EU Pharmaceutical Sector Inquiry – Preliminary Report

To much fanfare the European Commission published its preliminary report in the Pharmaceutical Sector Inquiry on 28 November 2008. Although the report is work in progress, the Commission claims to be ‘shocked’ that originator companies use patent rights and other legal measures to delay entry by generic companies.

The report explores innovators’ actions against other innovators and shortcomings in the patent and regulatory systems. However, it reserves most criticism for innovators’ actions against generics. The Commission claims that innovators use a ‘toolbox’ of measures against generics i.e. the use of ancillary patents, patent litigation, patent settlements, regulatory intervention and follow on product switching. At the same time, the Commission acknowledges that the patent system is the cornerstone of commercial innovation.

The Commission continues to evaluate the evidence seized in a series of raids on companies in January 2008 and in response to questionnaires issued to pharmaceutical companies and other stakeholders. For maximum effect it also launched further raids on some companies a matter of days before the preliminary report [click here].

Although the report is an interim step, the direction of travel is clear: the Commission wishes to remove obstacles to generic entry. In doing so, it will explore that fine line between the existence of rights and when enforcement of those rights infringes competition law. DG Competition can take direct initiatives to bring infringement proceedings in specific cases. It can also be expected to issue guidelines, a form of ‘soft’ law, on some areas of concern. Other measures, such as patent and regulatory regime reforms would require wider support in the Commission and from Member States and would not be such a quick gain. Yet even if outcomes are uncertain and slow, the Commission has certainly gained the industry’s attention this year.

For the text of the Commission press release: please click here

For the text of the full report: please click here