Neelie Kroes has started the year energetically. First, she launches an antitrust investigation into Microsoft. Now, Europe’s competition commissioner has the pharmaceuticals sector in her sights. Dawn raids on the world’s biggest drugs companies show that Brussels wants 2008 to be the year it puts consumers first. This is commendable. There is, moreover, a case to be answered. But, if drugs prices have been kept artificially high, it may be unfair to hold manufacturers solely to blame.
The EU Commission is concerned that the price of medicines is rising, while innovation declines. It will look at whether drug makers abuse patent rights to delay the introduction of low-cost generic alternatives. There are suspicions that manufacturers cut deals with one generic rival to exclude others and try to extend the life of intellectual property rights to stifle competition.
This foray into one of the EU’s most technically regulated industries is overdue.
Since AstraZeneca was fined €60m in 2005 for abusing market dominance with an anti-ulcer drug, an inquiry into companies’ attempts to impede parallel trade and capture markets through their generic subsidiaries has made sense. It is welcome evidence that, after Europe’s eternal constitutional wrangling, the Commission’s focus is firmly on public-interest issues.
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