EU: Pharmaceuticals

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The EU National Competition Authorities (NCAs) have been very active in the pharmaceutical sector this year. While the European Commission (the Commission) has considered several concentrations, taking decisions that develop its analytical approach to the sector, the NCAs have led in the behavioural context.

‘Pay-for-delay’ agreements have continued to attract regulatory scrutiny (eg, the UK Paroxetine case),1 and alleged market sharing agreements have remained on the agenda, with the Italian Lucentis/Avastin case ongoing and the UK’s Competition and Markets Authority (the CMA) being in the early stages of investigating at least one other alleged case. Lucentis/Avastin has been referred by the Italian Council of State (the ICS) to the European Court of Justice (the ECJ) in March. Interestingly, other behavioural investigations are considering alleged excessive pricing (eg, the CMA’s Pfizer/Flynn investigation2 and the Italian Competition Authority (the ICA)’s Aspen investigation),3 an issue that has not been the subject of scrutiny from European competition regulators in recent years. In a related vein, public health authorities (particularly in the UK) have increasingly resorted to litigation seeking compensation for overspending as a result of alleged illegal behaviour by pharmaceutical companies.

We also started to see the interplay with the IT and technology sector become increasingly important, as the Commission, NCAs and national courts have started to be faced with questions relating to data, access and interfaces in a number of contexts, from eMedicine platforms to research databases and patient records. Many of these issues have echoes in the discussion created by the Commission’s broader Digital Single Market initiative.

Finally, while the Commission completed its sector inquiry into the pharmaceutical sector in 2009, a number of NCA-initiated inquiries are ongoing.

Looking ahead, beyond the pending NCA investigations, the much anticipated Lundbeck and Servier judgments are expected in the next year (with the Lundbeck judgment due in September). Expectations are high, following the ECJ’s ‘narrow’ approach to identifying ‘by object’ infringements in Cartes Bancaires.4 Given the importance of patents to the sector, the circumstances in which it is appropriate to find an agreement (particularly a settlement agreement) to be ‘by object’, or by its very nature, restrictive of competition is clearly of crucial importance.

Mergers and acquisitions

Market definition

Both the Commission and the NCAs have been refining their approach to market definition, moving away from a focus on Anatomical Therapeutic Chemical (ATC) classifications, in recent years. The Commission has, for example, taken the view that the ATC-focused approach is inappropriate in certain therapeutic areas. For example, in the oncology sector, the Commission considered that, because products may be indicated for various types of cancer, a definition based on mode of operation may be more appropriate. In its 2015 Novartis/GSK Oncology Business decision, the Commission looked at several targeted therapies to define the relevant product markets, concluding that it was appropriate to define relevant markets for the treatment of each of advanced melanoma and ovarian cancer.5

In addition, the Commission and the NCAs are increasingly taking into account treatment protocols (or guidelines), using therapeutic prescription advice at various ‘treatment stages’ to identify competing products. As a result, pharmaceutical products that may fall within different ATC3 categories may be considered to be substitutes if they are prescribed at the same treatment stage (potentially even when one product is the primary treatment and others are alternatives for non-responding patients).

Finally, biosimilars6are playing an important role in the market and, as a result, in assessments of concentrations. In Pfizer/Hospira, the Commission analysed competition in relation to both sterile injectable drugs and biosimilar products. In its decision, the Commission explained that, given the expense of biological therapies, entry of biosimilars should enable wider access by patients.7 Accordingly, to address the competition concerns raised by the Commission in the market for infliximab drugs, Pfizer committed to divest the development, manufacturing and EEA marketing rights to its infliximab biosimilar. The marketing rights outside of the EEA remained with the merged entity.

eHealth, the role of data and platform access

Growing interest in eHealth is leading to new and multi-disciplinary collaborations and other transactions between pharmaceutical companies, IT companies, data storage and analytics companies and medical device makers. In the past year, the Commission assessed a range of issues potentially created by eHealth platforms in its Sanofi/Google/DMI JV review.8 The Commission cleared the deal, whereby Sanofi and Verily Life Sciences formed a joint venture to offer services for the management and treatment of diabetes using an integrated digital e-medicine platform. The JV will also collect, process and analyse data related to diabetes and, along with the services offered, may commercialise products such as specialised continuous glucose monitors, insulin pumps and concentrated insulin formulations.

