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EU Competition Inquiry into Pharmaceutical Sector

July 2009

On 8 July 2009 the European Commission published its final report into possible anti-competitive practices in the pharmaceuticals sector. The investigation was prompted by a perceived decline in new drugs reaching the market and possible delays in the market entry of generic drugs.

The detailed report, which runs to more than 500 pages, concluded that generic medicines take too long to reach the market. It also confirmed that fewer innovative medicines are reaching the market.

The Commission found that generic drugs usually took around seven months to reach the market, once the exclusivity of the original drug had expired. For the highest selling medicines, this period was found to be four months. The Commiss ion recognised these delays as important. Generic equivalents were found to be 25% cheaper on average than the original compounds one year after loss of exclusivity. This already considerable difference increases to 40% two years after the loss of exclusivity. The Commission concluded, from studying a sample of medicines which lost exclusivity between 2000 and 2007, that €3 billion could have been saved if generic entry occurred immediately.

The use of the patent system was highlighted as key in the pharmaceutical sector. The Commission recognised that patents allowed companies developing new drugs to recoup their investment, but it also found that these companies use a variety of strategies to extend the commercial life of their products. The filing of large numbers of patent applications in relation to a single medicine (so-called "patent clusters") was highlighted as one of these strategies. Such behaviour is considered by the Commission to contribute to delayed generics entry.

The report confirms the Commission's view that a single Community-wide patent and patent litigation system would be beneficial to EU citizens. The European Patent Office is praised for its efforts to speed patent prosecution in Europe via its "raising the bar" initiative.

Although the report did not include an in depth analysis of regulatory frameworks within Europe, it was recognised that these systems also impact upon the industry. Streamlining is recommended in these areas.

In view of the findings in the report, the Commission has promised to scrutinise the pharmaceutical sector more closely. The first investigations of individual companies are reportedly already underway. This may be the Commission's final report on the investigation, but it seems the issues under consideration are anything but resolved.

A Citizen's Summary can be downlo aded from:

http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/citizens_summary.pdf

 

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Boult Wade Tennant LLP

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    We are delighted to announce that Managing Intellectual Property (MIP) has ranked our trade mark practice in the top tier of its 2016 annual survey. MIP’s IP Stars rankings are based on extensive research among thousands of intellectual property practitioners from around the globe, creating one of the most comprehensive and authoritative surveys of the IP legal market. It covers 80 countries and identifies the best patent, trade mark and copyright firms and practitioners in the world.
    - Boult Wade Tennant

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