On March 15, 2021, the Council of State delivered a non-final judgment (the “New Judgment”) dismissing in part, on procedural grounds, the applications brought by F. Hoffmann-La Roche Ltd. and Roche S.p.A. (“Roche”), as well as Novartis Farma S.p.A. and Novartis AG (“Novartis”; jointly, the “Parties”), for the revocation of a 2019 judgment of the same court (the “2019 Judgment”).[1] By the 2019 Judgment, the Council of State upheld the ruling of the Lazio Regional Administrative Court (the “TAR Lazio”) as well as the 2014 ICA decision fining the Parties for their participation in an alleged cartel (as described below; the “ICA Decision”).[2]

Moreover, by separate order issued on March 18, 2021 (the “Order”), the Council of State stayed the revocation proceedings pending before it and referred the matter to the Court of Justice of the EU (the “ECJ”) for a preliminary interpretative ruling.


The ICA Decision

In 2014 the ICA fined the Parties for an anticompetitive agreement aimed at creating an artificial product differentiation between two drugs, which were allegedly equivalent for the treatment of age-related macular degeneration (“AMD”) (Lucentis and Avastin off-label), in order to influence prescriptions by doctors and health services and thereby increase the sales of the more expensive drug.[3]

According to the ICA, the Parties’ anticompetitive strategy aimed at reducing the use of Avastin in ophthalmology and increasing the use of Lucentis, thus significantly raising the costs borne by the Italian health service. This objective was pursued inter alia through the dissemination of allegedly misleading information aimed at casting doubts over the safety of the use of Avastin for AMD, despite the lack of scientific evidence supporting such doubts. The ICA established that the Parties’ conduct amounted to a market-sharing agreement constituting a by-object restriction in violation of Article 101 TFEU, and fined the Parties approximately €180 million overall. Both the TAR Lazio and the Council of State on appeal upheld the ICA Decision.

The 2019 Judgment

In particular, on July 15, 2019, the Council of State fully rejected the Parties’ appeals against the TAR Lazio’s ruling. The 2019 Judgment heavily relied on the guidance provided by the ECJ in an interpretative ruling it delivered in January 2018 (in Case C-179/16), following a preliminary reference by the Council of State, in the appeal proceedings concerning the ICA Decision, in December 2015 (the “Preliminary Ruling”).[4]

The following aspects of the 2019 Judgment – concerning the relevant market definition and the dissemination of allegedly misleading information are noteworthy, as the Parties subsequently based their applications for revocation on the following issues:

i. The relevant market definition

As mentioned above, the ICA included the two drugs in the same relevant market. According to the Parties, the ICA had wrongly defined the relevant market on the ground that the regulatory framework did not provide for substitutability between off-label medicines and medicines that are authorized for a specific use. The 2019 Judgment rejected this argument. In the Council of State’s view, insofar as sector regulation did not prohibit the off-label use of Avastin, nor its repackaging for such off-label use, the ICA was right in defining the relevant product market as comprising both Lucentis and Avastin used off label.

ii. The dissemination of allegedly misleading information

The Council of State dismissed the Parties’ claim that the ICA was wrong to find that they had colluded in order “to manipulate the public’s risk perception” of the off-label use of Lucentis, as well as to “artificially” differentiate between two medicinal products which, in the ICA’s view, were in fact equivalent (and, as such, substitutable) from the point of view of safety and effectiveness in the treatment of AMD.

The Parties later applied to the Council of State for revocation of the 2019 Judgment on grounds of error of fact. In particular, according to Roche, the Council of State committed errors of fact with regard to: (a) the definition of the relevant market, particularly by failing to establish the unlawfulness of the conditions under which Avastin was repackaged and prescribed with a view to its off-label use (the “First Plea”); and

(b) the allegations of the lesser safety of off-license Avastin compared to Lucentis, which were characterized as being misleading in nature (the “Second Plea”). Novartis challenged the 2019 Judgment on grounds of error of fact with respect to point (b) above only, and in connection with Novartis AG’s alleged liability.

