basic  patent  and  SPC
expired in 2018, had a composition patent which was opposed by 15 parties
but  withdrawn  by  the  patentee  in  appeal  shortly  before  oral  proceedings.  A
divisional  of  the  parent  was  refused  in  examination44.  A  further  Patent
Cooperation Treaty ("PCT") application has been filed, which is yet to enter

44 This decision is currently under appeal.

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the  European  phase.  This  serves  to  extend  the  period  of  uncertainty  for
companies seeking to bring competitor products to market.
4.21
Another potential tactic is to seek a divisional with broad claims similar to those of the
parent patent application as filed, where there may be a risk the parent patent will be
narrowed or limited during examination or in opposition. This permits the wide scope of
the original parent patent to be maintained for a longer period of time regardless of the
outcome  of  any  opposition  or  appeal,  meaning  any  uncertainty  the  broader  claims
create will persist until conclusion of all of the relevant proceedings.  For example:
4.21.1
In relation to a drug for the treatment of hyperparathyroidism, the basic patent
has expired. However, a secondary formulation patent and a series of seven
divisionals have been filed, some of which were filed almost 14 years after the
filing of the parent. Following opposition proceedings, the Technical Board of
Appeal upheld the parent patent in amended form, with narrower claims and
an amended specification. However, the current divisional system has meant
that the patentee was able to maintain the broad scope of the original parent
application by filing for divisionals prior to conclusion of the proceedings of the
parent patent. This means that generic and biosimilar companies continue to
face uncertainty as to the scope of protection conferred by the patent family.
4.21.2
In relation to a drug for multiple sclerosis, there are two patent families with
sixteen  divisional  patents  at  varying  stages  of  examination,  opposition  and
appeal. In relation to one of these patent families, the parent patent relating to
extended  release  formulations  has  been  revoked  in  opposition  proceedings
with  an  appeal  pending.  However,  a  divisional  patent  application  has  been
filed with a broader scope of protection covering not only prolonged release
formulations but also enteric coated formulations. This divisional was granted
by the EPO, although it has since been revoked in opposition with an appeal
hearing scheduled in 2021. The applicant has filed a further series of divisional
patent applications covering a similar broad scope. Three of these divisional
patent applications have received an intention to grant communication several
times  (up  to  five  times  in  one  instance)  and  each  time  the  divisional  patent
application was abandoned and the proceedings were subsequently resumed
when further processing was requested. This has caused delay to the grant
of the divisional applications, which in turn extends the uncertainty faced by
companies seeking to launch competitor products. Due to the length of time
taken for opposition and appeal proceedings at the EPO, it is very likely that
opposition proceedings will not be concluded for all pending divisional patent
applications before expiry of the 20-year patent term.
4.21.3
A  patent relating  to  a medication  for  chronic  obstructive  pulmonary  disease
was opposed and maintained in amended form at first instance. The decision
was appealed by both parties and oral proceedings were cancelled because
the patentee requested the revocation of the patent. The patentee had also
filed a divisional patent that has been granted with similar scope of protection
to the parent. The divisional has been opposed by 10 opponents, although a
subsequent divisional has also been filed.
4.22
As illustrated by the examples listed below, the filing of multiple divisional applications
is commonplace in the pharmaceutical sector. Where these divisional applications are
filed on a sequential basis or remain pending for significant periods of time, uncertainty
is  generated  for  competitors,  requiring  investment  of  significant  time  and  cost  to
navigate.  The  proliferation  of  patents  can  also  result  in  the  patent  'thicket'  issues
discussed at section 3 above. For example:
4.22.1
A pharmaceutical combination drug designed to treat very severe idiopathic
restless leg syndrome is protected by fifty-five divisional patents across seven
patent families.

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4.22.2
An  immunomodulating  drug  primarily  used  for  treating  multiple  sclerosis  is
protected by nineteen divisional patents across six patent families. One of the
families  includes  a  patent  application  concerning  use  of  the  drug  in  the
paediatric population. With regard to the parent patent and one divisional, we
understand the applicant has withdrawn the pending patent applications after
being  summoned  to  an  oral  hearing  or  receiving  communication  from  the
Examining Division with strong objections against novelty and inventive step
whilst continuing to file further divisional applications.
4.23
A member of Medicines for Europe raised the use of delaying tactics as a real issue,
stating "it appears that originators deliberately use tactics to delay patent examination
at  EPO  leading  to  very  late  grant,  often  even  close  to  its  expiry  date.  Although  it  is
possible to oppose patents or invalidate them at national level, these procedures are
often  extremely  lengthy,  costly  and  time  consuming.  The  purpose  of  the  tactic  is  to
ensure that spurious patents cannot be challenged in advance of a launch and so create
a  risk  to  the  generic  entrant,  hence  potentially  delaying  their  launch.  In  some  cases,
uncertainty  is  perpetuated  by  retaining  pending  divisional  patent  applications  for
extended  periods  of  time.  Mechanisms  may  be  deployed  to  seek  to  ensure  that  this
happens; for example, by disapproving the text for grant of divisional patents45. In one
case  in  relation  to  a  controlled  release  pharmaceutical  formulation,  the  patentee
received  five  communications  of  intention  to  grant  a  divisional  patent  and  to  each
responded  disapproving  the  text  intended  to  grant,  including  correction  of  minor
typographical errors. For example, correcting "Invention" to "invention". This behaviour
was repeated in relation to two further divisionals where two and five communications
of intention to grant, respectively, were received. Such apparent misuse of systems for
approving  text  intended  to  grant  has  strayed  from  the  original  intention  of  these
procedures,  which  is  primarily  concerned  with  the  patentee  completing  the  final
formalities  of  patent  grant,  such  as filing  the  translation  of  the  claims  and  paying  the
necessary fees.
4.24
In relation to divisional applications with clearly overlapping claims, the EPO Boards of
Appeal  has  referred  a  question  to  the  Enlarged  Board  of  Appeal  (G  4/19)  in  Case  T
0318/14 in relation to the status of patents for the prevention and treatment of allergic
diarrhoea46.  The  question  under  consideration  is  whether  "a  European  patent
application [can] be refused under Article 97(2) EPC if it claims the same subject-matter
as a European patent which was granted to the same applicant and does not form part
of the state of the art pursuant to Article 54(2) and (3) EPC" and what the acceptable
conditions  for  such  a  refusal  would  be.47  The  outcome  of  this  decision  could  have
implications  for  the  future  of  the  strategy  of  granting  divisional  patents  with  largely
overlapping claims.
5.
PATENT LINKAGE
5.1
'Patent  linkage'  describes  a  practice  whereby  the  standing  of  a  generic  or  biosimilar
product  with  regard  to  a  marketing  authorisation  or  other  administrative  approval  or
procedure required before market entry48 is linked to the status of a patent (or patent
application)  pertaining  to  the  reference  medicinal  product.  These  administrative
processes should remain entirely independent from the status of any patent, given the
rights afforded by a patent are very well protected under the current patent system. The
artificial  linkage  of  patent  status  to  these  processes  is  readily  exploited  as  a  tactic
designed to hinder market entry for generic or biosimilar products. In practice, this tactic
is  effective  and  is  particularly  problematic  where  the  patent  being  relied  upon  is
ultimately found to be invalid.

45 See footnote 7 of this whitepaper.
46 European Patent Office, Case T 0318/14 (Double patenting) of 7.2.2019 (7 March 2019) [https://www.epo.org/law-
practice/case-law-appeals/recent/t140318ex1.html]
47 Ibid.
48 For example, pricing approval, agreement to reimbursement status.

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5.2
Patent linkage was described as "unlawful" by the 2009 Report and it is prohibited under
European law49. In the 2017 Resolution, the European Parliament acknowledged that
'patent  linkage'  continues  to  be  a  problem  across  the  EU50.  It  requested  that  the
Commission  focus  on  "guaranteeing  timely  entry  into  the  market  for  generic  and
biosimilar  medicines"  and  "ending  patent  linkage  according  to  the  Commission’s
guidelines"51.
5.3
Article 126 of Directive 2001/83/EC (relating to medicinal products for human use) (the
"Directive") states  that  “[a]n  authorization  to  market  a  medicinal  product  shall  not  be
refused, suspended or revoked except on the grounds set out in the Directive”. Patent
protection covering a medicinal product is not listed under the exhaustive set of grounds
in the Directive. Furthermore, in the context of Article 10 of the Directive, provision is
made  to  exempt  from  patent  infringement  the  conduct  of  such  studies  and  trials  as
necessary  pursuant  to  the  abridged  approval  procedure52,  the  Bolar  exemption.  As
described  at  5.11.2  below,  any  attempt  to  practise  patent  linkage  by  Member  States
undermines the Bolar exemption, which was intended as a crucial tool to achieve the
Commission's aim of bringing affordable medicines to the market promptly.
5.4
Although  the  law  is  clear  in  relation  to  the  prohibition  of  patent  linkage  in  obtaining
marketing  authorisation  approval,  some  uncertainty  remains  in  the  context  of  pricing
and  reimbursement  activities.  Directive  89/105/EEC  (the  "Transparency  Directive",
which governs the transparency of pricing of medicinal products across Member States)
does not contain an equivalent provision as that set out above in relation to marketing
authorisation approval.
5.5
In  a  proposal  to  amend  the  Transparency  Directive  in  2012,  the  following  express
prohibition was proposed:
"Article 14(2) - The protection of intellectual property rights shall not be a valid ground
to refuse, suspend or revoke decisions relating to the price of a medicinal product or its
inclusion within the public health insurance system."
5.6
However, the proposal was not progressed due to political reasons. As recently as 2017
(in the 2017 Resolution) the European Parliament called upon the Commission to revise
the Transparency Directive as a means to end patent linkage53 and the Commission's
view on patent linkage is also clear.
5.7
'Patent linkage' may occur in a number of ways:
Marketing authorisation linkage
5.7.1
The grant of marketing authorisation to a generic product may be tied to the
expiration  of  patent  rights  attaching  to  the  reference  medicinal  product.
Alternatively, an originator may exploit or misuse procedures for the granting
of an MA for a competitor claiming that the application for an MA represents
an  infringement  of  its  relevant  patent(s).  This  often  results  in  litigation
proceedings being issued by an originator.
5.7.2
Portugal has historically had a strong practice of patent linkage.   The 2008
Paper  referred  to  the  70  cases  brought  against  Portuguese  regulatory
authorities in 2007, and between 2011 and January 2019, Portugal operated

