Generics sector hampered by patent laws

Date: 27/06/1996

By Michael Mann

MOST people would probably be none the wiser if their doctor told them they were about to be prescribed Diazepam.

Such ignorance is a source of constant frustration to a number of pharmaceutical companies making determined efforts to gain a share of the market dominated by Valium, a brand name for Diazepam which is universally assumed to be a generic term.

Generic drug manufacturers believe that European legislation is heavily stacked in favour of the major producers of branded drugs and often prevents cheaper generics from gaining a relevant share of the market.

The European Generic medicines Association (EGA) hopes the Commission will respond soon to the MEPs' vote in favour of the legal right to test and register generic pharmaceuticals within the period of patent exclusivity.

In other markets, pharmaceutical companies are allowed to research and register new products while a drug is still under patent, allowing them to place their rival generic medicines on the market the day the patent on the original runs out, normally after 25 years.

In Europe, this is illegal, and it can take up to three years to prepare a rival for marketing against the original brand. This, the EGA believes, completely undermines the principle of open competition.

It also places domestic manufacturers at a huge disadvantage compared with their US rivals, who can carry out the basic research in advance, giving them a significant lead when it comes to registering a new product in the Union.

EGA Director Greg Perry claims companies are already moving their development operations outside the EU to avoid such restrictions.

His association wants the Commission to allow development work while patents still apply. Failing this, he says, national authorities might have to make changes unilaterally.

Patent regulations also prevent major Italian and Spanish makers of active pharmaceutical ingredients from exporting to the growing US generic market.

Perry warns that the US will soon begin sourcing materials from China, India and Latin America.

Not only does this threaten to undermine existing orders worth about 2.5 billion ecu, it could also deprive the Union of growth potential worth a further 1.5 billion ecu.

Convinced that quality controls are less effective in developing countries, the EGA is also lobbying for the Union to introduce quality control rules to allow EU inspectors to check on the manufacturing processes in rival countries.

Generic producers' problems do not end with patent law. Despite the theoretical existence of a single market, many companies encounter difficulties with the mutual recognition of approval procedures.

“Although the Commission is doing its utmost to make the 'decentralised procedure' work, national governments are still tending to protect their national registration procedures and also lack experience in working with one another,” explains Perry.

The use of generics in the EU is expected to rise by 12&percent; a year until 2000, compared to just 4&percent; for the entire pharmaceutical industry, and their market share is set to rise to 14&percent; at the turn of the century.

Apart from the benefits for European business, the EGA points to lower health bills through medicines which are just as effective and safe as branded products, but often a third of the price.