Healthy Skepticism Library item: 15955

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Publication type: news

Newman M, Kresge N.
Teva, Servier Face EU Antitrust Probe for Drug Delays (Update3)
Bloomberg.com 2009 Jun 8
http://www.bloomberg.com/apps/news?pid=20601202&sid=aKb5SA50Ywdk

Full text:

Teva Pharmaceutical Industries Ltd., France’s Les Laboratoires Servier and other generic-drug makers face European Union antitrust probes of agreements that may have delayed the sale of a blood pressure medication.

The investigations, which also include Krka Group d.d., India’s Lupin Ltd., Mylan Inc.’s Matrix Laboratories unit and Unichem Laboratories Ltd.’s Niche Generics unit, concern deals that may have hindered the market entry of a generic version of Servier’s perindopril, the European Commission said today.

The probes come as antitrust regulators on both sides of the Atlantic focus on how settlements between brand-drug companies and generics might harm consumers. The U.S. Congress is considering legislation that would ban settlements that involve financial incentives given to generic-drug companies.

“Both brand and generic pharma companies will be keeping a careful eye on the next steps taken by regulators,” said Suzanne Rab, a lawyer at Hogan & Hartson in London. The EU focus on patent settlements “mirrors to a certain extent developments in the U.S.”

The commission said in a related report today that companies use a variety of techniques to delay the introduction of generics “for as long as possible.” The commission, the EU’s executive arm, said it will continue to probe whether the use of patents to delay generics violates antitrust rules.

Something ‘Rotten’

“Overall, it’s indeed a conclusion that there is something rotten in the state,” European Competition Commissioner Neelie Kroes told journalists at a press conference in Brussels. “We will not hesitate to apply the antitrust rules where such delays result from anticompetitive practices.”

The commission’s final report follows an 18-month probe that began after raids at GlaxoSmithKline Plc, AstraZeneca Plc, Sanofi-Aventis SA and several competitors. The commission conducted additional raids in November at some of the companies that are the subject of today’s heightened investigations.

Teva, based in Petah Tikva, Israel, said in a statement that it’s “committed to competing strongly in a fair and open market” and will cooperate with the investigation.

Servier, a closely held company based in Neuilly-sur-Seine, France, said in a statement that it will “continue to defend its rights.”

Simona Gorjup, a spokeswoman for Novo Mesto, Slovenia-based Krka, said the company never made arrangements with other drugmakers to delay generics.

“As soon as a patent situation enables it, Krka comes on the market with its own versions,” Gorjup said in an e-mail.

‘Sigh of Relief’

Spokesmen for Lupin and Unichem didn’t immediately respond to requests for comment.

Gareth Williams, a partner at Marks & Clerk, said in a statement that the drug industry will be “breathing a sigh of relief” because the commission decided to probe individual cases “rather than using the blunt instrument of wholesale patent reform which would undermine innovation.”

Companies may have received indirect payments via broader commercial transactions with Servier that effectively resulted in them being unable to launch generic versions of perindopril, said Frances Cloud, a London-based independent analyst.

“The commission can reform the patent situation, and they can certainly directly ban out-and-out payments, which will presumably make originator companies a lot more cautious, but it’s not totally going to get rid of the deals,” Cloud said.

‘Red Flag’

Makers of brand-name drugs face a decline in revenue starting in 2011 when products generating $150 billion a year will have generic competition, analysts and investment advisers said last year. The EU spends 214 billion euros on medicines a year, or 430 euros a person, the commission’s preliminary report in November said.

While the investigation is a “red flag” for the industry, it’s unlikely to pose a direct risk to Teva’s business in Europe, said Gilad Sarig, a Tel Aviv-based analyst for Bank Hapoalim. “Innovative companies are more the focus,” Sarig said in an e-mail.

The European Federation of Pharmaceutical Industries and Associations, which represents brand name drug companies, said in a statement that the commission acknowledged that generic market drug delays are also caused by administrative and regulatory hurdles.

“We welcome the statement that there should be competition in the off-patent markets,” said Thomas Cueni, head of the industry group’s task force on the probe.

The commission called for a “community” patent that would be valid in all of the EU’s 27 member states. The current system is a patchwork of national patents that are enforced in national courts. The regulator said EU governments should “significantly accelerate” the approval procedures for generic drugs.

“Tightening up Europe’s legislative framework in the four areas of patent law, pharmaceutical legislation, price and reimbursement rules and competition law will result in a properly functioning pharmaceutical market,” Greg Perry, of the of the European Generic Medicines Association, said in a statement.