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AG’s Opinion – Licensed and Unlicensed Medicines May Fall Within the Same Relevant Product Market

Yesterday’s Opinion from Advocate General Saugmandsgaard Øe (AG) in Hoffmann-La Roche vs Autorità Garante della Concurrenza e del Mercato takes the position that licensed and unlicensed pharmaceutical products used for the same indication may fall within the same relevant product market. The Italian Council of State (ICS) referred a number of questions to the EU Court of Justice (CJEU) in March 2016 in the context of the appeal against the Italian Competition Authoirty’s (ICA) decision that Roche and Novartis reached an illegal market sharing agreement in the market for ophthalmic drugs for serious vascular eyesight conditions.

Background

Avastin (Genentech’s drug licensed to Roche) was approved for certain oncology indications. However, doctors started prescribing unlicensed Avastin to treat vascular eye conditions. Genentech’s Lucentis (licensed to Novartis), indicated for the treatment of certain vascular eye conditions, used a very similar active ingredient.

In 2014, the ICA fined Novartis (€92 million) and Roche (€90.5 million) for co-ordinating to limit unlicensed ophthalmic use of Avastin, to the benefit of Lucentis (which was more expensive than Avastin). The ICA concluded that the companies colluded to artificially differentiate the products using safety concerns regarding unlicensed use of Avastin (to discourage doctors from prescribing). On appeal, the Tribunale Administrativo Regionale del Lazio found that Novartis and Roche were actual competitors since Lucentis and Avastin (unlicensed) competed, and confirmed the ICA’s market sharing finding. The Parties appealed to the ICS, which referred five questions to the CJEU.

Assessment of Market Definition

In essence, the Council of State asked the CJEU whether the relevant product market can be defined independently of the scope of a marketing authorisation (MA) and whether the same market can contain unlicensed products, and products authorised, for the same indication.

The AG opines that, “[i]n the pharmaceutical sector, the content of marketing authorisations for medicinal products is not necessarily decisive in the determination of the relevant product market […] a relevant product market comprises all those products which are regarded as interchangeable or substitutable by the consumer, by reason of their characteristics, their prices and their intended use”. Therefore, the use of an unlicensed drug for an indication and a drug authorised for that indication may fall within the same relevant market, “provided that [the former] is actually used interchangeably with medicinal products whose marketing authorisation covers those indications”.

The AG goes on to opine that competition authorities and courts need not establish whether products are marketed and prescribed for unlicensed use in a manner that is consistent with the applicable legal framework when defining the relevant market.

Additional Observations

The AG confirms that Article 101 TFEU may apply to restrictions in licensing agreements, even where, but for the license, the parties would not compete on the relevant market.

Finally, the AG states that agreement to communicate to third parties safety concerns that have neither been proven nor ruled out by scientific research may restrict competition “by object” under Article 101 TFEU, where these allegations are misleading.

Next Steps

The AG’s Opinion is not binding on the judges of the CJEU. As the AG’s Opinion makes clear, the judgment will have significant implications for market definition in relation to pharmaceutical products, and potentially for field of use licenses.

© 2017 Covington & Burling LLP

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About this Author

Associate

Jennifer Boudet is an associate in the Brussels office.  Her practice focuses on all areas of EU Competition law, including cartel investigations, abuse of dominant position cases, state aid cases as well as regulatory issues.  Ms. Boudet advises clients in a variety of sectors, including media and technology, energy and natural resources.

32.2.545.7503
Miranda Cole, Covington Burling Law firm, Competition Attorney
Partner

Miranda Cole is a partner based in the firm’s Brussels office. She practices competition and communications law and policy, and has more than 15 years of experience in the field.  Chambers Global notes that she "takes a proactive, holistic approach" (2014).

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