EU regulators take on pharmaceutical industry

The EU will examine whether companies were deliberately preventing new firms from entering the market by abusing patent rights.

European Union antitrust regulators said Wednesday they were raiding pharmaceutical companies - including Pfizer, AstraZeneca and GlaxoSmithKline - in a probe into why so few new medicines and drugmakers are emerging. EU antitrust chief Neelie Kroes said she was looking at the entire pharmaceutical industry and wanted to know why generic drugs were so slow to be launched in Europe. Generic medicines are made by other companies after the original developer of the drug loses its exclusive patent rights. The European Commission said it was conducting inspections at the European premises of a number of pharmaceutical companies - both research-based and generic - including some based outside Europe. US-based Pfizer, Anglo-Swedish AstraZeneca, Britain's GlaxoSmithKline, Sanofi-Aventis of France and Sandoz International GmbH, the generics division of Swiss company Novartis, confirmed they had been the target of surprise raids and were cooperating with regulators. Wyeth of Madison, New Jersey, said EU officials went through its British offices late Tuesday, copying some documents and talking with staff. Kroes said the EU was working closely with US officials. The EU executive will examine whether companies were deliberately preventing new firms from entering the market by abusing patent rights and launching "vexatious litigation" to ward off potential rivals. It said the probe was partly triggered by its 2005 case against AstraZeneca in which the company was fined €60 million for filing misleading information to patent offices to delay generic versions of its ulcer drug Losec for most of the 1990s. Fewer new medicines are reaching the market, regulators said, one sign that competition may not be working. Only 28 new types of drugs were launched from 2000 to 2004, far fewer than the 40 that hit the market from 1995 to 1999. Regulators said they would also look into deals between drug companies - such as settlements in patent disputes - that might violate EU cartel rules. Pharmaceutical companies have argued that EU action to restrict patents would cost them billions of euros worth of research and development invested in new drugs, which get little or no return if cheaper generic drugs are allowed on the market. Some major health businesses - such as Johnson & Johnson - are now cutting costs and jobs as revenue streams from medicines dry up when patents expire in the next few years. But Kroes said patent protection cannot come at the expense of innovation that customers need to see in an industry essential to public health and the economy. "Without new pharmaceuticals, the quality of some medical treatments will stagnate; without generic products, the cost of some medical treatments will remain high," she said. "We need to know why this is happening, and what can be done about it."