In the course of its investigation, the Commission considered a number of issues that we see in the broader ongoing discussion on online platforms, including interoperability with and access by third-party devices (particularly where a platform operator offers a device, since this could create incentives to foreclose in particular circumstances). Similar foreclosure issues could arise in connection with pharmaceuticals delivered in conjunction with a platform. Further, vertical integration in the relevant IT stack (whether from the platform down to an OS or up to an app store) could also create foreclosure issues if, for example, application programming interfaces at the various layers of the stack are not open to competitors. Additional access concerns can also arise in relation to data. The Commission’s concerns in this context relate to data portability and interoperability to ensure that patients cannot be ‘locked in’ to a particular platform. The underlying concern is that a first mover platform in a nascent market may have the ability to lock in patients and ‘tip’ the market if patients (and healthcare providers) are unable to switch platforms. The concern is broadly similar to that reflected in the Commission’s Communication on ‘Online Platforms and the Digital Single Market Opportunities and Challenges for Europe’9 published on 25 May.

Behavioural investigations

‘Pay-for-delay’ agreements

While pharmaceutical companies await the General Court’s judgments in Lundbeck10 (expected in September) and Servier,11 the NCAs have continued to scrutinise agreements that are alleged to be intended to delay generic entry.

The CMA issued its first infringement decision in a ‘pay-for-delay’ case on 12 February 2016, fining GlaxoSmithKline (GSK), Generics UK Limited (GUK), Merck KGaG (Merck, GUK’s former parent company), Actavis UK Limited (Actavis), Xellia Pharmaceuticals ApS and Alpharma LLC (Alpharma) a total of £45 million for delaying market entry of generic versions of GSK’s blockbuster anti-depressant Seroxat (paroxetine) in the UK. The paroxetine patent was due to expire in 2001 and several generics (including GUK and Alpharma) were considering entering the UK paroxetine market. The CMA found that they agreed not to enter before 2004 in exchange for payments and other value transfers amounting to over £50 million. The CMA concluded that the agreements kept paroxetine prices high and deprived the National Health Service (the NHS) of the price reduction that would have resulted from earlier generic entry. The agreements between GSK and GUK, on the one hand, and GSK and Alpharma, on the other hand, were found to be anticompetitive, as they had the object and/or effect of preventing, restricting or distorting competition (infringing article 101 TFEU and Chapter I of the UK Competition Act 1998). While the CMA’s decision has not yet been published, its conclusion seems to reflect the Commission’s approach in its ‘pay-for-delay’ cases.

In April 2016, GSK, Merck, Actavis and Alpharma appealed to the UK Competition Appeal Tribunal (the CAT).12 The first hearings are scheduled for the end of October 2016. As noted above, the Lundbeck judgment is expected before then, so the CAT will likely have the General Court’s view on the ‘by object’ standard in reviewing that element of the CMA’s decision.

Excessive pricing

Competition authorities have historically been reluctant to investigate excessive pricing, given their desire to avoid becoming price regulators. Given this, and the extensive ex ante price regulation in the pharmaceutical sector, it is interesting that there are several excessive pricing cases at national level. This may reflect budgetary pressures in various national health services, a response to significant price increases in short periods of time or some combination of the two.

The CMA is investigating alleged excessive pricing in Pfizer/Flynn Pharma. On 6 August 2015, the CMA sent a Statement of Objections (SO) to Pfizer and Flynn Pharma (Flynn) alleging that they had abused their dominant positions in various UK markets by charging pharmacies and wholesalers ‘excessive and unfair’ prices for phenytoin sodium capsules.13 Both companies were effectively monopolists. Pfizer manufactured the drug and supplied it to Flynn, which distributed it to the NHS and private pharmacies. Pfizer previously manufactured and sold the drug under the Epanutin brand, but sold the distribution rights in September 2012 to Flynn. Flynn then ‘debranded’ the drug (thereby changing the pricing regime applicable to the product). As a result of the sale and debranding, prices rose dramatically: Pfizer started selling the drug (at wholesale level) at prices between 8 and 17 times higher than its old pricing for Epanutin, and Flynn’s price was 27 times Pfizer’s (prior retail) price. As a result, the NHS’s annual spend on phenytoin sodium capsules increased from approximately £2.3 million prior to September 2012 to over £50 million in 2013 (and over £40 million in 2014). The CMA’s decision is pending.

The CMA is currently in the early stages of at least one other (not yet public) investigation of an alleged abuse of a dominant position by a pharmaceutical company relating to excessive and unfair prices charged, confirming that excessive pricing is firmly on its agenda.

In addition to the ongoing probes in the UK, the ICA is investigating allegations that Aspen sought to compel the Italian drug agency AIFA to accept significant price increases for its anticancer drugs Alkeran, Leukeran, Purinethol and Thioguanine. The ICA alleges that Aspen’s conduct amounted to an abuse of its dominant position because it threatened to withdraw the drugs from the market in the event that it could not reach agreement on the increased prices.14 The ICA recently extended the deadline for its investigation (from June) to September, and stated that it had sent a second SO in April.15

Other behaviour under investigation

Several other types of behaviour have been investigated and continue to be scrutinised by the NCAs.

