[Ip-health] EU Commission adopts Final Report on Competition Inquiry

[Judit Rius Sanjuan]

The Report and more information is available here: http://ec.europa.eu/comp=
etition/sectors/pharmaceuticals/inquiry


Press Release
source: http://europa.eu/rapid/pressReleasesAction.do?reference=3DIP/09/109=
8&format=3DHTML&aged=3D0&language=3DEN&guiLanguage=3Den

IP/09/1098
Brussels, 8 th July 2009

Antitrust: shortcomings in pharmaceutical sector require further action

Market entry of generic drugs is delayed and there is a decline in the
number of novel medicines reaching the market, according to the
European Commission's final report on competition in the
pharmaceutical sector. The sector inquiry suggests that company
practices are among the causes, but does not exclude other factors
such as shortcomings in the regulatory framework. As a follow up, 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. The report also calls
on Member States to introduce legislation to facilitate the uptake of
generic drugs. The report notes near universal support amongst
stakeholders for a Community Patent and specialised patent litigation
system in Europe.

Competition Commissioner Neelie Kroes said: =93We must have more
competition and less red tape in pharmaceuticals. 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. We will not hesitate to apply the antitrust
rules where such delays result from anticompetitive practices. The
first antitrust investigations are already under way, and regulatory
adjustments are expected to follow dealing with a range of problems in
the sector."

Main findings and policy conclusions

The inquiry has contributed significantly to the debate on European
policy for pharmaceuticals, in particular for generic medicines.

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
citizens waited more than seven months after patent expiry for cheaper
generic medicines, costing them 20% in extra spending.

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.

Reacting to the findings, the Commission will 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. 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.
     * 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 urging Member States to:

     * ensure that third party submissions do not occur and in any
event do not lead to delays for generic approvals
     * 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
     * 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.

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).

Background

The inquiry began in January 2008 (see IP/08/49 and MEMO/08/20 ) to
examine the reasons why fewer new medicines were brought to market and
why generic entry seemed to be delayed in some cases. The goal is to
find ways that help the market work better.

Preliminary results were published in November 2008. More than 70
submissions were received from stakeholders. Consumer associations,
health insurers and the generics industry have welcomed the results
arguing that they confirm their concerns. The originator industry and
their advisors have supported the call for the creation of a Community
Patent and a specialised litigation system, whilst arguing that
generic delay and the decline in innovation is caused by regulatory
shortcomings.

For further information, see also MEMO/09/321

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