Brussels, 08/07/2009 (Agence Europe) - On Wednesday 8 July, the European Commissioner for Competition presented the Commission's final report on competition in the pharmaceutical sector. Neelie Kroes explained that market entry of generic drugs is delayed. Whilst repeating the need to encourage innovation, she deplored the decline in new medicines coming on to the market. The Commission intends to intensify its scrutiny of the pharmaceutical sector under EC antitrust law, including continued monitoring of settlements between originator and generic drug companies. The first antitrust investigations are already under way, affirmed Ms Kroes, in a reference to agreements between Servier and generic manufacturers Krka, Lupin, Matrix, Niche Generics Limited and Teva and perindopril, a leading drug that combats high blood pressure. Questioned about the follow-up by the Commission in another case involving the GSK laboratory, the commissioner reaffirmed that investigations would be carried out and lead to (when breaches to competition law had been demonstrated) appropriate fines. The Servier case illustrates that “companies are warned we won't accept any abuse or misuse in their sector”.
On the basis of a sample of medicines that faced loss of exclusivity in the period 2000 to 2007 in 17 member states, the inquiry found that customers waited more than seven months after patent expiry for cheaper generic medicines, costing them 20% in extra spending. Neelie Kroes illustrated an overall surcharge of €3bn. During her press conference, she highlighted at length “the importance of the pharmaceutical sector to health and consumers and taxpayers' spending” as well as public finances, particularly in the context of increased spending on medicines linked to the ageing of the European population. Generic delays matter as generic products are on average 40% cheaper two years after market entry compared to the originator drugs. Competition by generic products thus results in substantially lower prices for consumers. The inquiry showed that originator companies use a variety of instruments to extend the commercial life of their products without generic entry for as long as possible. The inquiry also confirms a decline of novel medicines reaching the market and points to certain company practices that might contribute to this phenomenon. Further market monitoring is ongoing to identify all the factors that contribute to this decline in innovation.
The Commission intends to apply increased scrutiny under EC Treaty antitrust law to the sector and bring specific cases where appropriate. The use of specific instruments by originator companies in order to delay generic entry will be subject to competition scrutiny if used in an anti-competitive way, which may constitute an infringement under Article 81 or 82 of the EC Treaty. Defensive patenting strategies that mainly focus on excluding competitors without pursuing innovative efforts will remain under scrutiny. To reduce the risk that settlements between originator and generic companies are concluded at the expense of consumers, the Commission undertakes to carry out further focused monitoring of settlements that limit or delay the market entry of generic drugs. In the case of clear indications that a submission by a stakeholder intervening before a marketing authorisation body was primarily made to delay the market entry of a competitor, injured parties and stakeholders are invited to bring relevant evidence of practices to the attention of the relevant competition authorities.
On regulatory issues the inquiry finds that there is an urgent need for the establishment of a Community patent and a unified specialised patent litigation system in Europe to reduce administrative burdens and uncertainty for companies. The commissioner said that the Community patent would be a “blessing” and asserted that it was imperative that the Commission pushed ahead with this dossier. 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. Kroes considers this as a “waste of time and money for everybody”. The commissioner believes that the recent initiatives of the European Patent Office (EPO) to ensure a high quality standard of patents granted and to accelerate procedures are welcome. This includes measures taken in March 2009 to limit the possibilities and time periods during which voluntary divisional patent applications can be filed (so called "raising the bar exercise").
The Commission is also encouraging member states to: 1) ensure that third party submissions do not occur and in any event do not lead to delays for generic approvals; 2) significantly accelerate approval procedures for generic medicines - for example, the Commission believes that generic products should automatically/immediately receive pricing and reimbursement status where the originator drug already benefits from such status, which would allow for a faster product launch in certain cases; 3) take action if misleading information campaigns questioning the quality of generic medicines are detected in their territory and streamline trials that test the added value of novel medicines.
To assist member states in delivering speedy generic uptake and improved price competition, the report contains an overview of national measures and their effects on generic uptake (volume, prices, number of entrants) and encourages member states that want to benefit from generic savings to consider such measures. In this light the Commission will also examine existing EU rules in the area of pricing and reimbursement (Transparency Directive 89/105/EEC).
Preliminary results were presented by Ms Kroes in November 2008 (EUROPE 9793). The final report and more information on the pharmaceutical sector inquiry will be available at: (http: //ec.europa.eu/comm/competition/sectors/pharmaceuticals/inquiry/index.html). (O.J./trans/rh)