Legal action set to follow EU pharma investigation

The European Commission has said it will start legal proceedings against companies found violating EU competition rules in the wake of its probe into the EU pharmaceutical industry.

In her interim report, European competition commissioner Neelie Kroes criticised drug companies for delaying or blocking market entry of competing medicines. ‘These preliminary results show that market entry of generic companies and the development of new and more affordable medicines is sometimes blocked or delayed, at significant cost to healthcare systems, consumers and taxpayers,’ she said.

Citing a sample of medicines that faced loss of exclusivity in the period 2000 to 2007 in 17 EU member states, the Commission report suggested that additional savings of around €3bn would have been possible over this period if generic medicines had entered the market without undue delay.

The report lists a number of practices used by originator companies – those that develop and sell new medicines – to delay or block market entry of competing medicines, whether these come from generics companies or other originator competitors.

These include multiple patent applications for the same medicine (so called patent clusters); initiation of disputes and litigation; conclusion of patent settlements that constrain market entry of generic companies; and interventions before national authorities when generic companies ask for regulatory approvals. The Commission cites one case in which 1,300 EU wide patents were filed for a single medicine.

The report points out the average time taken to sort out a patent dispute case was about three years and nearly 700 cases of reported patent litigation with generic companies were filed. Although the generic companies won 60% of these cases, there were also more than 200 settlement agreements that limited the entry to the market of the generic medicines and provided for payments from the originator to the generic companies.

Furthermore, the report found strangulation of innovation as some originator companies used ‘defensive patenting strategies’, thereby obstructing the path of innovation from competing pharmaceutical companies and delaying consumer access to innovative medicines.

‘We now have a solid view of what is happening and why: the next step is to discuss our findings with the stakeholders and to draw the necessary conclusions,’ said Kroes. ‘It is still early days, but the Commission will not hesitate to open antitrust cases against companies where there are indications that the antitrust rules may have been breached.’

The Commission is now inviting all stakeholders to submit their views and observations on the preliminary findings. The final report is expected in Spring 2009 while the public consultation period will close on 31 January, 2009, it said.