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Focus on excessive pricing in the pharmaceutical sector continues in the UK and EU

Posted on 03 August 2020

Pharmaceutical pricing remains a key area of interest for competition authorities in the UK and EU. 

Earlier this year the Court of Appeal, in its judgment in Competition and Markets Authority v Flynn Pharma Ltd & Ors [2020] EWCA Civ 339, affirmed the Competition Appeal Tribunal's overarching conclusion that the Competition and Markets Authority (CMA) needed to reconsider its findings in relation to its excessive pricing investigation into the Flynn Pharma and Pfizer pharmaceutical groups. Interestingly however, rather than viewing this decision as a setback, the CMA welcomed it as an important step forward in clarifying the legal test for excessive and unfair pricing.

The UK

We previously reported that it seemed likely this judgment would provide a framework for abusive pricing investigations by the CMA in the future, and it seems as though this is now already the case.  In addition to restarting its probe into Flynn Pharma and Pfizer, the CMA has now issued a supplementary statement of objections to Advanz Pharma (which the CMA is investigating separately in relation to its pricing of liothyronine), in order to address some of the issues arising from the Court of Appeal’s judgment.

The EU

The international significance of the Flynn Pharma/Pfizer case was highlighted by the fact that the European Commission intervened in support of the CMA. Indeed, at the same time as this case, the European Commission was conducting its own excessive pricing investigation into Aspen Pharma (concerning life-saving cancer medicines), which may explain the close eye that it was keeping on the proceedings.

Interestingly, in that case, Aspen Pharma has now offered the European Commission commitments in an attempt to avoid a full blown infringement decision. The European Commission has now invited interested parties to submit their views on the proposed commitments.

The commitments would see Aspen Pharma reduce its prices across Europe for six cancer medicines by, on average, c. 73%. These prices would be the maximum that Aspen Pharma could charge for the next ten years.  In addition, Aspen Pharma would guarantee the supply of the medicines for the next five years (and, for an additional five-year period, would either continue to supply or make its marketing authorisation available to other suppliers). What is particularly unusual about the commitments is that they will apply retroactively, taking effect as of October 2019 (with rebates being offered to affected parties as result).

If accepted, the undertakings would become legally binding. Whilst any European Commission commitment decision would shine a light on its approach to excessive pricing cases, it may not provide the clear framework that some had hoped for.

Comment

In addition to the excessive pricing cases outlined above, in the UK in particular, there are a number of ongoing probes into alleged anti-competitive agreements between pharmaceutical companies. Competition authorities' focus on the pharmaceutical sector therefore appears to show no signs of waning and this area looks set to remain a key enforcement priority.

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