Teva Fined €462.6 Million by European Commission for Abusing EPO’s Patent System

The European Commission has today imposed a €462.6 million antitrust fine on Teva for abusing its dominant position in the market for Copaxone, a blockbuster drug for treating multiple sclerosis. Teva’s abusive conduct was said to consist of prolonging legal uncertainty over the enforceability of its patents for Copaxone, and disparaging a rival’s generic version. It is rare of the anti-trust authorities in the EU to take action for misuse of the patent system, so their reasoning here merits some attention from both innovator companies and generic challengers in the pharmaceutical field.

Teva’s actions

Teva’s blockbuster medicine, Copaxone, contains the active pharmaceutical ingredient glatiramer acetate. Until 2015, Teva held a composition of matter patent covering glatiramer acetate. When the basic patent was close to expiration, Teva sought to extend protection for its product by filing secondary patents directed to, e.g., the manufacture of Copaxone and specific dosage regimes. Teva further filed multiple divisional applications from these secondary patents to create a thicket of rights. This is, of course, not unusual behaviour.

Teva began to exert these rights against competitors looking to enter the glatiramer acetate market, for example by seeking interim injunctions. At the same time, the rights were being challenged by rivals at the EPO and – where it appeared that the rights were likely to be revoked – withdrawn by Teva. Thus, Teva operated staggered cycles of divisional patents being granted, interim injunctions sought, and then the patents being withdrawn, allowing Teva to deter rivals from entering the market while avoiding adverse invalidity decisions being published by the national courts which would otherwise potentially have the effect of rendering the remaining patent family members unenforceable. Teva’s conduct therefore led to legal uncertainty for third parties regarding the enforceability of Teva’s secondary patents for Copaxone.

According to the Commission, Teva also ran a complementary campaign to disparage a rival’s generic version of Copaxone. Specifically, following the relevant health authorities approving a rival’s generic version (including confirming its safety, efficacy and therapeutic equivalence with Copaxone), Teva nonetheless spread misleading information to healthcare professionals and public and private health bodies in order to slow down the rival product’s entry onto the market.

Commission’s decision

Article 102 of the Treaty on the Functioning of the European Union (TFEU, as implemented by Regulation No 1/2003) prohibits the abuse of a dominant position within a market. The Commission concluded in its decision that Teva’s actions of misuse of patent procedures and systematic disparagement campaigns were complementary and cumulatively infringed Article 102 TFEU. In coming to its decision, the Commission relied on evidence in the form of documents from Teva’s in-house lawyers which are not privileged under EU law. According to the Commission, the documents related to the formulation of the tactics to extend the protection for Copaxone and which ultimately amounted to abusive behaviour.

In the Commission’s view, Teva’s anticompetitive activities prevented prices of glatiramer acetate products on the market from decreasing, consequently impacting the budgets of public health systems. This was supported by the fact that once the rival product entered the market the price of products decreased by roughly 40% to 80% across the relevant EU states.

Comment

There is limited information available thus far, but it seems that the practice of systemically withdrawing key patents, and re-starting enforcement actions based on new divisional applications is likely to be a key driver for the Commission’s finding of abuse. Patentees should take great care when seeking to delay generic entry in this way.

It is also worth mentioning that in the UK it is possible to ask the courts for a so-called “Arrow Declaration”, which is a Declaration from the court to the effect that the technical steps necessary to launch a specified medicinal product were obvious at the priority date of a given patent family. Our briefing note on the Arrow Declaration proceedings concerning the Humira antibody can be found here. Conduct along the lines set out above therefore risks proceedings for an Arrow Declaration in the UK, as well as anti-trust proceedings from the European Commission.