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Pharmaceutical Antitrust 2014 in 31 jurisdictions worldwide Contributing editor: Marleen Van Kerckhove Published by Getting the Deal Through in association with: Anderson Mo¯ri & Tomotsune Arzinger AZB & Partners Bech-Bruun bnt attorneys-at-law Caiado Guerreiro & Associados, RL Calavros & Partners Law Firm CMS, Russia ELI˙G, Attorneys-at-Law Fasken Martineau Fortak & Karasin´ski Legal Advisors LLP Hammarström Puhakka Partners, Attorneys Ltd Hogan Lovells Intuity Kim & Chang King & Wood Mallesons Legal and Economic Avantgarde SC Martínez Lage, Allendesalazar & Brokelmann McDermott Will & Emery Studio Legale Associato Meyerlustenberger Lachenal Avocats – Attorneys at Law Oppenhoff & Partner Pavlov and Partners Law Firm in cooperation with CMS Reich-Rohrwig Hainz Souza, Cescon, Barrieu & Flesch Advogados Tadmor & Co Attorneys at Law Torres, Plaz & Araujo Torys LLP CONTENTS Pharmaceutical Antitrust 2014 Belarus 3 France 56 Alexander Liessem Christophe Hénin and Anne Servoir Contributing editor: bnt attorneys-at-law Intuity Marleen Van Kerckhove Arnold & Porter LLP Brazil 8 Germany 65 Fabíola Carolina Lisboa Cammarota de Maxim Kleine and Daniel Dohrn Abreu, Joyce Midori Honda and Oppenhoff & Partner Luciano Inácio de Souza Getting the Deal Through is delighted to Souza, Cescon, Barrieu & Flesch Advogados Greece 73 publish the fully revised and updated Despina Samara seventh edition of Pharmaceutical Antitrust, Bulgaria 15 Calavros & Partners Law Firm a volume in our series of annual reports, Dessislava Fessenko which provide international analysis in Pavlov and Partners Law Firm in cooperation India 79 key areas of law and policy for corporate with CMS Reich-Rohrwig Hainz counsel, cross-border legal practitioners and Samir R Gandhi, Kamya Rajagopal and Karan Vir Khosla business people. Canada 19 AZB & Partners R Jay Holsten and Dany H Assaf Following the format adopted throughout Torys LLP the series, the same key questions are Israel 84 answered by leading practitioners in each David E Tadmor, Shai Bakal and Ido Cnaan of the 31 jurisdictions featured. New China 25 Tadmor & Co Attorneys at Law jurisdictions this year include Israel, Poland Susan Ning and Zhifeng Chai King & Wood Mallesons and Spain. Italy 90 Veronica Pinotti, Martino Sforza and Nicolò Every effort has been made to ensure that Denmark 31 di Castelnuovo matters of concern to readers are covered. Klaus Ewald Madsen, Jesper Kaltoft and McDermott Will & Emery Studio Legale However, specific legal advice should always Mark Gall Associato be sought from experienced local advisers. Bech-Bruun Getting the Deal Through publications are Japan 97 updated annually in print. Please ensure Estonia 37 Yusuke Nakano and Junya Kubota you are always referring to the latest print Aet Bergmann Anderson Mo¯ri & Tomotsune edition or to the online version at www. bnt attorneys-at-law GettingTheDealThrough.com. Korea 103 European Union 42 Hwa Soo Chung and Kyungsun Kyle Choi Getting the Deal Through gratefully Maxim Kleine, Daniel Dohrn and Julian Kim & Chang acknowledges the efforts of all the Grosse contributors to this volume, who were Oppenhoff & Partner chosen for their recognised expertise. Latvia 109 Getting the Deal Through would also like to Theis Klauberg and Renaˉrs Gasuˉns extend special thanks to contributing editor Finland 50 bnt attorneys-at-law Klaus Nyblin and Tuomas Saraste Marleen Van Kerckhove at Arnold & Porter Hammarström Puhakka Partners, Attorneys LLP for her continued assistance with this Ltd volume. Getting the Deal Through London April 2014 Publisher The information provided in this publication is Gideon Roberton general and may not apply in a specific situation. [email protected] Legal advice should always be sought before taking any legal action based on the information Subscriptions provided. This information is not intended to Rachel Nurse create, nor does receipt of it constitute, a lawyer– [email protected] client relationship. The publishers and authors Published by accept no responsibility for any acts or omissions Business development managers Law Business Research Ltd contained herein. Although the information George Ingledew 87 Lancaster Road provided is accurate as of April 2014, be advised [email protected] London, W11 1QQ, UK that this is a developing area. Tel: +44 20 7908 1188 Alan Lee Fax: +44 20 7229 6910 Printed and distributed by [email protected] © Law Business Research Ltd 2014 Encompass Print Solutions No photocopying: copyright licences do not apply. Tel: 0844 2480 112 Dan White First published 2008 [email protected] Seventh edition ISSN 1757-6288 www.gettingthedealthrough.com 1 CONTENTS Lithuania 115 South Africa 145 Ukraine 172 Yvonne Goldammer Stephen Langbridge Timur Bondaryev and Svitlana Malynovska bnt attorneys-at-law Fasken Martineau Arzinger Mexico 121 Spain 152 United Kingdom 179 León Ricardo Elizondo Helmut Brokelmann, Mariarosaria Ganino Angus Coulter and Tim Capel Legal and Economic Avantgarde SC and Claudia Fernández Hogan Lovells Martínez Lage, Allendesalazar & Brokelmann Poland 127 United States 187 Sławomir Karasin´ski Switzerland 159 Robert F Leibenluft, Leigh L Oliver and Fortak & Karasin´ski Legal Advisors LLP Simon Holzer, Pranvera Këllezi, Christophe Lauren E Battaglia Rapin and Kilian Schärli Hogan Lovells US LLP Meyerlustenberger Lachenal Avocats – Portugal 133 Attorneys at Law Joana Gomes dos Santos Venezuela 195 Caiado Guerreiro & Associados, RL Juan Domingo Alfonzo, Alejandro Gallotti Turkey 165 and Maritza Quintero Gönenç Gürkaynak and K Korhan Yıldırım Torres, Plaz & Araujo Russia 139 ELI˙G, Attorneys-at-Law Maxim Boulba, Elena Andrianova and Maria Ermolaeva CMS, Russia 2 Getting the Deal Through – Pharmaceutical Antitrust 2014 bnt attorneys-at-law BELARUS Belarus