49 European Commission, Final Report: Pharmaceutical Sector Inquiry (8 July 2009), para. 872
[https://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/staff_working_paper_part1.pdf]
50 European Parliament, Resolution of 2 March 2017 on EU options for improving access to medicines (2016/2057(INI))
(2 March 2017), para. 57 [https://www.europarl.europa.eu/doceo/document/TA-8-2017-0061_EN.pdf]
51 Ibid.
52 Article 10(6) of Directive 2001/83/EC
53 European Parliament, Resolution of 2 March 2017 on EU options for improving access to medicines (2016/2057(INI))
[https://www.europarl.europa.eu/doceo/document/TA-8-2017-0061_EN.html]

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a system of mandatory arbitration between patent holders and generics when
a generic applied for an MA54.
5.7.3
Despite  this  system  of  mandatory  arbitration  having  come  to  an  end,  an
application  for  an  MA  continues  to  be  considered  to  be  grounds  for  patent
infringement proceedings in Portugal, ensuring that linkage is still an issue for
generics  trying  to  enter  its  market.  The  law  requires  generics  to  file  MA
applications on the national medicines agency's website. Though not a linkage
issue  in  itself,  this  is  problematic  in  light  of  an  originator's  right  to  bring  an
infringement action before the Portuguese Intellectual Property Court, or using
voluntary arbitration, within 30 days of a generic entering an MA application
on the list55.
5.7.4
The  2008  Paper  also  cited  that,  at  the  time:  (i)  Slovakia  was  operating  a
system of MA-based linkage comparable to that of Portugal; and (ii) Hungary
required applicants for an MA to sign an undertaking stating that they do not
intend to infringe the relevant innovator patent if they wanted their product to
be approved56.
5.7.5
Currently, in France, the Medicine Act provides that a generic should provide
notice  to  a  patentee  of  its  application  for  a  generic  MA.  Furthermore,  the
French Medicines Agency (ANSM) will inform innovators within one month of
any relevant MAs granted to generics during the innovator's period of patent
protection57. The same legislation contains an obligation for generics to refrain
from  marketing  a  product  until  after  the  expiry  of  the  relevant  intellectual
property rights and to inform ANSM, prior to launch, of forms and dosages for
which the rights have not yet expired58.
Pricing & reimbursement linkage
5.7.6
In some Member States, the act of seeking pricing or reimbursement approval
is  considered  to  be  an  infringement  of  a  patent  and  thus  those  bringing
competitor products to market are required to wait until patent expiry to take
these  steps  without  risk.  Some  Member  States  do  not  allow  pricing  and
reimbursement decisions to be taken during the term of a patent relating to
the reference medicinal product, and there are examples of patentees going
further  and  issuing  court  proceedings  seeking  to  restrain  the  competent
authority from carrying out pricing and reimbursement activities in relation to
a competitor product during a patent term
5.7.7
In Italy, despite condemnation from both the Commission and Italy's national
competition  authority,  generics  may  not  list  pricing  and  reimbursement
schedules  until  originator  patents  expire  (under  the  so  called  "Balduzzi
Decree")59.
5.7.8
In  Poland,  generics  need  to  confirm  that  their  product  is  available  on  the
market  before  they  may  apply  for  a  reimbursement  status.  Given  that  first
launch is considered to constitute patent infringement or is blocked by market
exclusivity, the  product  is  not  available  for  patients  until  it  is  included  in  the
reimbursement list, which is often some time after patent or market exclusivity
expiry.

54 European Generic Medicines Association, Patent-related Barriers to Market Entry for Generic  Medicines
in
the
European Union, May 2008, pp. 23 and 24
55 Ibid.
56 Ibid.
57 Public Health Code, ss. L5121-10 and R5121-5
58 Public Health Code, ss. L5121-10
59 Ibid, p. 7

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5.7.9
In Germany, the Informationsstelle fur Arzneispezialitäten ("IFA") holds a price
list  of  products  which,  if  listed,  enables  reimbursement  from  public  health
insurance funds60. IFA's current policy is not to list a generic product if a patent
holder  has  filed  an  objection  against  its  listing.  More  recently,  the  IFA  has
begun  requesting  information  on  the  patent  expiry  of  reference  medicinal
products where a generic company seeks to apply to have its generic product
listed in the IFA database61.
5.7.10
In France, originators may inform the French pricing authority (CEPS) of any
patents  relevant  to  reference  medicinal  products.  Unless  the  generic
manufacturer  provides  a  statement  to  the  CEPS  confirming  that  it  will  not
infringe with its product62, it may not be listed as a 'reimbursed' product until
six months prior to the expiry of the relevant patent63.
Procurement linkage
5.7.11
An  originator  may  exploit/misuse  procedures  for  communication  with
competent  authorities  for  procuring  pharmaceuticals  in  Member  States  to
perturb generics from entering these markets. Delaying access of a generic
or biosimilar product under development to procurement procedures through
asserting patent rights has the inevitable effect of delaying market entry.
5.7.12
In addition, differences between Member States as to what constitutes an act
of  infringement  of  a  patent,  particularly  in  relation  to  procurement,  further
complicates the issue of patent linkage. Listing in the Lauer-Taxe in Germany
during the patent term is considered to be an infringing act,  even where the
product  will  be  physically  placed  on  the  market  after  the  expiry  date  of  the
patent (Simvastatin, 5 December 2006). Likewise, in the Netherlands, listing
a generic product on the G-Standaard medicines database, a necessary step
prior  to  the  product  being  sold,  is  considered  to  be  an  act  of  patent
infringement  (Glaxo  v  Pharmachemie,  22  June  2012)64.  Submitting  bids  for
tender processes pre-patent expiry, where the product will be supplied after
patent expiry are likewise often considered to be acts of patent infringement65
66.
Prescription listing based linkage
5.7.13
In  order  to  be  available  for  prescription  by  healthcare  practitioners  in  some
Member  States,  a  drug  must  be  listed  in  a  prescription  listing,  or  formulary.
Patentees  may  assert  that  this  listing  is  an  act  of  patent  infringement  and,
based  upon  the  listing,  seek  judicial  relief  on  the  basis  of  granted  patents.
Subject  to  the  precise  mechanisms  in  each  Member  State,  it  may  not
necessarily be the case that simply listing a product within such a database
means  that  the  product  is  available  for  sale  and thus such  actions  may  not
necessarily  be  considered  to  be  an  offer  for  sale,  within  national  patent
legislation67.

60 Ibid, p. 6
61 Whilst there is as yet no evidence that the IFA are using this information to reject the listing of generic and biosimilar
products in their database, there is the potential for such patent linkage to occur, thus creating a barrier to generic and
biosimilar entry.
62 This information is shared with the patentee.
63 Ibid.
64 Ibid, p. 7
65 Cf. the situation in the UK, where an offer to supply a product post-expiry that was made prior to expiry of a patent may
not be considered to amount to infringement (Jacob J in  Gerber Garment Technology Inc v Lectra Systems Ltd & Anor
[1995]). In France, the situation is less clear, which itself may create barriers to generic and biosimilar entry.
66 Some jurisdictions have attempted to introduce measures to mitigate the consequences of this, for example, in Italy,
where a biosimilar product enters the market, regional authorities must re-open any supply agreements within 60 days.
67 What constitutes an act of patent infringement is defined by patent law in each national jurisdiction in some instances.
This in itself can have a negative impact on generic and biosimilar market entry.

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5.8
Notwithstanding the above-identified risks of patent linkage and the repeated indications
from the Commission that patent linkage is not to be used within Member States, the
practice continues unabated.
5.9
For  example,  the  holder  of  various  patents  protecting  Alimta  (pemetrexed)  sought
injunctive  relief  against  two  generics  in  2019.  The  Higher  Regional  Court  in  Munich
dismissed  the  applications  against  the  two  generics  and  the  patentee  subsequently
withdrew its applications against other generic manufacturers.
5.10
Notwithstanding  this  decision,  in  parallel  proceedings,  the  patentee  filed  an  action
against the IFA objecting to the listing of generic pemetrexed and obtained an injunction
prohibiting the IFA from listing the generic product. This application was based upon the
same patent asserted directly against the generic manufacturers and has resulted in the
prevention of a generic alternative to Alimta entering the German market.
5.11
Ultimately,  'patent  linkage'  activities  hinder  and  delay  access  to  the  European
pharmaceuticals market for generic and biosimilar medicines, to the ultimate detriment
of  patients  and  healthcare  providers.  Furthermore,  'patent  linkage'  brings  about  a
number of specific disadvantages. For example:
Limited compensation for delay
5.11.1
If  patent  linkage  is  enshrined  in  legislation  and  the  competent  authority  is
acting  in  accordance  with  the  legislation,  there  is  often  limited,  if  any,
compensation  available  to  the  manufacturer  of  the  product  who  suffers
delayed  market  access.  The  same  is  also  true  for  the  health  services  and
patients  deprived  of  competition  and  lower  cost  medicines.  This  is  so
notwithstanding the Commission's view that linkage is contrary to EU law.
Undermining of the 'Bolar provision'
5.11.2
The purpose of the so-called 'Bolar provision' is to allow generics to conduct
the  necessary  studies  and  clinical  trials  required  to  obtain  marketing
authorisation  and  to  undertake  those  activities  without  risk  of  patent
infringement  proceedings  being  brought  against  them.  Linkage  of  the
regulatory approval processes to patent infringement directly undermines this
provision  and  may  result  in  generics  undertaking  those  activities  only  upon
patent expiry, thereby delaying access of those products to the market.
5.11.3
Cost of patent-based litigation to generics
5.11.4
'Patent linkage' is conducive to a proliferation of patent-based litigation, which
creates additional costs for generics seeking to enter the market. The 2009
Report  found  that  the  estimated  total  cost  of  patent  litigations  in  the  EU
between  2000  and  2007  was  in  excess  of  €420  mil ion68.  The  general
perception is that the situation has not improved since 2009
5.12
Involvement of regulators in questions outside their competence
5.12.1
Asking regulators of pharmaceutical safety and quality to become involved in
assessing the validity of patents undermines the exclusive competence of the
national  courts  to  rule  on  these  matters.    Put  simply,  regulatory  competent
authorities are experts in matters other than patent infringement or validity and
may  be  pushed  to  make  assessments  on  those  questions  based  upon
incomplete information. This is particularly problematic, as recognised in the
2009  Report,  where  "actions  are  accompanied  by  a  threat  to  sue  the

