The EC antitrust report results are in. Time to pop open the champagne?

Jul 28, 2009

Big Pharma is not opening the champagne in public, but it has plenty to celebrate. In fact it can still hardly keep the smile off its public face as it responds to the European Union inquiry into competition in the pharmaceutical sector.

For 18 months, the European Competition Commissioner Neelie Kroes has kept dozens of her officials and hundreds of European executives hard at work in her assessment of whether innovative firms have been distorting competition by illicitly keeping generics off the market.

On July 8, she emerged from her studious cocoon to claim that she had found there was indeed dirty work at the crossroads.

She could hardly say anything else. After kicking off this saga with dramatic dawn raids on drug firms back at the start of 2008, accompanied by lurid suspicions of anti-competitive behaviour, she would have looked a little foolish if she had said everything was fine. It would have left her facing questions about just why she had acted so rashly, and spent so much time, and raised the temperature so high. Embarrassing enough at the best of times. But just months before the end of her five year tenure — the entire European Commission is due for renewal later this year — it would have been even more embarrassing. With no time left to recover her reputation by mounting some other dramatic inquiry into another sector, she would for ever have been remember as the Competition Commissioner who went down in flames because of a bum steer.

But despite her insistence that something was rotten in the state of European pharmaceutical competition, there was actually not much reality behind her rhetoric. For all the huffing and the puffing of the last year and a half, for all the high-profile seizures of documents in companies like Sanofi-Synthélabo or GSK, all that Kroes did was to wave a 600-page report at everyone in general, and initiate an investigation against a small shoal of tiddlers — Servier and a handful of generic companies.

It doesn't take long, flipping through the report, to see that the inquiry has dropped the ball. Although it talks at great length about patenting practices and product life-cycle management and potential savings from wider or earlier use of generics, it doesn't reach conclusions that damn outright the industry's behaviour.

There are plenty of expressions of regret at the way the system operates, but on the central questions raised at the start of the inquiry — is innovation declining, and does Big Pharma abuse patent rights to frustrate generic entry — the report says very little, and certainly not enough to identify villains, still less to hang them.

It would be imprudent for Big Pharma executives to hold summer street parties to celebrate. But they will certainly be going off on holiday with a lighter heart than they did last year.

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