Competition in Pharmaceutical Sector-European Commission preliminary report

Last Friday, the European Commission published a 426-page preliminary report (http://ec.europa.eu/comm/competition/sectors/pharmaceuticals/inquiry/preliminary_report.pdf) regarding its competition inquiry into the European pharmaceutical sector. The Commission commenced the sector inquiry last January to examine why fewer new medicines were being brought to market in Europe and why generic entry seemed to be delayed in some cases (the report notes that while 40 new medicines were introduced annually between 1995 and 1999, only 27 were introduced annually between 2000 and 2007). The Commission has created dedicated webpage (http://ec.europa.eu/comm/competition/sectors/pharmaceuticals/inquiry/index.html) providing additional information regarding the sector inquiry into pharmaceuticals competition.

The Commission has offered its initial finding that "there is evidence that originator companies have engaged in practices with the objective of delaying or blocking market entry of competing medicines" and that as a result, "competition in this industry does not work as well as it should." The Commission reached this conclusion by examining a sample of 219 medicines facing a loss of exclusivity between 2000 and 2007, determining that but for delaying and blocking strategies employed by originator companies (i.e., innovator or brand companies that develop and sell new medicines), European consumers would have saved an additional € 3 billion ($3.79 billion) over this period.

The Commission concluded that the originators' strategies resulted in a delay of generic market entry of between four and seven months. In conducting the sector inquiry, the Commission sent out requests for information to 43 originator companies and 27 generic companies, engaged in a dialogue with industry associations at the European level, and consulted with representatives of consumer and patients associations, insurance companies, doctors, pharmacies, wholesalers, hospitals, parallel traders, patent offices, and competition authorities. Interestingly, the report states that the two biggest stakeholders -- the originator and generic companies -- were in agreement regarding the need to create a single Community Patent and a unified and specialized patent judiciary in Europe. Stakeholders and members of the public have until January 31, 2009 to submit comments concerning the Commission's preliminary findings, with the Commission expected to issue a final report sometime in the spring of 2009.