The entry of generics onto the European market is being delayed and there is also a decline in the number of novel medicines coming to market, the EC concludes in its final report on competition in the drug sector. EU officials are already investigating possible anticompetitive activities by drugmakers, but ‘regulatory adjustments’ are also expected, said European Competition Commissioner Neelie Kroes, announcing the investigation’s findings.

“We must have more competition and less red tape in pharmaceuticals – the sector is too important to the health and finances of Europe’s citizens and governments to accept anything less than the best,” said European Competition Commissioner 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,” she added.

Among the inquiry’s findings are that, during 2000-2007, EU citizens waited on average more than seven months after patent expiry for generic versions to come to market, costing them 20% in extra spending, and that originator companies are using ‘a variety of instruments’ to extend the commercial life of their products without generic competition for as long as possible.

Responding to these findings, the EC says it will apply increased scrutiny to the sector under EU antitrust laws and bring specific cases where appropriate. Tactics to delay generic entry and defensive strategies “that mainly focus on excluding competitors without pursuing innovative efforts” will be monitored closely, as will ‘reverse payment’ settlements that limit or delay generics’ market entry, it warns.

However, it also sees an urgent need to establish both a Community patent and a unified specialised patent litigation system for Europe, in order to reduce administrative burdens and uncertainty for companies; at present, 30% of patent court cases are conducted in parallel in several Member States, and in 11% of cases national courts reach conflicting judgements. The EC says it welcomes the European Patent Office’s recent initiatives aimed at ensuring a high quality standard of patents granted and accelerating procedures; these include moves to limit the possibilities and time periods during which voluntary divisional patent applications can be filed (the ‘raising the bar’ exercise).

Actions by the Member States must include ensuring that third-party submissions do not occur, or that at least they do not lead to delays for generic approvals, the report goes on. They must also speed up their approval procedures and act against misleading information campaigns which question the quality of generics, it says, and recommends that generics should “automatically/immediately” receive pricing and reimbursement status where the originator drug already benefits from such status, as this would permit speedier launches in some cases.

Responses
Responding to the inquiry’s report, spokesmen for the research-based industry have welcomed its shift away from the ‘emotive language’ used to express its interim findings in November 2008, and say the final report has failed to substantiate the EC’s initial allegations that patenting strategies dampen innovation or delay generic entry illegitimately.

“We have stated consistently that complex and divergent regulatory barriers are the primary cause of market entry delay for both generic and innovative medicines. We are pleased that the final report recognises this reality,” said Mr Arthur J Higgins, President of the European Federation of Pharmaceutical Industries and Associations. “What is important is that the [European] Commission uses this report to address the issue of competition in the off-patent market. This is an area that can generate savings which could be reinvested to fund innovative medicines,” added Mr Higgins, who is also CEO of Bayer Healthcare.

The European Generic Medicines Association (EGA) applauded the report’s conclusions that substantial reforms to EU and national legislation are needed, pointing out that current loopholes in the legislative framework “give rise to incoherent generic medicines policies in Member States and allow originator companies to behave anti-competitively”.

“We welcome the importance given by the European Commission to the need for high-quality patents and raising the bar for patent applications. The existence of certain dubious secondary patents has indeed created a block against competition and undermined confidence in real innovation,” said the EGA’s Director General Greg Perry. “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,” he added.