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Top EU court upholds AstraZeneca fine over ulcer drug

By Foo Yun Chee and Ben Hirschler

BRUSSELS (Reuters) - The European Union's highest court has upheld a 52.5 million euro ($69 million) antitrust fine levied against AstraZeneca for blocking the entry of cheaper rivals to its then bestseller ulcer drug Losec.

The decision is a blow for the British drugmaker and the wider pharmaceutical industry, which will in future have to take greater care not to overstep the mark in protecting branded medicines from cut-price generics.

"The abuses must be characterized as serious infringements, and consequently the amount of the fine cannot be reduced for those reasons," the Luxembourg-based EU Court of Justice (ECJ) said on Thursday.

The General Court, Europe's second-highest, had backed the European Commission in 2010 against British drugmaker AstraZeneca, but cut the penalty to 52.5 million euros from an original 60 million euros.

The Commission, which acts as EU antitrust and competition authority, originally penalized AstraZeneca for actions that regulators said had kept Losec prices artificially high.

The Commission welcomed the court verdict upholding its actions while AstraZeneca said it was disappointed, adding that it took compliance with all laws seriously.

Regulators on both sides of the Atlantic have generally frowned on actions by brand-name companies to delay either the production or sale of cheaper medicines to protect their own products.

The ECJ decision was an endorsement of the European Commission's policy of getting tough on tactics used by drugmakers to block cheap generics - a growing issue for the industry as many medicines reach the end of their patent life.

A finding in favor of AstraZeneca would have been a significant setback for EU antitrust regulators who have invested considerable time and money in a high-profile battle against pharmaceutical industry abuse in this area.

"The pharmaceutical industry is now subject to a set of onerous but not fully clear obligations," said Marie Manley, head of the pharma regulatory team at law firm Bristows.

"Ensuring compliance will require pharmaceutical companies to build in more checks and balances to their internal procedures."

The ECJ decision also has potential ramifications beyond the pharmaceutical sector by emphasizing that companies with a dominant market position have obligations to behave properly and transparently.

The case against AstraZeneca hinged on charges by the Commission that the company gave misleading information related to Losec to several national patent agencies from 1993-2000.

This blocked or delayed the entry of cheaper generics to the market and also prevented parallel imports of the drug - when the same patented drug is brought in more cheaply from another EU country.

The AstraZeneca case prompted EU antitrust enforcers to start an inquiry into the pharmaceutical sector in early 2008, which resulted in a critical report on methods used by the industry to delay generic competition and subsequent raids on drugmakers.

($1 = 0.7652 euro)

(Editing by Rex Merrifield and Elaine Hardcastle)

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