Pharmaceutical Sector Inquiry : Final Report

Pharmaceutical Sector Inquiry : 

Final Report 

Christian Schmidt 

European Commission 

Pharma Task Force 

COMPETITION – THE KEY TO ECONOMIC DEVELOPMENT 

AND WELFARE OF THE CONSUMER 

Bucharest, 6 October 2009 

DISCLAIMER 

“The views expressed are purely those of the writer and may not in any circumstances be 

regarded as stating an official position of the European Commission.”

Sector Inquiry into Pharmaceuticals in the EU 

The sector inquiry and the wider context 

� Pharmaceutical sector is essential 

� Each patient spends 430 €/annum on prescription medicine 

� EU citizens need access to innovative, safe and affordable medicines 

� Pharma SI as part of the ongoing Commission initiatives 

� Innovative Medicine Initiatives 

� High Level Pharmaceutical Forum 

� Commission Communication of December 2008 - Pharma Package 

� Commission‘s industrial property rights strategy 

� Main focus of the SI 

� Generic delay 

� Decline in innovation 

� nota bene: SI underlines the need for effective patent system to 

maintain incentives for innovation 

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Market characteristics and impact of generic entry 

� Price drop: 

� Generic price is on average 25% lower than Originator product prior to 

the loss of exclusivity (40% lower two years after loss of exclusivity) 

� Market share: 

� Generic market share is on average 30% after one year (45% after two 

years) 

� Generic delay: more than 7 months on average 

� Potential savings from generic entry could be 20% higher if generic 

entry is immediate 

3


Competition - originator and generic companies 

� Patent filing and enforcement strategies 

� Patent clusters 

� Divisional patents 

� Final outcomes of patent litigation 

� Average duration to reach final outcome: 2.8 years 

� Generic companies won 62% of patent litigation cases 

� Final outcome of opposition procedures before EPO 

� 60% of opposition cases led to revocation of the patent (in addition 

scope of patent was restricted in additional 15%) 

� Almost 80% of procedures before the EPO took more than 2 years 

4


Competition - originator and generic companies 

� Settlements and other agreements 

� More than 200 settlements: half of them restricted generic market 

entry, significant part of these contain value transfer (direct transfer: 

€ 200 mio) 

� Third party submissions in MA and P&R procedures 

� Interventions alleging patent infringement and safety issues 

� On average procedures with intervention last four months longer 

� Very limited success rates of originator companies in court 

� Cumulative use of practices 

5


Competition between originator companies 

� “Defensive” patents are used by many originator companies 

� 1100 potential overlaps and patent-related exchanges 

� Patent litigation 

� Almost 40% of respondent originator companies involved in patent 

litigation with another originator company 

� Opposition 

� Company challenging the patent of other originator company wins in 

70% of the cases; in addition scope of patent is reduced in 19% 

6


Policy Recommendations 

1. Intensify Competition Law Scrutiny 

2. Rapid Establishment of the Community Patent and 

Creation of a Unified Judiciary 

3. Streamlining Marketing Authorisations (MA) 

4. Improving Pricing and Reimbursement systems (P/R) 

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1. Intensify Competition Law Scrutiny 

� Possible areas of concern 

� defensive patenting 

� interventions towards MA and P&R 

� patent settlements 

� Continued monitoring of patent settlements which 

restrict generic entry and foresee a value transfer 

� First enforcement action under way: Servier case 

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2. Patents 


� Full support for Community patent & specialised 

patent litigation system 

� 30% duplication cases, 11% of contradicting judgements, 

high costs for litigation: 420 mio € 

� Renewed patent system now also supported by EFPIA 

and EGA (industry associations) 

� Improvement of EPO procedures (“raising the bar”) 

� First results: limitation of voluntary divisional applications 

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3. Marketing Authorisations 


� Enforce existing legal framework, a.o.: 

� respect of deadlines 

� no patent linkage 

� Limiting adverse effects of unjustified third party 

submissions (transparency) 

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4. Pricing and reimbursement 

� Enforce respect of deadlines 

� Encourage immediate/automatic pricing for generics 

� Limiting adverse effects of unjustified third party 

submissions (transparency) 

� Cross-border collaboration to assess the added 

value of new medicines 

� Recommendation to Member States to consider 

mechanisms that facilitate generic entry 

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For further information consult: 

http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/index.html 

or contact: 

Christian Schmidt 

European Commission 

DG Competition – Pharmaceuticals Sector Inquiry Task Force 

E-mail: Christian.Schmidt@ec.europa.eu 

Tel: (+32 2 29) 96 896 

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Pharmaceutical Sector Inquiry : Final Report

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