A European Union court backed an EU antitrust decision against Anglo-Swedish drugmaker AstraZeneca Thursday, lending weight to a regulatory crackdown on firms blocking cheaper drugs coming to market.
Antitrust lawyers said the ruling set a firm legal precedent for the regulator in its fight against companies suspected of preventing consumers from obtaining less expensive generic treatments.
Basically the regulator's hand has been strengthened, said Nicola Dagg, head of intellectual property litigation practice at Allen & Overy.
Pharmaceutical companies that get involved in those specific activities set out in the judgment will fall foul of the regulator, she said, adding that it would be difficult for companies to know what other activities could be seen as abusive by regulators.
In 2005, the European Commission, which acts as the EU's competition watchdog, said AstraZeneca had breached EU rules by blocking or delaying market access to generic versions of its ulcer pill Losec between 1993 and 2000.
The General Court, Europe's second-highest, ruled that the European Commission's decision was justified.
The General Court essentially upholds the decision of the Commission which found that the AstraZeneca Group abused its dominant position by preventing the marketing of generic products replicating Losec, the court said in a statement.
However, the court reduced the fine to 52.5 million euros ($64.2 million) from 60 million, saying the Commission had not proved that the deregistration of marketing authorizations for the drug in Denmark and Norway affected parallel imports.
Parallel trade occurs when European wholesalers buy drugs in low-priced markets and resell them in high-priced ones, effectively exporting price cuts.
AstraZeneca shares were down 0.3 percent by 1125 GMT versus a 1.1 percent drop in the Stoxx 600 healthcare index.
We were disappointed that the court hasn't confirmed our position. We will be reviewing it in detail and decide on any next step once we have a chance to go through it in more detail, AstraZeneca spokeswoman Sarah Lindgreen said.
A trader who asked not to be named said: This is just reaffirmation on a case that took place a few years ago.
The numbers for a company this size are small, they're not going to change anybody's forecast so it's not going to be on anybody's radar screen.
GlaxoSmithKline, France's Sanofi-Aventis, Novartis, Roche
and Germany's Boehringer Ingelheim said in January that the Commission had requested details of their drug patent settlements.
The Commission is now investigating France's Servier, Israeli company Teva and three other generics firms.
In a critical report on the sector last year, the Commission said delays in bringing less expensive generic drugs to market had pushed up consumers' bills by 20 percent between 2000 and 2007.
(Additional reporting by Ben Deighton; Editing by Dale Hudson and David Cowell) ($1=.8172 euro)