EU Commission fines Teva €462.6 million for misuse of divisional patents and disparagement campaign

On 31 October 2024 the European Commission (Commission) imposed a fine of €462.6 million on pharmaceutical company Teva for abuse of dominance in relation to its blockbuster drug Copaxone, which is used in the treatment of multiple sclerosis.  The abuse consists of a misuse of the patent procedures by strategically filing and withdrawing divisional patents to extend protection for the active pharmaceutical ingredient for the drug and a systematic disparagement campaign against a competing product to delay its market entry.  The Commission concluded that the two abuses are complementary and amount to a single and continuous infringement over a four-to-nine-year period (depending on the Member State) aimed at delaying competition and market entry of cheaper alternative medicines.

This is the first time the Commission has imposed a fine in respect of both types of conduct.  The level of the fine sends a clear message to pharmaceutical companies that the Commission will not tolerate these practices, which may have considerable adverse effects on public health budgets and on patients' access to safe, effective, affordable and innovative drugs.  In a previous case relating to disparagement, Vifor offered commitments to address the Commission's concerns and settle the case without a fine (see our briefing here).

Teva has issued a statement that it disagrees with the Commission's decision, which it claims is based on legal theories that it "believes to be extreme, untested and factually unsupported" and announcing its intention to appeal the decision.

Background

In March 2021 the Commission announced that it had launched a formal investigation into possible anti-competitive conduct by pharmaceutical company Teva in relation to its blockbuster drug Copaxone, used in the treatment of multiple sclerosis (see our briefing here).  The investigation focused on two novel types of abuse of dominance in the pharmaceutical sector: misuse of divisional patents and a disparagement campaign against a close competitor.

A divisional patent is a type of patent that stems from an earlier (the so-called "parent") patent application. Multiple divisional patents can be derived from a single parent application, and further divisional patents can then be filed that stem from those divisional patents, resulting in "cascading divisionals". This can result in a large family of patents, often covering closely related inventions.  Divisional patents can be branched off a patent application at any time until that patent application is granted (and if one patent in the family is granted, divisionals can be filed from any of the other pending patents). This means that a competitor wishing to enter the market can be faced with a stream of divisional patents, all cascading from a broad parent patent.

The Commission had concerns that a strategy of filing divisional patents, simply to put barriers in front of potential competitors who have to challenge the patents in question and can then be faced with a withdrawal of the divisional patent and have to restart legal challenges, is conduct aimed at keeping out competitors which could be an abuse of a dominant position under Article 102 TFEU.

The investigation also focused on exclusionary disparagement and whether Teva had engaged in a communication campaign addressed at healthcare bodies and professionals, aimed at reducing the use of competing drugs by creating concerns over the safety of their use.

The Commission's infringement decision

Following a detailed investigation, the Commission has now concluded that Teva has abused its dominant position in the market for glatiramer acetate, the active pharmaceutical ingredient for its drug Copaxone.

Misuse of divisional patents

Teva artificially extended the patent protection for glatiramer acetate by misusing the rules and procedures of the European Patent Office (EPO) on divisional patents.  When its main patent for glatiramer acetate was due to expire it filed a number of divisional patent applications with the EPO relating to the manufacturing process and dosage for glatiramer acetate.  When competitors challenged these patents, in an attempt to enter the market, and pending review by the EPO, Teva started to enforce the patents to obtain interim injunctions.  Once they seemed likely to be revoked Teva withdrew the patents to avoid a formal ruling of invalidity, which would have set a precedent that would have affected the validity of the remaining divisional patents.  As a result, Teva's competitors were forced to repeatedly start new lengthy challenges which in turn allowed Teva to extend legal uncertainty over its patents and delay market entry by competing medicines based on glatiramer acetate.  It took more than nine years before all the divisional patents were annulled.

Disparagement campaign

The Commission also found that Teva engaged in a disparagement campaign with the aim of reducing the use of competing glatiramer acetate medicines.  The campaign, addressed at healthcare bodies and professionals, targeted competing products by creating concerns over their safety, efficacy and therapeutic equivalence, despite their approval by the relevant public health authorities.

This is only the Commission's second investigation into disparagement campaigns.  The first investigation into potentially misleading information by Vifor over the safety of Monofer, a competing drug to its treatment for iron deficiency, settled with commitments.  Under the commitments Vifor has agreed to engage in a comprehensive communication campaign to remedy and undo the effects of its potentially misleading information campaign, to refrain from engaging in promotional and medical communications about Monofer's safety profile and to implement a number of internal compliance measures.

Comment

The Commission's decision will be welcomed by generic drug manufacturers who have often complained that conduct such as the misuse of patent procedures and exclusionary disparagement tactics can be important barriers to market entry for them, making it difficult to compete with originators’ drugs despite patent expiry for the active ingredient.

Once the full decision is available, we will have more detailed guidance on the Commission's analysis of Teva's divisional patents strategy but the case is very much about a strategy around misuse of process (known as 'divisionals game') and should not be interpreted as a general rule that the use of divisional patents is in itself prohibited. A specific analysis of the facts and strategy involved will be important to understand whether a divisional strategy is misuse of the patent system aimed purely at excluding competitors.

On the disparagement campaign it is worth noting that this is not limited to the provision of objectively false information.  Disparagement can also include any alarmist or misleading communication that can influence the behaviour of healthcare professionals.  It could include ambiguous messaging, incomplete or subjective presentation of scientific studies and raising safety concerns of competing products without supporting evidence.  Caution is therefore required from companies, particularly in the pharmaceutical sector, when referring to competitor products in their communications with healthcare professionals or the public.