EC launches major pharma industry probe

By Anna Lewcock

- Last updated on GMT

Related tags: Ec, European union, Pharmaceutical industry

The European Commission has launched an investigation into the
entire European pharmaceutical sector, with surprise raids on a
number of manufacturers in a bid to unearth any evidence of
foul-play hampering the launch of new medicines on the market.

Numerous pharma firms have been subject to unannounced inspections over the last 24 to 48 hours, with EC representatives turning up at company premises to root through documents in search of any incriminating paperwork. The EC probe has been triggered in response to the significant drop in the number of novel medicines reaching the European market over recent years. From 1995 to 1999, for example, an average of 40 new molecular entities (NMEs) were launched each year. Between 2000 and 2004, this figure had dropped to an average of only 28. The Commission is also suspicious of generic medicines, which appear to be experiencing significant delays in getting to market. The EC plans to investigate the reasons behind these trends, with particular emphasis on whether any agreements, settlements or contracts restricting competition have been entered into, or any unilateral abuses of dominant positions. Artificial barriers to the entry of NMEs or generic medicines to the market could be the cause of the trends that have worried the EC, barriers that could have been erected knowingly by pharma companies misusing patent rights to stifle innovation, initiating 'vexatious' litigation, or colluding with other companies. Distorting the market in this way infringes EC regulations, and could lead to cases being brought against individual companies found guilty of knowingly partaking in such activities. "Vigorous competition in this sector is crucial for the public, as it ensure both access by patients to state-of the-art medicines, and value for money for health spending by individuals, private health schemes and government health services in Europe,"​ a statement from the EC said. The EC hoped to expose evidence of any anti-competitive behaviour through surprise raids on a number of pharma companies across Europe. While the EC has carried out similar 'sector enquires' before (for instance in the telecommunications, financial services and energy sectors), this is the very first time the Commission has resorted to surprise raids on firms that were completely unexpected and unannounced. "The kind of information the Commission will be examining in this inquiry, notably concerning the use of intellectual property rights, litigation and settlement agreements covering the EU, is by its nature information that companies tend to consider highly confidential,"​ a document released by the EC on Wednesday explained. "Such information may also be easily withheld, concealed or destroyed. The Commission is keen to have immediate access to all such company information and has therefore ordered unannounced inspections." ​ The Commission has compiled a list of manufacturers of both innovative and generic medicines, all of whom have 'significant commercial activities'​ in Europe and fulfil additional selection criteria, for example relating to their competitive environment. Who's on the list? ​ A number of pharmaceutical companies have already admitted that they have been approached by EC representatives looking to sift through their paperwork. A UK spokesperson from Wyeth​ told that EC representatives, along with officers from the UK Office of Fair Trade, turned up at the company's regional headquarters in Maidenhead within the last 24 hours, and proceeded to rifle through various files and documents. The firm was told very little beyond what was included in the publicly available press release issued by the Commission on Wednesday, though the company says it is cooperating fully with the investigation. Merck​ also confirmed that it had been approached as part of the ongoing investigation: "On January 15, 2008…an inquiry has been conducted also at Merck Sharpe & Dohme (MSD) Regional Business Support Center GmbH and MSD Sharpe & Dohme GmbH,"​ was told. "The Commission has not alleged that MSD has engaged in any unlawful practices. MSD is fully cooperating with the Commission's investigation." Pfizer​, AstraZeneca​ (already stung by anti-competition accusations in 2005 regarding anti-ulcer drug, Losec (omeprazole)), Sanofi Aventis​ and GlaxoSmithKline​ all also confirmed their involvement in the investigation, but were unwilling to provide any further details. Media reports also suggest that Novartis​, Teva​ and Johnson & Johnson​ have also confirmed their involvement in the case. Following the initial raids on Tuesday, documents will be analysed by the EC and requests for further information will be sent to certain companies and other actors in the sector. A preliminary report is expected to be published in autumn 2008, with a final report gauging reactions from the sector and the public due in spring 2009. This latest interrogation of the pharma industry, hot on the heels of the UK's Serious Fraud Office's investigation into allegations of illegal bribes paid by pharma firms to Saddam Hussein's Iraqi regime, is yet another nail in the coffin of the sector's ailing reputation. Although no conclusions regarding the possibility of anti-competitive activities are likely to emerge for some time, the mere suggestion of pharmaceutical companies conspiring to keep much needed drugs off the market in aid of fattening their wallets is likely to be enough to send public opinion polls plummeting in completely the wrong direction.

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