Competition Tribunal issues reasons for its dismissal of JAMP’s anti-competition allegations against Janssen
As discussed in a previous post, the Competition Tribunal dismissed JAMP’s application against Janssen alleging abuse of dominance in relation to Stelara, Janssen’s drug containing the active ingredient ustekinumab. The Tribunal recently issued the public reasons for its decision.
In brief, JAMP claimed that Janssen engaged in a practice of anti-competitive acts intended to prevent or delay entry and expansion in the market for the supply of ustekinumab biologics by JAMP and other potential competitors that supply “biosimilars”, which are highly similar versions of brand name biologics. Section 79 of the Competition Act permits private parties to apply directly to the Tribunal if they are affected by abuse of dominance practices. However, the party must first obtain leave from the Tribunal to bring the application.
The Tribunal dismissed JAMP’s application for leave. A key takeaway appears to be that applicants must put forward substantial, direct evidence for each allegation. The Tribunal will not grant leave on the basis of theories or arguments.
The Tribunal noted that, on an application for leave, it does not make any conclusions about whether the respondent has in fact engaged in the alleged conduct – it only looks to whether the evidence in the leave application is sufficient to meet the test for leave.
The test for leave and preliminary issue of interpretation
The Tribunal had to determine whether it has “reason to believe” that the applicant is directly and substantially affected in its business by any practice referred to in section 79 that could be subject to an order under that section. The application for leave must be supported by evidence that gives rise to a bona fide belief that the applicant may have been directly and substantially affected in its business by the impugned practice, and that the practice “could” be subject to an order under section 79. The legal threshold of “reason to believe” is lower than a balance of probabilities, but it requires more than a “mere possibility”.
This application was the first to seek leave to commence a proceeding under section 79. The parties disputed whether the test required JAMP to show a substantial impact on its entire business. Following a comprehensive discussion of statutory interpretation and case law concerning similar provisions in the Competition Act, the Tribunal agreed with JAMP and held that an applicant seeking leave need not show a substantial impact on the applicant’s entire business. Leave may be granted where only part of the business is directly and substantially affected.
JAMP’s allegations and evidence
According to JAMP, Janssen’s acts could be characterized as anti-competitive because their subjective and objective purpose was “to negatively affect and exclude JAMP and other suppliers of biosimilars” that compete with STELARA and because their subjective and objective purpose was to have an adverse effect on competition by permitting Janssen to maintain its high pricing for STELARA and maintain its high market share.
The Tribunal held that JAMP’s evidence did not give rise to a bona fide belief that it was directly and substantially affected in its business by the reviewable practice under section 79.
a) Alleged “gaming” of the regulatory system and “sham” litigation
JAMP alleged that Janssen “gamed” the regulatory process (1) by attempting to list an additional patent on the patent register against STELARA, knowing that it would disincentivize a biosimilar manufacturer from launching and (2) after Janssen received an unfavourable decision, it unsuccessfully sought judicial review and unsuccessfully appealed, knowing that both were very unlikely to succeed.
The Tribunal found JAMP did not adduce sufficient cogent evidence for the purposes of a bona fide belief that the alleged acts could be subject to an order under section 79(1)(a). The Tribunal noted that JAMP’s submissions did not engage with the merits of the patent listing or the judicial review application and did not show that either was without foundation. The evidence also failed to show that the proceedings delayed JAMP receiving approval to market its product.
b) FINLIUS as a “fighting brand”:
JAMP alleged anti-competitive acts relating to Janssen’s FINLIUS product. A fighting brand is one introduced at low prices and marketed aggressively to drive one or more competitors out of a market, so that the main brand can continue selling at high prices. However, there was insufficient cogent evidence to support a bona fide belief that FINLIUS could be a “fighting brand”. JAMP did not suggest that it had been forced out of the market by FINLIUS after it was introduced and did not detail FINLIUS’s negative exclusionary impact in the short time (3 weeks) it was on the market before JAMP filed its application with the Tribunal.
c) Predatory pricing
JAMP also alleged that Janssen engage in predatory pricing with FINLIUS. Predatory pricing refers to selling articles at a price lower than the acquisition cost for the purpose of disciplining or eliminating a competitor. The Tribunal found that JAMP offered no direct evidence of Janssen selling FINLIUS at predatory prices.
d) Communications with physicians, insurers, patients
JAMP alleged that Janssen caused uncertainty and delayed competition by misusing its patient support system in various ways. The Tribunal found that “despite filing vigorous submissions to advance its theory on anti-competitive acts, the evidence to support JAMP’s position on these issues was very thin” and the arguments were “mostly based on alleged omissions and vague statements”.
e) Conduct that causes a substantial lessening or prevention of competition (“SLC/SPC”)
JAMP submitted that, but for Janssen’s anti-competitive conduct, rivals would have launched biosimilars to STELARA earlier, and a substantial portion of Janssen’s $2.1 billion in sales of STELARA would have been lost. However, the Tribunal found that “JAMP did not do much more than describe the alleged SPC in its submissions”. It held there was insufficient cogent evidence before it to raise a bona fide belief that Janssen’s conduct could have had the effect of a SLC/SPC in the market for the supply of ustekinumab drugs.
Was JAMP directly and substantially affected in its business by the impugned practice?
To grant leave, the Tribunal would need to find that JAMP’s business had been directly and substantially affected in its business by the alleged conduct. Largely based on the findings discussed above, the Tribunal held the alleged acts were not sufficiently supported by the evidence for the Tribunal to be able to form a bona fide belief that the alleged practice could be subject to an order under section 79. The Tribunal also noted a temporal issue: JAMP’s business could not have been substantially affected by some of the alleged behaviour since that behaviour occurred later in time than the alleged impact.
The Tribunal dismissed JAMP’s application with costs. In separate reasons, the Tribunal ordered that the costs payable to Janssen would be $15,000.
A copy of the Tribunal’s reasons can be found here.
