FCA fines 3 laboratories €444m
The French Competition Authority (FCA) sanctioned Novartis, Roche and Genentech with a €444 million fine, for abusing their collective dominant position.
On September 9, 2020, the French Competition Authority ("FCA") sanctioned Novartis, Roche and Genentech with a €444 million fine, for abusing their collective dominant position in order to promote the sale of the drug Lucentis, used to treat age-related macular degeneration (AMD), to the detriment of Avastin.
Background
Avastin is a drug developed by Genentech to treat certain types of cancer. In France, Avastin has been marketed since 2005 by Roche (Genentech's sole shareholder since 2009), in accordance with a European marketing authorization for oncology indications.
Genentech has also developed Lucentis, a drug used for the treatment of AMD. Following the granting of a European marketing authorization in 2007, Genentech has granted Novartis a license to use and market Lucentis in France.
The first treatments of Avastin in oncology have demonstrated positive effects on the medical condition of patients also suffering from AMD, prompting doctors to prescribe Avastin in ophthalmology. The cost of Avastin was then 30 times lower than that of Lucentis (approximately 35 euros versus 1161 euros per injection in 2007).
The use of Avastin for diseases not covered by its marketing authorization has triggered cautious reactions in many European countries. In France, the regulation of non-authorized prescription by the Bertrand law in 2011 and the prohibition by the French General Directorate of Health of the use of Avastin outside the scope of its marketing authorization in 2012 preceded the adoption of a new regulatory framework authorizing the issuance of a temporary recommendation for use ("RTU") for specialties deemed essential to improve the condition of patients, despite the existence of an effective alternative with a marketing authorization. This new framework led the French Agency for the Safety of Health Products to issue an RTU to Avastin for the treatment of AMD in June 2015.
Investigation of practices by the European competition authorities
The licensing agreements between the three laboratories had been examined by the Italian Competition Authority, which imposed a fine of 182 million Euros in 2014. The European Court of Justice specified in 2018 that Avastin could be considered to be part of the same market as Lucentis although the marketing authorization indications are very different and confirmed that the agreement between Roche and Novartis groups to increase the use of Lucentis could constitute a restriction of competition by object.
These practices had been the subject, in parallel, of an investigation by the DGCCRF, transmitted to the FCA, which carried out inspections and seizures in April 2014 at the premises of Novartis and Roche.
The companies had challenged the validity of these inspections and seizures without success.
Practices sanctioned by the FCA: abuses of collective dominance
Following a 200-page decision, the FCA sanctioned the three laboratories, not on the basis of a cartel like the Italian authority, but on the basis of abuses of collective dominance.
This different approach in the grounds for sanctioning two almost identical practices in two distinct geographic markets and the choice to resort to the qualification of abuse of collective dominance are rare enough to be highlighted, particularly in the pharmaceutical sector. Besides, most of the decisions identifying collective dominant positions are long-standing.
In this case, the FCA's investigation stressed the existence of strong structural and strategic links between the three laboratories, arising in particular from the license agreements for the marketing of Avastin and Lucentis in Europe, and from cross-capital links between them, due to Novartis' non-controlling interest in Roche and Roche's controlling interest in Genentech.
According to the FCA, these close connections prompted the three operators to adopt a policy of joint action on the market, aimed at maintaining the distinction between the two drugs and delaying the development of Avastin compared to Lucentis, whose marketing was highly profitable for the three laboratories.
The FCA therefore considered that Novartis, Roche and Genentech formed a collective entity that held a dominant position in the market for the treatment of exudative AMD. The FCA then identified two types of abuse.
First, the dissemination by Novartis of a speech denigrating the use of Avastin in ophthalmology to ophthalmologists and patient associations in order to promote the prescription of Lucentis. This strategy enabled to maintain the price of Lucentis at a very high level. Besides, the price of Eylea, a competing product of Lucentis, which arrived on the market at the end of 2013, was also set according to a distorted benchmark.
Secondly, the distribution by Novartis, Roche and Genentech of an alarmist and misleading statement to the French public authorities, which had the effect of encouraging the health authorities to remain cautious, slowing down the process of regulating and securing the use of Avastin outside of its marketing authorization and thus delaying the renegotiation of the price of Lucentis, based on a comparison with an equivalent drug.
Such practices (denigration of a drug towards prescribers and users and influencing public authorities), already identified on several occasions by the FCA in the pharmaceutical sector, have been qualified as "particularly serious" precisely because of their occurrence in the health sector, where competition is already limited, and their considerable impact on the finances of the French Health Insurance.
At the time of writing, Novartis and Roche have already announced that they will lodge an appeal before the Paris Court of Appeal.
