European regulators raid top pharmas for suspected antitrust activity
BRUSSELS, Belgium—As part of an ongoing antitrust investigation of several large pharmas, European regulators on Oct. 6 raided at least three of the world’s top drugmakers, according to the European Commission (EC).
A commission spokesman confirmed that regulators performed surprise inspections on several companies, but did not specify which companies were raided.
"The European Commission can confirm that on Oct. 6, Commission officials started surprise inspections at the premises of certain companies active in the pharmaceutical industry," the EC says in a prepared statement. "The Commission has reason to believe that the provisions of the EC Treaty prohibiting restrictive business practices and/or the abuse of a dominant market position (Articles 81 and 82) may have been infringed."
Teva and Novartis confirmed to Drug Discovery News that they were investigated. According to media reports, French pharma sanofi-aventis, India’s Ranbaxy and Ratiopharm of Germany were also visited by regulators.
“We can confirm that the Commission has visited the offices of Sandoz, France,” a Novartis Media Relations representative says. “We are cooperating fully with the authorities. At the moment, we cannot comment on the nature of the investigation.”
Shir Altay, a Teva Corporate Communications representative, says the visit was “part of a broader investigation regarding uncompetitive practices within the generic industry in France.”
“Officials from the EU commission visited our offices in Paris Tuesday, Oct. 6. We are providing full support to the Commission officials. In any event, we believe that Teva France has conducted its business in a responsible manner,” Altay says.
GlaxoSmithKline, Roche, Bayer, Novo Nordisk and Lundbeck told Reuters they were not aware of any raids on their companies.
The EU began raiding some of the world’s top pharmas in January 2008. According to the European Union (EU), drugmakers are illegally blocking the release of generic drugs, which they suspect has cost the healthcare system billions of dollars. The EU estimates that such “delays” in generic releases, which regulators suspect may happen when drugmakers cut deals with generic producers to hold back the introduction of less expensive versions of their drugs, have resulted in a 20 percent cost increase to consumers.
The pharmas have contended that most of the delays—which have been the subject of many high-figure legal settlements in the United States—are due to regulatory and other bureaucratic issues, rather than deliberate action by companies.
"Surprise inspections are a preliminary step in the investigation of suspected anticompetitive practices," an EC spokesman says. "The fact that the European Commission carries out such inspections does not mean that the companies are guilty of anti-competitive behavior, nor does it prejudge the outcome of the investigation itself. The European Commission respects the rights of defense, in particular the right of companies to be heard in the Commission’s proceedings against them."
In a report issued in July, EC Commissioner Neelie Kroes said she would not hesitate to go after drugmakers that cut deals with generic drugmakers.
To date, the commission has only launched one specific investigation that probed alleged blocks on generic versions of Servier’s heart drug perindopril.
"There is no fixed deadline to complete inquiries into anticompetitive conduct," the EC spokesman says. "Their duration depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned co-operate with the Commission and the exercise of the rights of defense."
In a separate legal development, in what is being considered a victory for the pharmaceutical industry, the European Court of Justice on Oct. 6 rendered a decision telling EU lawmakers to reconsider claims that GSK’s wholesale pricing policy is anticompetitive.
The case centered on different pricing that GSK established in 1998 for products in Spain depending on whether they are used nationally or resold. The company opposed discount drug trading, which exploits a price differential for medical products among countries.
Europe’s Court of First Instance first examined the issue after the EC determined that the practice violated competition law. The court agreed that the practice was anticompetitive, but annulled the EC’s decision, saying that it did not adequately consider the possible advantage of innovation in the industry.
The parties appealed to the Europe’s highest court, which held that although the lower court erred in defining consumer disadvantage as a prerequisite for anticompetitiveness, its decision was otherwise well-founded. The court also dismissed a portion of the appeal asking for a special exemption to European law, saying that an exemption must demonstrate technical or economic progress, the burden of proof for which lies with the requesting company.
The court dismissed the appeal, and the issue has been remanded to the EC.