The Vifor Case: Disparagement Reloaded?

Procedural Background

Disparagement, or, disseminating negative and often misleading information about a competitor’s products to discourage its use, is an important topic in light of the on-going debate in the Directorate-General for Competition (DG COMP) about the evolution of Article 102 of the TFEU. The EC published draft guidelines on exclusionary conduct on August 2, 2024 however there is as yet no mention of disparagement. Equally, the Court of Justice of the European Union (CJEU) hasn’t yet ruled on disparagement as a unilateral conduct that violates Article 102 TFEU either.

On June 20, 2022 after a complaint by Pharmacosmos, a Danish pharmaceutical company focused on the treatment of iron deficiency conditions, the EC opened a formal investigation into Vifor Pharma, a multinational pharmaceutical company based in Switzerland, for possible anticompetitive disparagement of iron medicine. Vifor allegedly disseminated misleading information regarding the safety of Pharmacosmos’ iron deficiency treatment, Monofer, with a view to boost its own intravenous iron medicine, Ferinject.

The EC stated that Vifor embarked on a misleading communication campaign against Monofer that may have delayed its uptake. While the commitment decision is not public yet, the commitments provide a deductive insight into what the communication campaign may have entailed. For example, the proposed commitments of April 16, 2024 (see below) state that Vifor shall not imply or suggest that Monofer is dextran-based or dextran-derived which may result in an increased risk of hypersensitivity reactions (HSR) compared to Ferinject.

In parallel with the EC, on January 31, 2024 the UK Competition and Markets Authority CMA also opened an investigation into Vifor in relation to the same concerns as in the EC’s case, namely whether Vifor’s claims regarding the safety and effectiveness of Monofer were misleading and hence amounted to an abuse of dominant position in the supply of iron deficiency treatments for patients of the National Health Service (NHS). The UK Prescription Medicines Code of Practice Authority (PMCPA) had already imposed sanctions on Vifor in 2016 for the breach of the Association of the British Pharmaceutical Industry Code (ABPI), for producing material which created doubt about the safety of Monofer, making misleading comparisons between Monofer and Ferinject, as well as sending an unsolicited promotional email from its medical information department that was allegedly not fair or balanced about adverse reactions.

To address the EC’s concerns, on April 16, 2024, Vifor offered up a series of commitments. Firstly, Vifor committed to a clarifying communication campaign conveying that there is no evidence that calls Monofer’s safety into question with a view to undo the effects of the potentially misleading messages the company previously disseminated against Monofer. This includes the clarification that Monofer does not present an increased risk of any hypersensitivity reaction compared to Ferinject. These messages will be transmitted via mail, e-mail, medical journals and in-person meetings. They will also be made available on Vifor’s website; third parties, including Pharmacosmos, will also be allowed to use them.

Secondly, Vifor committed not to engage in written or oral external promotional and medical communications within the EEA for the next ten years, that contain information that is not based on or included in Monofer’s Summary of Product Characteristics (SmPC, the officially approved conditions of the efficient and safe use of a medicinal product) nor which are not derived from a clinical head-to-head trial between Ferinject and Monofer.

Lastly, Vifor Pharma committed to implement measures and safeguards to ensure compliance of promotional and medical communications and of internal training materials with the EC’s competition regime. This includes annual staff trainings and certification of compliance.

On July 22, 2024, two years after the investigation was opened, the EC accepted Vifor’s commitments.

Interestingly, the EC did not come to a definite conclusion on whether there was an infringement of Article 102 TFEU, but it found that there are no grounds for further action. In this context, it is also worth noting that Teva received a second Letter of Facts from the EC in May 2024, to which it responded in June 2024, though it may have concerned the patent limb of the EC’s investigation.

Assessment of Disparagement by Regulatory Authorities So Far

In the European Union, a series of investigations have been conducted, mainly at a national level, addressing the disparaging practices of incumbents to curb the uptake of generic products. Disparagement cases have been particularly prominent in France, where they have become a significant line of antitrust law with regard to the pharmaceutical sector. The French Competition Authority (FCA), followed by other National Competition Authorities (NCAs) – Italian, Belgian, Danish – has been a pioneer in relation to disparagement practices under both national and EU competition legal frameworks for over a decade. Four out of its ten disparagement cases address the pharmaceutical industry.

As far as case law on an EU level goes, the Court of Justice of the European Union (CJEU) has held on a preliminary ruling that disparagement practices may constitute a “by object” infringement of EU competition law under the scope of Article 101 TFEU. In another case, the CJEU held that certain forms of comparative advertising are unlawful if they are misleading or discrediting.

The FCA’s practice is a useful tool when it comes to the assessment of disparagement. According to the consistent practice of the FCA, disparagement differs from criticism in that it comes from an economic actor who seeks to gain a competitive advantage by penalizing his competitor. In each of its decisions relating to the pharmaceutical sector, the FCA imposed sanctions on the disparaging party under article 102 TFEU as well as the French commercial code (article L. 420-2) and followed an effects-based approach i.e. the conduct was found abusive based on the effects it had on the market/consumers. Typically, in such disparagement cases, the dominant company conducted a systematic, extensive misinformation campaign, targeting individuals who either make or influence purchasing decisions (e.g. healthcare professionals, such as pharmacists, doctors, etc.).

Through its four cases that focus on the pharmaceutical industry, the FCA established four criteria in order to assess disparagement as an abusive conduct: (1) dominant position held by the disparaging company, (2) disparagement of a competitor’s product (through a commercial strategy aimed at gaining an advantage over a competitor’s product), (3) establishment of a link between the dominant position and the disparagement conduct, and (4) actual or potential effects on the market.

It is worth noting that the Paris Court of Appeal (PCA) overturned one of the FCA’s decisions. This particular case concerned not an originator and a generic product, but a product that had received marketing authorization (MA) for the treatment of ophthalmological conditions and one that was prescribed “off label”. The PCA found that this raised the threshold for establishing disparagement. More specifically, it took into account the contribution of the communication campaign to a public interest debate, the neutral tone of the campaign and the factual accuracy of the disseminated information.

Also notable is the Danish Competition Council’s (DCC) assessment of disparagement, which also deviated from the FCA’s practice. The DCC concluded that regardless of the accuracy and truthfulness of the dispersed information, the covert nature of the strategy could still limit competition and be deemed abusive.

What’s Next? Future Assessment of Disparagement

While the concept of disparagement as a potential abuse of dominant position is new at EU level, the EC has the NCA’s guidance to follow. The outcome of the Teva case will likely shed further light on the EC’s approach to disparagement.

Despite the regulators’ recent attention to disparagement as a possible violation of competition law, as AG Rantos recalls in SEN, “…statements targeting or denigrating competitors are commonplace in an environment of competition on the merits, and should be considered relevant only when they are part of a foreclosure strategy”. Therefore, a balance has to be struck between the ability to highlight the differences between products, which is an essential part of competition, as companies strive to distinguish their products on quality and efficacy, on the one hand, and disparagement based on wrong or misleading facts on the other.

*Trainee Maira Aivalioti also contributed to this article.