Jan 17 2010　pipelinereview.com

US and EU regulators close in on pharmaceutical pay-for-delay deals

The evolving relationship between branded and generics pharmaceutical companies is set to undergo considerable change as regulators in both the US and EU move to restrict 'pay-for-delay' deals in a bid to increase generics cost-savings. As deals that delay the market entry of generics come under increasing scrutiny, the industry may find that its best option is to cease such practices altogether.

Following its year-long pharmaceutical sector inquiry, the EC has asked a number of companies to provide information pertaining to generics settlement agreements in Europe between July 2008 and December 2009. Companies in the frame include AstraZeneca, Boehringer Ingelheim, GlaxoSmithKline, Novartis, Roche, Sanofi-Aventis, Teva, and Niche Generics.

Niche Generics Limited is a company dedicated to the launch of generic pharmaceutical products throughout Europe on the first day of patent expiry. We are a small but very focused company employing a highly experienced international team. Niche Generics can demonstrate an impressive track record of product launches and we were the first company in the United Kingdom to successfully apply through the Patent Courts for a declaration of non-infringement.

Development of our products is carried out fully respecting intellectual property rights. Many of our projects are being developed in partnership with reputable companies using either their or our own facilities. Niche is a fully owned subsidiary of Unichem Laboratories Limited, an Indian independent research and manufacturing company having its own active pharmaceutical ingredient plants and MHRA-approved finished-dose manufacturing units.

Based both in the UK and Ireland, Niche Generics employs around 90 members of staff involved in patents, regulatory affairs, solid-dose manufacture, quality control, marketing and sales.

Niche Generics' products are directly marketed to community and hospital pharmacists in Ireland, via wholesalers in the UK whilst sales in Europe are distributed through selected partners.

The EC has also said that, from now on, it intends to gather these data on an annual basis, in much the same way as the US Federal Trade Commission (FTC), which produces annual reports detailing the type and frequency of settlement agreements undertaken by pharmaceutical companies in the US. The EC has said that although this will initially be a data-gathering exercise, it will investigate those agreements that raise anticompetitive concerns.

Settlement agreements between branded and generics companies have long been a means of minimizing the risk and cost associated with the often complex patent litigation that can precede generics entry. However, questions of competition emerge when such agreements result in pharmaceutical companies paying generics companies to delay the market launch of their generic drugs. These so-called 'pay-for-delay' agreements result in healthcare providers buying expensive branded drugs for longer than would otherwise be necessary.

Indeed, the EC estimates that delaying the market entry of generics cost at least E3 billion ($4 billion) between 2000 and 2007. While the EC ascribed delayed generics entry to a number of causes, pay-for-delay agreements represent one of the most amenable to regulation and enforcement. Consequently, the EC's decision to begin cataloguing agreements between branded and generics companies presages greater scrutiny, and potentially restrictions.

The situation in the US is considerably more advanced than in the EU, with the Federal Trade Commission's (FTC's) repeated calls for an end to pay-for-delay agreements likely to bear fruit under President Obama's healthcare reform drive. The healthcare reform bill passed by the House of Representatives contains a provision that would ban pay-for-delay agreements, although that passed by the Senate, with which it must be combined, does not. Nonetheless, the momentum behind such a ban is gathering pace. A number of competition and consumer watchdog groups, including the American Antitrust Institute and Consumer Federation of America, wrote to the US Senate this week, urging it to incorporate anti-pay-for-delay provisions, while the FTC is due to hold a press conference on January 13 to this effect.

Even in the event that the pay-for-delay ban fails to make it into the final bill, Datamonitor expects companies engaging in such settlement agreements to come under greater pressure from the US FTC, which now has the backing of the new administration, and potentially the judicial system. Moreover, with the EC now also scrutinizing branded-generic deals that delay generics entry, the wisest course for the industry may well be to desist from such practices.

Competition Commissioner Neelie Kroes, now in her last days in the job (she is likely to be switched to computerization in the new Commission, due to take office in February)

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2010/1/14　WSJ

Pfizer Contacted On EU Commission Probe, Cooperating Fully

Pfizer Inc. Thursday said it has been contacted by the European Commission in an antitrust probe into patent settlements between pharmaceutical companies and generic drug makers and that it is cooperating fully.

The commission, the European Union's regulatory arm, is worried that payments pharmaceuticals companies make to generic drugs makers to delay the release of cheaper medicines are forcing consumers to pay higher prices. The commission on Tuesday said it asked several pharmaceuticals companies to disclose their patent agreements with generic drugs manufacturers, but it didn't name the companies it has approached.

Pfizer, the world's biggest drug maker by sales, said Thursday in a statement that it "is confident all our actions are, and have always been, fully compliant with applicable competition and patent laws. We will fully co-operate with the European Commission and continue to partner with them to strengthen the competitiveness of the pharmaceutical sector to benefit today's European citizens and future generations."

Other companies contacted by the EU commission over their drug settlements include GlaxoSmithKline PLC and AstraZeneca PLC of the U.K., France-based Sanofi-Aventis SA, Swiss drug makers Roche Holding AG and Novartis AG and Danish drugs firm H. Lundbeck A/S.

In a sweeping antitrust investigation of the pharmaceuticals sector launched two years ago, the commission found that cheaper generic drugs are slow coming onto the market.

On Tuesday, the commission's top antitrust official, Neelie Kroes, said the EU "inquiry points to significant shortcomings in the pharmaceutical sector. Patent settlements are an area of concern, not least if there are situations where an originator company pays off a generic competitor in return for delayed market entry."

