Peter O'Donnell
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The mountain heaved and brought forth a mouse. After almost a year of investigation, the EU's antitrust authorities delivered
their preliminary report in late 2008 on their investigation into the pharmaceutical industry's supposed sabotage of competition
through collaboration, collusion, and conspiracy. Even with 426 pages of the report behind them, officials responsible still
do not feel in a position to level any specific accusations, still less to name names or press charges.
A mouse
The interim report on the investigation by the EU's commissioner for competition, Neelie Kroes, concluded that "competition
in this industry does not work as well as it should." But she has adduced little evidence to support that any failings are
the consequence of improper activity.
The hollowness of the case was instantly underlined by the European Federation of Pharmaceutical Industries and Associations
(EFPIA). It said it was "disappointed" that officials had tried to "mischaracterize the industry as anticompetitive," particularly
by the use of "selective quotations" from material seized from companies in the course of dawn raids."Those quotes simply show how innovators have rightly sought to protect their inventions and illustrate the highly competitive
nature of innovation in this sector...They are not evidence of competition law infringements, as the report itself recognizes,"
retorted EFPIA.
The industry analysis of the report is uncharacteristically harsh for a sector that has always preferred the velvet glove
to the mailed fist for its European diplomacy. "The report acknowledges that patents are key to pharmaceutical innovation
and should be protected. It then contradicts itself by questioning the right of the industry to use perfectly lawful practices—such
as patent portfolios, patent litigation, and the release of improved medicines," says EFPIA. "Furthermore, the report does
not establish that such activities deter generic entry because the facts on generic entry tell a different story."
Amid the magma
Those who wish to make their own assessment of how far the EU document validates its claims of subverted competition can do
so at http://ec.europa.eu/comm/competition/sectors/pharmaceuticals/inquiry/index.html. For Applied Clinical Trials readers, it is perhaps more valuable to trawl through the magma of this voluminous report for information of more specific
interest to the clinical trials community.
The report's presentation of the current state of the sector in Europe offers some insight into how officialdom views the
industry and its attempts to create new products. It says the sector is "vital to the health of Europe's citizens" because
"Europe's patients need access to safe, innovative, and affordable medicines."
It values the EU market for prescription and nonprescription medicines at €138 billion ($200 billion) ex factory and €214
billion at retail prices—retail expenditure of approximately €430 for each EU citizen in 2007. The market for prescription
medicines was worth around €120 billion at ex factory prices, it estimates.
The inquiry covers 2000–2007, and focused on 43 originator companies and 27 generic companies that "cooperated actively,"
representing, together, over 80% of the Rx market.
R&D spending
Findings include calculations that originator companies spent on average 17% of their turnover from Rx meds on R&D worldwide
in 2000–2007, with 1.5% of turnover spent on basic research, and the rest mostly on preclinical and clinical trials and tests.
"According to the submissions received by the respondent companies," preclinical and clinical trials "are generally financed
by the companies' own resources...and financial support received from governments or other sources is not significant." And
"the development phase, in particular Phase III trials, is the most expensive."
For large firms, "research is an international activity in the sense that it can be located wherever a suitable research environment
exists. Once a potential compound has been identified, there seem to be some synergies for the development phase (preclinical
and clinical trials), although certain trials need to be carried out nationally or regionally."
An average of five years is reported for "a potential medicine to go through the three clinical trial phases," as the report
expresses it, with a range of two to 10 years. For the 20 best-selling molecules, it calculates the period between first patent
application and market launch at between six and 10 years, and for a wider sample of 141 products for which complete data
was available, the average was 8.6 years.
Somewhat skeptically, the report observes: "The originator industry claims that the cost of a new medicine from basic research
to launch amounts to between US $800 million and US $1 billion (this figure includes the costs of failed projects)," adding
"Some respondents have suggested, however, the costs are closer to $450 million."
Expenditure on marketing and promotional activities is estimated at 23% of turnover—"thus about one third more than they spent
on R&D as a whole," the report adds with an unmistakably censorious air. Similarly, the report cites industry figures indicating
that as few as one in 5000–10,000 compounds tested are successfully launched, before going on to remark: "In the course of
the sector inquiry it was not possible to verify this data, as many companies claimed that they were unable to provide the
requested information."
