It’s been another rocky few weeks for pharma in Europe. Particularly for big brand name companies. But necessity is proving the mother of invention, says Pharm Exec’s Brussels correspondent, Reflector.
AstraZeneca suffered a serious setback at the start of July when the European General Court ruled that it had illegally prevented generic competition. The case dates back years, but the company – and many others in the industry – had been pinning their hopes on an appeal against a European Commission decision of June 2005 that the patent system had been misused to protect its anti-ulcer product Losec.
It isn’t just the confirmation of the €60 million fine that the Commission imposed at the time – although that is bad enough in cash-strapped times. Even more disconcerting are the broader implications for defending brand names.
As the Commission crowed triumphantly when the court issued its ruling, the judgement is significant for several reasons. It upholds the Commission’s decision on abuse of dominance in the pharmaceutical market. It also establishes that misuse of regulatory procedures, including the patent system, may constitute an infringement of EU competition rules. The court rejected AstraZeneca’s claims that its conduct constituted normal competition and that it could be explained by errors or unauthorized behaviour by AstraZeneca’s patent agents.
The industry is still smarting from what it sees as the injustices in the Commission’s report just a year ago following the competition inquiry into the pharmaceutical sector, which threatened tough action against any attempts to stifle generic competition. Now Joaquín Almunia, the Commission Vice President who has taken over the competition policy portfolio from Neelie Kroes, is making clear he is
determined to keep up the pressure.
“Companies should not misuse the patent system and the system for authorization of medicines to extend the protection of their blockbuster products and delay the entry of generics into the market”, he said as the court judgement emerged. “Generic drugs benefit patients and governments that pay for medicines. I am determined to use competition rules whenever appropriate to fight such unfair and anticompetitive practices,” he went on.
The normally-reserved European Federation of Pharmaceutical Industries and Associations was provoked into a sharp response. EFPIA had intervened in the case because it was concerned that the Commission’s decision adopted a very narrow market definition in order to be able to demonstrate dominance. Now that this approach has been upheld by the court, EFPIA is even more concerned. The ruling “means that virtually any innovative product, even if introduced into a therapeutic area where other substitutable products can be prescribed to treat the same condition, risks being regarded as constituting its own relevant market, in which case the innovator will be assumed to be dominant”, it said in a terse statement. It went on to warn of “a chilling effect on pro-competitive commercial conduct and ultimately on innovation in Europe.”
As it that wasn’t enough bad news, just a few days later the Commission also announced that there had been a decrease in “potentially problematic patent settlements in the EU pharma sector”. In other words, brand name companies are increasingly being frightened off defending their patents in those borderline areas where the complexities of law and procedure leave scope for interpretation. The number of cases has halved, and the sums involved have dropped from more than € 200 million to less than € 1 million. “This would suggest an increased awareness of the industry of which settlement agreements might attract competition law scrutiny”, the Commission remarked, drily. It also made plain that it will “continue monitoring the sector”. It already has investigations underway into patent settlements, involving Servier and Lundbeck.
So how to respond? Two recent examples show some imagination. Among the brand name companies, Belgian biopharmaceuticals company UCB has just announced that it is reinforcing its IT teams to make better use of technology in developing treatments for patients. At a time when commodity products are becoming increasingly vulnerable to competition, UCB has made a virtue of pursuing the more elusive but potentially more profitable high-tech heights of medicines development. That still-vague concept of personalized medicine is opening up avenues that some companies are approaching on carefully-chosen fronts – and IT is becoming as central to the exploration as biochemistry.
The other example that has provoked some gasps of admiration – at the very least at the chutzpah it demonstrates – comes from the other end of the industry spectrum. This is the establishment of a chair at the University of Leuven in Belgium, by none other than the European Generics Association. The chair, entitled “European policy towards generic medicines”, will study the generic medicines policy environment in European countries. Greg Perry, the EGA director general, was as triumphant as the Commission in his speech at the inauguration: “As is recognized by all policy makers and stakeholders in the pharmaceutical market, generic medicines offer equivalent medical treatments at lower costs for healthcare systems and patients”.
Which is where we came in.