The European Commission has opened formal proceedings against French-based drug major Sanofi-Aventis, claiming the firm obstructed its inspectors who carried out unannounced dawn raids at its premises, and those of many other drugmakers, in January.
The Commission inspectors, who were looking for evidence of possible antitrust behaviour by both research-based and generic drugmakers, identified “certain documents” at Sanofi’s offices which, they said, were relevant for their inquiry. However, the firm refused to let the officials examine and take a copy of the documents unless the French authorities produced a national search warrant, which was subsequently produced, it says.
“Regulation 1/2003 on the implementation of the EC Treaty competition rules empowers the Commission to search companies’ records and to take copies of documents during unannounced on site inspections. In turn, companies have an obligation to comply with Commission inspection decisions and to cooperate with inspectors, notably by presenting documents identified during the inspection and allowing Commission officials to take copies,” said Commission officials.
The unprecedented January dawn raids were launched by the European Commissioner for Competition, Neelie Kroes, with the help of he European Patent Office (EPO), to discover why the numbers of new drugs arriving on the 484 billion euro European Union (EU) market had declined, from an average of 40 a year during 1995-1999 to just 28 annually between 2000 and 2004. The ongoing investigation is looking at claims that research-based drugmakers have engaged in unfair practices aimed at preventing generic competitors to their products from coming to market, such as patent “evergreening,” and have subsequently also eased back on attempts to develop innovative new medicines.
Commissioner Kroes’ investigators have now questioned around 100 companies. Then, in mid-May it was announced that the probe was being broadened to include approximately 80 other bodies, including associations of doctors, pharmacists and patients, and the drug price regulators of the EU member states, thus making this potentially the widest antitrust investigation ever conducted by the EU.
However, legal experts do not believe that the scope of the inquiry is set to widen. Stephen Rose, partner at Eversheds LLP, says he expects the investigation will still focus on barriers to entry by new and generic drugs and, at least for the moment, will not extend to other potentially difficult areas such as distribution strategies and national drug reimbursement schemes. “Both of these areas have been the subject of recent reviews by the Office of Fair Trading (OFT) in the UK and it is to be hoped that the Commission will not want to repeat the exercise,” he says.
Observers also point out that if Sanofi is found guilty of obstructing the EU investigation it could be fined up to 1% of its revenues, which based on its 2007 results would total 280 million, although it practice a penalty of this magnitude is considered unlikely.
– In 2005, the EU fined AstraZeneca €60 million after finding it guilty of unfair practices aimed at extending the patent life of its blockbuster Losec (omeprazole), and delaying the market entry of generic competitors.
