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 The Competition and Markets Authority (CMA) said on Tuesday it had
provisionally found that the U.S. company's European unit, Merck
Sharp & Dohme, had abused its dominant position through a discount
scheme for Remicade.
Remicade, known generically as infliximab, is an antibody drug used
to treat conditions such as rheumatoid arthritis and Crohn’s
disease. The drug is proving an important test for the emerging
biosimilars industry.
It was the first antibody drug for which copycat versions were
approved by European regulators, leading to the launch of discounted
products from biosimilar drugmakers including South Korea's
Celltrion, which works with Pfizer.
One person familiar with the investigation said MSD offered a
discount to customers who continued to buy Remicade in the same
quantities but not if they started buying biosimilars, effectively
amounting to an incentive not to switch.
Remicade has been a big seller for Merck over the years but sales
have been falling in the face of biosimilar competition, declining
29 percent last year to $1.27 billion. Merck sells the drug in
Europe while Johnson & Johnson markets it in the United States.
Such biotech drugs are made inside living cells so it is impossible
to make exact generic copies, as happens with simple pills, so
regulators have come up with the notion of approving products that
are "similar" enough to do the same job.
The process of making biotech drugs is relatively costly.
The CMA said it proposed to find MSD and its parent Merck & Co
jointly and severally liable for the alleged infringement. The CMA
opened its investigation in December 2015.
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The CMA can fine companies up to 10 percent of their global turnover
if they are found to have breached competition law, although a CMA
spokesman emphasized this was a ceiling rather than a guideline for
penalties.
MSD said it was cooperating fully with the CMA, adding it was
confident the proceedings would show it had complied with
competition law.
It argued that the discounts in question meant infliximab was
competitively priced and offered savings to the UK National Health
Service, without hindering competition.
Tuesday's statement of objections from the CMA sets out the
competition body's provisional views and does not mean there has in
fact been any breach of competition law.
"The CMA will carefully consider any representations by the company
under investigation before determining whether the law has been
infringed," it said in a statement.
(Editing by Susan Fenton and Edmund Blair)
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