Alexander Liessem bnt attorneys-at-law Pharmaceutical regulatory law Competition legislation and regulation 1 Which legislation sets out the regulatory framework for the 4 Which legislation sets out competition law? marketing, authorisation and pricing of pharmaceutical products, The competition law in Belarus is regulated by the following legal including generic drugs? acts: The legal basis for regulating the marketing, authorisation and pric- • Customs Union Treaty on Uniform Competition Principles and ing of pharmaceutical products in Belarus comprises: Rules of 9 December 2010 (NRLA 12 January 2011, N 3/2642); • Act on Drugs of 20 July 2006 (National Register of Legal Acts • Presidential Edict on Reinforcement of State Antimonopoly (NRLA) 2 August 2006, N 122, 2/1258); Regulation and Control of 27 February 2012 (NRLA 5 March • Act on Public Health of 18 June 1993 (NRLA 25 January 2002, 2012, N 26, 1/13362); N 10, 2/840); • Act on the Oppression of Monopolistic Activity and on • Presidential Edict on Setting Prices for Drugs of 11 August 2005 Competition Development of 12 December 2013 (NRLA 17 (NRLA 17 August 2005, N 126, 1/6687); December 2013, N 2/2092) (the Competition Act); • Presidential Edict on Price Regulation in the Republic of Belarus • Governmental Regulations on Ministry of the Economy Issues of 25 February 2011 (NRLA 3 March 2011, N 26, 1/12374); of 29 July 2006 (NRLA 21 August 2006, N 130, 5/22734); • Governmental Regulations on Concept of Drugs Provision • Regulations of the Ministry of Entrepreneurship and Investments in Belarus of 13 August 2001 (NRLA 27 August 2001, N 79, (MEI) on Detection of Monopolistic Prices of 28 April 2000 5/7393); (NRLA 2 June 2000, N 51, 8/3471); • Governmental Regulations on Drugs Registration of 2 • Regulations of the MEI on the Register of Commercial September 2008 (NRLA 10 September 2008, N 213, 5/28269); Organisations Dominating on Goods Markets of 7 July 2000 • Presidential Edict on Licensing of Some Activities of 1 September (NRLA 16 August 2000, N 74, 8/3751); 2010 (NRLA 8 September 2010, N 212, 1/11914); • Regulations of the MEI on Reorganisation of Commercial • Regulations of the Ministry of Health on Advertising of Drugs Organisations Dominating on Goods Markets of 27 March of 23 July 2013 (NRLA 26 August 2013, N 8/27822); and 2000 (NRLA 28 April 2000, N 40, 8/3289); • Regulations of the Ministry of Health on Pricing of Drugs • Regulations of the MEI on Oppression of Anti-competitive Produced by Belarusian Companies of 7 September 2012 Agreements on Prices of 28 April 2000 (NRLA 2 June 2000, N (NRLA 11 October 2012, 8/26444). 51, 8/3470); • Regulations of the Ministry of the Economy on Handling Applications Concerning Breaches of Antimonopoly Legislation 2 Which bodies are entrusted with enforcing these regulatory rules? Regarding Unfair Competition of 17 April 2006 (NRLA 15 The Ministry of Health is entrusted with enforcing these regulatory May 2006, N 73, 8/14358); rules. • Regulations of the Ministry of the Economy on Handling Applications Concerning Assertion of Compliance of Agreements 3 Which aspects of this legislation are most directly relevant to the Restricting Competition with Antimonopoly Legislation of 10 application of competition law to the pharmaceutical sector? April 2006 (NRLA 12 May 2006, N 72, 8/14343); • Regulations of the Ministry of the Economy on the Prevention Previously, mark-up barriers concerning drugs produced in Belarus of Antitrust Legislation Breaches of 17 April 2006 (NRLA 17 or imported from other countries were set forth by the Presidential May 2006, N 74, 8/14376); and Edict on Pricing. In 2011 a new Presidential Edict on price regula- • Regulations of the Ministry of the Economy on the Determination tion changed price regulations to a great extent. At present, mark-up of the Dominant Position of the Commercial Organisations on barriers still apply to drugs produced by residents of Belarus and are Goods Markets of 17 October 2002 (NRLA 4 November 2002, included in the list of drugs with regulated prices. This list is specified N 122, 8/8695). by governmental regulations. The prime costs of drugs produced by residents of Belarus are set by manufacturers and should not exceed the maximum prime costs set by the Regulations of the Ministry of 5 Are there guidelines on the application of competition law that are Health on Drugs Pricing. directly relevant to the pharmaceutical sector? Mark-up barriers are cancelled for drugs imported from other Currently, none exist. Regarding the pharmaceutical sector, as well countries or those not included in the list of drugs with regulated as other sectors, the competition law rules in Belarus are uniformly prices. applied. www.gettingthedealthrough.com 3 BELARUS bnt attorneys-at-law 6 Which authorities investigate and decide on pharmaceutical publicly available information on whether such inquiries have been mergers and the anti-competitive effect of conduct or agreements conducted in the pharmaceutical sector. in the pharmaceutical sector? The pricing policy departments (PPD) of the Ministry of the 10 Is the regulatory body for the pharmaceutical sector responsible Economy and regional (Minsk city) executive committees are for sector-specific regulation of competition distinct from the authorised to exercise control over mergers and any anti-competitive general competition rules? conduct. According to article 9 of the Competition Act, the consent No specific mechanism exists. The Ministry of Health is not entitled of the PPD is required for establishing holding companies or asso- to establish sector-specific regulation of competition distinct from ciations of commercial organisations, and mergers and acquisitions the general competition rules. are subject to clearance by the PPD (eg, statutory consolidations