68 European Commission, Final Report: Pharmaceutical Sector Inquiry (8 July 2009), para. 660
[https://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/staff_working_paper_part1.pdf]

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marketing  authorisation  body  for  damages  if  marketing  authorisation  is
granted."69
6.
PRODUCT HOPPING
6.1
'Product  hopping'  refers to the  introduction  by  pharmaceutical  companies  of  modified
versions of pharmaceuticals or second-generation pharmaceuticals and the strategies
used to switch patients from an original product to a follow-on product that benefits from
further patent protection. This may include the complete removal from the market of the
original  formulation  because  it  is  nearing  the  expiry  of  relevant  patent  rights.  The
removal  effectively  forces  all  patients  to  switch  to  another  notionally  "improved"
formulation, for example, the introduction of a tablet in place of a capsule, that happens
to be patent protected for a longer period of time70.
6.2
The  second  generation  product  may  be  more  expensive  leading  to  an  immediate
increase  in  profits.  The  first  generation  product  may  be  withdrawn  entirely,  forcing
clinicians to prescribe the more expensive second generation product ('a hard switch').
Alternatively, the market for the first generation product may be left to atrophy, whilst all
marketing  and  promotional  spend  is  focused  on  moving  sales  on  to  the  second
generation product ('a soft switch'). A successful switch will ensure the product market
retains patent protection for a longer period of time, as the market for the first generation
product has effectively been eliminated prior to generic entry. A generic entrant seeking
to  bring  a  generic  version  of  the  first  generation  product  to  market  will  find  that  all
patients have already been established on the second generation product. Issues such
as prescriber inertia inhibit switching back to the first generation product even though a
generic version of equivalent therapeutic value may now be available at a lower cost.
The second generation product will be established as the incumbent product of choice.
The fact it also benefits from patent or regulatory exclusivities effectively neutralises all
the potential benefits of generic competition.
6.3
The  2008  Paper  included  'Fosamax'  (an  osteoporosis  medicine)  as  an  example  of  a
product  market  being  manipulated  through  the  introduction  of  a  secondary  product
combined with marketing efforts to shift the market:
"The originator… used its marketing resources to shift the market from Fosamax® to
Fosavance®,  which  is  the  same medicine  as  Fosamax®  with  the  addition  of  a  small
amount of vitamin D. This ‘new’ medicine, with no substantial added therapeutic value,
is  even  the  subject  of  a  patent  application  despite  the  fact  that  patients  who  were
prescribed  Fosamax®  in  the  past  were  instructed  to  consume  this  medicine  in
combination with vitamin D"71.
6.4
The  2009  Report  noted  that  it  was  common  practice  for  a  variety  of  measures to  be
used in order to "maximise revenue streams from existing pharmaceutical products by
delaying  or  damping  the  effect  of  generic  entry"72.  One  such  strategy  was  the
introduction  of  follow-on  products,  often  shortly  before  the  primary  product's  patent
protection expired, combined with targeted efforts to switch customers to the secondary
product73.

69
European
Commission,
Final
Report:
Pharmaceutical
Sector
Inquiry
(8
July
2009),
p.315
[https://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/staff_working_paper_part1.pdf],
70 Those marketing reference medicinal products may also seek to prevent the approval of generic competitor products
by refusing to provide their product for the purposes of carrying out mandatory bioequivalence studies, necessary for the
generic to obtain an MA.
71 Ibid, p. 15
72 European Commission, Final Report: Pharmaceutical Sector Inquiry (8 July 2009) para. 1050
[https://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/staff_working_paper_part1.pdf],
73 Ibid, chpt. 2.6, para. 989

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6.5
A  number  of  pharmaceutical  companies  commented  in  the  2009  Report  on  the
importance of timing to the introduction of a secondary product in order to facilitate this
switch. One generic company noted that (underlining for emphasis):
"A  pre-patent  expiry  entry  of  the  second  generation  product  enables  the Innovator  to
switch patients in a pricing climate where the first generation product price is stable. The
second  generation  product  may  be  priced  at  or  slightly  below  the  first  product,  and
positioned as being ‘better and similarly cost effective’. If the prescriber is prepared to
accept  this  Innovator  argument  and  switch  prescribing,  he  is  unlikely  to  go  back
subsequently to the first generation product when a generic is available. If the second
generation product appears after patent expiry of the original product, then the pricing
climate will be different. The generic will have caused the market price to fall, and thus
to switch to the newer product will likely incur a cost penalty to the physician budget,
something  he  is  likely to  resist  unless the  second  generation  is  a  compellingly  better
product. This is seldom if ever the case."74
Another pharmaceutical company noted that (underlining for emphasis):
"The  launch  of  [our  second  generation  product]  is  a  challenge,  not  experienced  until
now, as generics firms, […] press onto the market with al  force and as we have to fear
the loss of our patent […]. This means each patient that is not switched quickly enough
to [our second generation product] is forever lost to the generics. Once the patient is
switched to [our second generation product] the physician does not have to, cannot and
will  not  switch  him  to  a  generic,  and  what  is  more  important:  the  pharmacist  cannot
substitute!! "75
6.6
The Report noted the use of certain strategies by the originator to facilitate switching
prior to generic launch. These included: (i) decreases  in marketing spend on the first
generation product and increased spending in support of second generation products76
and/or  intervention  with  marketing  authorisation  bodies  or  pricing/reimbursement
bodies77 as the primary product patent came closer to expiry78; (ii) the withdrawal of the
first  generation  product79;  or  (iii)  actions  with  the  equivalent  effect to  withdrawing  the
first generation product; for example, litigation80.
6.7
In relation to the final point, generic companies claimed that: "such withdrawals before
generic market entry leave doctors and patients with no other choice than to switch to
the second generation product"81. In the Commission's investigation, it found that in at
least 30% of the cases where the launch of the secondary product was shortly before
the loss of exclusivity of the first product, the primary product was withdrawn from the
market82.
6.8
The  2009  Report  cited  generic  companies  complaining  that  switching  patients  to  the
next generation product before patent expiry may have an effect on their market entry:
"In some cases we develop a product… but by the time we come to launch… the market
has completely gone or switched to another molecule  / form and our opportunity has
diminished."83

74 Ibid, para. 1026
75 Ibid, para. 1028
76 It is noted that this strategy is no longer effective following a revision of Directive 2001/83/EC.
77 European Commission, Final Report: Pharmaceutical Sector Inquiry (8 July 2009), paras. 1042-1043
[https://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/staff_working_paper_part1.pdf]
78 Ibid, paras. 1037-1039.
79 Ibid, para. 1045.
80 Ibid, para. 1040.
81 Ibid, para. 1045.
82 Ibid, paras. 1031 and 1045.
83 Ibid, para. 1047.

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"[T]he market situation was not favourable to generic versions due to the introduction of
a new pharmaceutical form by the originator company, which would [make it] difficult for
generics to achieve a reasonable market share."84
6.9
The  2009  Report  additionally  quoted  a  national  pricing  and  reimbursement  authority
which observed that:
"There  are  a  number  of  examples  where  the  introduction  of  a  second  generation  –
patent protected-version of a product prior to such generic entry and at the same time
withdrawal  of  the  first  (or  previous)  generation  of  that  originator  product  from  the
market… caused a shift of budgets towards the second generation patent protected,
therefore no generics".85
6.10
In  its  summary  of  life cycle  strategies  for  follow-on  products  , the  Commission  found
that86:
6.10.1
For  40%  of  the  medicines  in the  sample selected  for  in  depth  investigation,
which  had  lost  exclusivity  between  2000  and  2007,  originator  companies
launched so called second generation/follow-on medicines.
6.10.2
On average, the launch took place one year and five months before loss of
exclusivity of the first generation product. In some cases the first medicine was
withdrawn  from  the  market  some  months  after  the  launch  of  the  second
generation medicine.
6.10.3
Nearly  60%  of  the  patent  related  litigation  cases  between  originator  and
generic companies examined in the context of the inquiry concern medicines
that were subject to switch from first to second generation products.
6.11
The 2019 Report does not specifically refer to product hopping. However, in its section
on  the  misuse  of  regulatory  framework  it  does  consider  both  the  AstraZeneca87  and
Reckitt Benckiser88 cases, which may be regarded as examples of product hopping as
a strategy to delay generic entry.
6.12
Previous developments
6.13
The most well-known examples of this behaviour within the EU are the Commission's
decision  against  AstraZeneca  and  the  UK's  Office  of  Fair  Trading's  ("OFT")  decision
against Reckitt Benckiser.
6.13.1
AstraZeneca:
In  2005  the  Commission  found  that  AstraZeneca  had  abused  its  dominant
position through, amongst other things, the launch of a tablet form of Losec
combined  with  the  deregistration  of  the  marketing  authorisations  for  the
capsule form of Losec in national markets where the patent or SPC was due
to expire, and withdrawal of those capsules89. This finding was appealed and
upheld by the European Courts.
Both  the  General  Court  and  Court  of  Justice  observed  that  (underlining  for
emphasis): "the preparation by an undertaking, even in a dominant position,
of  a  strategy  whose  object  it  is  to  minimise  the  erosion  of  its  sales  and  to

