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31 May 2018Asia-Pacific

Pfizer’s generic deals don’t violate competition law, says Australian court

A court has rejected an appeal by the Australian Competition and Consumer Commission (ACCC), in a decision which confirmed that deals made by Pfizer in relation to generic cholesterol-lowering medication do not constitute a misuse of its market power.

The Full Federal Court of Australia  dismissed the ACCC’s appeal on Friday, May 25.

Pfizer markets cholesterol-lowering medication atorvastatin under the brand name  Lipitor (atorvastatin calcium). According to the court, Lipitor was the biggest selling drug in the world between the mid-1990s and 2012.

Pfizer’s patent for Lipitor (Australian patent number 601,981) expired in May 2012, and in anticipation of this, Pfizer offered pharmacies discounts and rebates based on a bundled supply of Lipitor and Pfizer’s generic atorvastatin product, called ‘atorvastatin Pfizer’.

The ACCC, Australia’s competition regulator, alleged that this was an abuse of market power and commenced proceedings against the pharmaceutical company in 2014.

It  accused Pfizer of “misusing its market power to prevent or deter competition from other suppliers selling generic atorvastatin products to pharmacies”, saying the company “engaged in exclusive dealing conduct for the purpose of substantially lessening competition when offering to supply atorvastatin to community pharmacies”.

Rod Sims, chairman of the ACCC, said the regulator was “concerned that Pfizer’s use of its market position as supplier of the top selling branded atorvastatin immediately before generic products were able to enter the market harmed the competitive process”.

In response, executives at Pfizer said the steps taken were necessary to meet competition in the atorvastatin market and avoid being “slaughtered”.

The matter went to trial at the Federal Court of Australia in 2015. Although Pfizer recognised that its behaviour may have made it harder for generic manufacturers to compete, Justice Flick ruled that Pfizer’s conduct was not in breach of the Competition and Consumer Act (CCA).

The ACCC appealed against the decision.

Last week, the Full Federal Court released its decision, which affirmed Justice Flick’s findings. It held there was no breach or misuse of market power, as Pfizer’s actions were not illegal and were taken to achieve a legitimate business objective.

The court noted that the purpose of Pfizer’s actions was to remain competitive in the atorvastatin market rather than to substantially lessen competition, and dismissed the appeal.

Justice Flick had ordered the ACCC to pay Pfizer’s costs in the initial trial, and the Full Federal Court said the costs of the appeal will be reserved until a later point.

According to law firm  Baker McKenzie, the decision confirms that patent owners can implement strategies to protect their market share in light of the competitive threat arising from patent expiry where there is a legitimate commercial purpose to the strategy and there is unlikely to be any anti-competitive effect.

The ACCC said it is “carefully considering the judgment” and “remains committed to pursuing cases involving anti-competitive conduct”.

In November 2017, a new test for the misuse of market power was instigated in Australia under an  amended CCA, s. 46. Under the new standard, a corporation is unable to engage in conduct which has the “purpose, effect, or likely effect of substantially lessening competition”.

A spokesperson for Pfizer said the company welcomes the decision.

“We have always maintained that our behaviour was appropriate and reflected the high ethical standards, integrity and compliance that are central to our culture,” they added.

“During the court’s considerations we have continued our work with clinicians and pharmacists, who prescribe and dispense Pfizer medicines to patients every day.”

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More on this story

Asia-Pacific
26 June 2018   The Australian Competition and Consumer Commission said yesterday that it has sought to appeal against a decision by the Full Federal Court of Australia in a case involving Pfizer.

More on this story

Asia-Pacific
26 June 2018   The Australian Competition and Consumer Commission said yesterday that it has sought to appeal against a decision by the Full Federal Court of Australia in a case involving Pfizer.