The European Commission has just published its final report on its inquiry into the pharmaceutical sector. This report concludes that further scrutiny is needed to increase innovation and competition. The Commission states that it will pursue any behaviour that infringes competition rules, wherever Community interest so requires.

The Commission launched the inquiry on 15 January 2008 to gain a better understanding of the competitive relationship amongst originator companies and between originator and generic companies. The Commission was particularly concerned with the practices used by originator companies to block or delay competition from manufacturers of generic pharmaceuticals.

The final conclusions of the report fall short of declaring these practices as per se violations of European competition rules. However, the Commission does state that it will intensify its scrutiny in certain areas.

With regard to competition between originator companies, the Commission states that it will focus on (i) defensive patenting strategies that are designed to exclude competitors and (ii) refusals to grant licenses on unused patents where such behaviour blocks innovation.

With regard to competition between originator companies and generic companies, the Commission states that it will focus on originator companies’ use of specific instruments to delay generic entry. The Commission invites stakeholders to bring evidence of such practices to the attention of the relevant competition authorities. With regard to patent litigation settlement agreements, the Commission will focus on those agreements that limit generic entry.

As a follow up to this inquiry, the Commission is conducting investigations of individual pharmaceutical companies.