More specifically, Roche claimed that the Council of State: (a) did not investigate the possible unlawfulness of demand (prescription) and supply (repackaging) of Avastin as an off-label product, and upheld the ICA Decision, notwithstanding the fact that several regulatory authorities and courts had reached the conclusion of their illegality; and (b) upheld the ICA Decision, which established the existence of a by-object restriction, without even investigating whether the information disseminated was in fact misleading, which was, however, a distinct element required in order to find a restriction by object, in light of the preliminary ruling of the ECJ. Novartis’s claims refer to point (b) above only, and to the fact that the Council of State overlooked that Novartis AG could not be held directly or indirectly liable for the alleged cartel.

The Parties also argued that, even in the absence of an error of fact – and, therefore, if the Council of State declared inadmissible one or both of the first two pleas –, the Court should nonetheless find that its 2019 Judgment unlawfully departed from the preliminary ruling of the ECJ because it failed to carry out the factual verifications that the ECJ had expressly required it to do, with respect to points (a) and (b) above.

In this respect, Roche also asked the Council of State to rule on whether the Italian legal system is incompatible with EU law – particularly with the duty of sincere cooperation between the Union and the Member States’ authorities, pursuant to Article 4(3) of the Treaty on European Union because it does not allow for the revocation of a ruling of a national court on the basis that it violates EU law, in particular the principles of EU law affirmed by the ECJ in a preliminary ruling delivered in main proceedings pending before the same referring court.

The New Judgment

By the New Judgment, the Council of State declared the parties’ applications partly inadmissible on procedural grounds. The First Plea and the Second Plea were declared inadmissible as the Council of State found that the 2019 Judgment had already adjudicated those issues.

The Council of State held that the Parties extensively put forward their arguments concerning the alleged cartel in the appeal proceedings for the annulment of the TAR Lazio judgment. Therefore, by having abusive recourse to the revocation remedy, they merely reiterated their defenses to call into question the Court’s assessment.

According to the Council of State, what the Parties claimed to be an erroneous perception by the court of the material content of the documents submitted in the proceedings constituted instead, at the most, an error of assessment or of interpretation of the facts, concerning an issue that the judgment fully covered, which as such could not be challenged by an application for revocation. Moreover, the Council of State emphasized that, according to settled case law, the fact that a court does not expressly rule on every single argument put forward by a party in support of its claim does not constitute a ground for revocation.

For the same reasons, the Council of State also rejected Novartis’s pleas concerning Novartis AG’s liability.

With respect to the ground of revocation concerning the violation of EU law, the Council of State decided to ask the ECJ to deliver a second preliminary ruling (see below). It is noteworthy that, under Italian law, since the revocation proceedings are still pending, the 2019 Judgment has not yet acquired the force of res judicata.

The Order

On March 18, 2021, the Council of State, by means of the Order, referred to the ECJ three preliminary questions,[5] seeking guidance on: (i) whether the 2019 Judgment violated an earlier preliminary ruling delivered by the ECJ in the same case, also calling into question the allocation of competence between the ECJ and national courts; and (ii) the lawfulness of the Italian rules of procedure, insofar as they do not provide for a case of revocation in the event of a violation of EU law by the Court that delivered the judgment being challenged, even when the lack of such remedy results in a final Court ruling contrary to EU law.[6]

[1] Council of State Judgments, respectively, No. 2222/2021 and No. 4990/2019 (the latter upholding TAR Lazio Judgment No. 12168/2014). Pursuant to Article 106 of the Code of Administrative Procedure, a judgment delivered by the Council of State can be challenged before the same Chamber of that court, adjudicating in a different composition, on the ground of error of fact. According to the settled case law on the admissibility of such applications, an error of fact giving rise to revocation must: (i) result from the court’s erroneous or omitted perception of the material content of the documents filed in the proceedings, which has led the court to take a decision on the basis of a false factual assumption, i.e. by considering proven a fact which is actually non-existent, or non-existent a fact which has actually been proven; (ii) not relate to a contentious point on which the decision has expressly ruled; and (iii) concern a decisive element in the ruling to be revoked. An error of fact exists also where the court has failed to rule on one or more pleas, or has ruled on issues or objections that the parties did not raise in their pleadings in the case, due to an oversight in the court’s process of perception of the records of the proceedings.

