[Ip-health] Antitrust: Commission launches sector inquiry into pharmaceuticals with unannounced inspections

[Michelle Childs]

<snip> The inquiry is a response to indications that competition in
pharmaceutical markets in Europe may not be working well: fewer new
pharmaceuticals are being brought to market, and the entry of generic
pharmaceuticals sometimes seems to be delayed.

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Antitrust: Commission launches sector inquiry into pharmaceuticals
with unannounced inspections

Reference:  IP/08/49    Date:  16/01/2008

IP/08/49

Brussels, 16 January 2008
Antitrust: Commission launches sector inquiry into pharmaceuticals
with unannounced inspections

The European Commission has launched a sector inquiry into competition
in the pharmaceuticals sector (under Article 17 of Regulation 1/2003),
and is conducting inspections at the premises of a number of
innovative and generic pharmaceutical companies. The inquiry is a
response to indications that competition in pharmaceutical markets in
Europe may not be working well: fewer new pharmaceuticals are being
brought to market, and the entry of generic pharmaceuticals sometimes
seems to be delayed. The inquiry will therefore look at the reasons
for this. In particular, the inquiry will examine whether agreements
between pharmaceutical companies, such as settlements in patent
disputes, may infringe the EC Treaty's prohibition on restrictive
business practices (Article 81). It will also look into whether
companies may have created artificial barriers to entry, whether
through the misuse of patent rights, vexatious litigation or other
means, and whether such practices may infringe the EC Treaty's ban on
abuses of dominant market positions (Article 82). Vigorous competition
in this sector is crucial for the public, as it ensures both access by
patients to state-of-the-art medicines, and value for money for health
spending by individuals, private health schemes and government health
services in Europe. An interim report is planned for autumn 2008 and
final results are expected in the spring of 2009. The inquiry's
findings will allow the Commission or national competition authorities
to focus any future action on the most serious competition concerns,
and to identify remedies to resolve the specific competition problems
in individual cases.

Competition Commissioner Neelie Kroes said: "Individuals and
governments want a strong pharmaceuticals sector that delivers better
products and value for money. But if innovative products are not being
produced, and cheaper generic alternatives to existing products are in
some cases being delayed, then we need to find out why and, if
necessary, take action."

Unlike cartel cases, where the Commission carries out inspections when
it has indications that specific companies have committed competition
law infringements, these inspections are not aimed at investigating
practices of companies which the Commission has already positive
indications of wrong-doing. They are just the starting point of this
general sector inquiry and aim to ensure that the Commission has
immediate access to relevant information that will guide the next
steps in the inquiry. The kind of information the Commission will be
examining, such as the use of intellectual property rights, litigation
and settlement agreements covering the EU, is by its nature
information that companies tend to consider highly confidential. Such
information may also be easily withheld, concealed or destroyed. This
is why inspections have been considered appropriate.

Innovation in the pharmaceutical sector is driven by patents and other
intellectual property rights, and the inquiry will be conducted taking
into account these existing rights. The Commission's action will
therefore complement, not challenge, intellectual property law, as
both systems share the objectives of fostering innovation, and
increasing consumer welfare. The inquiry will also take due account of
the specificities of the relevant regulatory frameworks. It will not
in any way put into question the various health schemes in force in
the Member States. The inquiry is limited to medicines for human
consumption.

To carry out the inquiry, the Commission can use a wide range of
investigative tools to gather information from companies and trade
associations, including requests for information. During the inquiry,
the Commission will maintain an open dialogue with all stake-holders,
and will keep the sector informed about progress.

Background on sector inquiries

Sector inquiries are investigations that the European Commission may
decide to carry out into sectors of the economy, when a sector does
not seem to be working as well as it should. The Commission uses the
information obtained in the inquiry to better understand the market
from the point of view of competition policy, as analysed in its
report on the sector. Should there be grounds for doing so, the
Commission may =96 at a later stage - assess whether it needs to open
specific investigations to ensure the respect of Community rules on
restrictive agreements and abuse of dominant position (Articles 81 and
82 of the EC Treaty).

More information on the Commission=92s previous sector inquiries is
available at:

http://ec.europa.eu/comm/competition/antitrust/sector_inquiries.html

See also MEMO/08/20.

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Michelle Childs
Head of European Affairs
Knowledge Ecology International
michelle.childs@keionline.org