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Domeij, Bengt --- "Anticompetitive marketing in the context of pharmaceutical switching in Europe" [2013] ELECD 854; in Drexl, Josef; Lee, Nari (eds), "Pharmaceutical Innovation, Competition and Patent Law" (Edward Elgar Publishing, 2013) 273

Book Title: Pharmaceutical Innovation, Competition and Patent Law

Editor(s): Drexl, Josef; Lee, Nari

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9780857932457

Section: Chapter 10

Section Title: Anticompetitive marketing in the context of pharmaceutical switching in Europe

Author(s): Domeij, Bengt

Number of pages: 17

Abstract/Description:

In analyzing medicines that for the first time faced generic competition during the years 2000–2007, the European Commission found that generics became available in the market at a cost that was about 25 percent lower than the price charged by originator companies before loss of exclusivity. Prices of generic medicines continued to fall thereafter and two years after generic entry the prices were on average 40 percent below the price charged by the originator company at the end of exclusivity. Due to competition from generics the average prices went down also for originator companies. The threats of reduced volumes and prices after generic entry have naturally spurned counter measures by originator companies. These tactics are sometimes referred to as lifecycle strategies or, perhaps more derogatory, as ever-greening or product hopping. The intent is to extend the privileged position enjoyed during exclusivity, if not forever, at least for some months beyond the patent, supplementary protection certificate or data exclusivity period. This chapter concentrates on one of these strategies, namely originator companies trying to switch patients from medicines facing imminent loss of exclusivity, to a so-called second generation or follow-on medicine. The findings in the EU Commission sector inquiry suggested that originator companies launched follow-on medicines and tried to switch patients in relation to 40 percent of the medicines losing protection. Presumably, the more valuable a product is when exclusivity expires, the more likely switching-tactics are. Thus, switching is an important feature of the pharmaceutical landscape.