UK: Pharmaceutical Sector Inquiry - The Commission Backs Off

Last Updated: 10 July 2009
Article by David Marks and Nick Beckett

After an 18 month investigation the European Commission today published its final report in the pharmaceutical sector inquiry. The inquiry focused on why fewer pharmaceutical products were being brought forward by originators and the apparent difficulties faced by generic producers when launching a copy product following the originator's loss of exclusivity. The final report repeats many of the Commission's findings of fact from its interim report (see our earlier Law-Now) but has considerably softened its criticism of the originator industry. The final report is at pains to recognise the importance of the originator industry to the EU economy and to patients as well as the importance of intellectual property rights to protect innovation.

The final report's conclusions are grouped in four main areas:

  • Competition law scrutiny and enforcement - This will continue. Specific competition infringement proceedings will be opened on a case by case basis, and some are already underway. The Commission will monitor settlements which limit generic entry and include a value transfer from the originator to the generic company.
  • Patent framework - Stakeholders generally accept the need for a Community patent and a unified specialised patent litigation system in Europe to simplify and accelerate patent grant and enforcement. Initiatives by the European Patent Office to ensure a high quality standard of patents granted and to accelerate procedures were also supported.
  • Marketing authorisations - The Commission wishes to see full and effective implementation and enforcement of the current regulatory framework. National competent authorities should respect time limits, a factor which can benefit originators when first seeking approval and generics when seeking to launch a copy. The Commission wishes to discourage vexatious third party submissions in marketing authorisation procedures and particularly wishes to ensure that allegations of intellectual property infringement are excluded from the process.
  • Pricing and reimbursement - The Commission invites Member States to consider automatic pricing and reimbursement mechanisms for generic products. Third party submissions on patent, bioequivalence and safety issues should not be taken into account by competent authorities at this phase. Member States should respect existing procedural time limits in this area and exchange best practice on generic policies.

To some extent the final report is a retreat by the Commission's competition directorate, with its enthusiasm curbed by other Commission services. Clearly the Commission as a whole is better informed about the challenges faced by originator and generic companies. The competition directorate in particular seems to recognise that the originator/generic debate cannot be seen simply in competition law enforcement terms but also depends on the detailed implementation of the patent and regulatory systems. In other words, change needs to happen in areas where the Commission has no direct powers.

But overall the Commission can rate the pharmaceutical inquiry as a success. Right or wrong, it has succeeded in giving prominence to the originator/generic debate and has had the almost undivided attention of the pharmaceutical industry globally for the last 18 months. It can be expected that the Commission will try to maintain this profile when pursuing the four main areas which it has identified.

For the final report please click here. For the Commission's press release here

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 08/07/2009.

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