84 Ibid, para. 1049.
85 Ibid, para. 1048.
86 Ibid, p.367.
87 AstraZeneca AB and AstraZeneca plc v Commission, T321/05, AstraZeneca AB and AstraZeneca plc v European
Commission, C-457/10 P.
88 Office of Fair Trading, Abuse of a dominant position by Reckitt Benckiser Healthcare (UK) Limited and Reckitt
Benckiser Group plc, Decision No. CA98/02/2011 (2011)
89 COMP/A.37.507 – AstraZeneca (2005)

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enable  it  to  deal  with  competition  from  generic  products  is  legitimate  and  is
part of the normal competitive process, provided that the conduct envisaged
does not depart from practices coming within the scope of competition on the
merits, which is such as to benefit consumers."90
In this instance, the Courts found that the deliberate deregistration of the MA
was  designed  to  hinder  the  introduction  of  generic  products  and  parallel
imports  and  therefore  could  not  be  considered  competition  on  the  merits91.
Internal  documents  evidenced  AstraZeneca's  underlying  intent  and  failed  to
demonstrate  its  arguments  at  trial  that  it  had  legitimate  reasons  for
deregistration92.
While it was acknowledged that AstraZeneca had a right under law to request
the withdrawal of its MA, this did not prevent such conduct also being an abuse
of AstraZeneca's dominant market position, and it was noted that the majority
of cases concerning the abuse of a dominant position consisted of behaviour
that would otherwise be lawful under other branches of law93.
It should be noted that in this case, the abuse and commentary surrounding it
primarily related to AstraZeneca's withdrawal of the marketing authorisation in
certain jurisdictions for the capsule form of Losec. At the time, this prevented
generic companies from relying on it for their own marketing authorisations.
Such activity would no longer prevent a generic company from relying on it94
and,  therefore,  this  aspect  of  AstraZeneca's  abusive  behaviour  would  no
longer impact generic competition.
6.13.2
Reckitt Benckiser:
The  OFT's  2011  decision  found  that  Reckitt  Benckiser  had  abused  its
dominant position through the withdrawal and delisting of Gaviscon Original
Liquid from the NHS prescription channel in 2005. This withdrawal was made
after the expiry of the patent, but prior to the publication of a generic name.
This meant that following withdrawal, most prescriptions were instead written
for Gaviscon Advance Liquid, which was another version of the product still
under patent protection95.
The OFT found strong evidence that Reckitt Benckiser's decision to withdraw
Gaviscon  Original  was  to  restrict  competition  and  encourage  switching  to
Gaviscon  Advance96  and  the  timing  of  this  withdrawal  was  deliberately
intended to limit and deter generic competition97. Furthermore the OFT found
evidence  in  Reckitt  Benckiser's  internal  documents  that  the  withdrawal  was
not economically viable (i.e. it expected to suffer material market share losses
from implementing the strategy) and was likely to be loss-making in the first
instance98.  From  this,  the  OFT  concluded  that  there  was  no  commercially
rational reason to have employed the strategy and that other than seeking to
exclude effective competition to its Gaviscon product line, there would have
been no logical reason for it to have implemented the strategy99.

90 AstraZeneca AB and AstraZeneca plc v European Commission, C-457/10 P, para. 129
91 Ibid130
92 AstraZeneca, OJ 2006 L332/24, para. 789 and AstraZeneca AB and AstraZeneca plc v European Commission,
C-457/10 P, para. 136
93 AstraZeneca AB and AstraZeneca plc v European Commission, C-457/10 P, para. 132.
94 European Commission, Final Report: Pharmaceutical Sector Inquiry (8 July 2009), para. 1041
[https://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/staff_working_paper_part1.pdf]
95 Office of Fair Trading, Abuse of a dominant position by Reckitt Benckiser Healthcare (UK) Limited and Reckitt
Benckiser Group plc, Decision No. CA98/02/2011 (2011)
96 Reckitt Benckiser, paras. 6.8 and 6.9
97 Reckitt Benckiser, paras. 6.14 and 6.23
98 Reckitt Benckiser, paras. 6.30
99 Ibid.

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Reckitt  Benckiser  sought  to  argue  that  its  withdrawal  strategy  could  be
objectively justified and had stressed to stakeholders the benefits of Gaviscon
Advance Liquid over Gaviscon Original Liquid due to a lower sodium content.
However,  the  OFT  considered  that  "any  such  safety  advantage  in  terms  of
[Gaviscon Advance Liquid] would not justify the Withdrawal" given in part that
in the seven years both products had been available, the majority of GPs had
continued to prescribe Gaviscon Liquid and Gaviscon Liquid was suitable for
the majority of patients. Furthermore, these arguments were undermined by
internal  documents  which  indicated  that  Reckitt  Benckiser  was  more
concerned  by  its  potential  competitors  than  the  safety  issues  and  that
Gaviscon  Advance  was  equally  unsuitable  to  some  patients  due  to  its  high
levels of potassium100.
It should also be noted that Reckitt Benckiser's internal documents suggested
it had been considering actions which could delay or inhibit the publication of
the  generic  name  for  Gaviscon  Liquid101  and  the  OFT  also  investigated
whether  actions  taken  between  1996  and  2006  to  delay  these  regulatory
processes were abusive102.
6.13.3
Servier
In an investigation into Servier's perindopril product, the Commission found in
2016 that Servier had a strategy of switching patients from its first generation
perindopril  product  to  its  second  generation  perindopril  product,  which  had
obtained  patent  protection  until  2023.  Servier  then  withdrew  the  first
generation product before generic companies could enter the market.
The Commission noted that "[d]epending on the national regulatory regime,
generic substitution was made impossible or limited. It is undisputed that the
second  generation  product  has  no  therapeutic  advantages  for  patients  over
the first generation product.103"
6.13.4
Essential Pharma
The  CMA  launched  an  investigation  on  6  October  2020  by  the  CMA  under
Chapter II of the Competition Act 1998 into a potential 'abuse' of a dominant
position by Essential Pharma. This relates to Essential Pharma's intention to
discontinue  the  supply  of  Priadel,  a  lithium  carbonate  medication,  for  the
treatment of bipolar disorder. The allegation appears to be that the withdrawal
of  Priadel  would  force  customers  to  switch  to  Camcolit,  a  more  expensive
lithium carbonate treatment also sold by Essential Pharma. The suggestion is
that  Priadel  400mg  is  priced  at  £4.02  while  Camcolit  400mg  costs  £48.18.
Essential  Pharma  has  agreed  to  continue  to  supply  Priadel  while  the
investigation is ongoing104.
6.14
The theory of harm in these cases is that the withdrawal of the original product or MA
was designed to hinder generic competition and ensure patients and prescribers were
switched to secondary or alternative products. In the case of AstraZeneca and Reckitt
Benckiser,  the  finding  of  an  abuse  and  the  lack  of  an  objective  justification  was
demonstrated in contemporaneous internal documents that showed the true intentions
behind such actions.

100 Reckitt Benckiser, para. 6.93
101 Reckitt Benckiser, para. 1.12
102 Reckitt Benckiser, paras. 2.17
103 AT.39612 – Perindopril (Servier), (2014) para. 8
104CMA,
‘CMA
to
investigate
the
supply
of
bipolar
drug’
(Press
Release
6
October
2020)
[https://www.gov.uk/government/news/cma-to-investigate-the-supply-of-bipolar-drug], accessed 14 October 2020

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6.15
There have also been a number of instances where allegations of product hopping in
breach  of  the  Sherman  Act  have  been  considered  by  different  courts  in  the  United
States.
6.15.1
Abbott twice changed its product formulation (through marginally lowering the
drug’s strength and changing from capsule to tablet), stopped supplying the
older versions and took active steps to change the code in the National Drug
Data File for the older versions to obsolete, in effect preventing pharmacists
from  filling  prescriptions  with  a  generic  versions  of  these  older  drugs105.  A
court found that by removing the old products from the market and changing
the code in the National Drug Data File, consumer choice was removed, such
conduct  was  considered  "consumer  coercion"  and  was  "potentially
anticompetitive"106. The claim was settled by the parties.
6.15.2
Reckitt  Benckiser  switched  the  market  from  opioid  dependence-treating
Suboxone  tablets  to  sublingual  film107.  Reckitt's  alleged  actions  included
disparaging  Suboxone  tablets  by  warning  about  false  safety  concerns  and
publicly announced the removal of tablets for these fabricated safety reasons.
A court considered that "the threatened removal of the tablets from the market
in  conjunction  with  the  alleged  fabricated  safety  concerns  could  plausibly
coerce patients and doctors to switch from tablet to film".
The  Federal  Trade  Commission  ("FTC")  brought  an  antitrust  action  against
Reckitt  Benckiser  in  2019  also  alleging  that  Reckitt  "employed  a  'product
hopping' scheme where the company misrepresented that the film version of
Suboxone was safer than Suboxone tablets because children are less likely
to be accidentally exposed to the film product"108. In November 2019, Reckitt
settled the case agreeing to pay $50 million and provide the FTC with various
commitments  to  disclose  information  about  future  product  reformulations  to
the FTC, including a prohibition of withdrawing an original product for a certain
period after the launch of the follow on product.
6.15.3
As Forest’s Alzheimer’s drug Namenda IR (twice daily dose) neared the end
of its patent term, it introduced Namenda XR (once a day dose), with a patent
expiring fourteen years later. Forest announced its intention to discontinue the
IR product in August 2014.
A  court  found  that  “when  a  monopolist  combines  product  withdrawal  with
some other conduct, the overall effect of which is to coerce consumers rather
than persuade them on the merits and to impede competition, its actions are
anticompetitive under the Sherman Act”109
6.16
We  have  come  across  alleged  instances  of  product  hopping  occurring  in  different
Member States within the EU including the use of a 'hard switch' where a product has
been withdrawn from a market prior to patent expiry.
7.
PREDATORY PRICING / ANTI-COMPETITIVE REBATES
7.1
Article 102 of the Treaty on the Functioning of the European Union ("TFEU") prohibits
"any  abuse  by  one  or  more  undertakings  of  a  dominant  position  within  the  internal

