Major drug companies are delaying or blocking cheaper generic medicines, raising bills for taxpayers and reducing incentives to innovate, the European Union said.
EU Competition Commissioner Neelie Kroes said competition in the pharmaceutical sector was not working as it should: multiple patent filings, lawsuits and court settlements cost governments billions of euros that they shouldn't have to pay for prescriptions. "It is early days, but the Commission will not hesitate to open antitrust cases against companies when it sees that competition has been breached."
Drug companies said the report exaggerated the delays and ignored the complexity of the market. The attack from the EU's executive arm adds pressure on companies that face losing many patents over the next four years, including some of their best-selling products. They also face problems in the US with President-elect Barack Obama, who wants to reform health insurance to cover millions of uninsured people, expected to be paid for partly by cutting treatment costs.
3 billion euros is a big number
A European Commission study of medicines that lost patent protection in 17 European countries between 2000 and 2007 found that delays in generic entry cost 3 billion euros (3.8 billion dollars).
The Commission had already fined AstraZeneca 60 million euros for delaying a cheaper generic version of its ulcer drug Losec. It has raided the offices of several companies, including AstraZeneca, GlaxoSmithKline, Pfizer, Merck & Co, Sanofi-Aventis, Teva and Novartis, as well as smaller firms.
The Commission appears to be working on several cases, which won't be known for a year. Documents showed attempts by some companies to keep generics off the market; in one case more than 1,300 patents had been filed for a single medicine. There were more than 700 lawsuits that delayed cheaper generics, lasting three years on average, and companies paid more than 200 million euros to keep generics off the market. Big companies also intervened in regulatory procedures to delay generic approvals.
Fewer generics than in America
The European Generic Medicines Association welcomed the report, saying it highlighted many obstacles the industry faces: generics make up 40% of the medicines market in Europe, compared with 60% in the United States. Drug companies insisted that the fall in new medicines approved since the 1990s is due to the huge rise in the cost of developing them.
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