Pfizer may be off the hook, but ACM pharma supervision continues
Pharma companies beware: discount schemes by former patent owners raise red flags at competition authorities. On 11 February 2022, the Dutch Authority for Consumers and Markets (ACM) announced it has dropped its abuse of dominance investigation into drug manufacturer Pfizer after it agreed to discontinue its discount structure for hospitals buying its drug Enbrel.
Pfizer may be ‘off the hook’, but the investigation itself underlines the ACM’s determination to tackle abuse of dominance in the pharmaceutical sector; an issue that is also high on the European Commission’s enforcement agenda (see our April 2021 newsletter). Pharma companies should therefore be alert and aware of their behaviour: competition authorities are watching closely.
ACM investigation
In 2015, Pfizer’s patent on the active ingredient of the (at the time) second most sold autoimmune disease treatment drug ‘Enbrel’ expired. Consequently, rival companies were allowed to enter the market with biosimilars. Biological medicines such as Enbrel have an active substance derived from living organisms. Biosimilars aim to have the same therapeutic mechanism as the original patented medicines, but are not exact copies (unlike small generic molecules). Only two of these biosimilars are currently active on the Dutch pharma market.
Following information about Pfizer’s ‘exclusivity rebates’ for hospitals, the ACM initiated an investigation which revealed that a hospital’s discount for future Enbrel purchases could be significantly reduced if the purchased volume fell below a pre-specified percentage. According to the ACM, these rebates discourage hospitals from switching to another (competing) drug, particularly since hospitals would still have to offer Enbrel to patients who need or want to stick to the same drug.
Even though Pfizer has stated that it disagrees with the alleged violations, it has indicated to remove the discount clauses in all current and future contracts. The ACM thereupon decided to close its investigation.
Intensified supervision
This is the second time the ACM has closed an investigation into a pharma company’s discount structure after informal commitments. The ACM is clearly not afraid to tackle rebate systems, despite the potentially daunting task of a thorough and detailed economic analysis resulting from the Intel judgment’s clarified effects-based analysis (see our February 2022 newsletter). The ACM is specifically calling on market parties to continue to keep it informed of any forced buying through discount schemes. Moreover, it has designated excessive prices and barriers to entry once the patent on expensive medicines has expired as one of its 2022-2023 focus areas, and imposed its first-ever fine for excessive pharma pricing in July 2021 (see our August 2021 newsletter).
Meanwhile, the European Commission is also playing its part in the scrutiny of the pharma sector. It recently imposed a EUR 60.5 million pay-for-delay fine, accepted commitments for excessive pricing and is investigating potential anticompetitive conduct of pharmaceutical company Teva. The appeal by drug manufacturer and originator company Servier against the General Court’s ruling on its patent settlement agreements is also pending (see our January 2019 newsletter).
Pharma manufacturers should be very alert and aware of their behaviour; competition authorities seem to have sunk their teeth into the pharma sector.
This article was published in the Competition Newsletter of March 2022. Other articles in this newsletter:
