EC Launches Inquiry Into Pharma Industry

The European Commission has launched what it calls a sector inquiry into competition in the pharmaceuticals industry, sending teams of inspectors on surprise visits to the headquarters of a number of drug companies around Europe.

"We have launched this inquiry because pharmaceuticals markets are not working as well as they might," explained Neelie Kroes, commissioner for competition policy, at a press conference in Brussels called to announce the moves. Patent protection has never been stronger, she said, "but the number of new pharmaceuticals coming to market is declining." Moreover, "generic manufacturers are not jumping into the markets as quickly as we would expect," she adds.

The inquiry will examine whether agreements between pharmaceutical companies, such as settlements in patent disputes, infringe antitrust regulations and if companies have created artificial barriers to entry through the misuse of patent rights and vexatious litigation. The EC concedes that tighter regulations adopted in Europe since 1995 may have an impact on the number of new drugs brought to market, but it doesn???t believe that regulations alone fully explain the decline in introductions.

Kroes plans to issue an interim report this fall and a final report in the spring of 2009. A sector inquiry is unlike a cartel case, where the commission has specific information about possible unlawful action, although information gathered during the inquiry may be used to prosecute cartel cases later on.