The pharmaceutical industry under the sunlight of the French jurisdictions
Catherine Robin and Johanna Guerrero
Two commercial practices in the pharmaceutical field to be noted: the first one illustrates a commercial strategy that leads to criminal fines; the second one shows that a protective commercial policy is not automatically an abuse of a dominant position.
Failure to comply with the French “anti-cadeaux” mechanism:
URGO Group sentenced to 6,6 million euros
The URGO Group has been sentenced to 6,6 million euros for failure to comply with the French legal “anti-cadeaux” mechanism1.
Through its legal power of investigation, the French economic administration discovered illegal practices committed by the Urgo Group within 2015 and 2021, on the French market. The manufacturer distributed gifts to the pharmacists who bought its products or waived to have a discount on the purchase price, infringing the provisions of the French Code de la santé publique. Through this behaviour, the Urgo Group increased its profits and its market shares.
In addition to the confiscation of more than 5,4 million euros, fines totalling 1,125 million euros were imposed on the Urgo Group, in the context of a procedure of prior recognition of guilt2.
The French economic administration assessed the fraud to 55 million euros and continues to investigate the pharmacists involved in the illegal practices.
Main rules
Published in 1993 and integrated in the French Code de la santé publique (Art. 1453-3 and seq.) the French anti-gifts rules implement an anti-corruption system to protect the independence of the actors of the Health sector. These rules provide a framework for benefits offered to healthcare professionals by manufacturers and prohibits, in particular:
- healthcare professionals from receiving benefits in cash or in kind, in any form whatsoever, directly or indirectly, from manufacturers;
- manufacturers from offering or promising benefits in cash or in kind in any form whatsoever, directly or indirectly, to healthcare professionals.
Under these rules, both pharmacists and manufacturers may be sued and sentenced by imprisonment and fines. Additional penalties such as temporary or permanent ban on practicing, confiscation of the gifts or disciplinary sanctions may also be imposed.
Cancellation of the record fine imposed on Novartis, Roche and Genentech for denigrating a “competitor” alleged as an abuse of a dominant position
In 2020, the French Competition Authority fined Novartis, Roche and Genentech 440 million euros for abusing their collective dominant position on the French market3.
The Authority blamed these laboratories for “abusive practices” to preserve sales of the drug Lucentis, prescribed for the treatment of age-related macular degeneration (“AMD”), to the detriment of a product thirty times less expensive, Avastin.
Following the development of the use of Avastin, an anti-cancer drug that was found to have positive effects in treating AMD patients, but which did not have a marketing authorization (“MA”) to treat AMD, the laboratories Novartis and Roche had adopted, between 2008 and 2013, “blocking” practices condemned by the Authority that consisted, in particular, in:
- a global and structured communication campaign tending to discredit ophthalmologists,
- an alarmist and misleading message to the French public authorities.
However, the Cour d’appel of Parisoverturned this decision and ruled that no anti-competitive practice had been established against Novartis, Roche and Genentech (February 16, 2023, No. 20/14632).
The Court distinguished between two periods: before and after the entry into force of the “Bertrand” Law in 2011 (adopted following the Mediator scandal), which restricts the use of non-approved drugs.
With regard to the practices performed for the period prior to this law, the Court found that the speech of the laboratories lacked “neither moderation nor caution” and that it was neither alarmist nor misleading. No eviction behaviour on the part of the laboratories was therefore characterized.
Regarding the practices that took place after the Bertrand Law came into force, according to the Court, Avastin had to be considered as being off the market for the treatment of AMD. As a result, the laboratories could not be accused of any eviction behaviour since these drugs could not be considered as competitor products.
Consequently, the Court cancelled the €440 million fine imposed by the French Competition Authority against these laboratories.
The Alerion Team in charge of Distribution and Commercial Contracts, Catherine Robin and Johanna Guerrero, is at the disposal of the French and foreign companies to draft and organise their commercial relationships.
Catherine Robin, Partner and Johanna Guerrero, Associate
[1] DGCCRF press release from January 27, 2023
[2] TJ Dijon, January 23, 2023
[3] Decision 20-D-11 of September 9, 2020