Italy: The Italian Antitrust Authority rule that Merck Group must grant royalty-free licenses of its patented active ingredient Finasteride

29 May 2007

Enrico Baccetti, Massimiliano De Santis

On 21 March 2007, the Italian Antitrust Authority (the “Authority”) has ruled that Merck & Co. and Merck Sharp & Dohme S.p.A. (together “Merck”) must grant licenses royalty-free under its Supplementary Protection Certificate (“SPC”) covering the active ingredient Finasteride and its presentation in tablets of 5 mg for the treatment of benign prostate hyperplasia (the “Product”). The SPC is due to expire on 1 July 2009. In particular, the Authority ruled that Merck must:

  1. grant to licensees a non-exclusive license free of charge under the SPC for importing, manufacturing, marketing and selling the Product in Italy as from 1 July 2007;

  2. not prohibit licensees from importing into Italy the active ingredient Finasteride provided that (i) it is used in the manufacturing of the Product in Italy by the licensees, or (ii) if it is to be sold to third parties in the EU Member States where the patent protection of Finasteride has expired, it is used only for the manufacturing and sale of the Product within such Member States; and

  3. not prohibit the licensee from buying the active ingredient Finasteride in Italy for the purposes of manufacturing and selling the Product in Italy.

The Authority accepted and made binding the commitments presented by Merck itself. The Authority’s decision concluded the ‘abuse of dominant position’ proceedings brought against Merck by one of its competitors (in relation to another active ingredient, Imipenem Cilastatina) in 2005, without any penalty being issued.

To date, the Authority has issued one other similar decision (dated 8 February 2006) in which it accepted the commitments offered by Glaxo to grant licenses of its active ingredient Sumatriptan Succinato, as well as disclosing the proprietary know how needed to facilitate its implementation in order to compensate competitors for the delay in receiving the licenses.

Such decisions are in accordance with the Authority’s efforts and initiatives aimed at encouraging the use of generic products in Italy.