Sanofi-Aventis offices in Paris: one of several drugmakers raided by
antitrust cops earlier this year.
PATRICE MAUREIN
In addition to possibly charging specific companies with
antitrust abuses, the Commission may also seek to rewrite
the rules. For instance, it could impose tougher requirements for drug patent registrations or block deals that the
E.C. suspects are aimed at stifling competition. The branded
companies say that Europe’s network of national health
systems encourage generic competition by allowing access
to the originator’s market approval data ten years after
regulatory approval. But that’s still twice the wait in the
United States.
The raids sent the branded drug companies into defensive
mode. They question the Commission’s assumption that the
slowdown in bringing new drugs to market is due to abusive
conduct. In a June response to a Commission questionnaire,
the European Federation of Pharmaceutical Industries and
Associations (EFPIA), an industry trade group representing
branded drug companies, said the slowdown, if it exists—a
notion they deny—has nothing to do with industry shenanigans. Rather, it’s a product of the risky, lengthy, and
expensive process of developing new drugs, as well as the
pricing pressure they face from government monopsonies
with enormous purchasing power who demand price cuts
and push to get cheaper generics to market.
“Compared to the time it takes to research, develop, and
test a new substance, and get it approved by the authorities,
the protection and exclusivity conferred by a patent really
are not that long,” says Dr. Heinz Hammann, director of
corporate division patents at Boehringer Ingelheim, a German branded drug company. Boerhringer wasn’t part of the
January raids, but it is being separately investigated by the
Commission. “We are concerned about an increasing trend
of questioning and limiting IP rights, including patents, by
means of competition law,” Hammann says.
In fact, the Commission has previously brought a number of cases against big drug companies. In 2005 it fined
AstraZeneca € 60 million for blocking or delaying market
entry of generic versions of its ulcer drug Losec (Prilosec in
the U.S.). The Commission found that, by giving misleading
information to several national patent offices, AstraZeneca
illegally obtained extended patent protection for Losec. It
also found the company acted improperly by deregistering
that its patent litigation settlements with
four generic companies constituted illegal
monopolization. This case followed through
on a strategy announced by an FTC commissioner to seek a more favorable ruling on
the subject from another circuit. Legislation
to curb “reverse payment” settlements has
been introduced in Congress, and several
bills are pending, including some that would
make such settlements “per se” antitrust
violations.
The FTC is also spending significant
resources reviewing the competitive impact
of “authorized” generics, another type of
agreement between branded and generic
pharmaceutical companies. In such an
agreement, a branded company permits a
generic company to sell a generic product
under the branded manufacturer’s own
Food and Drug Administration approval.
Critics argue that erodes the incentive of the
180-day exclusivity period that the Hatch-Waxman Act provides to the first generic
company to file for approval of a generic
version of a drug. But many commentators
wonder how a branded company licensing
a new generic competitor to enter with a
lower-priced product can possibly violate
the antitrust laws.
Finally, the FTC is trying to facilitate the
creation of a regulatory framework for
the approval of follow-on biologic drugs,
a process that is complicated by the fact
that biologic drugs are much more tricky
to copy than traditional small-molecule
pills. Congress’s attempts to address the
issue are on hold until after the presidential
election. The attention being given to the
pharmaceutical industry in the U.S. (and in
Europe) is certainly understandable, given
the importance of the sector to the global
economy and, more importantly, to people’s
health and lives.—Eric Stock, Robert
Leibenluft, and Janet McDavid are attorneys
at Hogan & Hartson.
