EU hits French drug maker Servier with huge fine over generics

(BRUSSELS) - The EU on Wednesday hit French drugs giant Servier with a huge 331 million euro fine for colluding to delay a cheaper generic version of perindopril, a popular blood pressure treatment.

In a statement, the European Commission said total fines in the case amounted to 427.7 million euros ($582 million), with Israeli generic giant Teva and four other companies also subject to penalties.

Servier is accused of trying to delay the introduction of a generic version of perindopril, a cardio-vascular medicine. The allegation is the result of a broad EU probe into the pharmaceutical industry launched in 2008.

"Servier had a strategy to systematically buy out any competitive threats to make sure that they stayed out of the market," said EU Competition Commissioner Joaquin Almunia.

"Such behaviour is clearly anti-competitive and abusive," he added.

In a statement, Servier expressed its "total disagreement with the novel arguments made in the decision" and said it would fight the decision at the European Court of Justice.

Generic products are far cheaper than brand medicines -- on average generics cost 40 percent less two years after they enter the market -- and are a huge savings to patients and health care providers while remaining just as effective.

But in so-called pay-for-delay deals, drug makers secretly compensate generic rivals to thwart the introduction of cheaper versions of blockbuster drugs for an agreed time.

Drug makers argue that the arrangement allows them sufficient time to recoup expensive research and marketing costs incurred to bring their products to the market.

- 'Pile of cash' -

In the EU statement, one generic company told investigators it was "bought out of perindopril" for a "pile of cash".

In total, cash payments from Servier to generics amounted to "several tens of millions of euros", the EU said.

The generic companies fined in the Servier case are Teva, Indian companies Unichem and Lupin, US company Mylan and Slovenia's Krka.

The companies are accused of accepting out-of-court settlements in patent disputes with Servier in return for delaying the sale of the drug in key markets.

The EU said that between 2005 and 2007, "virtually each time a generic company came close to entering the market, Servier and the company in question settled the challenge."

The fine inflicted on Servier is close to the maximum possible of up to 10 percent of the group's total annual sales. In 2013, Servier posted sales of 4.2 billion euros, with a net profit of 325 millions euros.

A year ago, Danish drugmaker Lundbeck was fined 93.8 million euros by the Commission for striking a 2002 agreement to delay the generic version of its popular anti-depressant, citalopram.

Also last year, the Commission fined Johnson & Johnson and Novartis 16.3 million euros for delaying the market entry of generic fentanyl, a strong painkiller, in the Netherlands.

- US probe launched -

Federal authorities in the United States last month opened their own probes into pay-to-delay deals.

In 2013, the US Supreme Court reversed a court decision that effectively gave pharmaceuticals free reign to strike the controversial deals with generic drug makers.

The decision, while finding the payments anti-competitive, did not go so far as to find the practice illegal.

But the justices said litigants could challenge the individual deals in court on a case-by-case basis.

The US government had argued before the court that pay-to-delay was tantamount to big drug manufacturers buying off competitors.