Drug firms ‘try to keep prices high’

DRUGS companies are doing everything they can to maintain the high price of medicine, including buying off companies that could sell them for less.

European Commission officials carried out surprise raids on pharmaceutical companies to gather evidence of anti-competitive practices in the multi-billion euro industry.

They found emails and other evidence that showed how companies were obstructing efforts to make cheaper medicines available for ailments from cancer and heart disease to pain.

They believe the drug companies’ success at fending off cheaper competition is leading them to cut back on developing new and better medicines.

In one case a company took out 1,300 patents for just one drug to make it almost impossible for another company to copy that drug when the official patent period runs out.

Normally, pharmaceutical companies are given patents of between 20 and 25 years when they alone can produce the drug.

At the end of that time other companies are free to replicate the drug, then known as generics, and they are normally sold much more cheaply to hospitals, pharmacies and the public.

In Europe, €214 billion is spent every year on prescription medicines, about €430 per person. This is expected to increase as the population gets older. At the same time, patents for blockbuster or best-selling medicines are due to run out in the next few years.

Generics are an average of 20% cheaper, but the difference in price can be as high as 90%. The commission estimated that generics saved about €14bn, but said another 5% could have been cut from the total cost if they avoided the delays due to obstruction.

Since 2000, pharmaceutical companies took almost 700 legal actions against generic companies over patents that lasted an average of three years. In 60% of cases the generics won, but the release of cheaper drugs was delayed.

More than 200 cases were settled but more than 20 of these involved so-called reverse payment settlements amounting to €200m, which meant the originator pharmaceutical company paid the generic firms not to replicate their drugs.

There was evidence too that the pharmaceutical companies intervened in national procedures when generic medicines were being approved, and this added to the delay of generics coming onto the market.

The investigation found that patent litigation cost over €420m and that 11% of final judgements by the courts were contradictory.

The commission will now launch a public consultation inviting feedback on their findings from stakeholders and will publish a final report early next year, which will suggest what further action is needed.

Thirteen of the top 15 pharmaceutical companies in the world have plants in Ireland producing six of the top 10 of the world’s top-selling drugs. Their exports were worth almost €30bn last year, accounting for 40% of total manufacturing exports and the industry that employs 17,000 people directly is the largest payer of corporation tax.

Generic drugs account for just over 40% of the market by volume in Europe, against more than 60% in the United States.