The EC Admonishes European Pharma, European Pharma Celebrates

Despite the rhetoric, the climax of the European Commission’s antitrust investigations — instigated with dawn raids on the major pharma companies by EC Competition Commissioner Neelie Kroes last year — has been more of a whimper than a bang.

Pharm Exec Europe’s EU correspondent Reflector goes so far as to say “Big Pharma is not opening the champagne in public, but it has plenty to celebrate. In fact it can still hardly keep the smile off its public face.”

For 18 months, Neelie Kroes has been assessing whether innovative firms have been distorting competition by illicitly keeping generics off the market. Last week she emerged from her “studious cocoon” to claim that she had found there was indeed dirty work at the crossroads.

But, as Reflector says: “She could hardly say anything else. After kicking off this saga with dramatic dawn raids… accompanied by lurid suspicions of anti-competitive behaviour, she would have looked a little foolish if she had said everything was fine. Embarrassing enough at the best of times. But just months before the end of her five year tenure — the entire European Commission is due for renewal later this year — it would have been even more embarrassing. With no time left to recover her reputation by mounting some other dramatic inquiry into another sector, she would for ever have been remember as the Competition Commissioner who went down in flames because of a bum steer.”

The actual report huffs and puffs about pharma’s attempts to combat generic competition, but there was actually not much reality behind her rhetoric. “All that Kroes did was to wave a 600-page report at everyone in general, and initiate an investigation against a small shoal of tiddlers — Servier and a handful of generic companies,” adds Reflector.

“It doesn’t take long, flipping through the report, to see that the inquiry has dropped the ball. Although it talks at great length about patenting practices and product life-cycle management…it doesn’t reach conclusions that damn outright the industry’s behaviour. There are plenty of expressions of regret at the way the system operates, but on the central questions raised at the start of the inquiry — is innovation declining, and does Big Pharma abuse patent rights to frustrate generic entry — the report says very little, and certainly not enough to identify villains, still less to hang them.”

So, Reflector concludes, it would be imprudent for Big Pharma executives to hold summer street parties to celebrate. But they will certainly be going off on holiday with a lighter heart than they did last year.