FAS RUSSIA: IPSEN UNREASONABLY REFUSED BIOTEK TO CONCLUDE CONTRACT FOR MEDICINE SUPPLY

In order not to enter into a contract with a counterparty the pharmaceutical company has repeatedly changed its commercial policy during the review of the distributor's application

The FAS Russia issued a warning to the pharmaceutical company Ipsen to stop actions that contain signs of violation of the Law on Protection of Competition. Thus, having no economic and technological grounds, the company refused to conclude a contract for the supply of a number of medicines to Biotek. At the same time, it has previously extended contracts with other contractors.

In 2019, the company Biotek addressed to Ipsen several times with an official offer of cooperation in the supply of medicines, including in respect of which the pharmaceutical company occupies a dominant position. Necessary documents for passing the inspection were also sent to the company. However, it not only violated the terms of consideration each time, but also made changes to its commercial policy three times. In particular, in its latest version, the Statute of limitations on the availability of debt for the possibility of refusing to cooperate with a business partner has undergone a significant change: it was increased from 12 months to 10 years. Referring to late payments in 2014-2015, Ipsen refused to enter into a contract with Biotek.

“The introduction of changes to the commercial policy during the review of the documents of Biotek, which significantly tighten the requirements for potential contractors, could be due, among other things, to the refusal of Ipsen to cooperate with this distributor. At the same time, the company, which occupies a dominant position in the wholesale market of medicines with the international generic names “Lanreotide” and “Cabozantinib” in Russia, within the same criteria for selecting the commercial policy as amended in 2018, extended contracts for their supply with other contractors. According to the provisions of the Law on Protection of Competition, such refusal to enter into a contract between a dominant entity and a counterparty should be due only to economic or technological reasons [1], which were absent at the date of consideration of the application of Biotek,” commented Maxim Degtyarev, Deputy Head of the Department for Control over Public Health Service of the FAS Russia.

Anticompetitive actions of the pharmaceutical company led to the issuance of a warning by the FAS Russia. Within 30 days of receiving the document, Ipsen has to perform the following actions:

-         exclude from the sections of the latest version of the company's commercial policy provisions on the grounds for refusing to enter into a distribution agreement with a business partner that do not meet the requirements of the Antimonopoly legislation;

-         re-examine the application of Biotek for the conclusion of a distribution agreement on the previously submitted package of documents, and send the draft agreement (offer) or economically or technologically justified refusal to conclude the contract.

In case of failure to perform these actions, the FAS Russia will be forced to initiate a case [2].

For reference:

[1] Paragraph 5 of the Part 1 of the Article 10 of the Federal Law of 26.07.2006 No. 135-FZ “On Protection of Competition”.

[2] Article 391 of the Federal Law of 26.07.2006 No. 135-FZ “On protection of competition”.