Healthy Skepticism Library item: 12483

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Publication type: news

Lawsky D, Hirschler B.
EU Raids Drug Companies
Reuters 2008 Jan 16
http://uk.reuters.com/article/stocksAndSharesNews/idUKGRI64319720080116?feedType=RSS&feedName=stocksAndSharesNews

Full text:

The European Commission raided pharmaceutical firms across Europe on Wednesday, launching a broad investigation into whether they made illegal agreements or misused patent rights to harm consumers.

Competition Commissioner Neelie Kroes identified no companies in a statement but said the European Union regulator suspected drugmakers had conspired to delay cheap generic alternatives to branded medicines.

The dawn raids and sector inquiry, which the Commission said was not based on specific suspected violations, could lead to cartel charges against companies and potentially huge fines.

Patents are the life blood of the pharmaceutical industry but critics allege drugmakers can misuse patent rights to delay the introduction of cheaper generic medicines in unjustified ways.

The cost of medicines is a vexed issue in Europe, where governments are seeking to clamp down on runaway healthcare bills at the same time as encouraging the development of the high-tech pharmaceutical and biotechnology sectors.

Kroes said the aim was to ensure governments and consumers got more new products and value for money. She said Europeans spend 200 billion euros annually on pharmaceuticals, or about 400 euros for each person.

“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,” she said in the statement.

GlaxoSmithKline Plc, Sanofi-Aventis SA and AstraZeneca Plc — three of Europe’s biggest drugmakers — said they were involved in the sector-wide inquiry and were cooperating fully.

ASTRAZENECA IN FOCUS

During the news conference Kroes cited AstraZeneca as a clear example of a company in which competition was not functioning optimally, referring to a 2005 decision in which the Commission fined the company 60 million euros.

The Commission found that AstraZeneca had misused the patent system to delay market entry of competitors for the ulcer drug Losec.

Other companies, including Merck KGaA, Bayer Schering Pharma and Roche Holding AG, said they were not aware that they were involved or had not received inquiries from officials.

The Commission said the probe arose out of concerns that competition was not functioning properly in the pharma sector — for example, the number of innovative drugs has decreased in recent years. However, it said it did not have positive indications of wrong-doing.

The raids will help establish if companies created barriers to competitors, whether they misused patent rights or engaged in “vexatious litigation” and if some firms abused their dominance of the market.

“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,” the Commission said.

The EU executive expects to announce preliminary results late this year and make a complete report in the spring of 2009.

The Commission said it raided companies because patents, litigation and settlement agreements are by their nature highly confidential.

“Such information may also be easily withheld, concealed or destroyed. This is why inspections have been considered appropriate,” it said.

The Commission underscored its view that the inquiry is meant to complement patents and not to challenge them.

“Both systems share the objectives of fostering innovation, and increasing consumer welfare,” the Commission said.

But the Commission said the number of new medicines reaching market has decreased.

It cited figures showing that from 1995 to 1999 there were 40 new “molecular entities” launched each year, but the figure dropped between 2000 and 2004 to only 28.

In all cases, the Commission is focusing on medicines for human consumption.

The Commission has already conducted sector inquiries into energy, financial services and telecommunications. This marks the first time a sector inquiry began with raids.