In an important decision of December 18, 2013, the French Competition Authority (“FCA”) fined Schering-Plough and its parent companies a total of EUR 15.3 million for impeding the launch of a generic drug destined to compete with its pain-killer Subutex®.

Schering-Plough (the “Laboratory”) acquired in 1997 the exclusive commercialisation rights for Subutex® (a medicine prescribed in case of opiate addiction) in France from its manufacturer, the English company Reckitt Benckiser.

In January of 2006 the French Authority in charge of the safety and commercialisation of medicines (“ANSM”) granted Arrow Génériques (“Arrow”) an authorisation to commercialise high dose buprenorphine (“HDB”), the main molecule of Subutex®.

In November of 2006 Arrow complained to the FCA that the Laboratory had abused its dominant position on the French pharmaceutical market for HDB in order to try to drive out Arrow’s generic.

In its investigation, the FCA found that both Reckitt Benckiser and the Laboratory had elaborated a number of strategies to delay and discourage the use of generics, notably a powerpoint action plan referred to by the Laboratory as the “French plan against generics”. In such document, the Laboratory set out three angles of attack:

(i) raise barriers to entry of the generics by actions vis-à-vis the ANSM;
(ii) limit the penetration of the generics by inciting pharmacies to conserve 3-month Subutex® stocks and
(iii) prepare the brand name transition to Subutex FDT ® and Suboxone®.

The Laboratory was found to have implemented the plan by denigrating Arrow’s generic and by granting pharmacists loyalty and volume discounts and favourable payment terms so that they could constitute a sizeable stock of Subutex®.

The denigration in question consisted of the Laboratory’s organising seminars, conference calls and other communications for medical and pharmaceutical representatives to deliver a scaremonger message to doctors in regard to the risks of Arrow’s generic. Without relying on any specific medical studies, the Laboratory simply called attention to the fact that the excipients used by Subutex® and Arrow were not similar, and that the excipients used in the generic were more readily soluble and therefore could more easily be misused by users trying to inject the product, which is not meant to be injected. Doctors were also encouraged when prescribing Subutex® to note expressly on their prescriptions that the latter was not substitutable.

The FCA held that the Laboratory impeded fair competition precisely at the two key stages relating to the substitutability of the medicine (i) at the prescription stage, by encouraging doctors to write “not substitutable” and (ii) at the stage of the issuance of the medicine, by inciting pharmacists not to substitute Subutex® even if the doctor did not expressly prescribe that Subutex® was not substitutable.

The FCA also found that the Laboratory and Reckitt Benckiser had entered into an agreement the purpose of which was to hinder the arrival of Arrow’s generic on the HDB market by saturating the pharmacists’ stocks with Subutex®.

Accordingly the FCA fined the Laboratory and its parent companies Financière MSD and Merck & Co. 15.3 million euros for disparagement and unjustified rebates granted to pharmacists and 414,000 euros for collusion. Reckitt Benckiser Healthcare Ltd. (UK) and Reckitt Benckiser plc were fined 318,000 for cartel practices.

The Laboratory and its mother company did not challenge FCA’s objections and instead, proposed commitments to avoid such practices being repeated in the future. They notably committed to implement a whistle-blowing and a training program within the group based on competition rules. They also committed to implement a specific procedure for brand-name medicines at the time such medicines are about to fall into the public domain including a scrutiny of the commercial strategy envisaged for the arrival of generics and training programs for salespersons so as to prohibit denigration.