105 Abbott Laboratories v. Teva Pharmaceuticals USA, Inc. (TriCor) 432 F. Supp. 2d 408 (D. Del. 2006), Section IV A.
This case was also cited in Walgreen Co. vs AstraZeneca 534 F.Supp. 2d 146 (D.D.C. 2008), where it was alleged
that AstraZeneca had sought to engage in product hopping by withdrawing marketing support for its original product
and aggressively marketing its newly reformulated product. This case was dismissed by the Court, as absent the
withdrawal there was no loss in consumer choice and generics successfully gained 30% of the market.
106 Abbot Laboratories v Teva Pharmaceuticals USA, Section IV A 4.
107 In re Suboxone Antitrust Litigation 64 F. Supp. 3d 665 (E.D. Pa. 2014).
108 Federal Trade Commission v Reckitt Benckiser Group Plc, Case 1:19CV00028
109New York ex rel. Schneiderman v. Actavis PLC (Namenda), 787 F.3d 638 (2d Cir. 2015), p. 35

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market or in a substantial part of it"110. This general prohibition is mirrored in the national
law of European countries (for instance in Chapter II of the Competition Act 1998 in the
United Kingdom).
7.2
Key  to  this  prohibition  is  the  principle  that  dominant  undertakings  have  a  "special
responsibility"  not  to  impair  competition  through  conduct  falling  outside  the  scope  of
competition on the merits111. There have been numerous examples of where companies
have been found to have breached this prohibition for different behaviours in different
sectors.
7.3
A key area of abuse has been through the imposition of unfair pricing practices, such
as predatory pricing or anti-competitive rebates, in an attempt to exclude competition
from the market in the long term. These abuses are not unique to the pharmaceutical
industry; however, they may form an additional tactic used by dominant pharmaceutical
companies to restrict entry and/or discourage competition.
7.4
Predatory pricing is a deliberate strategy whereby a dominant company sets its prices
at loss making levels in order to drive its competitors out of the market. The sale of a
product  below  the  average  variable  cost  (i.e.  the cost of  goods)  will  automatically  be
presumed  to  be  an  abusive  strategy  by  a  dominant  undertaking,  while  the  pricing  of
goods above the average variable cost, but below the average total cost (i.e. the total
cost of producing and selling the product), may still be abusive if evidence is found that
demonstrates an exclusionary strategy.
7.5
A dominant undertaking is also prohibited from entering into exclusive agreements with
its  customers.  Behaviour  which  in  effect  encourages  exclusivity  has  also  been
scrutinised. One of the key areas where such behaviour is seen is through rebates that
require  and/or  encourage  a  customer  to  purchase  all  of  their  requirements  from  the
dominant undertaking. It is common practice for pharmaceutical companies to negotiate
discounts and/or rebates112 and these can be beneficial as they result in lower prices.
However, competition law practice has also shown that rebates can be anti-competitive.
For instance, a loyalty rebate conditional on customers purchasing more than 80% of
their  requirements  from  the  dominant  company  may  be  anticompetitive  if  it  excludes
competitors from the market.
7.6
These behaviours are not unique to the pharmaceutical sector. However, the structure
of the market, and the probable dominance of patent holders during market exclusivity,
may incentivise patent holders to develop pricing strategies designed to limit the impact
of generic and biosimilar entry.
7.7
Although neither predatory pricing nor anti-competitive rebates were featured in any of
the previous reports mentioned elsewhere in this paper, there have been a number of
examples  where  the  pricing  practices  of  pharmaceutical  companies  have  been
investigated by European competition authorities. For instance, the UK Competition and
Markets  Authority  (the  "CMA")  has  found  instances  of  predatory  pricing  (Napp
Pharmaceuticals113) and more recently investigated Merck for its discount scheme114,
although  it  ultimately  found  it  had  no  grounds  for  action.  Hoffman  la  Roche  v
Commission115 is one of the earliest instances in a body of the EU case law on abusive
rebates  and  the  French  competition  authority  has  found  a  number  of  abusive  pricing
practices  by  pharmaceutical  companies,  such  as  GlaxoSmithKline116  and  Schering-

110 Article 102 TFEU
111 See for instance, AstraZeneca AB and AstraZeneca plc v Commission, T321/05, para. 355
112 See European Commission, Final Report: Pharmaceutical Sector Inquiry (8 July 2009), para. 358
[https://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/staff_working_paper_part1.pdf]
113 Case CA98/2/2001, Napp Pharmaceutical Holdings Limited and Subsidiaries (2001)
114 Case 50236, Remicade: No grounds for action decision (2019)
115 Case 85/76, Hoffman La Roche v Commission (1979)
116 Decision No. 07-D-09 14, relative à des pratiques mises en œuvre par le laboratoire GlaxoSmithKline France, March
2017. However, this decision was later overturned on appeal as the Court considered that the French Competition
Authority had not adequately demonstrated a link between GlaxoSmithKline's dominance on one market and its

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Plough117.  Furthermore,  in  the  Netherlands,  the  Dutch  Authority  for  Consumers  and
Markets (“ACM”), in its 2019 TNF-alfa inhibitors sector inquiry report, commented that
the  offering  of  conditional  discounts  by  originators  to  hospitals  may  be  restrictive  of
competition in certain circumstances118.
7.7.1
Napp Pharmaceuticals119
The OFT investigated Napp Pharmaceuticals following a complaint that its use
of discounts of over 90% effectively prevented its competitors from gaining a
foothold  in  the  market  for  the  supply  of  sustained  release  morphine  to
hospitals  and  to  pharmacies  in  the  community120.  The  OFT  found  that  this
strategy  was  complemented  by  excessive  prices  of  the  same  products  to
community  pharmacies  and  wholesalers  where  there  were  high  barriers  to
entry and limited competition. Napp Pharmaceuticals prices to the community
segments were in most cases over 1000% higher than the prices charged to
hospitals121.
The OFT found that such behaviour was abusive, as Napp Pharmaceuticals
was pricing below the average variable cost. Case law on predatory pricing
has previously found that "a dominant undertaking has no interest in applying
such prices except that of eliminating competitors"122 and as such it can be
assumed  that  such  discounting  is  intentionally  designed  to  eliminate
competition. This decision was upheld by the Competition Appeal Tribunal123.
7.7.2
Competition and Markets Authority Case 50236: Remicade124
In December 2015 the CMA opened a formal investigation into whether Merck
Sharp & Dohme Limited ("MSD") had abused a dominant position by offering
loyalty-inducing discounts for the sale of Remicade (infliximab) in the UK.
The  CMA considered  that  MSD's  discount  scheme  was  designed  to  induce
the NHS to be loyal to Remicade and, therefore, have an exclusionary effect.
In particular, the discount scheme was intended to force biosimilars to sell at
very low prices in order to compensate the NHS for the discount it would lose
on purchases of Remicade if it switched, and the criteria of the scheme meant
that most of the NHS's purchasing requirements for infliximab would need to
be of Remicade in order to benefit from the discount. Furthermore the NHS
had  understood  how  the  discount  scheme  would  work  and  was  concerned
about the implications125.
However, the CMA eventually dropped the case as the discount scheme failed
to  limit  competition.  The  CMA  did  find  evidence  of  an  anti-competitive
intention; however, MSD's assumptions about the market and the effect of its
discount scheme were wrong and failed to have the desired effect126.
However,  the  CMA  cautioned  companies  that  "if  it  had  been  successful,
MSD's  discount  scheme could  have  delayed  the  NHS  from  benefitting from

predatory pricing practices on another market (Cour d’Appel de Paris, 1ère Chambre, Section H), GlaxoSmithKline,
Case no. RG 2007/07008, 8 April 2008)
117 Decision No. 13-D-21, relative à des pratiques mises en œuvre sur le marché français de la buprénorphine haut
dosage commercialisée en ville, 18 December 2013
118 Authority for Consumers and Markets, Sector Inquiry: TNF-alfa Inhibitors (September 2019), p.5
119 Office of Fair Trading Decision No. CA98/2/2001
120 The OFT was one of the UK's competition authorities prior to 2013 along with the Competition Commission. The OFT
and Competition Commission were replaced with the CMA in 2013.
121 Office of Fair Trading Decision No. CA98/2/2001, paragraph 252
122 Office of Fair Trading Decision No. CA98/2/2001, paragraph 188
123 Napp Pharmaceutical Holdings Limited and Subsidiaries v Director General of Fair Trading [2002] CAT 1
124 CMA, No Grounds For Action Decision Competition Act 1998: Remicade 50236 (2019)
125 CMA, No Grounds For Action Decision Competition Act 1998: Remicade 50236 (2019), para. 1.15
126 CMA, No Grounds For Action Decision Competition Act 1998: Remicade 50236 (2019), para. 1.16