or if the company covering more than 35 per cent of a specific market acquires shares of a company appearing in the same market). The 11 Can antitrust concerns be addressed with industrial-policy type Eurasian Economic Committee is responsible for investigating and arguments, such as strengthening the local or regional research enforcing the competition rules of the Customs Union if a violation and development activities? is made on transboundary markets (see question 14). Support of scientific and innovation activity is designated as one of the preferential areas of socio-economic policy in Belarus. Tax 7 What remedies can competition authorities impose for exemptions, exemptions from customs duties and other prefer- anti-competitive conduct or agreements by pharmaceutical ences are applied to the companies performing research and devel- companies? opment (including the Presidential Edict on Encouragement of the Foundation and Development of Productions Based on Innovative Concerning the rules established by the respective above-mentioned and High Technologies of 8 July 1996). Antitrust concerns may be Regulations of the ME on the Prevention of Antitrust Legislation raised in the event of abuse by innovators of their dominant position Breaches in case of Antitrust Violation, the PPD may in given cases or antitrust violations specified by the Competition Act. demand that an offending entity stop the relevant illegal activity (ie, cancel an anti-competitive agreement, eliminate causes affecting pricing, and others). If the offender does not obey, the PPD is entitled 12 To what extent do non-government groups play a role in the to hold it responsible under the Administrative Code by imposing a application of competition rules to the pharmaceutical sector? penalty (ranging from €195 to €488, depending on the offence). In Non-governmental groups do not have any additional rights in com- the case of a gross violation of antitrust legislation, an offender may parison to those granted to other companies. be held responsible under the Criminal Code (eg, predatory pricing, competition restriction). The Presidential Edict on Reinforcement Review of mergers of State Antimonopoly Regulation and Control set forth additional penalties for violation of antitrust laws. Thus, for abuse of dominant 13 To what extent are the sector-specific features of the position on the market a penalty ranging from €195 to €977 may be pharmaceutical industry taken into account when mergers imposed on a responsible company’s official. A penalty of up to 10 between two pharmaceutical companies are being reviewed? per cent of the company’s turnover for the year previous to the year The general rules on reviewing mergers by antitrust authorities are when the violation was disclosed may be imposed on the company. established by the Competition Act. They are applicable in any sec- A penalty is applied to the turnover earned from the sale of goods tor of the current economy, including the pharmaceutical industry, on the market where the violation was made. The same penalty is without regulating any sector-specific feature. set forth for conclusion and execution of antimonopoly agreements, unfair competition and coordinated actions. Additionally, Customs Union Treaty on Uniform Competition 14 How are product markets and geographic markets typically Principles and Rules of 9 December 2010 between Belarus, Russia defined in the pharmaceutical sector? and Kazakhstan) defines penalties for breach of its provisions in the The pharmaceutical legislation does not define product markets transboundary markets (involving the territories of two Customs or geographical markets. However, the competition rules and the Union member states). In the case of unfair competition by legal antitrust law contain such definitions. According to article 1 of the entities a fine ranging from €2,083 to €10,417 can be imposed; com- Competition Act, a product market is defined as the area of cir- pany’s executives can be fined from €280 to €416. culation of a certain commodity having no substitutes or fungible commodities within the territory of Belarus; or part of its territory determined on the basis of the potential spending power of a buyer 8 Can private parties obtain competition-related remedies if they to purchase a commodity in a certain territory and absence of this suffer harm from anti-competitive conduct or agreements by power out of that mentioned area. Apart from that, the geographical pharmaceutical companies? What form would such remedies markets are usually defined as state markets including the territory typically take and how can they be obtained? of Belarus; and local markets including certain districts (city, town, Belarusian antitrust legislation does not provide any specific reme- village, district, etc). Furthermore, geographical borders of the mar- dies to private parties suffering harm from anti-competitive conduct ket can also be determined by economic, technological or adminis- or agreements. However, the general rules of compensation set forth trative barriers obstructing consumers from buying products within in the Civil Code have to be applied. a particular territory. On 1 January 2012 the Customs Union Treaty on Uniform 9 May the antitrust authority conduct sector-wide inquiries? If so, Competition Principles and Rules came into force. The Treaty reg- have such inquiries ever been conducted into the pharmaceutical ulates competition of Belarusian, Russian and Kazakh companies sector and, if so, what was the main outcome? on the transboundary markets – the markets in which geographic boundaries cover territories of at least two member states (Belarus, Under the Competition Act, antitrust authorities may conduct Russia or Kazakhstan). sector-wide inquiries. Besides