Industry hits back at Commission probe
pharmafile | December 4, 2008 | News story | Sales and Marketing |Â Â Europe, reformÂ
The pharmaceutical industry has hit back at what it says is an ill-informed attack on the sector by the European Commission.
European competition commissioner Neelie Kroes launched a probe into the industry in January with a series of dawn raids, and has just published a preliminary report which criticises the methods used to prevent generic competitors reaching the market.
It says the tactics put a strain on health budgets and reduce the incentive to innovate within the industry, and estimates that they cost European healthcare systems 3 billion euros in lost savings between 2003 and 2007.
But the pharma industry has hit back, saying the investigation is a 'missed opportunity' to tackle what it believes are the real problems in the EU markets.
Dawn raids
The sector probe began in January 2008 when GSK, Pfizer, AstraZeneca and Sanofi-Aventis were all raided at dawn by investigators looking for evidence to back up suspicion that generic launches were being deliberately – and illegally – delayed.
But the raids have not produced any evidence that specific companies have broken European law. Instead the head of the commission Neelie Kroes has issued a general warning to the sector about its practices.
The industry has a number of tactics at its disposal which it can legally use to defend its patents and exclusivity, but Kroes believes these are not in the proper spirit of competition, even if they are technically legal. "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 the inquiry had given the Commission a solid view of the situation, and its next step was to consult stakeholders to draw the necessary conclusions.
It also criticised several well-known defensive patent strategies. One, known as 'patent clustering' sees originator companies filing multiple patents for different components to the drug to obstruct new entrants. In one case, 1,300 patents were filed for a single medicine.
The report also condemned the amount of litigation used to block generics, which can delay competition by up to three years.
The probe also found that patent settlements were increasingly common. These can result from litigation where the originator company agrees to allow just one generics company a period of exclusivity with their version of the drug, fencing off any more competition.
The Commission said it could make significant changes to the regulations, and these might include introducing a single community patent and the creation of a unified and specialised patent judiciary in Europe to reduce the volume of litigation.
It said it had consulted both generic and originator companies and found support for the idea.
But industry association EFPIA says the report's authors have misunderstood how the industry operates.
"[It] misses the opportunity to address the real issues impeding innovation and the development of and access to innovative medicines."
He added that it also overstated the level as well as the reasons for delays in generic market access.
EFPIA says claims that the industry impedes innovation are unjustified, and it pointed out pharma's record in producing breakthroughs in cancer, rheumatoid arthritis and HIV/AIDS and other major diseases.
However, it says it will work with the Commission to improve access to medicines and innovation.
Kroes warned that the Commission would still launch anti-trust cases if it found evidence of illegal practices.
The Commission announced a second round of raids ahead of the report's release. It indicated this second probe had been triggered by the first and that it had reason to suspect a breach of the treaty that prohibits restrictive business practices and/or the abuse of a dominant market position. However, it maintains the two investigations are separate.
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