European Commission confirms further surprise inspections in the pharmaceutical sector

The European Commission yesterday confirmed that its officials have started further surprise inspections at the premises of several companies active in the pharmaceutical industry in some European Union member states following a sector-wide inquiry which revealed problems in the speed generic drugs come to the market after patents have expired. Such practices are claimed to have cost health care providers about 3 billion euros ($4.5 billion) between 2007 and 2008.

The news comes within days of outgoing EU Competition Commissioner Nellie Kroes defending her unit's previous 'dawn raids' on drugmakers, as part of a crackdown on transparency and competition, which she warned would continue (The Pharma Letter December 4).

In the latest move, the Commission says it has reason to believe that the provisions of the EC Treaty prohibiting restrictive business practices and/or the abuse of a dominant position (Articles 101 and 102 of the Treaty on the Functioning of the European Union - TFEU) may have been infringed.

The Commission did not reveal which drugmakers had been subjected to the latest investigation but, in January last year, raids were made on research-based firms such as AstraZeneca, GlaxoSmithKline, Pfizer, Merck & Co and Sanofi-Aventis, and some generics firms. Also raided in July was France's Servier, as well as several generic drug groups, for allegedly blocking market entry of the cardiovascular drug perindopril. Sanofi-Aventis and Novartis were also raided in October, as were generics companies Teva, Krka, Lupin, Mylan and Unichem.

However, according to coverage of the latest news by Reuters, officials at AstraZeneca, GSK, Bayer, Boehringer Ingelheim, Stada, Sanofi and Merck & Co said their firms were not involved in the Wednesday raids. Admitting it had been visited by EU officials, was Denmark's Lundbeck, whose offices in Italy had been subjected to inspection, as well as Israel's Teva.

In its Wednesday statement, the Commission said that surprise inspections are a preliminary step in the investigation of suspected anticompetitive practices. The fact that the European Commission carries out such inspections does not mean that the companies are guilty of anti-competitive behavior, nor does it prejudge the outcome of the investigation itself. The European Commission respects the rights of defence, in particular the right of companies to be heard in the Commission's proceedings against them.

However, if drugmakers are found guilty of anti-competitive activities, they can be fined up to 10% of their annual global turnover. There is no strict deadline to complete inquiries into anticompetitive conduct. Their duration depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned co-operate with the Commission and the exercise of the rights of defence.