Rebates and discounts

In June 2015, the CMA closed a case relating to an alleged loyalty-inducing discount scheme on grounds of administrative priority. While the case was closed, it serves as a timely reminder that NCAs are ready to investigate pricing behaviour other than excessive pricing. While the CMA did not take a decision in its case, it did provide some guidance on rebate and discount schemes that may raise competition concerns. It identifies rebates or discounts that are triggered at a volume threshold and apply discounts on units above and below the threshold (total volume discounts), and those that would result in below-cost pricing for the contestable sales (effectively predatory pricing) as being particularly problematic.16

Market sharing

NCAs are increasingly investigating whether cross-supply or distribution agreements amount to market allocation/sharing agreements. The ICA fined Novartis and Roche in 2014 for colluding to restrict the distribution of the cheaper Avastin, Roche’s cancer drug, in favour of Lucentis, Novartis’s drug designed for the treatment of age-related macular degeneration. The outcome of the appeal may provide guidance as to the assessment of alleged market sharing agreements. In considering the appeal, the ICS addressed five questions to the ECJ relating to the licensing agreement between Novartis and Roche, including whether a company that operated in a relevant market only as a result of a licensing agreement – as licensee – can be considered to be a competitor of the licensor, the relevant market for Lucentis and Avastin, and the interplay between competition and pharmaceutical regulation (ie, whether an agreement excluding a drug due to safety concerns that have neither been proven nor ruled out by scientific research may restrict competition ‘by object’).

Beyond this, at least one NCA is investigating whether cross-distribution arrangements amount to market sharing (eg, where party A distributes product B from party B, and party B distributes product A from party A). The investigation is at a preliminary stage, but it suggests that there is regulatory willingness to investigate such arrangements (even where products A and B are not substitutes, whether on- or off-label).

Misleading representations

Pharmaceutical companies should continue to be vigilant in relation to misleading representations relating to their products. Even where such conduct escapes competition law scrutiny, it may be problematic under consumer protection law.

In a recent case in Australia, the Federal Court found that Reckitt Benckiser had engaged in misleading conduct contravening the Australian Consumer Law by representing that its Nurofen Specific Pain products were each formulated to treat a specific type of pain, although they all contained the same active ingredient (ibuprofen lysine 342mg). It found that Reckitt Benckiser provided misleading indications on the packaging of each Nurofen Specific Pain product and on its website. The retail price of the Nurofen Specific Pain products was also almost double that of comparable pain relief products and of Nurofen’s standard ibuprofen products. Reckitt Benckiser admitted the conduct and consented to the orders made by the Federal Court. The Court ordered that Reckitt Benckiser remove the Nurofen Specific Pain products from the shelves within three months, publish website and newspaper corrective notices, implement a consumer protection compliance programme, and pay the Australian Competition and Consumer Commission’s costs.17 The UK Advertising Standards Authority (ASA) is also investigating alleged misrepresentations by Reckitt Benckiser involving its Nurofen Express product. The ASA received 12 complaints claiming that Reckitt Benckiser misled consumers by implying in an ad that Nurofen Express directly targets muscles in the head, such that it would provide faster headache relief than standard products.18

Access to data

Outside of the merger review context, NCAs have also faced questions regarding access to patient data. The French Competition Authority (the FCA), for example, recently assessed whether a refusal to grant access to patient registries is an abuse of a dominant position (in violation of article 102 TFEU and article L.420-2 of the French Commercial Code). Analytics firm Celtipharm complained in June 2013, alleging that the French ‘Caisse nationale d’assurance maladie des travailleurs salariés’ (the CNAMTS) and its subsidiary GIE SESAM-Vitale (GIE) had abused their dominant positions in the market for supply of historical aggregated patient data by refusing to give Celtipharm access to CNAMTS’s electronic patient files. Celtipharm wanted to use the data to conduct a medical study. The FCA declared the complaint inadmissible in October 2014 on the basis that the CNAMTS and GIE’s management of electronic public health data falls within the scope of a public administrative service mission, such that their conduct in relation to these records was not subject to competition law. In February 2016, the French Court of Appeal upheld the decision.19 Non-public entities will not, of course, have such a defence, and in a sector being increasingly driven by data, platforms and eHealth, this case may well be a skirmish before the battle, since neither the FCA nor the court addressed the substantive claim.


There is currently considerable litigation relating to the sector before the national courts. The UK NHS in particular has brought a number of compensation claims against pharmaceutical companies seeking reimbursement for money allegedly overspent as a result of illegal behaviour by pharmaceutical companies. For example, there is ongoing litigation in the High Court in which the NHS is making a follow-on claim against Servier seeking compensation for the alleged anticompetitive pricing of the cardiovascular drug Perindopril that resulted from the pay-for-delay agreements that were the subject of the Commission’s 2014 Decision. In addition, the Scottish, Welsh and Northern Irish public health authorities are seeking compensation. The total claim against Servier is approximately £260 million.

