(Adds generics lobby comment, Bayer Healthcare comment.)
By Peppi Kiviniemi
Of DOW JONES NEWSWIRES
BRUSSELS -(Dow Jones)- Big pharmaceutical companies abuse their position in the marketplace to delay and block cheaper versions of their drugs from coming to market, the E.U. Commission said Friday.
Competition in this industry "doesn't work as well as it should," and governments end up paying too much from their national health budgets, because generic drugs don't become available in a timely fashion, the commission said.
"It is still early days, but the commission won't hesitate to open antitrust cases against companies where there are indications that the antitrust rules may have been breached," Competition Commissioner Neelie Kroes said.
According to the preliminary findings, companies that develop and sell new medicines often use abusive tactics to delay the market entry of competing generic medicines, which can copy the branded drugs once the original patent expires.
The ruses used by the companies include multiple patent applications for the same medicine, disputes and litigation, the commission said.
Over seven years, the commission counted over 700 cases where large drugs companies sued generic drug companies over alleged patent infringements, which on average lasted nearly three years. The generic drug companies finally won the cases in over 60% of the cases.
Patent settlements that block generic drugs from coming to market were also popular, with over EUR200 million being paid to generic companies in so-called "reverse payment settlements" to stop generics from entering the market.
The commission looked at a sample of medicines on which patents were due to expire between 2000 and 2007. Based on the sample, savings of about EUR3 billion would have been possible if generic medicines had become available without delay, the commission said.
When generic drugs finally enter the market, the prices of medicines fall about 20%, the commission said.
Responding to the report, some big drugs companies questioned whether the commission should intervene in the way they choose to protect their patents.
"We believe that there is nothing in this report that is unlawful," said Arthur Higgins, CEO of Bayer Healthcare. He added that "it is possible that as a result of the findings our practices will be challenged and laws may need to be changed."
Generic companies welcomed the findings.
"This vindicates all the issues that we have been raising over the past five to six years" and shows that the original drug producers clearly have a strategy to keep the generics out, at a great cost to consumers, said Greg Perry, director general of the European Generic Medicine Association EGA.
EFPIA, an umbrella group of pharmaceutical associations, called for the commission to create a more efficient generic market instead of accusing drug developers of keeping generics out.
In the Netherlands, savings of up to EUR400 million were achieved in one year by promoting active price competition between generics, EFPIA said.
The European Commission started its inquiry last January, making unannounced raids at
AstraZeneca PLC (AZN),
GlaxoSmithKline PLC (GSK),
Sanofi-Aventis SA (SNY),
Novartis AG's (NVS) Sandoz generics unit and Merck & Co. (MRK).
It launched a new probe earlier this week, raiding the offices of pharmaceutical companies in the E.U. suspected of operating cartels or abusing their dominant market positions.
-By Peppi Kiviniemi, Dow Jones Newswires; +32-(0)2-741-1483; peppi.kiviniemi@dowjones.com
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Dow Jones Newswires
11-28-08 0949ET
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