Masterstudiengang "Drug Regulatory Affairs"

Master-Thesis

Market Exclusivity versus Market Penetration: Theory and Practice of Originator –Generic Competition ***

Sabina Freund-Rieger (Abschlußjahr: 2009)

Language: English

"It is very important that pharmaceutical markets function properly. Europe's citizens, including all of us here today, need access to safe, innovative and affordable medicines."

Neelie Kroes, European Commissioner for Competition Policy, at the presentation of the preliminary findings of the Pharmaceutical Sector Inquiry in Brussels, 28 November 2008

The overall goal of pharmaceutical legislation is to create an environment that allows patient access to safe, effective and innovative, yet affordable medicines. Innovation can only prosper if intellectual property rights are protected. Affordable prices are the result of competition and thus rely on a restriction to intellectual property rights. The two sectors of the pharmaceutical industry that represent innovation and affordability - originator and generic companies - are subject to a complex legal framework designed to establish a balance of power between the two industry players.

The theoretical background is determined by two legal concepts: the regulatory framework that defines the conditions for the protection of intellectual property and the procedures for marketing authorisation on the one hand; on the other hand, patents that protect the commercial exploitation of an invention. It is within this legal background that originator and generic companies navigate in their attempts to launch their products and to defend their property rights. To give a brief overview of the theoretical background, this thesis includes a brief description of the pharmaceutical sector and its market characteristics, the different marketing authorisation types and the legal provisions on data and market exclusivity as well as patents.

In practice, originator and generic companies have developed strategies to extend, respectively shorten the originator's market monopoly within - and in rare instances outside - the current legal framework. The suspected extent of divergence from the theoretical provisions was such that in January 2008 the European Commission launched a sector inquiry into the pharmaceutical market. The Preliminary Report on the Pharmaceutical Sector Inquiry of the European Commission's Directorate-General for Competition (DG COMP) was published on 28 November 2008 and has caused much controversy in the pharmaceutical industry. One of the most significant results of the sector inquiry is that the average time of generic entry after loss of exclusivity of the corresponding originator product for the period 2000 to 2007 was about seven months delayed and that immediate generic entry would have resulted in public savings of about € 3 billion. On 8 July 2009, DG COMP published the Final Report of the Pharmaceutical Sector Inquiry, which reconfirms the findings of the Preliminary Report and presents future actions that the Commission has deduced from these findings.

The range of originator activities to extend market exclusivity which are detailed in this paper include life-cycle strategies such as the development of second-generation products, interaction during the marketing approval or pricing and reimbursement process of generics, OTC switches, patent strategies comprising applications for multiple and divisional patents, patent litigation and settlements with generic competitors as well as negative information campaigns on generics.

The range of strategies open to generic companies to take away from the originator's market monopoly is more limited. Examples presented in this thesis include special marketing authorisation application strategies such as mixed applications and strategic choices of the reference medicinal product.

Furthermore, other reasons for divergence between theory and practice exist, which do not result from originator - generic competition. These include a lack of resources at competent authorities and disharmonised and intransparent requirements in marketing authorisation and pricing and reimbursement procedures.

This paper examines the theoretical legal background and factual implementation of the competition between the innovative and the generic pharmaceutical industry. The investigations are confined to human medicinal products in Europe. The conclusions and proposed actions of the Final Report on the Pharmaceutical Sector Inquiry are presented and discussed on their suitability to curb delays in generic market entry.

Pages: 67