a principle of public disclosure of information about activities of antitrust authorities will be intro- duced in Belarus from 1 July 2014. Until now there has been no 4 Getting the Deal Through – Pharmaceutical Antitrust 2014 bnt attorneys-at-law BELARUS 15 In what circumstances will a product and geographical overlap Parties to the agreement are free to submit it to the PPD on order between two merging parties be considered problematic? to find out whether this agreement complies with the antimonopoly Antitrust authorities may observe mergers, acquisitions, reorganisa- legislation or not. tions and liquidations of commercial organisations as far as this may lead to dominance within the specific market. The extent of control 20 Describe the nature and main ramifications of any cartel is not defined by legislation but, in consideration of article 9 of the investigations in the pharmaceutical sector. Competition Act, various regulations with reference to transactions There have not been any cartel investigations in the pharmaceutical in shares mast be adhered to. Thus, in the event of stock (share) sector as of yet. purchase a prior consent of the PDD is required if a company cov- ers more than 35 per cent of a specific product market, or the asset value of one of the contracting parties is more than 100,000 basic 21 To what extent are technology licensing agreements considered units (approximately €972,300 at the exchange rate of the National anti-competitive? Bank on 19 February 2014), or a contracting party’s annual revenue Under the Governmental Regulations on Registration of Licensing is more than 200,000 basic units (approximately €1.9 million). In Agreements, Cession and Pledge of Intellectual Property Rights general, such transactions may be invalidated by court decisions. Agreements and Franchise Agreements of 21 March 2009, licensing However, a product and geographical overlap between two merg- agreements have to be registered in the ‘State register of licensing ing parties is not considered to be problematic. In general, there is agreements, cession and pledge of intellectual property rights agree- a single-case decision to make, namely, to define a merger company ments’, by the National Centre of Intellectual Property. According to as dominant in the specific market or not (see question 26). To con- the legislation that was in effect before the above-mentioned regula- clude, a party is allowed to deal within the market unless and until tion entered into force, the National Centre of Intellectual Property an abuse of its dominant position arises. was entitled to reject a registration if the agreement did not com- ply with the applicable laws, including and in particular antitrust 16 When is an overlap with respect to products that are being law. However, the National Centre of Intellectual Property lost this developed likely to be problematic? competence. Under the regulations the parties to the agreement bear liability for conformity of the agreement with applicable laws, An overlap with respect to pipeline products is not considered to be including antitrust law. problematic. It is an issue in certain cases, for example, if a merger company is defined as market-dominant (see question 26). The party may act on the market unless it starts to abuse its dominant position. 22 To what extent are co-promotion and co-marketing agreements considered anti-competitive? 17 Which remedies will typically be required to resolve any issues According to article 13 of the Competition Act, co-promotion and that have been identified? co-marketing agreements are considered anti-competitive if they have the purpose or effect of restraining competition, or a company There are no regulations covering the remedies to be applied in such that is not acting within the same market and not a member of a cases. Basically, if antitrust concerns are raised, the general regula- group of companies is trying to coordinate the actions of other legal tion relating to remedies will be applied (see question 8). entities (eg, agreements leading to market allocation based on ter- ritorial principles, types and scope of transactions, types and scope 18 Would the acquisition of one or more patents or licences be of products, consumers and others). This issue must be followed by subject to merger reporting requirements? If so, when would that the PPD of the Ministry of the Economy in any case. be the case? The acquisition of one or more patents or licences is not subject to 23 What other forms of agreement with a competitor are likely merger reporting requirements per se. to be an issue? Can these issues be resolved by appropriate confidentiality provisions? Anti-competitive agreements According to the Regulations of the MEI on Oppression of Anti- 19 What is the general framework for assessing whether an Competitive Agreements on Prices, an agreement with a competi- agreement or practice can be considered anti-competitive? tor is likely to be an anti-competitive issue if its existence obviously causes restrictions on other companies to enter the market, even The general framework for assessing whether an agreement or though there is an unsatisfied demand and quite a high level of prof- practice can be considered anti-competitive is established by the itability; restrictions for other companies willing to enter a respective Competition Act (article 13). Thus incorporation (or participa- market to access input materials; or restrictions for other compa- tion in existing associations) and agreements between commercial nies to access a distribution network. If an agreement is considered organisations are considered void if the following circumstances are anti-competitive, the PPD sends the potential offender an obligatory present or result from these: demand to rescind