The earlier litigation seeking damages from Reckitt Benckiser relating to the abuse of its dominant position in the market for Gaviscon was settled. Accordingly, the Servier litigation can be viewed as another step in the evolution of follow-on damages claims in the UK. That said, if the General Court rules against the Commission’s ‘by object’ approach in September, it will be interesting to see whether the NHS and other health authorities are prepared to make an effects-based case.

Sector inquiries

While the Commission concluded its inquiry into the pharmaceutical sector in 2009,20 a number of NCAs have pursued sector inquiries. While a number of older inquiries have concluded this year,21 or are scaling down,22 others are still under way.

On 25 May 2016, the ICA announced the results of its sector inquiry into ‘Markets for vaccines of human use’.23 It raised several competition concerns relating to the general structure of the vaccine industry and more specifically its structure in the Italian market. The inquiry focused on the oligopolistic structure of the market, with four companies (GSK, Sanofi Pasteur, Merck Sharp & Dohme and Pfizer) accounting for 80 per cent of vaccine sales by value. The ICA took the view that competition between vaccines for the same disease may not develop as a result of the industry practice of differentiating between similar products for marketing purposes. The ICA recommended that medical authorities evaluate drugs intended to treat the same disease to determine whether or not they are substitutable.24 The ICA also raised concerns regarding tiered pricing practices in the sector, and called for greater transparency of vaccine costs and prices.25

The Lithuanian competition authority is currently seeking comments on the preliminary findings of its market study into reimbursable medicine, launched in May 2015.  In its preliminary findings, the authority has found that market entry by cheaper generic pharmaceuticals in Lithuania is restricted. The authority is suggesting that the conditions on which pharmaceuticals are included in the Price List of reimbursable medicines be amended to allow the inclusion of more generics.26 Finally, in September 2015 the Danish Competition and Consumer Authority announced an investigation focusing on competition between pharmaceutical wholesale suppliers.27


  1. Case CE/9531-11, Paroxetine investigation: anticompetitive agreements and conduct.
  2. Case CE/9742-13, Phenytoin sodium capsules: suspected unfair pricing.
  3. Case A480, Incremento Prezzo Farmaci Aspen.
  4. Case C-67/13 P Groupement des cartes bancaires v European Commission [2014].
  5. Commission Decision of 28 January 2015 in Case COMP/M. 7275 – Novartis/GlaxoSmithKline Oncology Business, paragraphs 31 and 72.
  6. ‘Biosimilars aim to have the same therapeutic mechanism as original patented medicines, but, unlike small molecule generics, are not exact copies of the originator drugs.’ See Commission Decision of 4 August 2015 in Case COMP/M. 7559 – Pfizer/Hospira, paragraph 9.
  7. Pfizer/Hospira Decision, paragraph 11.
  8. Commission Decision of 23 February 2016 in Case COMP/M.7813 – Sanofi/Google/DMI JV.
  9.; see also the Commission’s Staff Working Document on Online Platforms:
  10. Commission Decision of 19 June 2013 in Case COMP/AT.39226 – Lundbeck.
  11. Commission Decision of 9 July 2014 in Case COMP/AT.39612 – Perindopril (Servier).
  12. Summaries of the appeals are available on the CMA’s website, see, for example, for a summary of GSK’s appeal.
  13.  ‘CMA issues statement of objections to Pfizer and Flynn Pharma in anti-epilepsy drug investigation,’ CMA Press Release, 6 August 2015.
  14. See ‘A480 – Antitrust’s investigation on the price increase for Aspen’s anticancer drugs’, ICA press release, 27 November 2014.
  15. See announcement by the ICA:
  16. ‘Statement regarding the CMA’s decision to close an investigation into a suspected breach of competition law in the pharmaceutical sector on the grounds of administrative priority,’ 26 June 2015, see
  17. See
  18. ‘Nurofen makers under investigation after court rules on misleading adverts,’ The Guardian, 15 December 2015,
  19. Judgment of the Court of Appeal in Paris from 18 February 2016, see (in French), in particular pages 5 to 7.
  20. See for the 2009 Final Report of the Sector Inquiry, as well as the Reports on the Monitoring of Patent Settlements issued since.
  21. The competition authorities in Spain and Poland concluded their sector inquiries in mid-2015. Having looked at retail distribution, the Spanish authority called for the elimination of restrictions on market access that result from Spanish legislation.
  22. The Romanian Competition Council recently announced that it is close to completing its sector inquiry examining the penetration of generic drugs.
  23. For an executive summary of the ICA’s findings, see
  24. Paragraph 8 of the ICA’s Executive Summary.
  25. Paragraph 11 of the ICA’s Executive Summary.
  27. Danish Competition and Consumer Authority, Press Release, 7 September 2015,


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