Lee & Ko Represents Alvogen in Multinational Pharmaceutical Collusion Investigation; Secures Partial Victory on Appeal

Lee & Ko represented Alvogen in an investigation by the Korea Fair Trade Commission (“KFTC”) concerning alleged collusion between Alvogen and AstraZeneca relating to certain oncology drugs.

Following a three-year investigation, the KFTC issued an Examiner’s Report in June 2022 concluding that Alvogen’s agreement not to produce and sell generic versions of Zoladex, Casodex, and Arimidex (collectively, “DEX Drugs”) in exchange for exclusive distribution rights for AstraZeneca’s products constituted unlawful collusion. The KFTC imposed corrective measures, an administrative fine, and referred the matter for potential criminal prosecution.

In response, Lee & Ko, together with its in-house Competition Economics Consulting Group (CECG), submitted detailed economic and legal analyses arguing that (i) delays in generic development were attributable to the inherent scientific and technical complexities of oncology drug development, (ii) the grant of exclusive distribution rights was consistent with ordinary industry practice, and (iii) no economic compensation was exchanged for restricting competition, such that the arrangement did not constitute a “reverse payment” agreement.

As a result, the KFTC reduced the applicable surcharge rate to 3% (from the initially suggested 5–7%), imposed an administrative fine of approximately KRW 1.2 billion, and exempted Alvogen from criminal referral.

In subsequent administrative litigation before the Seoul High Court, Lee & Ko successfully challenged the KFTC’s findings with respect to Casodex and Arimidex. Although the court acknowledged the existence of certain agreements, it held that their anticompetitive effects had not been established. The court therefore overturned the KFTC’s decision with respect to those two products. With respect to Zoladex, the court concluded that the administrative fine could not be independently calculated, resulting in the cancellation of the related corrective orders and the entirety of the administrative fine.

The decision is significant in that, although collusion was recognized for one product, all administrative fines were ultimately cancelled. It represents an important precedent concerning non-compete arrangements in the pharmaceutical sector.