Some of the world's biggest pharmaceutical companies were raided by European competition authorities yesterday in an inquiry into whether they are conspiring to keep up the price of their drugs after their patents expire.
Pfizer, GlaxoSmithKline, AstraZeneca, Johnson & Johnson and Sanofi-Aventis were among those that confirmed they had been visited as part of a European Commission-led inquiry into delays in the launch of low-cost generic drugs. Teva, the world's biggest generics company, was also targeted.
Many of the companies involved have a significant presence in Ireland.
The inquiry will focus on whether the industry has abused patent rights to delay the introduction of low-cost generic alternatives. It will assess whether companies have made spurious attempts to extend the life of the intellectual property rights or cut deals with one generic rival to the exclusion of others.
The EU is increasingly concerned about the rising cost of medicines and declining innovation. Neelie Kroes, competition commissioner, said: "If innovative products are not being produced, and cheaper generic alternatives to existing products are in some cases being delayed, then we need to find out why and, if necessary, take action."
The dawn raids and sector inquiry, which the commission said was not based on specific suspected violations, could lead to cartel charges against companies and potentially huge fines.
The raids broke with commission practice in that, for the first time, no advance notice was given. Previous sectoral inquiries were launched with questionnaires sent to companies.
Europeans spent €200 billion a year on pharmaceuticals, or €400 per person, Ms Kroes said.
The commission stressed that its visits were the starting point for a broad inquiry, which is set to issue interim findings by next autumn and final results in spring 2009. It will examine whether pharmaceutical practices infringe EU treaty prohibitions on restrictive practices.
Pfizer, GSK, Teva, Sanofi-Aventis, AstraZeneca, Boehringer-Ingelheim and Merck of the US all confirmed they were contacted. Most would make no further comment. "We are co-operating with the inquiry," said AstraZeneca.
The commission has already conducted sector inquiries into energy, financial services and telecommunications.
