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Europe launches pharma competition crackdown

Published on 08/07/09 at 03:08pm

The European Union's competition watchdog has declared a crackdown on pharma industry competition, promising scrutiny of deals which it says have delayed the launch of generic competitors.

An 18-month in-depth inquiry into the sector by the Competition Commission found delays of seven months had cost patients and healthcare systems 20% more than necessary.

The pharma industry has been bracing itself for the final conclusions from Competition Commissioner Neelie Kroes since it launched its investigation with dawn raids in January 2008.

Now the Commission has promised to 'intensify its scrutiny' of pharma's competitive practices, and is taking specific action against Servier and a number of generic companies.

These companies - Krka, Lupin, Matrix Labs (a subsidiary of Mylan), Niche Generics and Teva are accused of agreeing deals with Servier to delay the launch of generic versions of its blood pressure treatment of Coversyl (perindopril).

These companies - Krka, Lupin, Matrix Labs (a subsidiary of Mylan), Niche Generics and Teva are accused of agreeing deals with Servier to delay the launch of generic versions of its blood pressure treatment of Coversyl (perindopril).

The Commission has based its conclusions on a sample of medicines that faced loss of exclusivity in the period 2000 to 2007 in 17 European Member States.

"We must have more competition and less red tape in pharmaceuticals," said Commissioner Kroes.

"The sector is too important to the health and finances of Europe's citizens and governments to accept anything less than the best. The inquiry has told us what is wrong with the sector, and now it is time to act. When it comes to generic entry, every week and month of delay costs money to patients and taxpayers."

Following on from the new scrutiny Kroes added that "regulatory adjustments" are expected to address what she called "a range of problems in the sector".

One conclusion that is not a matter of disagreement or controversy is the need to establish a single EU community patent and a unified specialised patent litigation system in Europe.

The Commission says there is an urgent need for these moves, which it says will reduce administrative burdens and uncertainty for companies.

It says a full 30% of patent court cases are conducted in parallel in several Member States, and in 11% of cases national courts reach conflicting judgements, causing unnecessary delay.

It welcomed European Patent Office (EPO) moves to guarantee high quality standard of patents granted and to accelerate procedures. In March this year the EPO proposed a limit to scope and time periods for voluntary divisional patent applications to be filed, the so-called "raising the bar" exercise

The Commission also urged Member States to:

* Ensure third party submissions do not occur or lead to delays for generic approvals

* 'Significantly accelerate' approval for generics. The Commission says one measure would help achieve this would be to automatically grant pricing and reimbursement status to generic medicines where the originator drug already benefits from such status

* Take action if misleading information campaigns questioning the quality of generic medicines are detected in their territory

* Streamline trials that test the added value of novel medicines.

The Commission's report also contains an overview of different approaches across Europe to generic entry to determine best practice, and it has pledged to examine existing EU rules on pricing and reimbursement.

Pharma's response

Europe's pharma industry body EFPIA has focused on the more positive aspects of the report, and shied away from the most critical points made by Kroes.

EFPIA says it notes a welcome shift away from the emotive language of the interim report, with a better balanced, more holistic view of the issues facing the sector."

Arthur Higgins, chief executive of Bayer Healthcare and president of EFPIA, said regulatory bureaucracy and not anti-competitive behaviour was the root of the problems.

"We have stated consistently that complex and divergent regulatory barriers are the primary cause of market entry delay for both generic and innovative medicines. We are pleased that the final report recognises this reality," said Arthur Higgins.

"We welcome many of the policy recommendations, such as a more streamlined patent system that reduces costs and increases legal and commercial certainty. We commit to working constructively with the Internal Market Commissioner, Member States, and the European Patent Office to push reforms forward under the Swedish Presidency."

Higgins pointed out that Commission's report had also conceded that competition in European generics markets could be increased.

He added: "What is important is that the Commission uses this report to address the issue of competition in the off-patent market. This is an area that can generate savings which could be reinvested to fund innovative medicines."

EFPIA warned the Commission to be careful about introducing ill thought-out schemes to increase competition. The pharma body also said the final report failed to substantiate its initial allegation that patenting strategies dampened innovation or broke competition laws by delaying generic entry.

It also expressed satisfaction that the final report recognised the importance of Europe's innovative pharma sector, and the protection of intellectual property rights.

The Commission said its report confirmed a decline of novel medicines reaching the market - and "certain company practices that might contribute to this phenomenon". This contrasts sharply with EFPIA's diagnosis of the problems, but the Commission said: "Further market monitoring was ongoing to identify all the factors that contribute to this decline in innovation."

The European Generics Association (EGA) has welcomed the report, but declined to address the Commission's criticism of lack of competition in the generics market.

Greg Perry, director general of the EGA, said: "Tightening up Europe's legislative framework in the four areas of patent law, pharmaceutical legislation, price and reimbursement rules and competition law will result in a properly functioning pharmaceutical market throughout Europe."

Related stories:

Reforms launched with call for action on European competitiveness

January 02, 2009

Industry hits back at Commission probe

December 04, 2008

Pharma companies raided over alleged generic blocking

January 18, 2008

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