the anti-competitive agreement and to implement • market allocation (based on territory, types of transactions, sorts restitution in integrum. The basic confidentiality provisions applied of goods, consumers); in such cases are regulated by article 140 of the Civil Code and the • barriers for other legal entities to enter the market; Law on Commercial Secrets of 5 January 2013. The parties must • arbitrarily raising, reduction or restraint of prices; define the list of information considered confidential in written • unauthorised limitation of production and control over sale of form. However, under article 11 of the Law on Commercial Secrets goods; or parties to the agreement are bound to submit corresponding confi- • refusals to enter into agreements with certain sellers or buyers. dential information at the request of antitrust authorities. The above-mentioned agreements or economic procedures may be found acceptable by the antimonopoly authority providing they 24 Which aspects of vertical agreements are most likely to raise encourage economic and technical development in Belarus and are antitrust concerns? to the advantage of consumers. Article 13 of Competition Act and the Regulations of the MEI on Oppression of Anti-Competitive Agreements on Prices lay down rules www.gettingthedealthrough.com 5 BELARUS bnt attorneys-at-law of exposure of antitrust agreements and establish criteria to define • force other parties to enter an agreement based on unfavourable whether a vertical agreement violates antitrust rules. Considering terms or deny the conclusion of an agreement if the other party this, a vertical agreement may raise antitrust concerns if: does not accept the unfavourable terms of the contract; • one of the contracting parties dominates the specific market; • enter agreements that restrict the freedom of other parties to set • an agreement limits or may limit competition directly (by resale prices or to define terms of agreement; price maintenance) or indirectly (exchange of information, pro- • enter into agreements restricting production or supplying a duction restraint, application of specific accounting techniques, party with market power to control certain markets; or etc); or • include discriminating conditions in agreements to put the • an agreement prohibits the buyer from entering into similar respective contractor in an unequal position. agreements with the competitors of the seller (excluding the situation when a buyer trades under the seller’s trademark or 27 When is a party likely to be considered dominant or jointly granted any other types of intellectual property). dominant? In deciding whether or not an agreement is anti-competitive, the According to article 5 of the Competition Act, a party is considered PPD considers whether it affects: to be dominant or jointly dominant on a particular market if it has • the business decision-making power of the parties involved; the possibility to influence the market crucially or to impede other • supply in a specific market; and parties from entering the market and its market share is more than • demand and supply correlation. 35 per cent. The dominant position of the party is determined by the PPD of the Ministry of the Economy. Entities considered as domi- If the agreement affects any of the above issues, it is considered anti- nating on the market are registered at the State Register of commer- competitive excluding situations when: cial organisations dominating on goods markets. As the case may • a market share of each party to the agreement is no more than be, the PPD takes the decision based on a market situation. With 15 per cent; reference to this, it is possible to register a party as dominant even if • there is a contract of franchise; or its share is under the respective limit value. • an agreement will encourage economic and technical develop- ment in Belarus. 28 Can a patent holder be dominant simply on account of the patent that it holds? 25 To what extent can the settlement of a patent dispute expose the No, a patent is not a criterion for defining whether a party is domi- parties concerned to liability for an antitrust violation? nant or not. But a holder can be found dominant if the patent is used A patent dispute settlement does not expose the parties concerned for the production of goods and there are no other substitutes. to liability for an antitrust violation unless the rules set forth by the Competition Act are obeyed (see questions 19 and 26). 29 To what extent can an application for the grant of a patent expose the patent owner to liability for an antitrust violation? Anti-competitive unilateral conduct The Patent Act of 16 December 2002 establishes rules of patent- ability of inventions, utility models and industrial designs. According 26 In what circumstances is conduct considered to be anti- to article 2, an invention needs to be novel, appropriate for indus- competitive if carried out by a firm with monopoly or market trial use and have an inventive element. A utility model needs to power? be novel and appropriate for industrial application (see article 3). According to article 12 of the Competition Act, firms with market Finally, an industrial design needs to be novel and original (see arti- power must not: cle 4). Generally patentability is examined by the patent authority in • impede other parties from entering the market; accordance with the respective rules provided by the regulations of • withdraw goods from the market, restrict production or conduct the Committee on Science and Technology on handling the applica- other measures that may cause shortage, a deliberate increase or tions for the grant of the patent. a decline in prices; Alexander Liessem [email protected] Svobody Square 23-85 Tel: +375 17 203 94 55 220030 Minsk Fax: +375 17 203 92 73 Belarus www.bnt.eu 6 Getting the Deal Through – Pharmaceutical Antitrust 2014 bnt attorneys-at-law BELARUS 30 To what extent can the enforcement of a patent expose the patent and importers of drugs may not set prices in any other way than owner to liability for an antitrust violation? is prescribed by the Edict (see question 3). The Regulations of the In cases of disuse or insufficient use of a patent by its holder within a Ministry of Health of 24 June 2005 contain a list of medicines pro- certain term (five years for inventions; three years for utility models duced in Belarus that must be available at any pharmacy. and industrial designs), article 38 of the Patent Act says that any person willing and able to use such patented invention, utility model 34 Has there been an increase in antitrust enforcement in the or industrial design may ask for the issue of a licensing agreement. If pharmaceutical sector in your jurisdiction? If so, please give an the patent holder refuses to conclude an agreement, the other party indication of the number of cases opened or pending and their must claim a compulsory licence. In the case of licensing, the court subject matters. defines the limits for exercising the respective patent as well as con- The pharmaceutical market is highly monopolised and controlled by cerning the amount, terms and methods of payments. The court is the state. According to the information of PPD available there were entitled to refuse enforcement of a patent if the patent holder is able five disputes relating to the pharmaceutical sector submitted to PPD to cause the disuse or the insufficient use of the patent with reason- in 2007–2013. Three of them were brought against governmental able excuse. authorities and a state-owned enterprise for creating barriers for claimants to enter into the Belarusian market and similar antitrust 31 To what extent can certain life-cycle management strategies actions. In all of those cases PPD found governmental authorities expose the patent owner to liability for an antitrust violation? (including the Ministry of Health) guilty of violating competition Life-cycle management strategies may expose the patent owner to law. PPD addressed warning letters to the infringers. The infring- liability for antitrust violation if they are intended to prevent compe- ers reported to PPD about the elimination of unlawful actions. The tition on the market, to put barriers to entry, that is, if this strategy other two disputes dealt with the infringements of trademark rights, may be recognised as anti-competitive in terms of articles 12 and 13 in particular the illegal registration of trademarks. of the Competition Act (see questions 19 and 26). 35 Is follow-on litigation a feature of pharmaceutical antitrust 32 Do authorised generics raise issues under the competition law? enforcement in your jurisdiction? If so, please briefly explain the nature and frequency of such litigation. In general the practice of authorised generics does not raise any issue under competition law as long as basic competition rules provided There is no follow-on litigation principle in Belarusian law. A court by the Competition Act are obeyed (see question 19). is not bound by previous PPD’s decision. In case of violation of competition law the claimant can submit the dispute to PPD or initiate court proceedings. The decision of PPD 33 To what extent can the specific features of the pharmaceutical is legally binding, however, a party to a dispute is entitled to initiate sector provide an objective justification for conduct that would further court proceedings if it does not agree with PPD’s decision or otherwise infringe antitrust rules? if another party refuses to follow the decision. Whereas antitrust legislation prohibits price fixing, market shar- ing and other abusive activities leading to competition restraint, pharmaceutical regulations provide for the reverse. Thus, accord- ing to the Presidential Edict on Setting Prices for Drugs, producers www.gettingthedealthrough.com 7 BRAZIL Souza, Cescon, Barrieu & Flesch Advogados Brazil Fabíola Carolina Lisboa Cammarota de Abreu, Joyce Midori Honda and Luciano Inácio de Souza Souza, Cescon, Barrieu & Flesch Advogados Pharmaceutical regulatory law CMED is responsible for medicine market regulation and for estab- lishing criteria for definition and adjusting of medicines prices. 1 Which legislation sets out the regulatory framework for the marketing, authorisation and pricing of pharmaceutical products, including generic drugs? 3 Which aspects of this legislation are most directly relevant to the application of competition law to the pharmaceutical sector? All companies acting in the pharmaceutical sector are under the supervision of the National Health Surveillance Agency (ANVISA). ANVISA and the Administrative Council for Economic Defence The main legislation that sets out the regulatory framework for the (CADE) have different and independent roles. While ANVISA aims market includes: to ensure the medical safety of health products and services, CADE • Law 5,991/1973, which provides for the sanitary control of is responsible for preserving competition between the players in the drugs, medicines, pharmaceutical inputs and related products; market. Although the sector is under the jurisdiction of a technical • Law 6,360/1976, which controls the register of pharmaceutical body, this does not exempt it from compliance with the antitrust products and issuance of operating licences and permits; rules. Indeed, there is a coexistence of both legal frameworks in • Decree 79,094/1977, which regulates Law 6,360/1976 subjects Brazil. the regulation of medicines, pharmaceutical inputs, drug-related In 2013 CADE and ANVISA executed a cooperation agreement products and others to the