AGCM

PRESS RELEASE

Drugs: Pfizer sanctioned with 10.6 million euro fine for abuse of dominant position

Exclusionary strategy used to obstruct and slow the entry of generic medicines for glaucoma. 14 million in lost savings for the National Health Service

In a meeting on 11^th January 2012, the Autorità Garante della Concorrenza e del Mercato resolved that the Pfizer group, a multinational company in the pharmaceuticals sector, abused its dominant position in the market for commercializing glaucoma medicines based on the active ingredient latanoprost through the application of a complex strategy designed to obstruct the entry of generic drugs into that market.

The Antitrust, which sanctioned the group with a 10.6 million euro fine, also ordered the cessation of the unlawful practice.

The delayed entry of generic drugs cost the National Health Service, which reimburses patients for glaucoma medicines, about 14 million euros in terms of lost savings. The market presence of the manufacturers of equivalent drugs, in fact, led to an immediate drop in prices, which were essentially cut in half.

The investigation was triggered by a report received from Ratiopharm Italia, which has an interest in producing the generic drug, and by a separate report from the European Generic Medicines Association.

The documents gathered by Authority offices revealed the existence of a complex strategy that Pfizer, the holder of 60% of the market of reference, used in defense of Xalatan, a global leader in glaucoma medicines and a flagship product for the company. The main purpose of the practices was to protect its market share from the entry of equivalent drugs subsequent to the expiration of patent protection, which was set to occur in September 2009. Pfizer's strategy consisted in artificially prolonging this protection from September 2009 to July 2011 and then to January 2012, thus bringing it in line with the dates in effect for other European Countries. Generic drug manufacturers found themselves in an uncertain legal climate with respect to the possibility of commercializing equivalent specialty drugs based on latanoprost. Pfizer further aggravated this uncertainty by presenting generic drug manufacturers with numerous warnings concerning an administrative and civil dispute that would demand large amounts of compensation should the generic medicines be commercialized prior to the new July 2011 expiration date for Xalatan patent protection.

The result of this strategy was that the first market entry was not possible until May 2010, with the last operators entering the market more than one and a half years after patent expiration.

According to industry data presented by Pfizer itself, the delayed entry of the manufacturers of generics gained the company a seven-month extension of its monopolistic profits, which amounted to approximately 17 million euros (based on the market share gained by generic manufacturers during the first seven months of market entry).

Thanks to its strategy, Pfizer managed to: 1) increase the effective market entry costs for the manufacturers of generic drugs; 2) delay the market entry of Xalatan-equivalent specialty drugs by at least 7 months; 3) maintain the de facto exclusive commercialization of medicines based on latanoprost even after patent coverage had expired; 4) cause an estimated 14 million euros in lost savings by the NHS. These elements led the Authority to classify the sanctioned competitive violation as very serious.

Rome – 17^th January 2012