Something 'rotten' in EU pharmaceutical sector, says Kroes

Ms Kroes made the statement following the publication of a final inquiry report on Europe's pharmaceutical sector – a document that points to widespread collusion between drug companies producing original products and others producing generic copies.

According to the report, a considerable number of generic drug producers have accepted payments to delay the release of medicines that are on average 40 percent cheaper than the original product two years after its initial release.

Sending a clear signal that it means to crack down on the practice that results in European citizens paying more for their medicines, the commission has opened a formal antitrust investigation against French company Les Laboratoires Servier and a number of generic drug producers suspected of collusion.

"When it comes to generic entry, every week and month of delay costs money to patients and taxpayers. We will not hesitate to apply the antitrust rules where such delays result from anticompetitive practices," said Ms Kroes.

The case, the first of its kind, surrounds the production of a generic form of perindopril, a cardiovascular medicine used to prevent heart disease and lower blood pressure originally developed by Servier.

The commission says it has evidence of a least a further 200 incidences of illegal agreements between European drug companies, all of which could lead to fines if sufficient evidence is found.

"We hoped to get out a case that is really damaging," said Ms Kroes when asked why the commission had concentrated its first case on Servier and not on other suspected companies, some of which are considerably bigger.

The debate over artificially inflated drug prices is particularly relevant at present as Europe's population grows older and the prospects for both private and public pensions look shakier due to the financial crisis.

"With the ageing population we are going to need more medicine," said Ms Kroes.

European citizens currently spend €214 billion per year on pharmaceuticals, equivalent to 2 percent of the bloc's total GDP or €430 per year per citizen.

The commission report also calls on member states to introduce legislation to facilitate the uptake of generic drugs and says a community patent and specialised patent litigation system in Europe is now more necessary than ever.

At present 30 percent of patent court cases are conducted in parallel in several member states, and in 11 percent of cases national courts reach conflicting judgements.