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Significant Turnaround in Russian Antitrust Practice of Protecting the Exclusivity of Drugs

Despite the fact that the issue of intellectual property rights turnover is included in the perimeter of antimonopoly regulation, until recently the Russian Antitrust Agency took rather an observant position.

The regulator’s position was that the issue of patent infringement is a private legal dispute between original and generic manufacturers, which should not affect the turnover of drugs, particularly the execution of contracts based on the results of public procurement. Only in isolated cases the Russian Antitrust Agency has established the fact of patent infringement and issued a corresponding order on the inadmissibility of anti-competitive practices.

Now the reverse trend has clearly emerged: the Russian Antitrust Agency has concluded that the early introduction of a generic drug to the market may qualify as a violation of Article 14.5 of the Federal Law “On Protection of Competition”, and the relevant violator may be ordered to transfer to the federal budget the multimillion income received from unfair competition.

In particular, on 04.10.2024, the Russian Antitrust Agency rendered the decision on violation of Article 14.5 of the Federal Law “On Protection of Competition” on the part of AxelPharm LLC, demanded to stop introduction of the generic drug into civil turnover and to transfer more than 500 million roubles to the federal budget.

The case was initiated at the request of the patent holder (Agouron Pharmaceuticals), the holder of the marketing authorization (Pfizer Inc.) and the official distributors (Pfizer Innovations LLC, Pharmstandard JSC) of the original drug «Inlita» (INN Axitinib), who claimed that AxelPharm LLC and OncoTarget LLC illegally introduced the generic drug Axitinib into civil turnover before the expiry of patent protection (30.06.2025).

Despite the arguments of AxelPharm LLC and OncoTarget LLC to the contrary, the Russian Antitrust Agency reached the following conclusions:

• competitive relations were established between the business entities Pfizer Innovations LLC and AxelPharm LLC
• the companies AxelPharm LLC and OncoTarget LLC could not have been unaware of the availability of the original drug «Inlita» on the commodity market, as well as that the active substance (INN Axitinib) has been granted patent protection
• the generic drug «Axitinib» used a patent, the legal protection of which is valid until 30.06.2025, without proper consent
• the actions of the companies Axelpharm LLC and OncoTarget LLC aimed at concluding a license agreement and then issuing a compulsory license were not intended to legally use the patent but were only an attempt to justify their own actions for its illegal use

The Russian Antitrust Agency has established the presence of all signs of unfair competition provided for by law and not only issued an order to stop the illegal actions, but also obliged to transfer to the federal budget the amount of income received by AxelPharm LLC because of the violation of antimonopoly legislation.

It is noteworthy that, according to the Russian Antitrust Agency, the practice of early launch of a generic drug in order to capture the market under patent protection of the original drug is «unfair competition not only against suppliers of the original drug, but also against other pharmaceutical companies that have registered their generics and are waiting for the patent to expire for their legal introduction into turnover».

This practice has been further confirmed.

For example, last week our team took part in another precedent-setting patent dispute, following which the Russian Antitrust Agency, based on the same legal arguments, prohibited further introduction of the generic drug into turnover and ordered the manufacturer to transfer multimillion income received from unfair competition to the federal budget.

This significant turnaround in practice makes us think again about the balance of power in the pharmaceutical market. Obviously, new opportunities are opening new opportunities to protect patents for original drugs. At the same time, generic manufacturers are constantly improving the economic, production and legal strategies for launches and will take this practice into account when implementing new projects.