EU to tackle pharmaceutical tricks
Pharmaceutical companies are abusing their position to block competitors, concludes European Competition Commissioner Neelie Kroes after conducting a ten-month inquiry.
The probe began and ended with raids at a number of drug firms.
Ms Kroes says the searches were justified in view of the issue's importance for every European: access to cheap new medicines.
If Europe stopped using medicines for a single year, the money saved would be enough to bankroll Europe's entire financial rescue plan. The question arises, then, whether drugs are too expensive. Are we really getting our money's worth?
EU Commissioner for Competition, Neelie Kroes
Two things awoke the commissioner's suspicion early this year. She first noticed it often takes months before a generic version becomes available after a successful drug's patent expires. She also observed that the number of new drugs on the market had dropped.
Ms Kroes came under fire for launching a probe on the basis of such a vague leads. The preliminary results, however, confirm that something is amiss.
"You'd be surprised to see how far companies are willing to go to protect the scope and duration of their patents", Ms Kroes said during the presentation of her findings.
"The fact is that the sums involved are huge."
The pharmaceutical industry proves to have a hefty ‘toolkit' of tricks. One of them is to apply at once for as many patents in as many European countries as possible. That way a single drug can result in as many as 1,300 patents. This causes competitors to keep busy a long time sorting it all out.
Another trick is to sue a competitor which is planning to bring out a cheap generic version of a drug. The maker of the generic drug is usually cleared of any wrongdoing. But the trial can take years. In the meantime, the cheap generic drug can't be brought out. Such practices also explain the lack of new medicines. The pharmaceutical giants block them to protect their own more expensive and more lucrative drugs.
Documents seized during searches clearly show that drug companies deliberately try to sideline competitors. An internal memo confiscated at one major company, for example, explicitly states that it wants to explore how to obtain patents "with the sole purpose of limiting competitor's opportunities".
"We don't say that-they themselves confess it", stresses Ms Kroes.
If cheap generic drugs had become available immediately - and not seven months later - for the limited number of medicines the Commission looked at, European consumers would, between 2000 and 2007, have seen savings worth three billion euros.
That the pharmaceutical industry is guilty of such dubious practices is nothing new, says doctor Dirk van Duppen of the Belgian organisation Medicine for the People.
"What is new is that such claims are now substantiated by an institution with considerable authority. In addition, these allegations are being born out by written documents, seized by the European Commission, which furnish explicit evidence for the things we have been trying to prove for several years on the basis of figures only."
Is all this, however, enough to take the next step and tackle these companies in the same tough way that Ms Kroes clamped down on computer giant Microsoft?
"You can't blame big and powerful companies for being big and powerful", observes Edward Miller, who specialises in competition law at London's Reed Smith. "It's going to take a long time", he warns, "to establish what the legal boundaries will be, and exactly what the freedom of action for the pharma-companies will be."
Maybe we won't have to wait that long. After all, stresses Ms Kroes, she and the drug companies are in complete agreement about one thing: something has to be done as soon as possible to trim the jungle of European patents.
Introduce a single EU patent so companies can't abuse the existing chaos in order to milk their patents as long as possible. And the companies themselves can organise their business in a far more efficient way than is currently the case. A win-win situation, in sum. First, however, Brussels will have to conduct considerable negotiations.
Perro de Jong