In a series of dawn raids on 16 January 2008, the European Commission (EC) carried out a number of unannounced inspections of both innovative (drug developing, pharma) and generic pharmaceutical companies thereby launching a sector inquiry into the pharmaceuticals industry.
Companies targeted include both European companies, U.S. pharmaceutical companies with significant operations in Europe and Israel’s own Teva Pharmaceuticals, the worlds 4th largest drug manufacturer, which cannot truly be described as being a generic drug company in that Teva has and is developing new drugs as well.
The inquiry is essentially to provide the Commission with information about commercial practices within the pharmaceutical industry. It was launched in response to concern that competition in the European sector may not be working properly, with a significant decrease in both novel and generic medicines for human consumption entering the European pharmaceutical market in recent years.
The suspicion the probe is expected to confirm, is the existence of confidential anti-competitive agreements wherein the companies holding patent rights due to run out, come to agreements with generic drug manufacturers, under which they delay their market entry, enabling the drug developers to extend their often legally extended patents still further.
It’s a great scam, the profit margins of monopoly drugs are such that generic companies can rake in the profits without going to the trouble of manufacturing and distributing, and the Innovative (Pharma) companies can cut in the generics for a share of the profits. Who foots the bill? The consumers of course, twice. The National Health Services and Health Insurance funds and the ill buy drugs at prices designed to fund innovative research. However, without needing to develop new drugs to rake in high profits, why should the so called Pharma Industries waste their resources in risky, expensive, long term R&D projects?
Patent abuse in the pharmaceutical industry is rife. An Australian judge joined the term “ever-greening” to describe tactics resulting in patent applications being refiled to prevent drugs coming off patent. In 2005, AstraZeneca €60 million by the European Commission, for misleading patent offices in the EU, and last year, the Commission launched proceedings against Boehringer for alleged misuse of the patent system to exclude competition in the area of chronic obstructive pulmonary disease drugs.
The Commission has announced that it would examine whether the investigated parties’ exercise of patents and agreements between competitors, comply with the EC Treaty’s rules on restrictive business practices. Another area of inquiry is misuse of patent application procedures, oppositions and frivolous lawsuits designed to prevent or deter launches of generic alternatives. The first results of the European Commission’s inquiry are expected to be published in an interim report this autumn and a final report is due in the spring of 2009.