National Health Surveillance System; according to which the agencies agreed to cooperate with each other • Law 9,782/1999, which establishes ANVISA; exchanging documents and information, sharing technical reports, • Law 9,787/1999, which disciplines generic drugs; studies and research material, holding meetings and seminars and • Law 6,437/1977, which configures violations to the federal sani- jointly working on the promotion of activities and projects. tary legislation (ie, persons or companies that operate without regulatory permits; restrain inspection of regulatory authorities, Competition legislation and regulation etc), and it also establishes general penalities (ie, warning, seizure of product, etc); 4 Which legislation sets out competition law? • Law 10,742/2003, which establishes the Drug Market The legislation that sets out competition law in Brazil is Federal Law Regulation Chamber (CMED); and 12,529/2011 (the Competition Law), effective since 29 May 2012. • several Resolutions of ANVISA, including RDC 17/2010 (good The Competition Law structured the Brazilian Competition System manufacturing practices); RDC 25/2007 (outsourcing of pro- (SBDC), providing prevention and repression of violations against duction steps, quality-control and storage of medicines); RDC the economic order, and introduced the pre-merger notification sys- 66/2007 (Certificate of Best Practices); and RDC 96/2008 (mar- tem in Brazil. keting, advertising and promotion of medicines). 5 Are there guidelines on the application of competition law that are Finally, CMED, from time to time, issues specific resolutions to directly relevant to the pharmaceutical sector? inform the market regarding new medicine prices and the adjust- In Brazil, there are no specific guidelines that are directly relevant to ment coefficient used for the applicable increase, based on billing the pharmaceutical sector. However, there are two important resolu- information periodically provided by pharmaceutical companies. tions established by CADE that apply to all sectors of the economy: first, Resolution 2/2012, which regulates the pre-merger notification 2 Which bodies are entrusted with enforcing these regulatory rules? of transactions that are reportable according to Law 12,529/2011 ANVISA, under the authority of the Ministry of Health, is the pri- and provides the fast-track analysis of merger filings (on 19 February mary authority for enforcing regulatory rules. It coordinates the 2014, CADE issued a public consultation to inform the general pub- National Health Surveillance System and its main role is to protect lic and receive comments about the proposed changes in Resolution and promote the population’s health by ensuring the sanitary safety 2/2012, which establishes, among other things, the inclusion of an of health products and services. ANVISA is responsible for medi- eligible case for the fast-track procedure), among other relevant mat- cines registration proceedings, issuance of licences and permits and ters for the merger control system in Brazil; and second, Resolution also for establishing regulations applying to the sector. 3/2012, which establishes a list of fields of business activities for ANVISA also monitors drug prices and gives technical support the purpose of the application of fines set forth in article 37 of Law for the definition of drug prices. One of the agency’s divisions is the 12,529/2011 and other measures. Executive Secretariat of the CMED, an interministerial body com- posed of representatives of the State Office and the Ministries of Health, Finance, Justice, Development, Industry and Foreign Trade. 8 Getting the Deal Through – Pharmaceutical Antitrust 2014 Souza, Cescon, Barrieu & Flesch Advogados BRAZIL 6 Which authorities investigate and decide on pharmaceutical activities in the vitamins market with a total fine due of over 15 mergers and the anti-competitive effect of conduct or agreements million reais; and in the pharmaceutical sector? • in 2005, in Administrative Proceeding No. 08012,009088/1999- The Competition Law merged the roles of investigating anti-com- 48 concerning the relevant market of manufacturing of drugs in petitive conduct and deciding on mergers and conduct into one sin- the Brazilian territory, CADE found against 20 companies for gle enforcement agency, that is, CADE. Currently, the new CADE is establishing unlawful agreements between themselves that con- composed of: sisted of fixing conditions for sales and distribution of drugs in • the General Superintendency (GS), responsible for the investiga- the market; creating market barriers to new entrants; and refus- tion of all anti-competitive conduct and for rendering clearance ing to sell goods within the standard payment methods in order decisions, on a preliminary basis, on merger filings in all eco- to boycott generics not manufactured by the laboratories in nomic sectors, including in the pharmaceutical sector; and collusion. • the Administrative Tribunal, which is a decision-making body composed of one chairman and six commissioners, duly In the second instance, CADE applied a fine of 1 per cent of the gross appointed by the president of the republic and responsible for: revenue of the companies involved and a penalty of 2 per cent of • judging administrative proceedings relating to anti-competi- the gross revenue of the leading company. Also, CADE obliged the tive conduct; companies to publish the decision in the newspapers, fixed a daily • reviewing the merger filings cleared by the General fine for each day of non-compliance following the decision to order Superintendency in case of third parties’ appeal or at the the cessation of anti-competitive activities and CADE’s commission- Tribunal’s request; and ers also recommended the creation of compliance programmes