The pharmaceutical industry is responding to the challenges of decreasing productivity and increasing costs by concentrating its promotional activities on top-selling drugs and licensing more products through co-marketing and co-promotion agreements. Broadly speaking, such agreements are unlikely to fall foul of EU competition law, even if entered into between competitors - as long as the parties are free to set their own respective prices. However, the recent ruling of the Court of Justice of the EU in the Hoffman-La Roche/Novartis case is likely to have implications on the extent to which parties to such agreements may lawfully discuss their joint marketing efforts.
In that case, the Court held that joint marketing discussions in the context of co-promotion and co-marketing agreements between competitors:
- are not ancillary to the main licensing agreement, because they are not indispensable to the implementation of the main agreement;
- are inherently suspicions when they relate to the drug marketed by only one of the parties, unless there is evidence that they pursue objectives related to pharmacovigilance; and
- are inherently anti-competitive (without the need to show effects) if they are misleading as to the potential side effects of a particular use of a drug. The Court went on to clarify that such information can be misleading if it is capable of artificially altering the public perception of the risks associated with that use of the drug without reliable evidence – or based on “scientific uncertainty”.
The Court found that that even when two products are marketed for completely different conditions, but used (off-label) for the same condition, they can be substitutable and, therefore, the parties to the licensing agreements are to be regarded as competitors. Competition authorities may now look at other co-marketing and co-promotion agreements to see if the drugs covered by such agreements are widely prescribed for the same purposes, regardless of the use specified in their marketing authorisations.
The case will have important implications for the life sciences industry. In a previous case concerning AstraZeneca, the Court had found that the provision of misleading information by a dominant company could constitute an abuse of that dominant position. Following on from that case, the Hoffman-La Roche case is the first of its kind in which the EU judiciary decided that misleading joint marketing constitutes an anticompetitive agreement, without the need for a finding of market power. Companies will therefore want to review their current joint marketing efforts and be especially careful going forward in how they refer to each other’s products.
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Francesco Liberatore, Competition Partner, Squire Patton Boggs