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TWN Info Service on Intellectual Property Issues (Apr07/01) 10 April 2007 Thailand’s issuing of three compulsory licences in the last few months to enable access to more affordable generic medicines was hailed as a major milestone by many health-related organisations around the world and was also seen by experts as a legally valid measure under international and national law. However, despite repeated attempts by the Thai government to explain (1) the process it undertook to issue the licences and the rationale for issuing the licences, showing that the licences would not affect the profits of the multinational companies, the companies have tried to use many methods to undermine the measures taken by the Thai authorities. Less publicised is the fact that some developed countries are also taking measures to provide cheaper medicines to their people. And these measures have not attracted such negative press coverage. Recently Italy took measures to reduce the costs of medicines by introducing as early as possible competition (from generic medicines) into the market. Italy’s Competition Authority has in the recent years compelled pharmaceutical companies to issue licences to generic competitors without any provision for royalty to remedy the abuse by a company of its dominant position in the market. The Italian Competition Authority decided at its meeting on 21 March, 2007 that the Merck Group will be obliged to grant free licences to allow the manufacture and sale in Italy of the active ingredient Finasteride and related generic drugs, two years before the 2009 expiration of the Supplementary Protection Certificate provided in European Union law. Finasteride is used in the treatment of hypertrophy of the prostate as well as male pattern hair loss. The decision brought to a close an investigation launched in February 2005 into the possible abuse of a dominant position by the companies Merck & Co. Inc. and Merck Sharp & Dohme (Italia). According to a press release dated 26 March 2007 (2), the “corporation's commitment to remove an obstacle to the production in Italy of Finasteride and a generic version of related pharmaceuticals, among the most important drugs used in the treatment of hypertrophy of the prostate, will encourage greater competition in this market and may lead to significant reductions in retail prices and in costs for the National Health System in Italy and in other European countries.” It further states that “This ruling needs to be seen in the wider context of the Authority's efforts to encourage businesses to adopt commitments aimed at improving market conditions, competition and consumer choice. In the pharmaceuticals sector in particular the Antitrust Authority's initiative is aimed at encouraging more widespread use of generic products, taking advantage of notifications from the Italian Office of Patents and Trademarks within the Ministry of Economic Development which are based on regulations governing patents in this sector.” Previously in two other cases relating to pharmaceuticals, the Italian Competition Authority also reached similar conclusions. a) GSK product used to treat Migraine headaches (3) On 23 February 2005, the Competition Authority begun investigating (under Article 82 of the European Community Treaty) the alleged anti-competitive behaviour of Glaxo Group Limited, when it refused to grant a licence to Fabbrica Italiana Sintetici SpA (FIS) a chemical company that produces active ingredients, for the manufacturing in Italy of sumatriptan succinate and for the commercialisation of that ingredient in other EC countries where the relevant patent has or will have expired. It was decided that Glaxo was abusing its dominant position by refusing to grant third parties the licence to produce the sumatriptan succinate active ingredient (although the patent was to expire soon). If a licence is granted by Glaxo, the generic product would be able to enter the market as soon as the patent expired. However if no licence is granted, then the generic company would take longer to enter the market considering that the proceedings to obtain authorisation to commercialise pharmaceutical products in EU member states normally takes a long time. According to L.Vasques, Italian law provides that third parties wishing to produce and commercialise medical products outside Italy using products that are still under patent protection in Italy (but not in other EU countries), may start to negotiate with the patent owner in proceedings initiated before the Ministry of Productive Activities to obtain an export licence. According to the law (DM 10/2002) the request for the export licence should be submitted to the Italian Patent and Trademark Office. If no agreement is reached among the parties concerned, the Ministry shall help the parties reach an agreement. However if the intervention does not lead to any positive result, the Ministry will transmit a copy of the file of the proceedings to the Competition Authority. Such a settlement was not accepted by Glaxo, which led to investigation by the Competition Authority. Glaxo however took remedial actions, which led the Competition Authority to state that Glaxo’s remedial actions put a stop to improper conduct, preventing delays in bringing generic medicines to market. It is important to note that Glaxo’s original refusal to deal was seen by the Authority as an abuse of dominant position. The Authority stated that a refusal to deal of a patent holder is illegal if the holder is a dominant firm and if the refusal could impede or delay access to a competitor, even one in a different geographic market. b) Merck's imipenem-cilastatin (4) Merck in Italy had an industrial patent giving it exclusive rights to the sale of a pharmaceutical product “Tienam” (an antibiotic intended for the treatment of particularly serious infections, most often contracted in hospitals) based on the active ingredient Imipenem Cilastatina. In 2005 the Competition Authority found evidence of possible abuse of dominant position by Merck as it refused to grant a licence for the production in Italy of Imipenem Cilastatina to be exported for the manufacture of generic pharmaceuticals in countries not covered by patents.The Italian Competition Authority decided to order an interim measure on Merck & Co. Inc., a company of the pharmaceuticals group Merck based on EU competition law. Its decision obliges Merck to allow by granting a licence, the manufacture and warehousing in Italy of the active ingredient Imipenem Cilastatina. This will permit chemical companies having plants in Italy to be already in a position, at the completion of the proceedings, to export the product in question to European countries where Merck has already lost all patent rights, in advance of the arrival in those markets of generic drugs which will compete with Merck’s Tienam product. These are cases in which the Italian Competition Authority had to assess the abusive nature of unjustified refusals to grant licences by the patent holder, that were necessary for the production of active ingredients in quantities sufficient to allow wide distribution of generic drugs, to the benefit of competition and consequently of consumers. Best Wishes NOTES (1) February 2007. Thai Ministry of Public Health and National Health Security Office White Paper Facts and Evidences on the 10 Burning Issues Related to the Government Use of Patents on Three Patented Essential Drugs in Thailand. See http://www.cptech.org/ip/health/c/thailand/thai-cl-white-paper.pdf (2) Press Release A364 No. 19 Pharmaceuticals: Antitrust Authority Rules Merck must grant free licences for the active ingredient Finasteride. Press releases dated 03/26/2007. Available here (3) Vasques, L., “Dominance in Italy” Studio Legale Agnoli Bernardi e Associati available at http://www.globalcompetitionreview.com/ear/italy_dominance.cfm (4) Press Release A 364 No. 26 Pharmaceutical Antitrust Obliges Merck to License Manufacture of the Antibiotic Imipenem Cilastatina dated 21/6/2005 available here
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