An agreement between competitors may be a competition restriction by object

On 23 January 2018, the Court of Justice of the European Union delivered its decision on the preliminary ruling referred to it by the Italian Council of State in the dispute between Roche and Novartis on the one hand and the Italian competition authority (AGCM) on the other.

In 2014, Roche and Novartis were each fined more than €90m for entering into an agreement "to achieve an artificial differentiation between the medicinal products Avastin and Lucentis by manipulating the perception of the risks of using Avastin in the field of ophthalmology".

Avastin and Lucentis are two medicinal products belonging to the Roche group. Avastin has been commercialised by Roche itself as an oncological medicinal product while the commercialisation of Lucentis as an ophthalmic medicinal product has been entrusted to Novartis by a licensing agreement.

However, Avastin and Lucentis are derived from the same antibody and follow the same mode of therapeutic action. Avastin was registered on the list of medicinal products supported by the Italian National Health System two years before Lucentis' commercialisation authorisation.

Between these two dates, doctors noted the effectiveness of Avastin as a treatment for age-related macular degeneration; however, this was not included in its marketing authorisation, and doctors started to prescribe it widely off-label. After the beginning of Lucentis’ commercialisation, this practice did not cease, in particular because Lucentis was sold at nearly 10 times the price of Avastin.

Roche and Novartis were considered by the Italian authority as guilty of having sought to produce and disseminate "opinions which could give rise to public concern regarding the safety of Avastin when used in ophthalmology and to downplay the value of scientific opinions to the contrary" in order to divide the market between these two products and protect sales of Lucentis.

The AGCM estimated that this behaviour led to a decrease in Avastin’s sales for the benefit of Lucentis, resulting in an additional cost of €45m for the Italian National Health Service in 2012 alone.

On appeal from the AGCM’s decision, which was also upheld by the Regional Administrative Court for Lazio, the Italian Council of State decided to stay the proceedings and refer five questions to the Court of Justice of the European Union for a preliminary ruling.

In its judgment, the Court of Justice begins by responding jointly to the second, third and fourth questions concerning whether the definition of the "relevant market" should include both medicinal products authorised for the treatment of certain pathologies and at the same time medicinal products whose marketing authorisation does not cover the treatment of those pathologies but which are in practice used to treat them.

After recalling that medicinal products with the same therapeutic indications belong in principle to the same relevant market, the court distinguishes between medicinal products which are manufactured and sold lawfully and those which are manufactured and sold unlawfully, before concluding that these two categories of medicinal products are not, in principle, substitutable.

However, in the present case, the European regulation does not prohibit the prescription or repackaging of a medicinal product for an off-label use. Such prescriptions and repackaging are subject to conditions, but the verification of their conformity in each individual case is the responsibility of the competent regulatory authorities. The court concludes that the AGCM did not have to carry out such a verification exercise where this had not already been done by the competent authorities, and it was therefore justified to consider that there is a "concrete report of substitutability" between Avastin and Lucentis.

In its first preliminary question, the Italian Council of State asked whether restrictions of competition provided for between parties to a license agreement could escape the application of Article 101 §1 TFEU because they were ancillary to the parties’ agreement.

In this case, the behaviour of the parties involved had led to the dissemination of misleading information regarding adverse effects of Avastin for the treatment of ocular pathologies. The purpose was to restrict health professionals by encouraging them to stop prescribing Avastin off-label. The court therefore considers that, because these healthcare professionals were third parties to the agreement between Roche and Novartis, this behaviour cannot be classified as an ancillary restriction to the license agreement since an ancillary restriction, by definition, only restricts the behavior of one of the parties to an agreement.

Finally, by its last question, the Italian Council of State asked the court whether the agreement fell within the category of agreement by object. The Court of Justice responds positively by noting the context of scientific uncertainty specific to these issues and the particularly harmful impact of the dissemination of misleading information if that were the case. It also confirms that an exemption under Article 101 §3 TFEU is not possible because the dissemination of misleading information on a medicine product cannot be regarded as an "indispensable" restriction within the meaning of Article 101§3 TFEU.

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