"Effective enforcement of EU competition rules in the pharmaceutical law remains a matter of high priority…"

Who requested the report and why?

In 2016, the Council requested an update on the enforcement activities of competition authorities since the 2008/2009 pharmaceutical sector enquiry. The European Parliament had also raised concerns regarding anticompetitive practices within the pharmaceutical sector that may endanger patients' access to affordable and innovative medicines, such as tactics to delay generic competition, pay-for-delay arrangements, price fixing and excessive pricing[1].

Examining the enforcement activities of the Commission and the national competition authorities (NCAs) across the EU, the report notes over 29 antitrust decisions against pharmaceutical companies taken since 2009, imposing fines of over EUR 1 billion in 21 of these cases. More than 100 cases (cartels, restrictive practices and abuse of dominance) were investigated, 20 of which are ongoing. The report highlights the decisions addressed at anticompetitive behaviour that had not previously been addressed (pay for delay cases).  EU merger control decisions also contributed to enforcement action with competition issues identified in 19 out of 80 EU mergers examined and requiring identified concerns to be addressed and divestments offered.   

Focus on anti-competitive practices that may endanger patients' access to affordable and innovative essential medicines. 

Recent estimates, from a 2018 Copenhagen Economics study, suggest that the costs of bringing a medicine from the laboratory to market are between EUR 0.5 billion and EUR 2.2 billion. With high medicine prices imposing burdens on national healthcare systems, effective competition from generics and, more recently, biosimilars, generally represents a vital source of price competition in pharmaceutical markets. The enforcement activities of the Commission and NCAs are examined in relation to each of these two issues.  

What competition enforcement activities have been taken as regards affordable medicines?

Landmark decisions have been taken against pay-for-delay deals (EU Lundbeck, Servier, Fentanyl and the UK Paroxetine). Recent years have seen significant calls for intervention against high prices for pharmaceutical products. NCAs have led investigations into the excessive and abusive pricing of off-patent medicines such as in Italy (Aspen), the United Kingdom (Pfizer/Flynn) and Denmark (CD Pharma), while the Commission opened its first formal investigation into excessive pricing case in 2017 (against Aspen in a number pf countries outside of Italy). A series of pioneering decisions have been taken by the French NCA involving disparagement practices, such as producing and disseminating incomplete and misleading information (vis-a-vis doctors, authorities and the general public).

The sheer diversity of the cases being taken by NCAs is noteworthy in itself. These range from: bid rigging in hospital tenders (Hungary, Slovenia); exchange of confidential information between wholesalers via common IT systems (Germany); co-marketing agreements (Italy) market sharing between pharmacies in supply to healthcare centres (Spain); export bans and parallel trading cases (Romania, Spain and Greece); excessive pricing (Italy, UK, France, Denmark); to complex legal strategies of filing for and obtaining IP rights aimed at delaying generic entry (Italy). 

Merger control interventions were made by the Commission in a number of EU mergers that could have led to price increases, in particular for generic products (Teva/Allergan) or biosimilar products (Pfizer/Hospira). These transactions were cleared only after the companies had committed to divest parts of their businesses to suitable buyers to preserve the existing degree of price competition.

What enforcement activities have been taken regarding access to innovative medicines?

Servier is mentioned here along with the Boehringer Ingelheim/Almirall settlement (allegations of filing unmeritorious patents to block or delay entry of competing products) and the Italian NCA decision in Hoffmann La Roche/Novartis (agreement aimed to discourage and limit off-label use of Avastin for eye diseases and towards the more expensive Lucentis). The main focus is on interventions in merger cases, such as: Novartis/GlaxoSmithKline Oncology where the Commission's concern was that a merger between two originators threatened to thwart advanced R&D projects for life-saving cancer drugs; Johnson & Johnson/Actelion where intervention was to ensure pipeline insomnia medicines at an early stage of development; and Pfizer/Hospira, where the concern was that the merger would eliminate one of two parallel projects to develop competing biosimilars.

The report concludes that while enforcing antitrust and merger control rules significantly contributes to ensuring that patients and healthcare systems have access to affordable and innovative medicines, competition law enforcement remains complementary to legislative and regulatory action.

So, we can expect all competition authorities to remain vigilant and proactive in investigating potentially anti-competitive situations in the pharmaceutical sector, including new trends, such as the growing relevance of biosimilars.