Europe regulatorsblame drug firms

Bloomberg

European Union regulators accused drugmakers of costing consumers in 17 countries as much as 3 billion euros ($3.9 billion) by using patent lawsuits and other tactics to keep cheaper generic medicines off the market.

The claim, part of an interim report by the European Commission Friday, was based on evidence collected during January raids at GlaxoSmithKline, AstraZeneca and at least seven competitors.

"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," European Competition Commissioner Neelie Kroes said in a statement from Brussels. The companies involved in the probe weren’t identified.

The makers of branded drugs face a decline in revenue starting in 2011 when products generating $150 billion a year will be hurt by generic competition. The EU spends 200 billion euros on medicines every year, or 400 euros per person. The report found that savings from generics, which can cost as much as 90 percent less than branded drugs, were about 14 billion euros from 2000 to 2007.

Kroes said the commission "would not hesitate" to open antitrust cases against companies when there’s evidence that they’ve abused their dominant market position or engaged in restrictive business practices.

The EU based the lost savings of 3 billion euros on a sample of medicines that faced the loss of exclusivity from 2000 to 2007 in 17 countries. The savings could have been realized if the generic medicines had been approved for sale without delay.

Companies’ argument
Companies have argued that they use patents to improve their products, Tim Frazer, a lawyer at Arnold & Porter in London, said in an interview on Nov. 26. EU inspectors conducted a second round of surprise inspections earlier this week. Teva Pharmaceutical Industries, the world’s biggest generic-drug maker, France’s Les Laboratoires Servier and Slovenia’s Krka Group said they were raided.

Companies can comment on the study until Jan. 31, 2009. A final report is expected in the second quarter of 2009, the regulator said.

The commission said compan-ies use a variety of tactics to delay or block the sale of generic drugs, including filing large numbers of patents for the same drug, suing generic companies, settling patent disputes and intervening in national procedures for generic drug approvals.

"Where successful, these practices result in significant additional costs for public health budgets - and ultimately taxpayers and patients - and reduce incentives to innovate," the commission said in the statement.

Companies seek patents for so-called replacement therapies when the original patent is about to expire. They may broaden the use of drug or change its form, such as a liquid or capsule. In one case, the EU found 1,300 patents for a single medicine.

"I suppose we have all had conversations around how can we block generic manufacturers," according to one document found by the commission. "Don’t play games in patenting new salt forms too late, the generics are starting earlier and earlier," the document said.