PharmExec Blog

Europe: Not Out of the Antitrust Woods Yet

Kroes

EC Competition Commissioner Neelie Kroes

Guest blog from Pharm Exec Europe‘s Brussels correspondent, Reflector.

The new year has started with a grim reminder that last year’s heat over competition in the European pharmaceutical sector has not been dissipated by the winter’s frosts. Before January was a week old, the European Commission (EC) announced that it had opened a formal antitrust investigation into Danish drugmaker Lundbeck.

The Commission said it was examining “potential breaches of EU rules on restrictive business practices and on the abuse of a dominant market position.” In particular, it aims to investigate “unilateral behaviour and agreements by Lundbeck which may hinder the entry of generic citalopram into markets.”This was an unwelcome throwback to similar raids and investigations the Commission undertook during its pharmaceutical sector inquiry, and which delivered a rather damp squib last July.

But like a toothache that reasserts itself after wakening, quashing any comforting notions that it was just an unpleasant dream, the sector inquiry is back. As the Commission said, “the knowledge acquired during the pharmaceutical sector inquiry, specifically on ways originator companies use obstruct the entry of generic drugs onto the market, has allowed the Commission to draw conclusions on where Commission action based on competition law could be appropriate and effective. The Commission has decided that the investigation focusing on Lundbeck’s conduct should be dealt with as a matter of priority, and as a result has opened proceedings.”

Bad enough for Lundbeck. But worse was to come – and very soon. Just days later, the Commission confirmed that it had sent out a demand for information “to certain pharmaceutical companies” for copies of any patent settlement agreements that originator and generic manufacturers had reached in the eighteen months up to the end of last year. They have to provide copies of all annexes, related agreements and amendments.

The Commission is looking in particular at patent settlements where an originator company pays off a generic competitor in return for delayed market entry of a generic drug. This is new territory. It is the realisation of some of the worst imaginings of the pharmaceutical industry while the sector inquiry was underway. It sweeps away any of the sighs of relief emitted last summer when the inquiry appeared to have drawn something of a blank because it suggests that the Commission is now inclined to keep the industry on the rack over possible strong-arm tactics to keep generics off the market, even if it never finds anything conclusive.

Competition Commissioner Neelie Kroes, now in her last days in the job (she is likely to be switched to computerization in the new Commission, due to take office in February), commented, almost triumphally: “The Commission’s pharmaceutical sector inquiry points to significant shortcomings in the pharmaceutical sector.”

She made clear that in her view, even if the sector inquiry did not produce enough evidence to hang anyone out to dry, it “highlighted the risk that certain types of patent settlements may have negative effects on European consumers by depriving them of a broader choice of medicines at lower prices.” So she is determined to prove, while she still has the chance, that her long battle with the industry was not for nothing.

“Patent settlements are an area of concern, not least if there are situations where an originator company pays off a generic competitor in return for delayed market entry. We need to monitor this type of agreement in order to better understand why, by whom and under which conditions they are concluded. The monitoring will also provide us with the possibility to act should this become necessary,” Kroes declared.

She says that the Commission will analyse the pharmaceutical companies’ responses when they are received, and publish a report. And if a specific settlement raises additional questions, “a more targeted request for information could follow”. In addition, “depending on the outcome of the exercise, this round of information requests may be repeated annually for as long as the Commission considers that there is a potential problem.”

So, as her parting gesture, Kroes has placed a time-bomb right in the middle of one of the most sensitive parts of the pharmaceutical industry. That will keep ticking away for years, generating a sense of unease and uncertainty among innovators whose products are reaching patent expiry, and among companies that want to copy them. Unless – and it is a big unless – the industry is able to persuade Kroes’ successor that this is just a vengeful witch-hunt, and that it is time for everyone to leave the woods and head for higher ground.

Reflector

This entry was posted in Europe, Global, Guest Blog, Regulatory and tagged , , , , , , . Bookmark the permalink. Trackbacks are closed, but you can post a comment.

Post a Comment

Your email is never published nor shared. Required fields are marked *

*
*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

  • Categories

  • Meta