EU Fines Danish Pharma Company Lundbeck, Generic Drug Makers, Including Ranbaxy, Over Citalopram Deal, Lundbeck Vows An Appeal

The European Union on Wednesday fined Danish pharmaceutical company H. Lundbeck A/S (CPH:LUN) €93.8 million ($125.6 million), alleging it paid several generic drugmakers millions of euros to not sell cheaper generic versions of a lucrative Lundbeck anti-depression medication, Citalopram.

Lundbeck immediately vowed an appeal, saying its patent rights to Citalopram are valid, have been confirmed by the European Patent Office and that numerous analyses of generic versions of Citalopram reveal that all were produced with "infringing processes."

The EU also fined generic drugmakers who struck deals with Lundbeck a total of €52.2 million. These generic firms include Alpharma, now with Pfizer Inc. (NYSE:PFE); Merck KGaA, (ETR:MRK); Arrow, now with Actavis Inc. (NYSE:ACT); and Ranbaxy Laboratories Limited (NSE:RANBAXY).

The arrangement, made in 2002, was “unacceptable” and “anticompetitive,” said European Commission Vice President Joaquín Almunia. “Agreements of this type directly harm patients and national health systems, which are already under tight budgetary constraints,” he said in a statement.

The EU estimated that a generic version of Citalopram was later sold in the U.K. for 90 percent less than Lundbeck's prices, once the agreements were rendered null and void.

Lundbeck said in a statement that it plans to appeal the EU fine, calling the body’s decision “erroneous.”

“The agreements did not restrict competition in the market beyond the protection already offered by society via the patent rights Lundbeck already held,” read the company's statement.

The company argued that the types of agreements it had with generic drugmakers can be legitimate and that the generic companies themselves conceded that their products violated Lundbeck patents.

Lundbeck "acted transparently and in good faith in trying to protect our patents," the company said. "Upon entering the agreements they were all reviewed by external antitrust experts. The agreements were furthermore in 2004 reviewed by both the European Commission and the Danish Competition Authorities, who publicly stated that it could not be rendered probable that the agreements were restricting competition."

The EU fines come on the heels of a U.S. Supreme Court decision on Monday stating that similar agreements between brand and generic drugmakers can be subject to antitrust scrutiny by federal agencies such as the Federal Trade Commission.

The FTC has made undoing anticompetitive patent settlements a priority, hailing the court decision on Monday as a significant step toward “addressing a problem that has cost Americans $3.5 billion a year in higher drug prices.”

Previously, several appellate courts held that these arrangements weren’t subject to antitrust regulation.

Patent litigation reached record levels in 2012, with more lawsuits in almost all industries, reports Reuters.