Big Pharma under fire

European regulators raid top pharmas for suspected antitrust activity

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BRUSSELS, Belgium—As part of an ongoing antitrustinvestigation of several large pharmas, European regulators on Oct. 6 raided atleast three of the world's top drugmakers, according to the European Commission(EC)
A commission spokesman confirmed that regulators performedsurprise inspections on several companies, but did not specify which companieswere raided.
"The European Commission can confirm that on Oct. 6,Commission officials started surprise inspections at the premises of certaincompanies active in the pharmaceutical industry," the EC says in aprepared statement. "The Commission has reason to believe that theprovisions of the EC Treaty prohibiting restrictive business practices and/orthe abuse of a dominant market position (Articles 81 and 82) may have beeninfringed."
Teva and Novartis confirmed to Drug Discovery News that theywere 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 officesof Sandoz, France," a Novartis Media Relations representative says. "We arecooperating fully with the authorities. At the moment, we cannot comment on thenature of the investigation."
Shir Altay, a Teva Corporate Communications representative,says the visit was "part of a broader investigation regarding uncompetitivepractices within the generic industry in France."
"Officials from the EU commission visited our offices inParis Tuesday, Oct. 6. We are providing full support to the Commissionofficials. In any event, we believe that Teva France has conducted its businessin a responsible manner," Altay says.
GlaxoSmithKline, Roche, Bayer, Novo Nordisk and Lundbecktold Reuters they were not aware of any raids on their companies.
The EU began raiding some of the world's top pharmas inJanuary 2008. According to the European Union (EU), drugmakers are illegallyblocking the release of generic drugs, which they suspect has cost thehealthcare system billions of dollars. The EU estimates that such "delays" ingeneric releases, which regulators suspect may happen when drugmakers cut dealswith generic producers to hold back the introduction of less expensive versionsof their drugs, have resulted in a 20 percent cost increase to consumers.
The pharmas have contended that most of the delays—whichhave been the subject of many high-figure legal settlements in the UnitedStates—are due to regulatory and other bureaucratic issues, rather thandeliberate action by companies.
"Surprise inspections are a preliminary step in theinvestigation of suspected anticompetitive practices," an EC spokesmansays. "The fact that the European Commission carries out such inspectionsdoes not mean that the companies are guilty of anti-competitive behavior, nordoes it prejudge the outcome of the investigation itself. The European Commissionrespects the rights of defense, in particular the right of companies to beheard in the Commission's proceedings against them."
In a report issued in July, EC Commissioner Neelie Kroessaid she would not hesitate to go after drugmakers that cut deals with genericdrugmakers. 
To date, thecommission has only launched one specific investigation that probed allegedblocks on generic versions of Servier's heart drug perindopril.
"There is no fixed deadline to complete inquiries intoanticompetitive conduct," the EC spokesman says. "Their durationdepends on a number of factors, including the complexity of each case, theextent to which the undertakings concerned co-operate with the Commission andthe exercise of the rights of defense."
In a separate legal development, in what is being considereda victory for the pharmaceutical industry, the European Court of Justice onOct. 6 rendered a decision telling EU lawmakers to reconsider claims that GSK'swholesale pricing policy is anticompetitive. 
The case centered on different pricing that GSK establishedin 1998 for products in Spain depending on whether they are used nationally orresold. The company opposed discount drug trading, which exploits a pricedifferential for medical products among countries.
Europe's Court of First Instance first examined the issueafter the EC determined that the practice violated competition law. The courtagreed that the practice was anticompetitive, but annulled the EC's decision,saying that it did not adequately consider the possible advantage of innovationin the industry. 
The parties appealed to the Europe's highest court, whichheld that although the lower court erred in defining consumer disadvantage as aprerequisite for anticompetitiveness, its decision was otherwise well-founded.The court also dismissed a portion of the appeal asking for a special exemptionto European law, saying that an exemption must demonstrate technical oreconomic progress, the burden of proof for which lies with the requesting company. 
The court dismissed the appeal, and the issue has beenremanded to the EC.

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