EU Commission Fines Danish Drugmaker Lundbeck And 8 Other Pharma Companies Over Pay-For-Delay Deal

The European Commission Wednesday fined several drug makers for a total of 146 million euros ($196 million) for delaying the supply of a cheaper version of Danish pharma giant Lundbeck's (CPH: LUN) anti-depressant drug, Citalopram, to the market.

Lundbeck was accused of paying eight generic drug makers for delaying their versions of Citalopram, which is marketed as Celexa to consumers.

The action is based on a 2009 report by the commission on the pharmaceutical sector, which found that agreements between drug companies to delay the supply of cheaper versions of drugs to market have led to consumers spending as much as 20 percent more for their medicine, Reuters reported.

In these agreements, known as "pay-for-delay" deals, brand-name manufacturers pay generic drug makers for not releasing a generic and cheaper version of their drug to the market. The Lundbeck probe is the antitrust body’s first case over the pay-for-delay agreements.

“It is unacceptable that a company pays off its competitors to stay out of its market and delay the entry of cheaper medicines,” EU Competition Commissioner Joaquin Almunia, said in a statement.

European Commission, the EU’s antitrust regulator, found that Lundbeck colluded with eight other companies in a pay-for-delay deal to block their antidepressant drug in 2002, and also bought away the stock of drugs from these companies "for the sole purpose of destroying it," a European Commission press release said.

"Agreements of this type directly harm patients and national health systems, which are already under tight budgetary constraints. The Commission will not tolerate such anticompetitive practices," Almunia said.

Lundbeck, which was handed over a fine of 93.8 million euros, said it would appeal the fine, according to Bloomberg.

Germany's Merck KGaA (ETR:MRK) was penalized 21.4 million euros, which included a fine of 7.8 million euros levied jointly on Merck and its former subsidiary, Generics UK, which is now owned by U.S. generic drug maker Mylan (NASDAQ:MYL), according to the European Commission release.

The other companies fined by the European Commission were Arrow Group, Arrow Generics and Resolution Chemicals (9.98 million euros); Zoetis Products, Xellia Pharmaceuticals and A.L. Industrier (10.53 million euros); Ranbaxy Laboratories (BOM:500359) and Ranbaxy UK (10.32 million euros); for a total fine on generic drug makers amounting to 52.24 million euros.