The US Federal Trade Commission (FTC) has voted to settle antitrust charges against Elan and Toronto-based Biovail. The two pharmaceutical companies were accused of dividing up the market for the generic version of a popular blood pressure medication.
The FTC said the settlement required Elan and Biovail to end a 1999 deal that enabled them to avoid competition between their generic versions of Bayer AG's blood pressure medication, Adalat. Biovail and Elan are the only firms with approval from the US Food and Drugs Administration to market generic versions of Adalat.
Under the settlement, Biovail and Elan are banned from entering into similar agreements in the future. Elan said the settlement did not include a fine or penalty and did not constitute an admission by Elan that any law had been violated. It also said it did not anticipate any significant impact on its business under the settlement.
"While Elan will not receive royalties from Biovail, it will gain revenue from two products sold through a new distributor," the company said.
Analysts said there would be little change to Elan's revenue line as a result. "Within the overall context of what Elan has been going through, this is a small thing," said Mr Ian Hunter, analyst with Goodbody Stockbrokers.
The news had little impact on Elan's beleaguered share price, which lost a further 2.3 per cent in Dublin yesterday to close at €6.35.
The Adalat case marks the first time the FTC has taken enforcement action against an allegedly anti-competitive agreement between two competing generic drug makers.
It's the second Biovail dispute with the FTC in recent months. In April, Biovail settled FTC antitrust charges over a questionable patent for its hypertension drug Tiazac.
Biovail's statement said the agreement between the two companies had been good for consumers because it allowed Biovail to market effectively against the Adalat brand, introducing new versions of the product earlier than either Elan or Biovail could have accomplished alone.
In a separate statement, Elan said users of the medication "will continue to benefit from competition under the new arrangement contained in the FTC Consent Agreement, as they had under the existing arrangement".
According to the FTC, Biovail and Elan reached a deal in 1999 that left Elan with a monopoly over 30mg generic version of Adalat, while Biovail kept a monopoly over 60mg generic Adalat, the FTC said.
"Their agreement gave them substantial incentives not to compete with each other and to deprive consumers of the price cuts that normally occur with generic competition," FTC competition chief Mr Joseph Simons said in a statement.
Elan shared the profits from its 30mg version with Biovail, while Biovail paid Elan a multimillion dollar royalty from its 60mg version, the agency said.
The companies got FDA approval for their generic versions of Adalat the following year. Since then, neither has introduced a product in competition with the other's dosage, the agency said.
The settlement remains in force for 10 years and requires both companies to take steps to introduce competitive versions of Adalat. - (Additional reporting Reuters)
