The Associated Press January 16, 2008
EU probes drug makers @@@
European Union antitrust regulators said Wednesday they were raiding pharmaceutical companies -- including Pfizer Inc., GlaxoSmithKline and Sanofi Aventis -- in a probe into why so few new medicines and drug makers are emerging.
EU antitrust chief Neelie Kroes said she was looking at the entire pharmaceutical industry and wanted to know why generic drugs were so slow to be launched in Europe. Generic medicines are made by other companies after the original developer of the drug loses its exclusive patent rights.
The European Commission said it was conducting inspections at the European premises of a number of pharmaceutical makers -- both research-based and generic -- including some based outside Europe.
U.S.-based Pfizer, Britain's GlaxoSmithKline and Sanofi-Aventis of France -- the world's three biggest drug makers -- along with Anglo-Swedish AstraZeneca, Merck Sharp & Dohme, Johnson & Johnson's Belgian unit, Wyeth of Madison, New Jersey, and Sandoz International GmbH, the generics division of Swiss company Novartis, confirmed they had been the target of surprise raids and were cooperating with regulators.
Kroes said the EU was working closely with U.S. officials -- "We're not the only one active in this," she said.
The EU executive will examine whether companies were deliberately preventing new firms from entering the market by abusing patent rights and launching "vexatious litigation"i p to ward off potential rivals.
It said the probe was partly triggered by its 2005 case against AstraZeneca in which the company was fined 60 million euros ($73 million) for filing misleading information to patent offices to delay generic versions of its ulcer Χα drug Losec for most of the 1990s.
Fewer new medicines are reaching the market, regulators said, one sign that competition may not be working. Only 28 new types of drugs were launched from 2000 to 2004, far fewer than the 40 that hit the market from 1995 to 1999.
"The Commission wants to investigate the reasons for this and in particular whether any agreements restricting competition or unilateral abuses of dominant position are connected to it," the EU said.
Regulators said they would also look into deals between drug companies -- such as settlements in patent disputes -- that might violate EU cartel rules.
Pharmaceutical companies have argued that EU action to restrict patents would cost them billions of euros worth of research and development invested in new drugs, which get little or no return if cheaper generic drugs are allowed on the market.
Some major health businesses -- such as Johnson & Johnson -- are now cutting costs and jobs as revenues from medicines dry up when patents expire in the next few years.
But Kroes said patent protection cannot come at the expense of innovation that customers need in an industry essential to public health and the economy.
"Without new pharmaceuticals, the quality of some medical treatments will stagnate; without generic products, the cost of some medical treatments will remain high," she said. "We need to know why this is happening, and what can be done about it."
Europe spends 200 billion euros ($298 billion) on medicines every year, or 400 euros ($595) per person. Most of that cost is carried by state health insurance programs.
Kroes said officials will likely follow up the raids with requests for information -- both from the companies it has raided and from others. That is a precursor to launching formal probes into individual companies that can eventually lead to fines of up to 10 percent of annual global sales.
The EU executive will issue a first report later this year on its findings into problems in the sector. Its final conclusions will be published in early 2009.
Swiss giant Roche Holding AG, Schering-Plough Corp. of Kenilworth, New Jersey and several German-based companies -- Merck KcGA, Bayer Schering Pharma AG, Boehringer Ingelheim GmbH and Stada Arzneimittel AG -- all said they were not under investigation.
Times January 17, 2008
firms raided after competition inquiry is launched by the EU
The European Commission is getting tough in its quest to find out if big pharmaceutical firms acted illegally to stop new drugs hitting the market
Some of the world's largest pharmaceutical companies were raided early as the European Commission launched a wide-ranging inquiry to determine whether they were acting illegally to prevent new drugs from coming on to the market.
Announcing the investigation, Neelie Kroes, the Competition Commissioner, said: "If innovative products are not being produced, and cheaper generic alternatives to existing products are in some cases being delayed, then we need to find out why and, if necessary, take action."
Companies that found EU and national competition inspectors on their doorsteps yesterday included Pfizer, GlaxoSmithKline, AstraZeneca, Johnson & Johnson, Merck & Co and Sanofi-Aventis.
Ms Kroes insisted that the inspections were not targeting companies suspected of wrongdoing, but were the starting point of a broad inquiry into the pharmaceutical sector to uncover information about intellectual property rights and litigation and settlement agreements. The investigation is expected to take over a year.
"By its nature, this is information that companies tend to consider highly confidential. Such information may also be easily withheld, concealed or destroyed. That is why we decided that inspections were necessary," Ms Kroes said.
AstraZeneca, which the Commission fined ?60 million in 2005 for mis-using the patent system to delay market entry of rivals to its ulcer drug Losec, confirmed that it was part of the sector inquiry and was "co-operating fully".
The company, which has lodged an appeal against the fine, said in a brief statement that the inquiry "relates to the introduction of innovative and generic medicines for human consumption on to the market and covers commercial practices, including the use of patents".
Commenting on behalf of the sector, the European Pharmaceutical Federation said it hoped "this inquiry will enable the Commission to better understand the nature and process of innovation in the pharmaceutical sector and the importance of intellectual property rights in driving pharmaceutical innovation".
The Commission has already launched similar inquiries into other areas - telecommunications, energy and financial services - to establish how companies in a particular sector behave, to determine whether EU competition rules are being flouted.
Ms Kroes said that she had chosen her latest target since she was determined to use her antitrust powers to solve problems that make a difference to the lives of individuals.
"Few things make more of a difference than this," she said, pointing out some ?200 billion (£149.4 billion) is spent on medicines in the EU every year - the equivalent of Euro400 for every man, woman and child.
"Without new pharmaceuticals, the quality of some medical treatments will stagnate. Without generic products, the cost of some medical treatments will remain high," Ms Kroes added.
The Commission justified its claim that market forces were not operating satisfactorily by noting that the number of novel medicines being placed on the market was declining. Between 1995 and 1999, an average of 40 novel molecular entities were launched annually. The figure was 28 over the next five years.
To try to reverse the trend, the Commission and the European pharmaceuticals industry launched an innovative medicines initiative last month in the hope of increasing public and private funding for drug research.
Industry sources maintain that apart from the high cost and time involved in developing new products, European manufacturers also face tougher regulatory burdens than competitors in the US or in emerging economies such as India.
Mrs Kroes's decision to turn the spotlight on the pharmaceutical sector using her antitrust powers follows an announcement on Monday of a new investigation into Microsoft's business practices, after the Commission had received complaints that the company was unfairly penalising competitors.
E28 new types of drugs went on sale between 2000 and 2004, far fewer than the 40 that hit the market from
E 1995 to 1999 AstraZeneca was fined Euro 60 million for filing misleading information to patent offices to delay generic versions of its ulcer drug Losec for most of the 1990s