EU Widens Drug-Firms Probe
Investigators Assess
If Companies Tried
To Block Competition
By JEANNE WHALEN and CHARLES FORELLE
June 27, 2008; Page B5
European Union investigators are widening a probe of the pharmaceutical industry as they look into whether drug companies have used unfair tactics to block competition and prop up prices.
In recent weeks, investigators have sent questionnaires to drug wholesalers and trading firms, asking them about pharmaceutical companies' distribution methods and other practices. The investigators asked for responses by mid-June, according to people who received the questionnaires. A spokesman said the European Commission has "sent several different sets of questionnaires to different people," but declined to comment further.
The latest round of questioning broadens an inquiry begun in January, when EU investigators visited drug-company offices unannounced and collected documents. At the time, Neelie Kroes, the EU's antitrust chief, said the investigators were looking into whether branded-drug companies were paying generic-drug makers to keep their low-cost pills off the market.
In the latest questionnaires, the EU is asking about the distribution methods drug companies use in Europe, and whether they are blocking competitors from distributing medicines.
Heinz Kobelt, secretary-general of a trade group representing drug trading companies, says EU investigators sent him a questionnaire in mid-May asking whether drug companies were using litigation or other tactics to thwart a practice called parallel trade. Mr. Kobelt heads the European Association of Euro-Pharmaceutical Companies.
Parallel trade involves wholesalers or trading companies buying drugs in a market where prices are cheap and selling them in a different country where prices are higher. Drug companies oppose parallel trade because it undercuts their direct sales, but wholesalers say it benefits consumers by lowering prices.
Mr. Kobelt said the questionnaire asked for his group's views on so-called direct-to-pharmacy distribution channels, which Pfizer Inc. and AstraZeneca PLC have recently established in Britain. Direct-to-pharmacy channels differ from traditional distribution in that the drug company pays wholesalers a set fee to deliver goods to pharmacies, rather than selling to the wholesaler. The drug companies say the approach helps them keep better control over their goods and prevents counterfeit medicines from getting into pharmacies. Wholesalers say big pharmaceutical companies are trying to prevent parallel trade, a charge the companies deny.
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