EC final report condemns industry malpractice

Jul 10, 2009
By PharmTech Editors

The European Commission has confirmed that the market entry of generic drugs is delayed and that company practices are among the causes in its final report on the competition inquiry into the pharmaceutical sector. The agency has also opened a case against Les Laboratoires Servier for suspected breaches of the EC Treaty's rules on restrictive business practices and abuse of a dominant market position.

"Unfortunately, the report confirms that there are competition problems in the pharma sector and that company practices are a significant factor behind them," Neelie Kroes, European Commissioner for Competition, declared at a press conference in Brussels (Belgium) on 8 July. "In particular, the report concludes that makers of original medicines are actively trying to delay the entry of generic medicines onto their markets."

Company practices are not the only suspect in the delay of generic medicines, however; the report has suggested that other conditions, such as shortcomings in the regulatory framework, may also play an important role. Concern has also been raised regarding the lack of new, innovative medicines reaching the market and the EC has said that further market monitoring is ongoing to identify the factors contributing to this problem.

One of the main tools used to block market entry of generic products appears to be the use of patents — particularly numerous patent applications for the same medicine (known as patent clusters or patent thickets). The report says: "Documents gathered in the course of the inquiry confirm that an important objective of this approach is to delay or block the market entry of generic medicines." The inquiry found that individual medicines are protected by up to nearly 100 product-specific patent families, which can lead to 1300 patents or pending patent applications across the European member states.

Other patent issues, including filing strategies, and exchanges and litigations were also discussed in the report. The conclusion was that a Community patent and a unified specialized patent litigation system in Europe, which have already received strong support from stakeholders, would improve the situation and provide significant cost and efficiency improvements — at the moment, 30% of national patent-related court cases are parallel cases. The report has stated that: "The Commission continues to make all efforts leading to the rapid adoption of these instruments."

But patents aren't the only problem; the report highlighted several other obstacles to the market entry of generic products. When applying for marketing authorization or pricing/reimbursement status, some generic companies face intervention from originators, which claim the generic products are less safe, less effective or of inferior quality. Some also claimed that obtaining market authorization or pricing/reimbursement status could violate their patent rights, even though marketing authorization bodies must not take this argument into account, according to EU legislation.

"Generic medicines have been facing severe delays in getting on the market for too long now," said Greg Perry, Director General of the European Generic Medicines Association (EGA). "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 throughout Europe."

As a result of the findings of the report, the EC has said that it will intensify scrutiny of the pharmaceutical sector under EC antitrust law and continue to monitor settlements between originator and generic drug companies. Member states will also be asked to consider policies that ensure rapid uptake of generic medicines and encourage generic competition.

The EGA and its members have called upon the European and national authorities for quick implementation of the conclusions and recommendations made by the inquiry report.

Although this is the final report of the sector inquiry, Kroes has warned that this is not the end. "As with all sector inquiries, the publication of the final report is just the beginning of our work," she said. "The Commission will now step up its antitrust enforcement and work with member states to improve the regulatory framework and procedures for pricing and reimbursement and market authorization."

The sector inquiry began on 15 January 2008. Coverage of the progress of the inquiry can be found in previous Pharmaceutical Technology Europe news articles:

Dismal FDA drug approval rate leads to sector inquiry
EC battles "shocking" practices
EU sector enquiry instils fear