Italy: the abuse of a dominant position by Pfizer in Xalatan case

18 May 2014

The decision no. 693/214 of the Consiglio di Stato (Italy's highest administrative Court) filed on February 12, 2014 closed the saga of the Xalatan case in Italy, ruling that Pfizer had abused its dominant position.

Background

As discussed in our previous Newsletter, (http://www.twobirds.com/en/news/articles/2012/italy-court-quashes-decision-1012) Pfizer owned an European patent (EP 0 364 417), claiming a class of prostaglandin active ingredients for the treatment of glaucoma, including latanoprost (active ingredient of Xalatan). On the basis of that patent Pfizer filed and obtained Supplementary Protection Certificates (hereinafter “SPC”) and paediatric extensions in several EU countries but not in Italy.

Pfizer therefore applied for several divisional applications of EP ‘417 and, on the basis of one of these applications (EP 1 225 168), requested a SPC and the relevant paediatric extension in Italy.
By a decision dated 11 January 2012 the Autorità garante della concorrenza e del mercato (Italian Competition Authority – hereinafter “AGCM”) found Pfizer to have abused its dominant position in the market of prostaglandin drugs by putting in place a “complex legal strategy” to delay the entry of generic drugs onto the Italian market and consequently imposed a fine of 10.6 milion Euros on the originator company.

On first appeal, by a decision dated 3 September 2012, the Tribunale Amministrativo Regionale per il Lazio (Regional Administrative Court of Lazio) disagreed with the above assessment and held that the simple use of legal means to protect intellectual property rights is not sufficient to amount to an abuse of a dominant position. The decision of the AGCM was therefore quashed.

The judgment of the Consiglio di Stato

As anticipated, the Consiglio di Stato upheld the AGCM’s decision, reinstating the fine on Pfizer.

The Court firstly stressed that Pfizer’s applications for a divisional patent, an Italian SPC and the paediatric extension had not led to the launch on the market of any new drug since the commercialisation of latanoprost, which was protected by the parent application.

The Consiglio di Stato further stated that Pfizer had actually misused its intellectual property rights, and that it was irrelevant whether the divisional patent and the relevant SPC were or were not legitimately requested and obtained since the scope of patent law is different from that of competition law.

In particular, the Court held that, “This case does not concern a conduct prohibited under patent law, but the anti-competition implications of a series of acts that are per-se lawful. In fact, the abuse of a dominant position attributed to Pfizer is nothing but the specification of the broader category of abuse of right, whose precondition is the existence of a right which is used artificially, for a scope which is incoherent with that for which that right is granted: in the case at issue, the exclusion of competitors from the market”.

The Consiglio di Stato recognized that Pfizer's conduct, which had exploited the patent system to delay the launch of the generic drugs of Xalatan, went beyond that of mere patent protection, and was in fact anti-competitive. In fact the main goal of the originator company in applying for divisional patents and an Italian SPC did not seem to be the protection of a new product but merely to artificially lengthen the patent protection of Xalatan in Italy1.

According to the Italian Court, the request for divisional patents, an Italian SPC and a paediatric extension constituted only one element of the complex strategy of Pfizer, which also included the sending of warning letters to generic companies, the consequential civil proceedings and the actions before AIFA (Italian Medicines Authority) to avoid the inclusion of the generic products in the so-called “lista di trasparenza” (transparency list).

Finally, the Consiglio di Stato held that the set of commitments proposed by Pfizer in April/May 2011, including an undertaking by the originator company to publicly offer a free licence for the non-exclusive use in Italy of the divisional patent, were unable to eliminate the anti-competitive conduct mainly because the patent at issue would have expired in July 2011 as well as because the contested behavior had already caused irreversible damages to the competition.

In light of the above, the Consiglio di Stato reinstated the previous decision of AGCM comfirming the fine imposed on Pfizer.

The most significant aspect of this decision is the fact that the court held that there were anti-competitive acts which are per se lawful and legitimate if in compliance with patent law.

Due to the fact the Consiglio di Stato gave a very short reasoning for the basis of its decision, mainly referring back to the previous decision of AGCM, it is difficult to draw general principles to be applied to the originator companies who decide to enforce their exclusive rights in Italy against generic companies.

Consequently, since the subject matter of these proceedings is very peculiar, this decision will not necessarily become a leading case in anti-trust matters in the life sciences sector.

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