Australia’s competition watchdog has failed to convince a Federal Court judge that a strategy employed by pharmaceutical company Pfizer, to enter the market for generic products upon expiry of its patent covering blockbuster cholesterol-lowering drug LIPITOR, constituted an illegal misuse of market power, or ‘exclusive dealing’: Australian Competition and Consumer Commission v Pfizer Australia Pty Ltd [2015] FCA 113.From the year 2000, when it acquired Warner Lambert LLC, Pfizer was the owner of an Australian patent protecting the drug atorvastatin, and the exclusive supplier of the drug to the Australian market under the brand name LIPITOR. The patent expired on 18 May 2012. However, Pfizer faced initial limited generic competition from 19 February 2012, from which date Ranbaxy Australia Pty Ltd was able to supply atorvastatin to the Australian market under the terms of a settlement agreement reached with Pfizer in earlier proceedings.
Pfizer’s internal modelling indicated that the expiry of the patent, and the consequent entry of generic competition to the market, would have a significant impact on revenues. A 2009 estimate suggested that the value of sales of LIPITOR would fall from $771 million in 2011 (i.e. that last full year before patent expiry) to just $70 million in 2015.
Pfizer therefore devised a strategy according to which it would produce its own generic (i.e. ‘unbranded’) atorvastatin, and that would enable it to leverage the final year or so of the market exclusivity, which it enjoyed as a result of its patent rights, into a form of ‘loyalty scheme’ that would encourage pharmacies to stock the Pfizer generic product in preference to the products of other generic suppliers.
The Australian Competition & Consumer Commission (ACCC) alleged that Pfizer’s scheme involved a misuse of the market power it enjoyed during the term of its patent, contrary to section 46 of the Competition and Consumer Act 2010 (‘CCA’), as well as exclusive dealing contrary to section 47 of the CCA, and commenced proceedings against Pfizer in the Federal Court of Australia.
The case was heard over 14 days in October 2014. The court (Justice Flick, who also decided the MPEG LA v Regency Media case at first instance, in which he was soundly rolled on appeal) has now handed down its decision, finding that the ACCC failed to establish that Pfizer had acted contrary to section 46 or 47 of the CCA, and thus that Pfizer’s strategy is not contrary to Australian competition law.
Tags: Australia, Competition law, Pharmaceuticals
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