UPDATE 2-EU fines 6 drug firms 428 mln euros for blocking cheaper drugs

Wed Jul 9, 2014 9:27am EDT

* France's Servier, Israel's Teva among those fined

* Six companies get combined penalty of 428 million euros

* EU's Almunia - deals to buy out competition broke rules

* Servier to challenge EU ruling in court (Adds Servier appeal, details)

By Foo Yun Chee

BRUSSELS, July 9 (Reuters) - European Union antitrust regulators fined French drugmaker Servier, Israel's Teva and four others a total of 428 million euros ($583 million) on Wednesday, as they crack down on deals which block cheaper generic medicine.

Regulators on both sides of the Atlantic have frowned on such agreements, saying they jack up the cost of drugs by as much as 20 percent for consumers.

The pharmaceutical industry says so-called pay-for-delay deals, where brand-name drugmakers pay cheaper non-brand generics firms to hold back from launching rival medicines, help to avert lengthy and costly litigation.

"Servier had a strategy to systematically buy out any competitive threats to make sure that they stayed out of the market. Such behaviour is clearly anti-competitive and abusive," European Competition Commissioner Joaquin Almunia said in a statement.

The European Commission said Servier's deals with the generics rivals between 2005 and 2007 were aimed at protecting its best-selling blood pressure medicine perindopril from competition in the 28-country bloc.

Servier, France's second-largest drugmaker, was hit with the biggest fine at 331 million euros, while world No. 1 generic drugmaker Teva's penalty came to 15.57 million euros.

Servier said it would challenge the EU ruling in court.

"Patients have not been deprived of perindopril at any time. Moreover, generic entry has not been delayed. Servier has acted in a transparent and legitimate way to defend its patents," said spokeswoman Lucy Vincent.

The other penalised companies were Unichem and its subsidiary Niche, as well as Matrix, which is now known as Mylan Laboratories, Slovenian peer Krka and Lupin.

The sanctions are the third by the Commission against pay-for-delay deals following fines in the past year against Denmark's Lundbeck, Merck KGaA, Indian No. 1 drugmaker Ranbaxy, Johnson & Johnson and Novartis.

It is examining a similar deal between Teva and U.S. peer Cephalon, which is now part of the Israeli company, related to a pill for sleeping disorder. (Reporting by Foo Yun Chee; Editing by Mark Potter and Elaine Hardcastle)

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