The investigation kicked on Wednesday 16 January as the Commission began to conduct (unannounced) inspections at the premises of a number of (unnamed) innovative and generic pharmaceutical companies.
The inquiry was launched in response to the fact that fewer new pharmaceuticals are being brought to market, while the entry of generic pharmaceuticals “sometimes seems” to be delayed.
But note, the Commission has no evidence of wrongdoing. Instead, it is going on a fishing trip, in the evident hope of uncovering some malpractice. Unlike cartel cases, where the Commission carries out inspections on the basis of prima facie evidence that specific companies have infringed competition law, these inspections are “just the starting point” of this general sector inquiry.
Insult on injury
Piling insult on injury, the Commission insists that surprise investigations are justified because the “highly confidential” information it wants to examine could easily be “withheld, concealed or destroyed.”
The inquiry will examine whether agreements between pharmaceutical companies, such as settlements in patent disputes, may infringe the EC Treaty's prohibition on restrictive business practices. It will also consider if companies have created artificial barriers to entry, through the misuse of patent rights, vexatious litigation or other means.
After the offence of launching a surprise inquiry, the Commission emolliently promises it will “maintain an open dialogue” with all stakeholders, and will “keep the sector informed” about progress. An interim report is promised for autumn 2008 and final results are expected in the spring of 2009.
Justifying the investigation Competition Commissioner Neelie Kroes said, “Individuals and governments want a strong pharmaceuticals sector that delivers better products and value for money. But if innovative products are not being produced, and cheaper generic alternatives to existing products are in some cases being delayed, then we need to find out why and, if necessary, take action.”
Macho mistake
It may well be that there are anti-competitive forces at work in the European pharmaceutical market: every sector has its bad apples. But this macho, raids-at-dawn approach to rooting them out is as inappropriate as a ban on bendy cucumbers.
The pharmaceutical industry’s productivity problems can hardly be addressed by the distraction of a pan-European antitrust investigation. Rather than going looking for trouble, the Commission needs to indicate its specific concerns and work with the industry to see if these are justified, in the same spirit of cooperation and trust that inspired the Innovative Medicines Initiative.
After all, both the enquiry and the research programme have the same objective of increasing the productivity and competitiveness of European pharmaceuticals.
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