Bad medicine

According to The Times in 2005, it costs a pharmaceutical company around $1bn to bring a new blockbuster drug to market, taking into account research, development, marketing and regulatory approval. With industry insiders expecting this to reach $2bn by 2010, it’s little wonder that innovator companies get testy when their attempts to protect their investment using legitimate patent laws are undermined. With the ink drying on the final report of a long-running and agonising investigation into anti-competitive practices in the industry, their ire is now turned firmly towards DG Comp, the competition directorate of the European Commission.

DG Comp has always viewed the major patent originators, often the major pharmaceutical companies, with suspicion. It struggles to get its head around the fact that the major asset of companies in this sector (but not just this sector) is essentially a monopoly right – patents. Many of its biggest successes (and failures) have come when catching these companies falling foul of myriad competition rules. But DG Comp upped the ante last year when it launched a full sector inquiry into the pharmaceutical industry. On announcing the investigation, it stated that it wanted to find out why fewer new pharmaceutical products were being brought to market and why there was such a delay in getting cheaper generic versions of blockbuster drugs out when their patents expired.

It began its inquiry in a bizarre fashion. Commission officials raided the headquarters of several of the world’s largest pharmaceutical companies – including GlaxoSmithKline, AstraZeneca, Sanofi-Aventis and Pfizer – while making clear that it had no ‘specific evidence of wrongdoing’. It was the first time dawn raids had been used to open a sector inquiry and did not augur well for what was to come.

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