to • judging oppositions submitted by the General all companies. Superintendency with respect to merger filings; and • the Department of Economic Studies, responsible for providing 8 Can private parties obtain competition-related remedies if they economic opinions and studies. suffer harm from anti-competitive conduct or agreements by pharmaceutical companies? What form would such remedies Besides CADE, the SBDC is composed of the Secretariat for typically take and how can they be obtained? Economic Monitoring of the Ministry of Finance (SEAE), which is Private parties may report the harmful effects of anti-competitive responsible for promoting competition among government agencies conduct or agreements by pharmaceutical companies. However, it (including ANVISA), to express opinions of general interest to the is important to note that article 135 of CADE’s Resolution 1/2012 economic order, to develop studies for different sectors of public determines that the commencement of any type of administrative policies, and to propose the revision of laws and regulations that proceedings established by the Competition Law to investigate pri- may affect competition in all sectors of the Brazilian economy. vate matters without public interest is not permitted. For this reason, in case a private party wishes to obtain a specific remedy against 7 What remedies can competition authorities impose for pharmaceutical companies for a private matter that does not affect anti-competitive conduct or agreements by pharmaceutical the public interest (ie, competition as a whole and consumer wel- companies? fare), it would need to seek such remedies before the judiciary. Such CADE shall analyse the conduct of the object of an administrative provision derives from the goals of the Competition Law, which pro- proceeding and may apply penalties on companies, legal entities tects competition and consumer welfare instead of private parties, and/or individuals, including administrators that are involved in vio- although they can indirectly benefit from CADE’s decisions. lations of the economic order. CADE may impose pecuniary and Most CADE investigations that have resulted in a finding of non-pecuniary penalties such as (i) in case of legal entities, a fine anti-competitive behaviour were ex officio investigations. It is pos- ranging from 0.1 to 20 per cent over the gross sales of the company, sible that CADE received anonymous tip-offs from third parties, but group or conglomerate in the field of the business activity in which this has not been disclosed in public records. the violation occurred; or (ii) in the case of individuals or public or private legal entities, which do not perform business activity, 9 May the antitrust authority conduct sector-wide inquiries? If so, where it is not possible to use the gross sales criterion, the fine will have such inquiries ever been conducted into the pharmaceutical be between 50,000 and 2 billion reais; and (iii) if the administrator sector and, if so, what was the main outcome? is directly or indirectly responsible for the violation, when negligence According to the Competition Law, SEAE is the agency in charge of or wilful misconduct is proven, a fine of between 1 and 20 per cent competition advocacy activities. SEAE may, by its own initiative or of that applied to the company referred in item (i) or the legal entity at the request of CADE or other authorities, develop studies evaluat- referred in item (ii). ing the competitive situation of specific sectors of the national eco- According to CADE’s rules, in case of recurrences the fines shall nomic activity, and prepare industry studies that serve as input for be doubled. Non-pecuniary penalties may also be applied without the participation of the Ministry of Finance in the creation of secto- affecting existing or subsequent penalties. For example, CADE may rial public policies in the forums in which this Ministry has a seat. oblige the company to publish the decision in newspapers, may pro- Since the Competition Law came into effect (29 May 2012), SEAE hibit a company: (i) from bidding for public service concessions for has not published any inquiries in the pharmaceutical sector. a term of not less than five years; (ii) from making payments by The only documents prepared by the authorities are not sector- instalments of federal taxes and impose a prohibition on receiving wide inquiries but rather academic papers. In 2008, SEAE prepared fiscal incentives or public subsidies. Also, CADE may demand the a paper about innovation in the Brazilian pharmaceutical market spin-off of the company, transfer of corporate control, sale of assets that concluded that Brazil needs a more efficient regulatory frame- or partial interruption of activities and any other action required to work to allow innovation to grow in this market and, in 2001, eliminate the harmful effects to the economic order. SEAE prepared a paper about government policy and regulation Based on CADE’s precedents, two examples of cartel cases can of the pharmaceutical market, which discusses public expenditure illustrate the fines already imposed by CADE on pharmaceutical on pharmaceutical products, price formation and the impacts of the companies: Generics Law. • in 2007, in Administrative Proceeding No. 08012,004599/1999- 18, companies were condemned for the practice of cartel www.gettingthedealthrough.com 9

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Tadmor & Co Attorneys at Law. Torres, Plaz & Araujo . marketing, authorisation and pricing of pharmaceutical products, including generic drugs? Customs Union Treaty on Uniform Competition Principles and. Rules of 9 .. Life-cycle management strategies may expose the patent owner to liability for
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