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The EU executive on Wednesday imposed hefty fines of around 150 million euros on pharmaceutical firms including Denmark's Lundbeck for colluding to delay the sale a decade ago of a cheap generic version of a widely sold anti-depressant.
Lundbeck was fined 93.8 million euros by the European Commission for striking a 2002 agreement with producers of generic drugs to delay the introduction on the market of its popular anti-depressant, citalopram.
"It is unacceptable that a company pays off its competitors to stay out of its market and delay the entry of cheaper medicines," said Joaquin Almunia, the EU's Competition Commissioner.
"Agreements of this type directly harm patients and national health systems, which are already under tight budgetary constraints. The Commission will not tolerate such anticompetitive practices".
The generics firms involved include notably Alpharma (now part of Zoetis), Merck KGaA/Generics UK (Generics UK is now part of Mylan), Arrow (now part of Actavis), and Ranbaxy. They were fined 52.2 million euros.
The agreement between Lundbeck and the generics producers "violated EU antitrust rules that prohibit anticompetitive agreements," the Commission said in a statement.
Citalopram, a blockbuster antidepressant, was Lundbeck's best-selling product at the time.
When the Danish firm's patent for the citalopram molecule expired, one of the generics producers had started selling its own version and several others were preparing to do so.
But instead of competing with Lundbeck, the generics companies agreed in 2002 "not to enter the market in return for substantial payments and other inducements from Lundbeck amounting to tens of millions of euros," the Commission said.
During its investigation into the case, the EU executive found internal documents that refer to a "club" being formed and to "a pile of $$$" to be shared.
Lundbeck paid significant lump sums, purchased generics' stock for the sole purpose of destroying it under agreements designed to ensure the generics producers would stay out of the market for a set time.
However the Danish firm said it would appeal, saying it "strongly" disagreed with the ruling and believed it was "erroneous".
In a statement it said the payments "did not restrict competition" beyond the protection offered via patents rights held by Lundbeck and confirmed by the European Patent Office.
Competition from generics is known to drive prices down significantly, reducing the profits of the producer on the branded product and bringing large benefits to patients.
The EU said that prices of generic citalopram dropped on average by 90 percent in Britain compared to Lundbeck's previous price level once widespread generic market entry took place.