[2] ICA decision of February 27, 2014, No. 24823, Case I760, Roche-Novartis/Farmaci Avastin e Lucentis.

[3] In the late 1990ies, U.S. pharmaceutical company Genentech developed a revolutionary active ingredient called bevacizumab (later sold under the brand name Avastin) to treat certain types of cancer. Bevacizumab was licensed to its parent company Roche for distribution outside of the U.S., and was granted a market authorization by the European Commission in 2005. In parallel, having found that Avastin could also help treat MAD, Genentech developed and started selling ranibizumab, a specific molecule (sold under the name of Lucentis) that it considered more appropriate for treating AMD for a number of technical reasons. Lucentis was licensed to Novartis for distribution outside of the U.S., and was granted an EU market authorization in 2007. As Avastin was about 30 times cheaper that Lucentis, some doctors administered Avastin “off-label” for AMD treatment, on their own responsibility, where, on the basis of an assessment of individual patients, they concluded that it was necessary to do so to meet a patient’s specific needs. Roche, however, never applied for an authorization to market Avastin for AMD treatment. In light of the objective differences between the two molecules, a scientific debate arose in many countries on the respective safety and efficacy of Avastin and Lucentis for AMD treatment.

[4] The ECJ established the following principles in the Preliminary Ruling: (i) both a medicinal product authorized for the treatment of a specific disease and a medicinal product used off-label for the treatment of the same disease, may be considered as forming part of the same relevant market, where there exists a relationship of substitutability between the authorized and unauthorized drugs. In order to establish whether such a relationship exists, the competition

authority must take account of the outcome of the examination (if any) by the competent authorities or courts (relating to the conformity of the product at issue with the applicable provisions governing the manufacture or the marketing of that product) by assessing any effects it may have on the structure of supply and demand; (ii) an arrangement put in place between the parties to a licensing agreement for the exploitation of a medicinal product, which, in order to reduce competitive pressure on the use of that product for the treatment of given diseases, is designed to restrict the conduct of third parties promoting the use of another medicine for the treatment of those diseases, does not fall outside the application of Article 101 TFEU on the ground that the arrangement is ancillary to the license agreement; and (iii) an agreement between companies marketing two competing drugs, which is intended to provide misleading information on the negative side effects of the use of one of them for the off-label treatment of a disease, with a view to reducing the competitive pressure resulting from such use on the other medicine, constitutes a restriction of competition by object falling outside of the legal exception of Article 101(3) TFEU. It is for national courts to assess whether such concerted campaign is indeed objectively misleading.

[5] Namely: Question 1

May the national court, against whose decisions there is no judicial remedy under national law – in proceedings in which the party’s plea is directly aimed at claiming infringement of the principles laid down by the ECJ in the same proceedings in order to have the contested judgment set aside – verify whether the principles laid down by the ECJ in the same proceedings have been correctly applied in the specific case, or is it for the ECJ to make that assessment?

Question 2

Has the 2019 Judgment violated, in the sense envisaged by the parties, the principles expressed by the ECJ in its preliminary ruling in relation to: (a) the inclusion in the same relevant market of the two medicinal products without taking into account the positions adopted by the competent authorities that would have ascertained the unlawfulness of the demand and supply of Avastin off-label; (b) the failure to verify the alleged misleading nature of the information disseminated by the companies?

Question 3

Do Articles 4(3), 19(1) TEU and 2(1) and (2) and 267 TFEU, also interpreted in light of Article 47 of the Charter of Fundamental Rights of the European Union, preclude a framework such as the one laid out by Articles 106 of the Italian Code of Administrative Procedure and 395 and 396 of the Italian Code of Civil Procedure to the extent it does not permit the use of a remedy directed at challenging the judgments of the Council of State that are in breach of the judgments of the ECJ, and in particular of the principles of law affirmed by the ECJ in a preliminary ruling?

[6] Council of State, Order No. 2327/2021. The case number of the new preliminary reference procedure before the ECJ is C-261/21.