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2010/1/7　Dow Jones

Lundbeck Cooperating With EU In Anti-Trust Investigation

Danish pharmaceutical company H Lundbeck A/S Thursday said it is cooperating with the European Commission in its formal investigation into allegations of fair competition violations, adding that it has done nothing wrong.

The commission, the European Union's executive arm and regulator, suspects the company of using its dominance in the market to prevent sales of generic versions of its anti-depressant drug 抗うつ剤 Citalopram through a range of illegal actions and agreements.

"Lundbeck is cooperating fully with the European Commission...and is confident that the group has complied with all relevant national and EU competition legislation," it said in a statement.

Lundbeck spokesman Mads Kronborg said the commission is only opening formal proceedings.

"This is not to say that the commission has proved any infringements or that there is a case being raised against Lundbeck," he said.

"We believe we have nothing to hide, we believe we have done nothing wrong," he added.

Kronborg said the probe seems to be related to the commission's 2005 investigation that Lundbeck may have abused its dominant position in the Italian market for antidepressant drugs.

Back then, the commission was concerned that Lundbeck may have illegally delayed or deterred the entry of generic drugs into the market place.

EU

The facts, to be investigated further, concern unilateral practices and/or agreements with the object or effect of preventing or delaying entry of generic citalopram into the markets of citalopram in the European Economic Area (EEA). Citalopram is an anti-depressant drug. These suspected practices and/or agreements constitute possible infringements of Article 101 and/or Article 102 of the Treaty on the Functioning of the European Union and Article 53 and/or Article 54 of the EEA Agreement.

July　8, 2009　 IP/09/1098

Antitrust: shortcomings in pharmaceutical sector require further action

Market entry of generic drugs is delayed and there is a decline in the number of novel medicines reaching the market, according to the European Commission's final report on competition in the pharmaceutical sector. The sector inquiry suggests that company practices are among the causes, but does not exclude other factors such as shortcomings in the regulatory framework. As a follow up, the Commission intends to intensify its scrutiny of the pharmaceutical sector under EC antitrust law, including continued monitoring of settlements between originator and generic drug companies. The first antitrust investigations are already under way. The report also calls on Member States to introduce legislation to facilitate the uptake of generic drugs. The report notes near universal support amongst stakeholders for a Community Patent and specialised patent litigation system in Europe.

Competition Commissioner Neelie Kroes said: “We must have more competition and less red tape in pharmaceuticals. The sector is too important to the health and finances of Europe's citizens and governments to accept anything less than the best. The inquiry has told us what is wrong with the sector, and now it is time to act. When it comes to generic entry, every week and month of delay costs money to patients and taxpayers. We will not hesitate to apply the antitrust rules where such delays result from anticompetitive practices. The first antitrust investigations are already under way, and regulatory adjustments are expected to follow dealing with a range of problems in the sector."

Main findings and policy conclusions

The inquiry has contributed significantly to the debate on European policy for pharmaceuticals, in particular for generic medicines.

On the basis of a sample of medicines that faced loss of exclusivity in the period 2000 to 2007 in 17 Member States, the inquiry found that citizens waited more than seven months after patent expiry for cheaper generic medicines, costing them 20% in extra spending.

Generic delays matter as generic products are on average 40% cheaper two years after market entry compared to the originator drugs. Competition by generic products thus results in substantially lower prices for consumers. The inquiry showed that originator companies use a variety of instruments to extend the commercial life of their products without generic entry for as long as possible.

The inquiry also confirms a decline of novel medicines reaching the market and points to certain company practices that might contribute to this phenomenon. Further market monitoring is ongoing to identify all the factors that contribute to this decline in innovation.

Reacting to the findings, the Commission will apply increased scrutiny under EC Treaty antitrust law to the sector and bring specific cases where appropriate. The use of specific instruments by originator companies in order to delay generic entry will be subject to competition scrutiny if used in an anti-competitive way, which may constitute an infringement under Article 81 or 82 of the EC Treaty. Defensive patenting strategies that mainly focus on excluding competitors without pursuing innovative efforts will remain under scrutiny. To reduce the risk that settlements between originator and generic companies are concluded at the expense of consumers, the Commission undertakes to carry out further focused monitoring of settlements that limit or delay the market entry of generic drugs. In the case of clear indications that a submission by a stakeholder intervening before a marketing authorisation body was primarily made to delay the market entry of a competitor, injured parties and stakeholders are invited to bring relevant evidence of practices to the attention of the relevant competition authorities.

On regulatory issues the inquiry finds that:

The Commission is also urging Member States to:

To assist Member States in delivering speedy generic uptake and improved price competition, the report contains an overview of national measures and their effects on generic uptake (volume, prices, number of entrants) and encourages Member States that want to benefit from generic savings to consider such measures. In this light the Commission will also examine existing EU rules in the area of pricing and reimbursement (Transparency Directive 89/105/EEC).

Background

The inquiry began in January 2008 to examine the reasons why fewer new medicines were brought to market and why generic entry seemed to be delayed in some cases. The goal is to find ways that help the market work better.

Preliminary results were published in November 2008. More than 70 submissions were received from stakeholders. Consumer associations, health insurers and the generics industry have welcomed the results arguing that they confirm their concerns. The originator industry and their advisors have supported the call for the creation of a Community Patent and a specialised litigation system, whilst arguing that generic delay and the decline in innovation is caused by regulatory shortcomings.