A Fairer Playing Field

Mergers and acquisitions drive the growth of companies within a competitive market, but when do these deals become damaging to a healthy market?

According to EU law, the point of harm officially occurs when anticompetitive practices result in the dominance of particular companies within the market and prevent patients’ from accessing the cheapest and most innovative pharmaceutical products. Prior to the European Commission’s inquiry into the pharmaceutical sector in 2009, anti-competitive practices were rife within the pharma industry, limiting patients’ inherent rights to such products.

In January of this year, the European Commission (EC) published a report detailing how active competition law enforcement helped to protect patients’ rights across the EU region between 2009 and 2017. Though EU competition laws did much to protect against dominance in the pharmaceutical market, they did not previously cover some of the anticompetitive practices some pharma companies were engaging in.

The adoption 29 antitrust decision by the EC helped tackle these unaddressed areas - imposing sanctions including fines totalling €1 billion and ensuring that companies complied with binding agreements to remedy anti competitive practices which had not previously been addressed. Over 100 cases were investigated and more than 20 were proven to have engaged in infringements of antitrust.

One of the major areas of investigation was the implementation of strategies to hinder competition from generics and biosimilars by large pharmaceutical companies. Generics and biosimilars are known to drive down market prices (generics on average slash prices by up to 50 percent) and therefore directly compete with commercially successful medical products. In attempts to extend the the commercial life of older products, some pharmaceutical companies would offer payments to generics suppliers with the intention of coercing these companies into delaying the release of their generic medicines. The EC specifically targeted these activities and sanctioned practices that resulted in higher prices.

Several recent cases of unfair pricing of off-patent medications have also been monitored by the Commission. In 2013, the EC launched a case against Pfizer and Flynn Pharma due to inappropriate and unfair conduct involving the epilepsy medication phenytoin sodium, a product which had been produced by Pfizer in both tablet and capsule forms. In 2012, Pfizer had transferred its market authorization for the capsule formulation of the drug to Flynn Pharma, a company specializing the acquisition of products in the secondary healthcare market. The generic company began selling its new product to the NHS, but in response to an increased sales price from Pfizer, Flynn began to sell the medicine to the NHS at an inflated price (an increase of between 2300 percent and 2600 percent) - only 25 percent lower than phenytoin sodium tablets produced by Pfizer.  The UK’s Competition and Markets Authority issued a fine of £90 million but this was overturned in 2018 the Competition Appeal Tribunal.

In addition to thwarting efforts to delay the entry of generic products to market, The EC has also intervened to protect against efforts which aimed to threaten the development of life-saving cancer therapeutics and insomnia medications. Intervention against rebate schemes which enabled the monopolization of hospital tenders or the spread of misleading information about the off-label use of medications has also been prioritized by the institution.

Despite its intensified effort to promote competitive practices within the industry, the pharmaceutical sector remains an area of high priority for the Commission. The organization intends to continue its proactive approach to the investigation and monitoring  of all anti-competitive activities within the market.