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The European Commission (EC) published a preliminary report stating that competition in the pharmaceutical industry does not work as well as it should.
Brussels (Nov. 28)-The European Commission (EC) published a preliminary report stating that competition in the pharmaceutical industry does not work as well as it should. The report cites evidence that originator companies have engaged in practices with the aim of delaying or blocking market entry of competing generic drugs. These practices include the following:
When these tactics are successful, they impose additional costs on public-health budgets and reduce incentives to innovate, according to an EC press release. The report examined a sample of medicines that faced the loss of patent exclusivity in 17 European Union member states between 2000 and 2007. The commission estimated that if the market entry of generic medicines had not been delayed, member states could have saved roughly €3 billion (about $4 billion).
The sector inquiry confirmed that generic drug entry often occurs later than expected. It took an average of seven months for generic products to enter the market, according to the report. Top-selling medicines faced an average delay of four months. Based on sample of medicines mentioned above, the report stated that the average price of drugs decreased by almost 20% after the first year following generic entry. In rare instances, prices decreased by 90%.
In an EC press release, Competition Commissioner Neelie Kroes said, “We now have a solid view of what is happening and why: the next step is to discuss our findings with the stakeholders and to draw the necessary conclusions. It is still early days, but the Commission will not hesitate to open antitrust cases against companies where there are indications that the antitrust rules may have been breached."
“The preliminary report does not adequately recognize the complex and highly regulated nature of the pharmaceutical market in Europe and misses the opportunity to address the real issues impeding innovation and the development of and access to innovative medicines“ said Arthur J. Higgins, chief executive officer of Bayer HealthCare (Harmondsworth, Middlesex, UK) and president of the European Federation of Pharmaceutical Industries and Associations (EFPIA), in an EFPIA statement. “The report also overstates the level as well as the reasons for delays in generic market access.”
The European Generic Medicines Association (EGA) welcomed the preliminary report’s findings. In an EGA press release, Greg Perry, director general of EGA, reiterated the association’s call for urgent reform that would foster authentic generic-medicines competition and close the loopholes that allow originators to block or delay the marketing of generic drugs.
The EC invited all stakeholders to submit comments about the preliminary findings before it reaches its final conclusions. The public consultation will last until Jan. 31, 2009. The final report will be published in spring 2009 and reflect the public comments.
In other news, the EC confirmed that its officials began inspections of several pharmaceutical companies’ offices in various member states on Nov. 24, 2008. In a press release, the EC said it had reason to believe that Articles 81 and 82 of the EC Treaty (which prohibit restrictive business practices or the abuse of a dominant market position) may have been infringed. EC officials were accompanied by their counterparts from the relevant national authorities.
The inspections are not part of the pharmaceutical-sector competition inquiry, according to the EC press release. The sector inquiry’s findings, however, have allowed the EC to decide where action based on competition law could be appropriate and effective.
The preliminary report and more information on the pharmaceutical sector inquiry will be available here.