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increased  competition  and  making  significant  savings"  and  "had  MSD's
scheme in practice been likely to prevent or limit competition from rivals, the
company could have faced severe financial penalties"127.
7.7.3
Schering-Plough128
Following  a  complaint,  the  French  competition  authority  investigated
Schering-Plough for abusing its dominant position and entering into an anti-
competitive  agreement  with  its  supplier  Reckitt  Benckiser.  Both  of  these
findings  related  to  a  strategy  by  Schering-Plough  to  prevent  the  generic
version of Subutex from successfully entering the market.
This  strategy  was  implemented  primarily  through  two  different  measures.
Firstly, the  disparagement  of  generic  versions  by  disseminating  an  alarmist
message to doctors and pharmacists on the risks of prescribing the generic
and  suggesting  a  change  of  treatment  could  cause  psychiatric  instability  in
patients. Secondly, pharmacists were given large financial incentives through
rebates to purchase large quantities of Subutex with the intention of flooding
the  market  and  ensuring  that  the  pharmacists  did  not  have  any  space
available to stock the generic version. The French competition authority found
that  there  could  be  no  objective  justification  for  these  rebates  that  also
exceeded the maximum legal cap.
These strategies were found to be very successful and affected competition
at two key stages of generic substitution. The campaign to disparage generics
resulted  in  a  significant  increase  in  non-substitutable  prescriptions  and  the
discounted  price  levels  incentivised  pharmacists  not  to  substitute  Subtex
when  an  open  prescription  was  written.  This  meant  that  substitution  was
minimal and generic competition negated129.
This decision was confirmed by the Court of Cassation in 2017.
7.7.4
Abbvie (Humira) & the ACM’s TNF-alfa inhibitors sector inquiry report
Between 2018 and 2019, the ACM investigated the state of competition in the
Dutch TNF-alfa inhibitors market (TNF-alfa inhibitors are biological drugs used
for rheumatism, psoriasis and Crohn's disease)130.
This  coincided  with  an  article  in  De  Groene  Amsterdammer  in  March  2019
alleging  that  AbbVie  had  used  various  tactics  to  keep  lower-cost  biosimilar
versions  of  Humira  (the  brand  name  for  adalimumab  –  a  rheumatism
medication)  off  the  market131.  The  primary  allegation  was  that  Abbvie  had
offered  discounts  of  up  to  89%  to  hospitals  (which  are  responsible  for  the
purchase  of  the  medicine  in  the  Netherlands)  on  the  condition  that  they
purchase the branded product for all patients132. For example, an alliance of
hospitals  treating  c.10  percent  of  Humira  patients  in  the  Netherlands,  the
Santeon group, had identified Amgen as a more attractively priced alternative
drug  for  its  rheumatism  treatment  needs.  However,  AbbVie  subsequently
approached each group hospital individually, outbidding Amgen with an 85%

127 CMA, 'CMA warns business after ending Remicade investigation' (Press Release 14 March 2019),
[https://www.gov.uk/government/news/cma-warns-businesses-after-ending-remicade-investigation], accessed 6 June
2020
128 Decision No. 13-D-21, relative à des pratiques mises en œuvre sur le marché français de la buprénorphine haut
dosage commercialisée en ville, 18 December 2013.
129 Autorité de la concurrence Medicinal Products (Press Release 19 December 2013)
[https://www.autoritedelaconcurrence.fr/en/communiques-de-presse/19-december-2013-medicinal-products],
accessed 6 June 2020
130 Authority for Consumers and Markets, Sector Inquiry: TNF-alfa Inhibitors (September 2019), p.2
131  Hordijk,  L.,  ‘Het  patent  gaat  voor  de  patiënt’,  De  Groene  Amsterdammer  (27  March  2019)
[https://www.groene.nl/artikel/het-patent-gaat-voor-de-patient]
132 Ibid

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price reduction133. The article concluded that the scheme had been successful
overall,  with  at  least  70%  of  Dutch  patients  continuing  to  use  the  originator
product  at the  time  of  publication,  despite  the  availability  of  biosimilars  with
cheaper list prices134.
In  its  TNF-alfa  inhibitors  market  inquiry  report,  the  ACM  noted  that
“competition from biosimilars results in substantially lower net purchase prices
of TNF-alfa inhibitors”135. It added that a “possible explanation for the limited
entry  of  biosimilars  is  the  conditional  discounts  applied  by  originators
[because] if a hospital does want to switch to a biosimilar, it will pay a much
higher price for the group of patients who are unwilling or unable to switch”136.
The ACM explained that the result of this can be that, even though a biosimilar
manufacturer offers a lower list price than an originator, switching to it as an
alternative can become “financially unattractive” for a hospital in the face of
such conditional discounts from originators137.
Although the ACM has not taken enforcement action against Abbvie in respect
of  the  allegations  outlined  above,  it  has  condemned  the  use  of  conditional
discounts by originators, concluding that “the practice of offering conditional
discounts  by  originators  to  hospitals  may  under  certain  circumstances  be
restrictive  of  competition”138.  It  added  that,  “where  practices  with  a  potential
exclusionary effect are identified, it aims to take enforcement measures where
appropriate”139.  The  report  also  recommended  best  practices  for  health
insurers and hospitals to encourage the increase in the take up of biosimilars,
and legislative changes by the Government to adjust price regulation to avoid
higher prices for residual patients140.
7.7.5
Roche Romania: Erlotinib
In January 2020, the Romanian Competition Authority fined Roche Romania
c.€3.4  mil ion  for  abusively  implementing  a  strategy  to  prevent  sales  of
cheaper alternatives to Erlotinib. It was found that Roche had been directing
patients to their most expensive product and encouraging sales by covering
the difference that patients paid between the expensive product and cheaper
equivalents. This was found to have cost the National Health Insurance Fund
an  additional  c.  €410,000  in  reimbursement  costs  compared  to  the  cost  if
patients had chosen the cheaper equivalent drugs141.
7.8
The impact of generic and biosimilar entry on a market will normally have a significant
impact on market shares and prices. Where this does not happen, this could point to
outside factors which are inhibiting market entry, including the possibility of dominant
companies seeking to exclude their competitors.
7.9
A  finding  of  predatory  pricing  by  a  competition  authority  would  rely  on  access  to  a
company's cost of goods and internal documents in order to determine whether there
was an exclusionary strategy. Absent this information, an exclusionary strategy may still
be suspected, as was the case by Napp Pharmaceutical's competitors who complained
to the competition authority, but would be challenging for any third party to prove.

133 Ibid
134 Ibid
135 Authority for Consumers and Markets, Sector Inquiry: TNF-alfa Inhibitors (September 2019), p.2
136 Ibid, p.4
137 Ibid
138 Ibid, p.2
139 Ibid, p.2
140 Ibid, p.4 and p.5.
141 Consiliul Concurentei Romania, The Competition Council Sanctioned Roche Romania with Fines of 12.8 million
Euro, (January 2020)  [http://www.consiliulconcurentei.ro/wp-
content/uploads/2020/04/amenda_roche_ian_2020_english.pdf], accessed 9/10/20

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8.
DENIGRATION IN ORDER TO HARM COMPETITION
8.1
Denigration  is  the  false  or  misleading  criticism  of  a  competitor's  product  in  order  to
influence  the  purchasing  patterns  or  habits  of  consumers.  For  instance,  false  or
misleading  criticism  from  the  patent  holder  to  prescribers  about  the  equivalence  or
efficacy of a generic or biosimilar product may have the effect of limiting the impact of
generic  or  biosimilar  entry  or  excluding  those  generic  and  biosimilar  potential
competitors from the market.
8.2
In  the  pharmaceutical  market,  misleading  information  may  have  a  particularly
detrimental impact, as "given the characteristics of the medicinal products market, it is
likely that the dissemination of such information will encourage doctors to refrain from
prescribing that product, thus resulting in the expected reduction in demand for that type
of use"142.
8.3
The 2019 Report notes that "another type of practice affecting generic competition is
the strategy used by some dominant companies to disparage (denigrate) the generic
entrant to hinder the uptake of cheaper generics"143. The report explores a number of
decisions  by  the  national  competition  authorities,  in  particular  the  French  authority,
which has been particular active in its enforcement of this practice. Some of these cases
are explored in more detail below.
8.4
The 2019 Report in particular notes that "disparagement practices are often only part of
a broader strategy aimed at hindering generic competition"144. This is clearly the case
and  is  demonstrated  in  some  of  the  cases  also  considered  in  other  sections.  For
instance the FTC's settlement with Reckitt Benckiser in relation to Suboxone noted a
strategy  of  misrepresentation  designed  to  facilitate  the  product  hopping145. The  2013
decision  by  the  French  competition  authority  against  Schering-Plough  found  that  the
strategy of anti-competitive rebates and disparagement was abusive146.
8.5
Finally,  the  2019  Report  also  notes  that  other  market  participants  may  also  unduly
restrict generic competition to preserve their own financial interests. In March 2009 the
Spanish competition authority147 intervened because associations of pharmacists were
making  recommendations  against  Laboratories  Davur's  generic  products  and  its
members made the decision to collectively boycott these products. This was apparently
motivated by reduced profits that pharmacists would obtain due to Laboratories Davur's
cheaper products.148.
8.6
Past decisions by national competition authorities have considered denigration under
both  the  laws  prohibiting  anti-competitive  agreements  and  abuse  of  dominance
depending on the circumstances.

142 Case C-179/16, Hoffman la Roche and others v Autoria Garante della Concorrenza e del Mercato (2018), paragraph
93
143 European Commission, Report from the Commission to the Council and the European Parliament: Competition
Enforcement in the Pharmaceutical Sector (2009-2017): European Competition Authorities Working Together for
Affordable and Innovative Medicines (2019), p. 28
[https://ec.europa.eu/competition/sectors/pharmaceuticals/report2019/report_en.pdf]
144 European Commission, Report from the Commission to the Council and the European Parliament: Competition
Enforcement in the Pharmaceutical Sector (2009-2017): European Competition Authorities Working Together for
Affordable and Innovative Medicines (2019), p. 29
145 Federal Trade Commission v Reckitt Benckiser Group Plc, Case 1:19CV00028
146 Decision No. 13-D-21, relative à des pratiques mises en œuvre sur le marché français de la buprénorphine haut
dosage commercialisée en ville, 18 December 2013.
147 European Commission, Report from the Commission to the Council and the European Parliament: Competition
Enforcement in the Pharmaceutical Sector (2009-2017): European Competition Authorities Working Together for
Affordable and Innovative Medicines (2019), p. 30; see also Productos Farmacéuticos Genéricos – Decision of the
CNC of 24 March 2009 in Case 649/08.
148 Note that this decision related to four different pharmaceutical associations. In 2014, the Spanish Supreme Court
quashed the decision relating to one of these associations (the other three were not granted leave to appeal) and
found that the communications circulated by the association were not aimed at harmonising its members behaviour.
(See Productos Farmacéuticos Genéricos- Judgment of the Tribunal Supremo of 24 October 2014 in Case
1220/2011).

