Raids signal start of EU pharmaceuticals probe

The European Commission has launched a major inquiry into the pharmaceuticals market – starting with surprise swoops on major companies across the continent.

The raids were approved at a closed meeting of EU Commissioners yesterday afternoon and got under way within hours.

This afternoon EU Competition Commissioner Neelie Kroes refused to name the companies or countries targeted, insisting there was no specific evidence of illegality against any particular firms.

She said she was beginning an inquiry into the whole sector.

She went on: “The inspections are therefore not targeting companies suspected of wrongdoing.

“They are just the starting point of a broad inquiry – a starting point that will ensure that the Commission has immediate access to the information it needs to guide its next steps.”

Such a large-scale sweep by the EU’s powerful antitrust authority is not unprecedented – the Commission has conducted similar inquiries before in the telecommunications, energy and financial services markets.

The aim has previously been to establish whether customers are being overcharged through cartel price-fixing arrangements, or other collusion between a group of firms which rigs the market, propping up prices and squeezing out potential competition.

Ms Kroes said: “We have launched this inquiry because pharmaceuticals markets are not working as well as they might.”

She said the sector was vital to people’s health – consumers spend about €200bn a year on medicines, or nearly €400 a year for every individual in the 27 EU countries.

The Commission needed to find out why the number of new medicines coming onto the European market was declining, despite strong patent protection for manufacturers, Ms Kroes claimed.

She said the inquiry would investigate agreements between pharmaceutical companies to see if artificial barriers have been created blocking innovative or generic products through the misuse of patent rights, “vexatious litigation” or other devices infringing an EU ban on abuses of dominant positions and restrictive business practices.

The raids were vital because “the kind of information the Commission will be examining is by its nature information that companies tend to consider highly confidential”.

Ms Kroes added: “Such information may also be easily withheld, concealed or destroyed. That is why we decided that inspections were necessary.”

This afternoon Catriona Munro, head of EU and Competition at law firm Maclay Murray & Spens, said the inquiry signalled the start of an “aggressive” investigation into Europe’s pharmaceutical sector, driven partly by concern about the possible blocking by big firms of cheaper generic drugs which could hit sales of their branded versions.

A Commission spokesman said access for customers to generic medicines at reasonable prices was a major concern which would be the focus for an inquiry likely to last until the Spring of next year.