EU warns of antitrust probes into drug makers

BRUSSELS - The European Union warned Wednesday of a wave of antitrust investigations into major drugmakers, saying they were deliberately stalling cheaper generic versions of their own medicines once exclusive patents expire.

"Makers of original medicines are actively trying to delay the entry of generic medicines onto their markets," EU Competition Commissioner Neelie Kroes said. "The Commission will now step up its antitrust enforcement" and monitor deals between major and generic drugmakers.

The EU also started an investigation into France's Les Laboratoires Servier for hindering the launch of generic versions of its heart disease drug perindopril.

Regulators said they suspected that Servier did deals with generic rivals Krka, Lupin, Matrix, Niche Generics Ltd and Teva to hold back cheaper versions.

Brian Ager of EFPIA, an industry group representing 44 drugmakers, said the EU report "claims erroneously that industry practices in some way contribute to slowing generic entry. There's nothing to substantiate these claims."

The group said regulators had also recognized that "complex and divergent regulatory barriers are the primary cause of market entry delay" because of the high costs of filing and defending separate national patents in the EU's 27 states.

The EU's antitrust division called for an EU-wide patent and litigation system and for national governments to speed up generic drug approvals. But it blamed drugmakers, too, for trying to discredit generics with misleading campaigns and misusing marketing authorizations to delay generic launches.

The EU says generic drugs are on average 40 percent cheaper than their branded rivals two years after they launch and play a key role in driving down health costs for Europe's aging and ailing population.

The European Commission said it would monitor deals between major pharmaceutical companies — such as Pfizer Inc., GlaxoSmithKline PLC and Sanofi-Aventis SA — and generic drugmakers because "every week and month of delay costs money to patients and taxpayers."

Kroes said regulators knew of at least 200 settlement agreements — some including payments to delay drug launches — between generic and brand-name drugmakers.

"A good number of them restrict entry onto the market of generics," she told reporters. "These settlements cause prices for consumers and for taxpayers to remain substantially higher than if competition existed."

EFPIA says companies have a right to defend patents for the medicines they develop and that the vast majority of these deals help competition because they settle legal action and allow the transfer of technology from one company to another.

GlaxoSmithKline spokesman Stephen Rea said intellectual property protection was "the bedrock of the pharmaceuticals industry" because it allowed drug developers recoup investment in new medicines — which can cost up to euro1 billion and 13 years to create and market.

Pfizer spokesman Oliver Stohlmann said in an e-mail the company fully complies with competition and patent laws. "We will continue to co-operate with the European Commission to clarify potential outstanding concerns and to strengthen the competitiveness of the pharmaceutical sector without undermining innovation," he wrote.

The EU report found that generic versions often don't launch until at least seven months after the patent on the original version expires. This cost European patients some euro3 billion more for medicines between 2000 and 2007, it said.

The European Union spent euro214 billion on medicines in 2007, or euro430 per person. Most of that cost is carried by state health insurance programs.

Regulators said there was a decline in the number of new drugs reaching the market and "certain company practices might contribute to this phenomenon." They gave no details but said they would closely monitor the pharmaceutical market to check what is holding back innovation.

Only 27 new types of drugs were launched from 2000 to 2004, far fewer than the 40 that hit the market from 1995 to 1999, it said.

Pharmaceutical companies are under pressure from the loss of exclusive patents for top-selling drugs and higher costs for research and development. Many are cutting costs and staff to try to stay profitable.

Launched in January 2008, the EU investigation gathered evidence from U.S.-based Pfizer, Britain's GlaxoSmithKline and Sanofi-Aventis of France — then the world's three biggest drug makers. Novartis AG is now No. 3 by sales and Sanofi-Aventis is No. 4.

Investigators also raided Anglo-Swedish AstraZeneca, Merck Sharp & Dohme, Johnson & Johnson's Belgian unit, Wyeth of Madison, New Jersey, and Sandoz International GmbH, the generics division of Swiss company Novartis, and consulted hospitals, pharmacies and insurers.

EU action was partly triggered by its 2005 case against AstraZeneca in which the company was fined euro60 million for filing misleading information to patent offices to delay generic versions of its ulcer drug Losec for most of the 1990s.

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Associated Press writers Meera Selva in London and Linda A. Johnson in Trenton, N.J., contributed to this story.

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