With an order issued on October 31, 2024, the European Commission fined Teva Pharmaceutical Industries (“Teva”) EUR 462.6 million for abusing of dominant position in relation to its drug Copaxone.

This European Commission decision is meant to further set on fire the already lively debate on the limits of patent law and antitrust rules in Europe.

1. Allegations: Abuse of Dominant Position and Patent Strategy

The order fined Teva for abuse of a dominant position. Specifically, two conducts were alleged, namely:

1. The first relates to the delaying of the market entry of competing generics of Copaxone – a drug containing the active ingredient glatiramer acetate produced by Teva and indicated for the treatment of multiple sclerosis – through the filing of several divisional patents and their subsequent waiver. This approach, referred to by the European Commission as ‘divisional games’, had, in the European Commission’s view, the effect of:
2. artificially extending the term of patent protection; 
3. restricting competition even beyond the natural expiry of the original patent.

• The second claim against Teva concerned the dissemination of false information in breach of competition rules aimed at dissuading consumers and healthcare professionals from adopting such cheaper versions of the drug by:
• denigrating generic Copaxone products; 
• casting doubts on their safety and efficacy.

2. Legal Analysis of Breaches: Article 102 of the Treaty on the Functioning of the European Union(“TFEU”)

The Commission’s allegations are mainly based on Article 102 TFEU, which prohibits the abuse of a dominant position within the internal market. A dominant company must avoid practices that (i) restrict, (ii) distort or (iii) prevent competition.

The practice of filing “divisional patents”, carried out by Teva, has been considered as an “exclusionary abuse”, as it prevents the entry of new players in the market through manipulation of the patent system.

This approach, although in line with patent law and the procedures of the major patent offices, including the European Patent Office, has been criticized from the competition point of view. In principle, the divisional patent system should protect distinct innovations and not allow the fragmentation of protection for a single invention to artificially obstruct competition.

In addition, the use of a disinformation campaign constitutes an abusive conduct, as it aims at diminishing the quality of competitors’ products without objective reasons, thus damaging the market and final consumers.

3. The Role of Divisional Patents and the ‘Manipulation’ of the Patent System

A divisional patent is an option under European law that allows patent owners to derive “child” patents from a main patent, thereby protecting more specific aspects of an invention. 

This system derives from one of the fundamental principles of patent law, i.e. that a patent can protect one, and only one, invention. Consequently, during the examination of patent applications, it is sometimes necessary to proceed with the filing of divisional applications when the examiner finds that more than one invention was covered by the original application. 

However, in Teva’s case, the excessive use of this practice was found to be abusive, as it was found to be aimed solely at extending the duration of monopoly protection for Copaxone. This practice, in addition to raising ethical and legal questions, led to the consideration of the need to change the patent system to avoid abuses. In particular, it has been suggested that European regulations on divisional patents may be updated to prevent anti-competitive practices, for instance by introducing stricter criteria for divisional patent granting.

4. Implications of the Teva Case for Competition Law and the Pharmaceutical Sector

The fine imposed on Teva represents a turning point for competition law applied to the pharmaceutical sector, as it further and rather explicitly underlines the need for a balance between patent protection and access to medicines. 

The European Commission, with this measure, wanted to give a strong signal against the strategic use of patents to obstruct access to generic medicines, which represent an affordable and accessible solution for patients, and which may also have a very important impact on Member States’ budgets concerning their healthcare spending.

In a scenario of increasing attention to anti-competitive practices in the health sector, the Commission’s intervention could lead other national and supranational authorities to monitor more strictly pharmaceutical companies’ behaviour in similar situations. Moreover, it may be possible that this case will put pressure on a reform of patent rules in Europe, aimed at limiting opportunities for abuse by dominant companies.