Off-label use of medicines: the CJEU on "by object" infringement under EU competition law

February 2018

In November 2017, we reported on Advocate General Saugmandsgaard Øe's Opinion in Case C-179/16 F. Hoffman-La Roche Ltd and Others v Autorità Garante della Concorrenza e del Mercato ("AGCM"). The case examined the interplay between pharmaceutical regulatory law and EU competition law, particularly Article 101 of the Treaty on the Functioning of the European Union ("TFEU"). Our discussion of his Opinion can be found here.

In January 2018, the Court of Justice of the European Union ("CJEU") handed down its ruling in the case, which we discuss in this article.

Facts

The detailed facts of the case are set out in our previous article. By way of summary, the case concerned two active ingredients developed by Genentech, Avastin (bevacizumab) and Lucentis (ranibizumab). Avastin was developed for the treatment of certain cancers and Lucentis was developed for the ophthalmology field to treat, for example, age-related macular degeneration ("AMD"). Genentech granted Roche (its parent company) a licence to exploit Avastin and Novartis a separate licence to exploit Lucentis.

The issues that are the subject of this case stemmed from the off-label use of Avastin for AMD in Italy prior to the launch of Lucentis, a practice which continued following the launch of Lucentis. Avastin was eventually removed from the list of reimbursed off-label medicines in Italy in 2012, following certain amendments made by the European Medicines Agency to the summary of product characteristics.

In February 2014, AGCM (the Italian Competition Authority) fined Roche and Novartis €180 million on the basis that they had put in place an agreement that restricted competition in breach of Article 101 TFEU. According to the AGCM, the companies' agreement was designed to achieve an artificial differentiation between Avastin and Lucentis by manipulating the perception of the risks of using Avastin in the ophthalmology field.

Following several appeals, the case was referred to the CJEU, which distilled the referring court's questions into the following points:

1. The extent to which off-label use of medicines can form part of the relevant product market when assessing the application of Article 101 TFEU;

2. Whether competition restrictions agreed between parties to a licensing agreement fall outside of the Article 101 TFEU prohibition on the basis that such restrictions are ancillary to the agreement;

3. Whether an arrangement to disseminate information relating to the efficacy of off-label use of medicines constitutes a restriction of competition by object; and

4. Whether such an arrangement is exempt from the prohibition under Article 101 TFEU on the basis of Article 101(3) TFEU.

The Advocate General Opinion

The Advocate General delivered his Opinion in September 2017, concluding that:

1. For the purposes of Article 101 TFEU, the relevant product market comprises all those products that are regarded by customers as interchangeable or substitutable, by reason of their characteristics, prices and intended use. Even where the lawfulness of off-label use was uncertain, the material factor was interchangeability, not whether the product benefitted from a marketing authorisation covering the specific therapeutic indication.

2. Even where competition restrictions take place in the context of a licensing agreement between non-competing undertakings, this does not automatically escape the prohibition contained in Article 101 TFEU. Any potential restriction needs to be carefully justified and must, in effect, be indispensable to the existence of the original licence.

3. Any collusion between two undertakings where they agree to communicate to third parties misleading allegations or information in order to reduce competition within a market will constitute a restriction of competition by object, within the meaning of Article 101(1) TFEU. Dissemination of allegations of the lesser safety of one medicinal product by comparison with another does reveal a sufficient degree of harm to competition where those allegations are misleading.

The CJEU Judgment

We summarise the CJEU's decision on each reference point below:

Relevant product market

The CJEU agreed with the Advocate General that the relevant product market includes all those products which are regarded as interchangeable or substitutable by the consumer, by reason of their characteristics, their prices and their intended use. Uncertainty relating to the lawfulness of off-label use of medicinal products does not preclude such products from belonging to the same relevant market.

The following points were material to the CJEU's decision:

  • Interchangeability and substitutability is not assessed solely on the basis of the objective characteristics of the products, rather the supply and demand on the market must also be considered. Prescribing doctors are guided by the therapeutic appropriateness and efficacy of medicines, meaning that medicinal products are often prescribed off-label.
  • Assessing compliance with pharmaceutical regulatory law is not in the remit of national competition authorities. However, the CJEU noted that where such compliance has been assessed by a competent authority or the courts, the national competition authority must take account of the outcome by assessing the effect that this may have on the supply and demand of those medicinal products.
The application of Article 101 TFEU to ancillary provisions of a licensing agreement

The CJEU held that the arrangement between the parties attempted to restrict the conduct of third parties and could not be considered as ancillary to the original licensing agreement. On this basis the arrangement could not be considered objectively necessary and was not justified under Article 101 TFEU.

Important factors in this part of the CJEU's decision were:

  • A restriction cannot be considered ancillary to the main operation of an agreement, which is not in itself anticompetitive, unless the operation would in effect be impossible to carry out in the absence of the restriction. Difficulty in implementing the agreement or less profitability of the operation is not sufficient to make the restriction ancillary.
  • Where the restriction is directed to the conduct of third parties (i.e. in this case, healthcare professionals prescribing Avastin for AMD at the expense of Lucentis), it cannot be said the restriction is objectively necessary to implement the underlying agreement, even where the licence is neutral as regards competition between the parties.
Restriction of Competition by Object

Again, the CJEU agreed with the Advocate General that an arrangement to disseminate misleading information, in circumstances of scientific uncertainty, concerning the adverse reactions from use of one medicinal product in order to reduce the competitive pressure on the other, is a restriction of competition by object. Such an arrangement cannot be exempt under Article 101(3) TFEU.

In forming its decision, the CJEU considered:

  • Account must be taken of the nature of the goods affected and the functioning and structure of the market in which the goods operate. Pharmaceutical products are subject to a pharmacovigilance system, which is the sole responsibility of the MA holder. Consequently, two undertakings that market competing products and collude to disseminate information relating to a product marketed by one of them may constitute evidence that the dissemination of such information is unrelated to pharmacovigilance.
  • The characteristics of the market in which medicinal products operate means that dissemination of such information will reduce demand for the off-label use, as doctors will refrain from prescribing the product.
  • Considering Article 101(3) TFEU, the dissemination of misleading information cannot be regarded as 'indispensable' for the purposes of Article 101(3).

Comment

The CJEU ruling is largely in line with the Advocate General's Opinion and will be of particular interest to participants in the pharmaceutical sector. It remains unsurprising that off-label use of medicinal products will be included in the same market as an on-label product where they are found to compete in practice. Care will need to be taken in relation to statements about a competing product as misleading statements, arising from an arrangement between undertakings, could be regarded as a "by object" infringement under Article 101 TFEU. Care must also be taken when agreeing collateral restrictions surrounding a licensing agreement to ensure that such restrictions do not fall foul of Article 101(1) TFEU.

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