European Commission fines 9 pharma firms, including Ranbaxy

Nine drugmakers, including Denmark's Lundbeck (LUN.CO) and India's Ranbaxy (RANB.NS), were fined a total of 146 million euros by EU antitrust regulators on Wednesday for blocking the supply of a cheaper anti-depressant medicine to the market.

The punishments follow a 2009 report by the European Commission on the pharmaceutical sector, which said "pay-for-delay" deals lead to consumers paying as much as 20 percent more for their medicines.

The EU action came two days after the U.S. Supreme Court said that U.S. regulators could challenge deals between brand-name drug companies and generic rivals because of the higher consumer costs.

Pay-for-delay agreements involve brand-name firms paying generic companies not to deliver versions of their drugs, which usually cost a fraction of the original medicine, to market, although the issue is also complicated by patent ownership.

In this case, Lundbeck was accused of paying other companies to have them delay delivering a generic version of its anti-depressant medicine citalopram to the market. Reuters first reported the fines on June 3.

"Agreements of this type directly harm patients and national health systems, which are already under tight budgetary constraints," said EU Competition Commissioner Joaquin Almunia.

"The Commission will not tolerate such anticompetitive practices."

The European Commission, which acts as competition regulator across the 27-member European Union, handed Lundbeck the largest fine totalling 93.8 million euros. As a result, Lundbeck cut its guidance for operating profits this year.

The Commission fined Germany's Merck KGaA (MRCG.DE) 21.4 million euros and handed a further 7.77 million euro fine jointly to Merck and its former subsidiary Generics UK, which is now owned by U.S. generic drugmaker Mylan (MYL.O).

The other penalised companies were Arrow, Resolution Chemicals, Xellia Pharmaceuticals, Alpharma - which is now part of Zoetis Products LLC, A.L. Industrier and India's No. 1 pharmaceutical company Ranbaxy (RANB.NS).

The Commission said the generic companies agreed with Lundbeck in 2002 not to enter the market in return for substantial payments, with internal company documents referring to forming "a club" and "a pile of $$$" to be shared.

It said Lundbeck also bought generics' stock and destroyed it. Lundbeck said it would appeal the EU decision to the courts.

The EU competition authority has two similar cases in the pipeline, involving Israel's Teva (TEVA.TA), French drugmaker Servier, Johnson & Johnson (JNJ.N) and Novartis (NOVN.VX).

Brand name companies have defended "pay-for-delay" deals in large part to protect patents and avoid costly litigation.