EU launches anti-trust probe of pharma firms

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The European Commission yesterday launched a probe into the pharmaceutical industry's settlements with generics firms, questioning whether such deals breech the EU's competition laws and restrict consumers' access to medicines. Increasingly, drugs companies, such as GSK and AstraZeneca have struck deals with generic competitors in an effort to preserve revenues on high earning treatments. The move follows a report on the industry last year that promised action on delays in getting drugs to market.

"The Commission's pharmaceutical sector inquiry points to significant shortcomings in the pharmaceutical sector. Patent settlements are an area of concern," EU competition commissioner Neelie Kroes said in the statement. "We need to monitor this type of agreement (patent settlements) in order to better understand why, by whom and under which conditions they are concluded. The monitoring will also provide us with the possibility to act should this become necessary."

Generics firms spend virtually nothing on research and development and challenge the patents on treatments, often promising to produce a copy for less money."Today's investigation is a logical step in progressing the Commission's agenda to ascertain whether or not there are unnecessary, anti-competitive delays in generic drug manufacture," said Gareth Williams, a partner at intellectual property law firm Marks & Clerk.

"There can often be as much commercial incentive for generic companies to restrict competition as there is for major pharmaceutical companies - everyone is in business to turn a profit. It is important, however, that clarification is given over the scope of this probe and the nature of the settlements involved.

"It is likely that larger financial deals designed to restrict a number of generic entrants coming to market for a given period of time will be put under the microscope. Such deals of course keep prices artificially high (if not higher), since the entry of any generic is delayed, he added."

While not named by the European Commission yesterday, both GSK and AstraZeneca confirmed that they had been contacted in relation to the probe. In a statement, GSK, said: "We have received a request from the EU commission, as part of their ongoing monitoring, for information regarding interactions with generic manufactures. We will be providing the Commission with all relevant information."

In a similar statement, AstraZeneca added: "We can confirm that we have been approached by the Commission and will continue to cooperate fully with their investigation. AstraZeneca is confident that its agreements comply with the law and benefit consumers, the settlement parties and society at large."

France's Sanofi-Aventis and Roche and Novartis from Switzerland are also taking part in the investigation.