Pharma generic delays could have cost 3bn [euro].(European antitrust)

Pharmaceutical companies have been trying to delay or block the entry of competing generic drugs onto the market at significant cost to the healthcare system, according to the European Commission (EC). Following its inquiry into the sector, the EC plans to intensify its scrutiny of antitrust practices by the pharmaceutical industry and has called on member states to introduce legislation to speed generic drugs to market. With no direct control over implementation of its recommendations, however, the Commission is unlikely to see quicker access to generic medicines any time soon.

The sector inquiry found that pharmaceutical companies use a variety of strategies to extend the monopolies of their popular medicines. Practices include excessive or dubious patenting, initiation of disputes and litigation, patent settlements that constrain market entry of generics, lifecycle strategies for follow-on products and lobbying regulatory agencies.

The Commission said it would scrutinise such practices, which, if used in an anti-competitive way and without pursuing innovation, may constitute an infringement under the EC Treaty antitrust law.

On average, consumers in Europe wait seven months for cheaper generic drugs to become available once patents on branded products expire, costing them 20% in extra spending. The Commission estimates that, had generic medicines not been blocked, 3bn [euro] could have been saved between 2000 and 2007 alone.

'We must have more competition and less red tape in pharmaceuticals,' said Competition Commissioner Neelie Kroes. 'When it comes to generic entry, every week and month of delay costs money to patients and taxpayers. We will not hesitate to apply the antitrust rules where such delays result from anticompetitive practices.'

The Commission has already begun formal antitrust proceedings against pharmaceutical firm Les Laboratoires Servier and a number of generics companies, including Matrix Laboratories and Teva. Servier is suspected of striking financial settlements to hinder market entry of the generic version of its cardiovascular drug perindopril.

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The sector inquiry, which involved company raids, was started in 2008 in an effort to discovery why fewer new medicines were brought to market and why generic entry seemed to be delayed in some cases.

Acknowledging that the regulatory system is a contributing factor, the Commission has reiterated the need to establish a Community-wide patent and a specialised litigation system--a move widely supported by the pharmaceutical industry, which blames both generic delays and innovation decline on regulatory uncertainty.

'We have stated consistently that complex and divergent regulatory barriers are the primary cause of market entry delay for both generic and innovative medicines,' said Arthur Higgins, ceo of Bayer Healthcare and president of the European Federation of Pharmaceutical Industries and Associations.

A spokesperson for the Association of the British Pharmaceutical Industry added that generic entry is actually getting faster, not slower, and that 80% of UK prescriptions in 2007 were for generic medicines, up from 60% in 1997.

Nevertheless, among the Commission's other recommendations are for member states to significantly accelerate approval procedures for generic medicines, improve price competition, and take action if they discover misleading information campaigns questioning the quality of generic medicines. The Commission also suggests that countries should streamline trials that test the added value of novel medicines.

'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,' said Greg Perry, director general of the European Generic Medicines Association (EGA), which called on the European and national authorities for quick implementation of the inquiry's recommendations.

A large number of pharmaceuticals are due to go off patent between 2009 and 2020, representing nearly 90bn [euro]---savings that will be lost if the recommendations fail to be adopted, according to the EGA.

However, it is uncertain whether anything will change. Many EU countries, for example, have complicated pricing and reimbursement procedures in place and are unlikely to revise them in the short term to accommodate these specific Commission recommendations, explains Milena Izmirlieva, analyst at IHS Global Insight.

'We do not expect an improvement in the competitive environment for generics as a result of the inquiry,' Izmirlieva adds, 'but the Commission could become better at identifying anti-competitive behaviour, by both originator and generic companies, and taking enforcement action.'

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