European drug companies are delaying or blocking the entry of cheaper generic medicines, pushing up bills for taxpayers and reducing the incentive for innovation, a hard-hitting EU report said yesterday.

Competition Commissioner Neelie Kroes said preliminary results of a year-long probe showed competition in the pharmaceuticals industry did not work as well as it should.

Practices such as multiple patent applications for the same drug, litigation and settlement deals that delayed generics deprived European healthcare providers of some €3 billion in potential cost savings between 2000 and last year, the report estimated.

"Market entry of generic companies and the development of new and more affordable medicines is sometimes blocked or delayed, at significant cost to healthcare systems, consumers and taxpayers," Ms Kroes said.

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