The European Commission has fined the pharmaceutical companies Teva and Cephalon €60.5 million for agreeing to delay the market entry after Cephalon's main patents had expired. The Commission reached the conclusion that the pay-for-delay agreement between undertakings violated EU antitrust rules and caused substantial harm to EU patients and healthcare systems by keeping prices high for the drug, modafinil.
Modafinil is Cephalon's best-selling product under the brand name “Provigil” that is used for the treatment of excessive daytime sleepiness. The European Commission found that Cephalon and Teva entered into a patent settlement agreement under which Teva committed not to enter the market with a cheaper version of modafinil, in exchange for a package of commercial side-deals and some cash payments. The Commission investigation has found that for several years, this “pay-for-delay” agreement eliminated Teva as a competitor and allowed Cephalon to continue charging high prices even if the main modafinil patent had expired. Consequently, the agreement resulted in the situation that Cephalon did not face competition from alternative cheaper medicines for long years. The Commission also took into account the harmful effects of this kind of agreements on innovation as pharma companies delay their efforts for developing new medicines.
The fines were set on the basis of the Commission's 2006 Guidelines on fines. The fines imposed by the Commission on Teva and Cephalon are €30 million and €30.5 million, respectively, amounting in total to €60.5 million.
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NAZALI TAX & LEGAL |