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European Commission publishes results of Pharma sector inquiry

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10 July 2009

On 8 July 2009, the European Commission presented its final report (the "Report") in its antitrust sector inquiry (the "Inquiry") into the pharmaceutical sector.

In its Report, the Commission presses for the rapid establishment of the Community patent and the creation of a unified patent litigation system. The Commission urges Member States to adapt their regulatory framework to make it easier for drugs to come on the market. Agreements restricting generic entry and defensive patenting strategies will also be closely scrutinised by competition authorities.


A sector inquiry enables the Commission to consider the industry as a whole, rather than focusing on specific companies, whilst gaining an in-depth understanding of competition issues in the sector. The Inquiry was prompted by the Commission's perception that the entry of generic medicines was being delayed and that fewer new pharmaceutical products were reaching the market.

The main steps of the Inquiry were as follows:

15 January 2008: the Commission launched the Inquiry (under Article 17 of Regulation 1/2003) with unannounced inspections at the offices of several leading pharmaceutical companies.

March - May 2008: the Commission sent questionnaires to approximately 100 companies that are producers of innovative and/or generic medicines and to other stakeholders.

28 November 2008: the Commission presented its preliminary findings at a conference in Brussels and invited interested stakeholders to submit their comments on its findings.

31 January 2009: the public consultation closed.

8 July 2009: publication of the Report.

Scope of the Report and main findings

The Report focuses on:

  • The competitive relationship between originator and generic companies and amongst originator companies. In this respect, the Inquiry concentrated on practices which companies may use to block or delay generic competition as well as to block or delay the development of competing originator products; and
  • Aspects of the regulatory framework, its implementation and alleged shortcomings reported by stakeholders with respect to the legislation governing patents, marketing authorisations as well as pricing and reimbursement.

According to the Commission, the results of the Inquiry suggest that the behaviour of companies may contribute to generic delay or impede the entry of new medicines on the market. In particular, the Commission focuses on the following behaviours by originator companies:

  • The use of "patent clusters" (i.e. a large number of EU-wide patents and pending patent applications for a single medicine)
  • The use of patent litigation
  • The conclusion of settlement agreements with generic companies in the EU
  • The conclusion of agreements concerning the sale/distribution of off-patent medicines with generic companies. One third of these agreements were concluded with generic companies before the originator company's product lost exclusivity ("early entry agreements"), which the Commission suspects could be used to preempt generic competition
  • Interventions in national marketing authorisations and/or pricing and reimbursement bodies for the approval of generic medicines, which on average led to four months of delay for the generic medicine
  • Attempts to influence wholesalers and active ingredients, manufacturers to disrupt the supply of generic products or to discredit generic products.

Intensification of competition law scrutiny

Whilst the Commission emphasizes that the Report does not identify individual cases of wrongdoing or provide any guidance on the compatibility with EC competition rules of the practices examined , the Commission underlines that it will make full use of its powers under the antitrust rules to pursue any infringement in the sector:

  • With regard to competition between originator companies in particular, the Commission will scrutinize defensive patenting strategies that mainly focus on excluding competitors without pursuing innovative efforts and/or the refusal to grant a license on unused patents
  • The Commission will also take action against the use of regulatory procedures by originator companies in order to delay generic entry
  • Agreements that are designed to keep competitors out of the market will also be monitored by the Commission. The Commission specifically refers to the case of settlement agreements that limit generic entry and include a value transfer from an originator company to one or more generic companies. To reduce the risk that settlements are concluded at the expense of consumers, the Commission will consider further focused monitoring of settlements within the context of the existing legal framework
  • In the context of merger cases, the Commission will make sure that the competitive structure and process is preserved in a market characterized by a trend towards increased concentration.

Improving the regulatory framework

The Report proposes possible policy options as to how the regulatory framework should evolve with a view to improving its functioning and minimising the risk of anti-competitive behaviour in the future. The main proposals are as follows:

  • The rapid establishment of the Community Patent and the creation of a unified litigation system, which would create significant cost and efficiency improvements. Regarding the request by the originator industry to introduce so-called "clearing way" mechanisms to solve patent issues before generic market entry, the Commission considers it is not clear that such new mechanisms would bring a positive added value at this stage
  • The Commission calls upon Member States and national agencies to make better use of the possibility of mutual recognition of marketing authorisations and underlines the need for stronger coordination between agencies in order to avoid as far as possible discrepancies in the application of the legal framework: Member States and agencies should ensure that submissions made by third parties during the marketing authorisation process are well documented, transparent and do not lead to delays for the applicant. The Commission will continue to act against patent linkage, as marketing authorisation bodies cannot take the patent status of the medicine into account when deciding on marketing authorisations of generic medicines. Member States are also urged to take action against innovative campaigns organised by the originator industry questioning the quality of generic medicines
  • The Commission urges all stakeholders to ensure that time-limits relating to the pricing and reimbursement status of medicines are respected. The Commission invites Member States to consider the introduction of national provisions granting automatic/immediate pricing and reimbursement status to generic products where the corresponding innovative product already benefits from reimbursement based on a higher price. In this context, originator companies should not intervene before pricing and reimbursement authorities in order to raise bioequivalence issues or a potential patent violation by the generic applicant. Member States are finally invited to further consider policies facilitating rapid generic uptake and/or generic competition.


From a competition law perspective, the conclusions of the Report appear relatively modest despite a highly mediatised launch of the inquiry, heralded by dawn raids at the offices of leading pharmaceutical companies (so far the only time this has happened in the context of an Inquiry) and followed by a very intensive investigation by a dedicated task force of DG Competition. The Report indeed focuses in large part on regulatory impediments to the development of generic medicines, which fall outside the jurisdiction of DG Competition, while antitrust issues (which the Commission recognises to be inseparable from the regulatory framework) appear to be more limited.

The Commission does not break new ground with respect to the nature of possible infringements of competition law by pharmaceutical companies. Rather, it relies on broad statements and on its own precedents, as well as cases brought by EU national competition authorities to illustrate the types of conduct that it would likely prosecute.

In particular, the Report fails to provide guidance on settlements and other agreements between originator and generic companies, a heavily-debated issue among antitrust experts in Europe and the US. The Commission merely announces that it intends to submit settlements to "further focussed monitoring", yet gives no indication as to how this monitoring could take place in the absence of a notification system. This creates some degree of legal uncertainty that may have the effect of chilling legitimate business conduct. It does not appear that the Commission intends to issue formal guidelines on the practices it identified during the course of the Inquiry: the Report merely indicates that enforcement actions will be taken on a case-by-case basis.

As part of its case-by-case approach, the Commission announced on the same day that it has opened proceedings against French pharmaceutical company Servier and five generics manufacturers (Krka, Lupin, Matrix Laboratories, Niche Generics and Teva) on suspicion of anticompetitive conduct on the market for perindopril, a generic cardio-vascular medicine. The investigation covers both Articles 81 and 82 of the EC Treaty and results from dawn raids conducted in November 2008 a few days before the preliminary findings of the Inquiry were made public.

For further information, please contact Michel Struys( or Charles Pommiès (