Brussels launches EU-wide pharmaceuticals inquiry

The European Commission said yesterday it is conducting surprise inspections in various pharmaceutical companies in the 27 member states as part of an in-depth inquiry.

Details on which companies and which member states are being targeted have not been released.

"We need to know what is happening in this sector," European Competition Commissioner Neelie Kroes told the press.

"Individuals and governments want a strong pharmaceuticals sector that delivers better products and value for money. But if innovative products are not being produced, and cheaper generic alternatives to existing products are in some cases being delayed, then we need to find out why and, if necessary, take action."

The Commission said it is conducting inspections at the premises of a number of innovative and generic pharmaceutical companies in response to indications that competition in this sector may not be working well.

The inquiry will establish whether agreements between pharmaceutical companies, such as settlements in patent disputes, may infringe the EC Treaty's prohibition on restrictive business practices. It will also look into whether companies may have created artificial barriers to entry, whether through the misuse of patent rights, vexatious litigation or other means, and whether such practices may infringe the ban on abuse of dominant market positions.

According to the EU executive, an interim report is planned for this autumn and final results are expected in the spring of 2009.

The Commission said the inquiry findings will allow the Commission and the national competition authorities in the EU to focus any future action on the most serious competition concerns and to identify remedies to resolve the specific competition problems in individual cases.

Brussels decided to focus on the sector after its own monitoring led to worries that competition in the industry is not functioning as it should.

The Commission noted that, with respect to novel medicines, the number of such medicines reaching the market has dropped over time. In fact, between 1995 and 1999, an average of 40 novel molecular entities were launched every year. From 2000 to 2004, the figure stood at just 28, the Commission said.

In the case of generic medicines, the Commission said there are indications that the entry of such medicines into the market place is, in some instances, delayed.

The Commission said it will investigate the causes of this trend and in particular whether it results from restrictions of competition between producers or any unilateral abuse of dominant positions.