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8.7
The leading European case was an Article 267 TFEU reference by the Italian courts. In
Hoffman la Roche v AGCM149, the CJEU was asked, among other things, whether "a
concerted practice intended to emphasise that a medicinal product is less safe or less
efficacious [should] be regarded as a restriction of competition by object"150 when the
claims could not be either proved or disproved by scientific evidence.
8.8
The  Italian  competition  authority  had  previously  found  that  Hoffman  la  Roche,  which
markets  Avastin,  and  its  licensee  Novartis,  which  is  licensed  to market  Lucentis,  had
sought to "create an artificial differentiation between those two medicinal products by
manipulating  the  perception  of  the  risk  associated  with  the  use  of  Avastin  for  the
treatment  of  those  diseases  through  the  production  and  dissemination  of  opinions
which, based on an 'alarmist' interpretation of available data, could give rise to public
concerns regarding the safety of certain uses of Avastin and influence the therapeutic
choice of doctors, and by downplaying any scientific knowledge to the contrary"151. This
action was taken to dissuade doctors from prescribing Avastin, the cheaper product, off-
label  and  the  AGCM found  that these  actions  had  caused  a  shift  in  demand  towards
Lucentis, resulting in an increase in costs to the national health services of €45 mil ion
in 2012 alone152.
8.9
The CJEU noted that the requirements of pharmacovigilance might call for steps to be
taken to inform "healthcare professionals and the general public of information relating
to the risks associated with off-label use"153. However, these requirements are solely for
the holder of the MA and, therefore, would not require the collusion of two undertakings
marketing competing products.
8.10
In particular it was noted that "given the characteristics of the medicinal products market,
it is likely that the dissemination of such [misleading] information will encourage doctors
to refrain from prescribing that product"154 and the provision of misleading information
to regulatory bodies, healthcare professionals and the general public also constituted
an infringement of the EU rules governing pharmaceutical matters that could also give
rise  to  penalties.  Given  this,  the  CJEU  held  that  an  agreement  to  disseminate
misleading  information  in  the  context  of  scientific  uncertainty  could  constitute  an
infringement by object under EU competition law155. It is understood that the appeals
are still ongoing in Italy.
8.11
In September 2020 the French Competition Authority also imposed a fine of €444 mil ion
on  Novartis,  Roche  and  Genentech  for  abusing  their  collective  dominance  by
exaggerating  the  risks  of  using  Avastin  off-label  and  spreading  an  alarmist  and
sometimes misleading discourse to public authorities regarding the risks of Avastin to
treat age-related macular degeneration. According to the French Competition Authority,
this had the effect of maintain the price of Lucentis, which was 30 times more expensive
(Lucentis  was  €1161  per  injection;  Aventis  was  €30/40  per  injection),  as  wel   as
artificially inflating the price of Eylea, a competing product156. It is understood that the
parties are likely to appeal the decision.
8.12
The  French  competition  authority  has  also  issued  a  number  of  decisions  where
denigration was found to be an abuse of dominance:
8.12.1
Sanofi-Aventis157

149 Hoffman la Roche and others v Autoria Garante della Concorrenza e del Mercato (2018) Case C-179/16
150 Ibid para. 36
151 Ibid para. 89
152 Ibid para. 33
153 Hoffman la Roche and others v Autoria Garante della Concorrenza e del Mercato (2018) Case C-179/16, para. 91
154 Ibid para. 93
155 Ibid para. 95
156 Autorite de la concurrence, Treatment for AMD: the Autorité fines 3 laboratories for abusive practices (9 September
2020)
[https://www.autoritedelaconcurrence.fr/en/press-release/treatment-amd-autorite-fines-3-laboratories-abusive-
practices], accessed 9 October 2020
157 Décision 13-D-11 relative à des pratiques mises en œuvre dans le secteur pharmaceutique, (14 May 2013).

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In May 2013 the French Competition Authority found that Sanofi-Aventis had
implemented  a  strategy  of  denigrating  the  generic  versions  of  its  branded
drug, Plavix, to pharmacists and doctors with the aim of limiting generic entry.
It  was  found  that  Sanofi-Aventis  implemented  a  global  and  structured
communication  strategy  "to  emphasise  the  […]  patent  related  differences,
however irrelevant, for generic substitution, to deter doctors and pharmacists
from the generic substitution process" insinuating "that these difference could
lead to the health professionals' liability should medical problems arise form
the  use  of  the  competitors'  generics"158.  These  alleged  concerns  were  not
followed  up  with  regulatory  action,  such  as  alerting  health  officials  to  the
claimed  risk  of  safety  or  efficiency.  The  Commission's  press  release
insinuates  that  presumably  such  steps  would  have  been  taken  if  Sanofi-
Aventis' claims were genuine.
The  French  Competition  Authority  found  that  this  behaviour  fell  outside
competition  on  the  merits  and  was  therefore  abusive.  This  decision  was
upheld on appeal159.
8.12.2
Johnson & Johnson160
In  December  2017,  the  French  Competition  Authority  found  that  Janssen-
Cilag (and its parent company Johnson & Johnson) had abused its dominant
position  and  consequently  delayed  the  arrival  of  the  generic  version  of
Durogesic by:
•  repeated  approaches  to  the  French  agency  for  medical  safety  of
health products (AFSSAPS) with the aim of convincing the agency to
refuse  to  grant  at  national  level  the  generic  status  to  competing
medicinal products, despite this status already having been obtained
at EU level; and
•  implementing  a  major  campaign  of  falsely  disparaging  the  generic
version and using misleading language to create doubt in the minds
of  healthcare  professionals  about  the  effectiveness  and  safety  of
these generic products161.
Influenced  by  the  alarmist  messages  from  Janssen-Cilag  the  AFSSAPS
initially  refused  to  recognise  the  generic  status  of  competitor  products,  and
later granted generic status with a warning attached, recommending careful
monitoring of certain patients in the event of changing between fentanyl-based
medicinal products.
This strategy of denigration included various messages to hospitals, doctors
and pharmacists that the generic was not equivalent, highlighting the warning
it had procured from the AFSSAPS. This included the training of 300 medical
sales representatives, extensive circulation of medical newsletters direct and
to the specialist press, training and telephone calls.

158European Commission, France: The Autorité de la Concurrence fines Sanofi-Aventis € 40 600 000 for denigrating
Generic Versions of branded Drug Plavix (Press Release)
[https://ec.europa.eu/competition/ecn/brief/03_2013/fr_sanofi.pdf], accessed 8 June 2020
159 Arrêt du 18 octobre 2016 de la Cour de cassation : rejet
160 Decision No. 17-D-25, relative à des pratiques mises en œuvre dans le secteur des dispositifs transdermiques de
fentanyl, 20 December 2017
161 Autorite de la concurrence,  20 December 2017: Medicinal products (Press Release)
[https://www.autoritedelaconcurrence.fr/en/communiques-de-presse/20-december-2017-medicinal-
products#:~:text=Following%20a%20referral%20by%20the,generic%20version%20of%20the%20Durogesic]
accessed 8 June 2020.

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This  combined  strategy  was  effective.  128,000  pharmacies  were  found  to
have  been  influenced  by  this  message  (i.e.  just  over  half  of  French
pharmacies). As part of a study to consider the effects of its campaign, 83%
of  pharmacists  asked  had  memorised  "the  risks  associated  with  changing
between  fentanyl-based  medicinal  products".  12,000  GPs  had  the
screensaver  emphasising  the  warning  from  the  AFSSAPS.  All  of  this
consequently meant that penetration levels of the generic product were low.
8.13
In  a  similar  pattern  of  behaviour  to  denigration,  allegations  are  occasionally  made  of
patent holders abusing the system by making misleading statement to authorities162 or
even vexatious or sham litigation163. While the latter has previously been recognised as
a  potential  abuse  by  the  European  Courts,  because  it  provides  an  exception  to  the
general human right principle of access to the courts, the bar to prove this is high and
the test is strictly applied164 165. However, this may be an easier test to meet if it can also
be  proved  that  during  the  course  of  litigation,  the  dominant  company  was  providing
misleading information to the authorities or courts.
9.
CONCLUSION
9.1
Overview of state of affairs for generics
9.2
The  previous  reviews,  the  number  of  examples  and  feedback  from  members  of
Medicines  for  Europe  suggest,  at  least  anecdotally,  that  generic  and  biosimilar
companies are finding it more difficult and expensive to navigate the large number  of
barriers  to  entry  discussed  above.  The  exploitation  of  these  barriers  also  appears  to
have increased in sophistication. In some cases, a generic or biosimilar may still be able
to  secure  market  entry  but  this  is  only  after  expensive  and  complex  litigation  across
many  jurisdictions.  The  high  costs  inherent  in  this  process  inevitably  need  to  be
recouped.  This may result in higher prices for healthcare providers, or the impact on
margins for generic and biosimilar manufacturers may result in market exit for smaller
manufacturers  and  ultimately  a  negative  impact  on  competition  in  the  generics  and
biosimilar space.  There are also many cases where the barriers successfully prevent
market entry leading to a significant delay in the introduction of generic competition to
the detriment of patients. In some cases, although it is more difficult to quantify, it is also
the  case  that  the  barriers  alone  exert  a  chilling  effect  and  are  sufficient  to  intimidate
generics so that market entry is not even attempted because of the potential risk and
cost.
9.3
Recommendations for reform
9.4
Patent linkage - Amend the Transparency directive
9.5
As referred to in paragraph 5.6 above, from as early as 2012 there have been calls for
an express prohibition on patent linkage to be included in the Transparency Directive.
As the EU looks again at its strategy to improve and accelerate patients’ access to safe
and  affordable  medicines166,  now  is  an  opportune  moment  to  end  the  uncertainty  of
patent linkage in the context of pricing and reimbursement activities. This paper calls
upon  the  Commission  to  amend  the  Transparency  Directive  to  include  an  express

