Drug Companies Overcharge in Europe by Billions by Blocking Generics Says EU     Print Email

European consumers and state-run health-care programs are being charged an extra €3 billion ($3.87 billion) annually because major pharmaceutical companies are creating barriers for the production and use of cheaper generic drugs, the European Commission says.

After a year-long probe into some of the leading companies’ practices, the commission said in a 400-page preliminary report that these multinationals “routinely use questionable tactics to delay market entry of generic drugs.”

While the Commission did not name names, Commission sources said that the companies included some of the world’s leading brands. EU antitrust chief Neelie Kroes warned in a news conference November 28 that “the Commission will not hesitate to open antitrust cases against companies where there are indications that the antitrust rules may have been breached.”

Tactics employed by the “originator companies” that the Commission singled out for blame include the seeking of hundreds of superfluous patents for popular medications to block generic manufactures from obtaining production rights; filing frivolous lawsuits against these manufacturers; and brokering back-room deals to keep medicines off the market for a period of time. The result was producers of generic drugs received more than €200 million in payments for keeping cheaper versions shelved.

The report’s discovery – big pharmaceutical companies are cheating on the system – will surprise people who have long admired European nations for their health-care policies aimed at keeping down cost to benefit consumers, including by the promotion of competition and the readiness to promote cheaper generics after the original patents on drugs have expired.

In 2007, European Affairs published an article in which Gretchen A. Jacobson, health economist with the Congressional Research Services, noted the price disparities between the U.S. and Western Europe for the same drugs and said that “the majority of researchers believe people in the U.S. pay more for certain pharmaceuticals than people in some western European countries.”

Noting that medication costs fall between 20 and 90 per cent after the introduction of generics, the Commission estimated that significant savings would have been possible had the medicines entered the market unabated, but this decrease in price provides incentives for pharmaceutical companies to maintain a stranglehold on production rights.

There is a widely held view European policies aimed at keeping drug prices low have had the long-term effect of driving cutting-edge medical research, development and innovation to the United States.