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Healthy Skepticism Library item: 14732

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

 

Publication type: news

EC Competition enquiry into pharma companies
The Lancet Student 2008 Nov 28
http://www.thelancetstudent.com/2008/11/28/ec-competition-enquiry-into-pharma-companies/


Full text:

The European Competition Commission estimates that pharmaceutical companies delaying the production of generic drugs have cost EU governments, health systems, and patients €3 billion between 2000 and 2007.

The preliminary results of an investigation by the Commission for Competition into the production of generic drugs in the EU, started in January, were released today. Recent “raids” on company premises by officials have been reported as linked to this enquiry.

Once developed, new drugs are patented by pharmaceutical companies (originator companies), however, once the patent expires (up to 20 years after launch in Europe), other companies (generics companies) can produce generic versions. This decreases the price by about 20% on average in the timescale the Commission used, but in some cases it was as much as 80-90%.

The Commission found that originator companies have been using various policies to try to prevent or slow down the production of generics, on average delaying generic entry into the market by 7 months. It notes that the main sources of revenue for most originator companies are “blockbuster drugs”, which bring in globally over US$1 billion annually. When these drugs come up to expiry, pharmaceuticals companies have a strong incentive to protect these patents to preserve profits.

These delays were caused by a variety of strategies on the part of originator companies (which the Commission adds may or may not have been designed for this purpose; however, it also presents the quotes below). The main ones are; filing multiple patents on the same drug (”patent clusters”), in one case 1,300; patent litigations against generics companies (which the generics companies won in 60% of cases); settlements with generics companies containing clauses forcing a delay in releasing generic drugs; and intervening in national processes for approving generic drugs.

The Commission also noted that originator pharmaceutical companies (who undertake nearly all R&D) on average spent 17% of turnover on R&D (including 1.5% on basic research, the rest going to clinical trials) and 23% of turnover on marketing and promotional activites.

In the process of the investigation both originator and generics companies have expressed a wish for a single, EU-wide patent judiciary.

The full report will be published in spring, 2009.

From the press release:

Documents found by the Commission during the sector inquiry included such declarations as:

“We identify options to obtain or acquire patents for the sole purpose of limiting the freedom of operation of our competitors… Rights covering competitive alternatives are maintained in major markets until risk of competing products appearing is minimal.”
“I suppose we have all had conversations around ‘how can we block generic manufacturers.’ (…) Don’t play games in patenting new salt forms too late, the generics are starting earlier and earlier. Get (…) claims on key intermediates that cover a number of routes. Process patents are not the biggest block but can put generics off if a superior chemistry job is done.”
“Interchangeability issues were used in (several countries) to limit generic erosion. (…) Outcome: extra (…) sales of USD 61 m compared to expected generic erosion.”

 

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