EU targets pharma companies in generic pay-off probe

Jan 12, 2010, 11:12 GMT

Brussels - The European Union's executive on Tuesday launched an investigation into deals between pharmaceutical firms and their rivals who produce cheap generic versions of their drugs in a bid to find out whether they are colluding unfairly.

The move comes after the European Commission ran a sweeping survey of the pharmaceutical sector which concluded that there were clear doubts concerning the way the sector operates.

The commission, the EU's executive, 'addressed requests for information to certain pharmaceutical companies asking them to submit copies of their patent settlement agreements,' the Brussels-based body said in a statement.

The probe concerns deals between the companies which develop new types of drugs, and firms which then identify the active ingredient and produce a so-called 'generic' copy, which is generally much cheaper.

The commission 'is in particular looking at patent settlements where an originator company pays off a generic competitor in return for delayed market entry of a generic drug,' the statement said.

The original enquiry 'highlighted the risk that certain types of patent settlements may have negative effects on European consumers by depriving them of a broader choice of medicines at lower prices,' the statement said.

The probe covered a 'selected number' of originator and generic drug companies. Once they reply, the commission is to 'analyse the agreements and publish a short report providing a statistical overview.'

Agreements which raise suspicions of unfair dealings could be hit with a more detailed investigation, the statement said.