Enforcement of competition law rules in the pharmaceutical sector remains a matter of high priority in Europe

​A report from the European Commission and national competition authorities of the EU Member States focuses on enforced antitrust and merger control rules in the pharmaceutical sector.

On 28 January 2019, the European Commission (Commission) published a report (Report) on how the Commission and national competition authorities of the EU Member States (NCAs) have enforced antitrust and merger control rules in the pharmaceutical sector.

The Report responds to concerns expressed by the Council and the European Parliament that anti-competitive practices of pharmaceutical companies may endanger access of patients to affordable and innovative medicines. Following the Commission’s inquiry into the pharmaceutical sector in 2009, competition law monitoring and enforcement in this sector have been a high priority across Europe.

The Report covers the period 2009-2017. It consists of an executive summary and 6 chapters, for a total of 45 pages. In particular, the Report provides: 

  • an overview of competition law enforcement by the Commission and the NCAs in the pharmaceutical sector (chapter 2)
  • a description of some key characteristics of the sector that shape the competition law assessment (chapter 3), and
  • illustrations of how competition law enforcement allegedly contributes to both cheaper medicines (chapter 4) and access to innovative medicines (chapter 5).

The work carried out by the Commission and NCAs

According to the Report, between 2009 and 2017, the Commission and the NCAs have: 

  • Adopted 29 antitrust decisions finding an infringement or accepting binding commitments in antitrust investigations in relation to pharmaceuticals. This was in addition to 17 infringement or commitment decisions in cases concerning medical devices, and 23 in cases related to other healthcare matters. 17 investigations were triggered by complaints, 8 were initiated ex officio, and 4 were started on other grounds (eg based on the Commission sector inquiry). Fines were imposed in 21 cases for over €1bn in total.
  • Looked at over 100 cases which did not ultimately lead to an infringement finding. And currently, they are investigating over 20 antitrust cases involving pharmaceuticals.
  • Assessed over 80 mergers, identifying competition risks in 19 of those mergers. On this basis, the intervention rate in mergers in the pharmaceutical sector was approx. 22% (compared to around 6% across all sectors).

According to the Report, the competition enforcement activities by the Commission and the NCAs have focused on two main objectives, namely: 

  • Access to cheaper medicines. The Report provides that the Commission and the NCAs have made significant efforts to investigate and sanction practices that result in higher medicine prices. As examples, the Report refers to a range of pay-for-delay, excessive pricing, and merger control cases. 
  • Access to innovative medicines and more choice. The Report’s focus in this regard appears to be on preserving competition in pipeline products when applying the relevant merger control rules.

Commission enforcement action in relation to disparagement?

In discussing access to cheaper medicines, the Report considers several types of behaviour that are considered in Commission decisions and Court of Justice (CJEU) case law - even though the Report sometimes incorrectly appears to portray the case law as being settled on a number of important issues.

However, the Report (from page 28) also looks at disparagement, a practice which has thus far only been investigated by the French Competition Authority and considered by the CJEU in Hoffmann-La Roche in the context of a preliminary ruling.

An infringement may arise where companies seek to disparage generic entrants into the market to limit their uptake and therefore the generic company’s ability to compete in the market (eg communicating alarmist messages among doctors and pharmacists on the risks of prescribing or issuing a generic product).

The inclusion of disparagement in the Report as a potential type of infringing behaviour - so far only enforced in France - may suggests that the Commission is considering it as serious a form of infringing behaviour as the other types of behaviour it has repeatedly investigated (eg pay-for-delay). This might signal increased enforcement action appetite by the Commission based on disparagement.

A focus on biosimilars in Europe

The Report underlines on several occasions the importance of biosimilars. The Report appears to place biosimilars on the same level as generics when it comes to competitive dynamics: “Effective competition from generics and, more recently, biosimilars typically represents a vital source of price competition on pharmaceutical markets and significantly drives down prices (…).” (Report, page 1.)

Biosimilar - and generics - competition are presented in the Report (page 21) as leading to lower prices for older medicines and a “disciplining force” towards originator companies.

For the time being, there have been no antitrust decisions sanctioning practices relating to biosimilars in Europe as far as we are aware. However, the Report emphasises (page 45) the importance of closely monitoring behaviour that may affect biosimilars: “Authorities must remain vigilant and pro-active in investigating potentially anti-competitive situations, including where new practices used by companies or new trends in the industry are concerned, such as the growing relevance of biosimilars.” (emphasis, Simmons & Simmons).

Therefore, enforcement action can likely be expected in relation to biosimilars in Europe.

A renewed competition law enforcement interest generally in the pharmaceutical sector in Europe

It is clear from the Report that the Commission and NCAs will continue to work together to expand their enforcement efforts in the pharmaceutical sector, and companies should not expect to see any lessening of efforts in this space.

The Report therefore confirms that the pharmaceutical sector remains under strict scrutiny of the Commission and the NCAs, who will “(…) continue their commitment to rigorously enforce competition law in the pharmaceutical sector in the future” (Report, page 45). As such, enforcement of competition rules by the Commission and the NCAs in the pharmaceutical sector “remains a matter of high priority” in Europe (Report, page 3).

As indicated above, the Report provides that the Commission and the NCAs will pay particular attention to new industry practices and to new market trends (eg biosimilars). At the same time, the Report acknowledges that “(…) there are limits to what competition law can do and continuous efforts by all stakeholders are needed to meet the societal challenge of ensuring sustainable access to affordable and innovative medicines” (Report, page 3).

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.