162 For instance, in AstraZeneca AB and AstraZeneca plc v European Commission, C 457/10 P, AstraZeneca was found
to have made misleading statements to the Patent Office in order to obtain SPCs that extended its exclusivity in relation
to Losac.
163 When the Commission first launched its Inquiry in 2008, vexatious litigation was one of the abuses it was seeking to
investigate (https://ec.europa.eu/commission/presscorner/detail/en/IP_08_49),  however this did not  end  up featuring in
the 2009 Report.
164 ITT Promedia NV v Commission of the European Communities, Case T-111/96 (1998), paragraphs 30 and 61.
165 We have also come across allegations of vexatious litigation and legal action against regulatory authorities. While this
point has not been explicitly considered by the courts, it seems likely that a similar test and similar high burden of proof
would apply to allegations that sham litigation had been brought against an authority.
166 European Commission, Communication: Pharmaceuticals – safe and affordable medicines (new EU strategy) (2 June
2020)  [https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12421-Pharmaceutical-Strategy-Timely-
patient-access-to-affordable-medicines]

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prohibition on patent linkage in relation to pricing and reimbursement activities, which
should be also not blocked during market exclusivity period.
9.6
Product hopping: legislation
9.7
In September 2019, a bill was introduced to the US House of Representatives, which
sought to prohibit product hopping. The proposed bill establishes that a pharmaceutical
manufacturer will have engaged in an "unfair method of competition" if the manufacturer
engaged  in  either  a  "hard  switch"  by  announcing  withdrawal  or  destroyed  inventory
while marketing a follow on product or a "soft switch" if this "unfairly disadvantage[d] the
listed drug or reference product relative to the follow-on product [...] in a manner that
impedes competition from a generic drug [...] and has no clinically meaningful difference
with  respect  to  safety,  purity  and  potency"167.  Such  switches  can  be  justified  if  the
pharmaceutical company can demonstrate it would have taken those actions regardless
of  generic  competition  for  certain  specific  reasons  such  as  safety  concerns  or
manufacturing problems outside its control.
9.8
The bill was referred to the Subcommittee on Antitrust, Commercial and Administrative
Law168 and is still being considered. However, this indicates a political will in the United
States to prevent this type of behaviour and an effective proposal for achieving this goal.
The introduction of similar legislation in the EU would serve to limit the scope for 'product
hopping'  style  abuses  to  be  carried  out  by  innovator  companies  in  the  EU  and  is,
therefore, commended by this paper.
9.9
Product hopping – maintaining access to earlier generation products
9.10
As  shown  in the  US  examples  at  paragraph  6.15  above,  product  hopping  allegations
may  require  some  level  of  balancing  between  competitive  harm  to  the  generic  and
biosimilars  market  and  the  consumer  benefit  delivered  through  modifications.  One
solution for balancing out these concerns recommended by this paper is for innovators
to maintain access to first generation products on the market until patent expiry allows
for generic and biosimilar entry. At this stage, the market can then determine whether
the purported 'improvements' of the second generation product outweigh the significant
cost benefits provided by generic versions of the first generation product.
9.11
Reform of divisional patent application filings
9.12
As outlined at section 4 above, the proliferation of divisional patents is a key factor in
prolonging the uncertainty around originator products and delaying the entry of generic
and biosimilar competitors. Such uncertainty arises both from the lengthy time periods
taken to examine patent applications (including divisionals) at the EPO and the ability
of applicants to apply for divisional applications at the EPO so long as an application is
pending, creating the 'cascade' of divisionals described in section 4.
9.13
Placing  time  limits  on  when  an  applicant  can  file  divisional  applications,  as  has  been
seen in national patent systems, and providing mechanisms such as Arrow declarations
under which generic and biosimilar companies can obtain commercial certainty in the
face  of  a  multitude  of  divisional  applications,  should  be  considered  to  overcome  the
barrier  that  the  current  practice  has  on  generic  and  biosimilar  entry.  In  particular,
imposing time limits to restrict the filing of third, fourth and fifth (and so on) generation
divisional  patents  many  years  following  filing  of  the  parent  patent  is  strongly
recommended.

167 H.R.4398 To amend the Federal Trade Commission Act to prohibit anticompetitive behaviours by drug product
manufacturers, and for other purposes (https://www.govinfo.gov/content/pkg/BILLS-116hr4398ih/pdf/BILLS-
116hr4398ih.pdf)
168 US Congress, Affordable Prescriptions for Patients Through Promoting Competition Act of 2019
[https://www.congress.gov/bill/116th-congress/house-bill/5133/all-info]

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9.14
Given the lengthy time periods encountered, additional EPO resources are suggested
in  order  to  minimise  the  time  period  from  filing  to  grant  and  to  enable  a  closer
examination  of  the  proposed  scope  of  protection  of  divisional  patents  to seek to  limit
proliferation and the harm that this causes.
9.15
Some members of Medicines for Europe suggest that concerns raised by the divisional
patent  system  could  be  addressed  through  changes  to  the  European  Patent
Convention,  such  as  divisionals  with  similar  claims  being  dealt  with together  with  the
parent  patent  in  the  same  opposition  or  appeal  proceeding.  For  example,  one
suggestion  is  that  "it  should  be  possible  to  decide  the  validity  of  the  whole  family
simultaneously and prevent the filing of new divisional members of the same family at
a later date". Another suggestion is "the divisional system should be reviewed to limit
the  number  of  divisionals  and  date  when  they  can  be  filed.  There  need[s]  to  be
legislative  changes  to  prevent  delaying  strategies  such  as  the  withdrawal  of  patents,
which is one way we are seeing originators avoid an adverse decision, especially when
divisionals are pending".
9.16
Ensure consistent EU-wide application of the IP Enforcement Directive
9.17
Directive  2004/48/EC  requires  all  Member  States  to  apply  effective,  dissuasive  and
proportionate  remedies  and  penalties  against  those  infringing  intellectual  property
rights.  In addition, Article 9 of the IP Enforcement Directive provides that in Member
States,  competent  judicial  authorities  may  make  provisional  measures,  such  as
preliminary  inunctions,  subject  to  the  provision  of  adequate  security  or  equivalent
assurance to ensure compensation in the event the provisional measure is ultimately
found to have been incorrectly granted.  Furthermore, where it is ultimately found that
there is no infringement or threat of the same, the judicial authority shall have the power
to order the applicant to provide appropriate compensation for any injury caused by that
provisional  measure.    In  this  way,  any  losses  suffered  by  a  generic  as  a  result  of  a
wrongly granted preliminary injunction should be compensated by the patentee.
9.18
The framework exists to enable compensation of losses suffered by a generic as a result
of an incorrectly ordered preliminary injunction, but implementation of the provisions of,
in particular Article 9 of the IP Enforcement Directive varies between Member States, a
circumstance  which  if  addressed  could  deal  with  the  difficulties  considered  in
paragraphs 2.17 and 2.18 above.
9.19
Similar  provisions  directed  at  losses  suffered  by  national  healthcare  providers;
insurance companies and other payers in similar circumstances would ensure that all
those suffering loss where generic and biosimilar medicines are kept from the market
by preliminary injunctions which are ultimately quashed, are compensated.
9.20
More enforcement by competition authorities given investigative powers
9.21
Anticompetitive strategies based on the misuse of divisional patents, reliance on patent
linkage  systems  and  use  of  product-hopping  strategies  have  a  significant  detrimental
impact on competition by delaying  generic and biosimilar entry. In the absence of an
objective justification,  such  behaviour  by  companies  with  a  dominant  market  position
should  be  considered  abusive.  Authorities  already  have  the  powers  to  tackle  this
anticompetitive behaviour and, given the importance of generic and biosimilar entry to
reducing  the  price  of  pharmaceuticals  (as  acknowledged  by  the  Commission  -  see
paragraph  2.28  above)  and  increasing  access  to  treatments for  patients,  they  should
devote greater resource to the prevention of this type of abuse. While such cases tend
to be complex and require an in depth knowledge of the pharmaceutical sector, there is
a  significant  multiplier  effect  in  terms  of  the  benefits.  A  successful  case  will  have  a
significant  deterrent  effect  within  the  pharmaceutical  sector  as  confirmed  by  the
Commission's investigation of reverse payment settlement agreements.

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9.22
Another valuable feature is the precedent value of any successful case particularly as
some  of  these  cases  are  relatively  innovative  within  the  EU  competition  law  context.
Generic and biosimilar companies will be able to use these cases to call out analogous
behaviour and inhibit some of the more egregious conduct in order to overcome these
barriers to entry.
9.23
An  additional  solution  is  raised  by  the  potential  introduction  of  the  Commission
Competition Tool which is currently being consulted on169. If implemented, a number of
the options currently being considered would potentially give the Commission a chance
to reconsider the European pharmaceuticals market more holistically in order to identify
and  remedy  structural  competition  problems  that  are  difficult  to  address  under  the
current EU competition rules. The Commission could potentially address some of the
concerns identified in this paper through structural and behavioural remedies and even
recommendations  for  legislative  changes  that  would  improve  the  functioning  of  the
market.
9.24
Private action by generic and biosimilar companies
9.25
The high cost expenditure and complexity involved in bringing a private competition law
action  against  an  originator  is  a  factor  which  deters  many  generics  and  biosimilar
manufacturers  from  lodging  claims  against  originators  for  some  of  the  obstructive
behaviours described in this whitepaper. The cost involved is exacerbated by the need
for  sufficient  disclosure  to  access  the  internal  strategy  documents  of  the  defendant,
given the importance of internal documents to proving such a case. Furthermore, the
asymmetry of resources between generics/biosimilar companies and originators deters
generics and biosimilar companies from taking on such actions. One potential solution
to this is for generic and biosimilar companies to consider collaborative actions, sharing
cost and risk where this is possible.

169  For  more  information,  see  [https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12416-New-
competition-tool]

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