A new report has highlighted the alarm among the biotech industry about the European Commission’s investigation into competition in the pharmaceutical sector, and concerns about any consequent reform of the patent system.

The latest biotechnology report from intellectual property firm Marks & Clerk, based on a survey of 365 executives across the biotechnology and pharmaceutical sectors, reveals “strong disagreement with the Commission’s preliminary findings”, published in November 2008. Those findings claimed the patent system is being used anti-competitively by innovator companies.

The study notes that 72% of respondents fear the inquiry will result in the “significant weakening” of patent protection for biotech companies, “deterring funding and innovation”. The outcome of the Commission’s inquiry is expected this summer.

Interestingly, the research shows opinion is divided as to whether the Commission has any basis for investigating alleged anti-competitive practises, with 51% believing that the pharmaceutical industry enquiry has no justification whatsoever. However, a clear majority argue against reform of the patent system by way of a solution.

Some 73% dispute the central claim that the way the patent system is used unfairly favours innovator companies over generics, with less than a quarter (23%) supporting patent reform to help generics compete. 80% suggest that reforming the system in favour of generics may reduce healthcare costs in the short term but will undermine drug innovation over the long run.

One of the few potential reforms which the industry would welcome from the investigation is the creation of a European Community patent. Yet while 80% express support for its establishment, little over a third (37%) believe this will be a likely outcome. This disappointment may help explain why those surveyed express greater frustration with the European patent system than that of the USA, the report’s authors note.

Gareth Williams, partner at Marks & Clerk and co-author of the report, says that the biotech industry “is yet to be convinced that the way the system is used is inherently anti-competitive, where the delay in generic market entry may well reflect the arduous marketing approval processes that trouble the whole industry”. He adds that “hasty reform could have unforeseen consequences that will hurt drug discovery, as well as punish other R&D-heavy industries that depend on the system. It is not as simple as wanting to reduce healthcare costs”.

Mr Williams adds that “biotechnology represents the future of healthcare” and “crippling its profitability in relation to R&D will not reduce healthcare costs in the long term. It will simply undermine that discovery taking place in the first place. After all, an expensive drug represents better healthcare than no drug coming to market at all.”

He concludes that “it is grimly ironic that the authorities are considering how to restrict patent activity at the very point the industry finds its patents are the only way of securing the vital funding it needs.”