UK watchdog accuses Merck of restricting biosimilar competition

Britain’s Competition and Markets Authority accused Merck‘s (NYSE:MRK) European unit, Merck Sharp & Dohme, of conducting an unfair discount scheme that it said was designed to restrict competition from biosimilar copies of the company’s drug, Remicade.

Remicade is an antibody drug used to treat rheumatoid arthritis, ulcerative colitis and Chron’s disease. It was the 1st antibody drug to face competition from copycat versions in the European markets. Biosimilar drugmakers, including South Korea’s Celltrion, have launched discounted products that are “similar” enough to Remicade to do the same job.

The competition watchdog reportedly said that MSD offered a discount to customers who continued to purchase Remicade in the same quantities, but not if they started buying biosimilars, according to Reuters.

The company said it did not believe it had broken any competition rules.

Although Remicade has been a top-seller for Merck over the years, sales have tumbled in the face of biosimilar competition. Last year, sales fell 29% to $1.27 billion. Merck sells the drug in Europe and Johnson & Johnson (NYSE:JNJ) markets it in the U.S.

The field of biosimilars is attracting investment, especially as blockbuster biotech drugs begin to go off patent. This year, the 1st biosimilar copy of an antibody drug for cancer launched in Europe.

The CMA opened its investigation in December 2015 and said it proposed to find MSD and Merck jointly and severally liable for the alleged infringement.

The UK regulator can fine companies up to 10% of their global turnover if the CMA determines they have broken competition law, although a CMA spokesman reportedly said the 10% figure is a cap rather than a standard guideline.

MSD argued that the discounts meant Remicade was priced competitively and offered savings to the UK National Health Service. The company said it was cooperating fully with the CMA.

“The CMA will carefully consider any representations by the company under investigation before determining whether the law has been infringed,” the CMA said in a statement.

Material from Reuters was used in this report.