Short Reads

First Dutch excessive pricing case in pharma may be expected soon

First Dutch excessive pricing case in pharma may be expected soon

First Dutch excessive pricing case in pharma may be expected soon

26.03.2018 NL law

On 7 March 2018, the president of the Dutch Authority for Consumers and Markets (ACM) together with two colleagues published a paper concerning the application of the competition rules in the pharmaceutical industry.

 

The paper specifically explains that they see a role for competition law enforcement if the owners of patented drugs engage in excessive pricing. In its agenda 2018-2019 published earlier this year, the ACM indicated that it will focus on four topics, one of which will be the price of pharmaceuticals [see our March 2018 Newsletter]. The latest paper could be seen as a follow-up on the issue and it seems likely that the ACM is looking for a case to pursue in the area.

The focus of the paper is on excessive pricing and introduces at least two positions that are noteworthy. First, the authors argue that they see no objection in principle to a finding of excessive pricing in cases where the relevant drug is still patent protected. This is interesting as competition enforcers that have previously pursued excessive pricing cases in the pharma setting have so far focused on drugs that had been off-patent for quite a while and for which the owner then quite suddenly implemented a massive price increase (e.g. the cases of Pfizer in the UK, Aspen in Italy and in the EU). A possible reason for an enforcement focus on off-patent price hikes could be that in such cases the risk of competition law enforcement getting entangled with innovation incentives may be less pronounced. This is because in off-patent scenarios sufficient time has often elapsed for innovators to recoup their investment and make a profit. The authors note, however, that also in cases where the patent is still in place there are ways to strike the right balance between acceptable price levels and innovation incentives.

Relatedly, the authors point towards a possible framework for deciding which excessive pricing cases they should pursue in relation to patented drugs that would also take into account innovation incentives. The authors argue that simply pursuing cases where the price is above the relevant ‘quality of life adjusted year’ (qualy) threshold should strike the right balance as it would incentivise producers to ‘focus on socially relevant products’ only (p. 13 of the paper). This threshold varies in the Netherlands depending on the severity of the disease, up to a maximum value of EUR 80,000 per qualy. The authors were quick to note, however, that prices below qualy are not necessarily non-excessive (p. 14 of the paper).

Now that the ACM seems to be moving towards an established framework for pursuing excessive pricing cases, one wonders whether the regulator is gearing up to actually commencing an enforcement action in the area. There are at least three reasons to expect that this is likely. First, experience shows that ACM is likely to turn priorities identified in its agenda into actual cases. Secondly, an excessive pricing case would fit the political climate – prevalent throughout Europe but certainly also in the Netherlands – that demands action against high prices for ‘sensitive’ drugs. Finally, the paper references an ACM working paper that is still a work in progress, which sets out in more detail the qualy-threshold based framework as a basis for excessive pricing cases. These reasons could be seen as signals that the ACM is preparing to get active in this space.

 

This article was published in the Competition Law Newsletter of April 2018. Other articles in this newsletter:

1.       District Court rules on the preliminary defences in CRT case

2.       District Court Amsterdam rules real estate platform Funda did not abuse its dominant position

Team

Related news

26.03.2020 BE law
​I am suffering significant financial losses as a result of the spread of the corona virus. Is there a possibility of State aid?

Short Reads - COVID-19 brings certain questions to centre stage regarding State aid. In this short read, Peter Wytinck, Sophie Van Besien and Michèle de Clerck discuss the possibility of State aid in case of significant financial losses as a result of the spread of the corona virus.

Read more

05.03.2020 NL law
Swifter merger clearance and shorter merger filings in Belgium

Short Reads - Companies can expect swifter merger clearance and simpler filing rules in Belgium. The Belgian Competition Authority has published a communication with additional rules concerning the simplified procedure for certain types of concentrations. As a result, a new category of concentrations will be eligible for a simplified merger filing, leading to swifter approval and lower costs. It will also allow the BCA to focus its resources on more problematic and complex files.

Read more

10.03.2020 NL law
De AVG staat niet in de weg aan de verwerking van persoonsgegevens door een toezichthouder tijdens een bedrijfsbezoek

Short Reads - Bedrijven die met toezicht worden geconfronteerd, zijn gehouden op verzoek van een toezichthouder in beginsel alle informatie te verstrekken. Met de komst van de Algemene verordening gegevensbescherming (AVG) is in de praktijk de vraag opgekomen of een toezichthouder bevoegd is om persoonsgegevens die onderdeel uitmaken van de gevraagde informatie te verwerken.

Read more

05.03.2020 NL law
ECJ confirms: gun jumping is double trouble

Short Reads - Companies beware: the European Court of Justice has confirmed the Commission’s practice of imposing two separate fines for gun jumping; one for failing to notify a concentration prior to its implementation, and another for implementing the concentration before obtaining clearance. The ruling underlines, once again, the increased focus of competition authorities on procedural merger control breaches – good reason for companies to keep a watchful eye on their gun jumping obligations and to take note of the possibility of two separate gun jumping fines. 

Read more

05.03.2020 NL law
CBb confirms: no cartel fine, still interest to appeal cartel decision

Short Reads - Companies can challenge a decision establishing that they committed a competition law violation, even if no fine was imposed on them. The CBb – the highest court for public enforcement of cartel cases – recently confirmed that the absence of a fine does not affect a company’s interest to appeal. Consequently, parent companies held liable for a subsidiary’s cartel infringement can still challenge a cartel decision, irrespective of whether fines were imposed on them separately.

Read more

05.03.2020 NL law
Commission continues cross-border trade crusade

Short Reads - The European Commission is on a roll in its fight against territorial sales restrictions. Just one month after fining broadcast network company NBCUniversal for restricting cross-border sales, it has also imposed a fine on hotel group Meliá for discriminating between customers based on nationality or place of residence. Meanwhile, the Commission is urging national consumer protection authorities to tackle cross-border issues, after an EU-wide screening of nearly 500 e-shops showed that one fifth of the flagged websites did not respect the Geo-blocking Regulation. 

Read more

This website uses cookies. Some of these cookies are essential for the technical functioning of our website and you cannot disable these cookies if you want to read our website. We also use functional cookies to ensure the website functions properly and analytical cookies to personalise content and to analyse our traffic. You can either accept or refuse these functional and analytical cookies.

Privacy – en cookieverklaring