UPDATE 1-EU targets drugmakers in generics antitrust probe
* More scrutiny on settlement deals by brands, generics
* Antitrust investigation into Servier, some generics firms
* EU in contact with U.S. authorities
(Adds comments from EU's Kroes, industry, lawyer, Teva)
By Foo Yun Chee
BRUSSELS, July 8 (Reuters) - EU antitrust regulators launched a crackdown on Wednesday on drugmakers suspected of arranging with generics producers to hold back cheap medicines in deals that cost healthcare providers billions of euros.
In the final report of her investigation into the sector, EU Competition Commissioner Neelie Kroes said delays in bringing less expensive generic drugs to the market had pushed up consumers' bills by 20 percent between 2000 and 2007.
"We will not hesitate to apply the antitrust rules where such delays result from anti-competitive practices," Kroes, tasked with ensuring fair play in the 27-country European Union, said in a statement.
"The first antitrust investigations are already under way, and regulatory adjustments are expected to follow dealing with a range of problems in the sector," she said.
The European Commission said it was investigating privately owned French drugmaker Servier and a number of generics companies, saying they may have blocked cardio-vascular generic medicine perindopril from entering the market.
It identified the generics firms as Krka d.d.; Lupin Ltd; Matrix Laboratories Ltd (MAXL.BO), now a unit of Mylan Inc (MYL.O); Niche Generics Ltd, part of Unichem Laboratories Ltd; and Israel's Teva Pharmaceutical Industries Ltd (TEVA.O).
Teva said in a statement that it would continue to cooperate with the Commission.
Drug industry body EFPIA welcomed the report, saying it shed light on regulatory barriers hindering the industry.
"We welcome many of the policy recommendations such as a more streamlined patent system that reduces costs and increases legal and commercial certainty," Arthur Higgins, EFPIA head and CEO of Bayer Healthcare BAYG.DE, said in a statement.
The Association of the British Pharmaceutical Industry said the report failed to show that industry had dragged its heels over innovation and put off generic entry.
The investigation started in January 2008 with raids on makers of brand-name drugs, including AstraZeneca (AZN.L), GlaxoSmithKline (GSK.L), Pfizer (PFE.N), Merck (MRK.N) and Sanofi-Aventis (SASY.PA), and some generics firms.
The Commission estimated in a preliminary report last November that settlement deals cost healthcare providers about 3 billion euros ($4.2 billion) between 2000 and 2007.
FOLLOWING U.S. LEAD
Settlement deals have also come under fire in the United States, with the Federal Trade Commission last month estimating the cost to consumers at $3.5 billion a year. [ID:nN233221] Legislation pending in the U.S. Congress would ban such deals.
Kroes said the Commission could learn from its counterparts across the Atlantic.
"We are inspired by what they have done and are doing. We'll be in close contact and if it is worthwhile what they are doing, we will try to find out what is best in the European context," she told a news conference.
The Commission said it would step up scrutiny of settlement deals to see if they complied with strict EU competition rules, examining current EU regulations on price and reimbursement.
It urged European countries to introduce legislation to facilitate the entry of generics and stressed the need for Europe-wide patents.
The EU executive has a tough balancing act, said Kristina Nordlander at law firm Sidley, which has clients in the pharmaceutical industry.
"The Commission will have to take great care that the cure doesn't become worse than the ailment in disrupting the delicate balance between competition and patent rights crucial to innovation in this industry," she said. (Additional reporting by Ben Deighton in London; Editing by Dale Hudson)
