Out-Law News 2 min. read
04 Dec 2014, 11:07 am
Natasha Pearman of Pinsent Masons, the law firm behind Out-Law.com, said that a drive for further cost savings in the NHS is likely to prompt the probes.
Pearman was commenting after a court in Italy upheld a previous ruling by the Italian competition regulator (the AGCM) that drugs companies Novartis and Roche had engaged in artificial product differentiation in the area of ophthalmic drugs with the object and effect of increasing sales of a higher-priced product. The court ruled that the AGCM was right to conclude that the companies had engaged in an anti-competitive agreement in breach of EU competition rules.
The AGCM had found that Roche and Novartis had tried to prevent the use of Roche's Avastin drug being used to treat certain forms of macular degeneration so that the sales of Novartis's alternative drug, Lucentis, could be protected. Lucentis was sold at more than 10 times the price of Avastin.
Roche and Novartis were found to have colluded to create an artificial product differentiation by claiming that Avastin was more dangerous than Lucentis with the aim of influencing doctors and patients, despite scientific studies providing evidence that the two drugs were both suitable for ophthalmic use.
The competition authorities in Belgium are also considering this issue after receiving a complaint from Belgian consumer group Test-Achats.
In 2008 the European Commission's Directorate-General for Competition conducted a widespread investigation into the pharmaceuticals industry. The investigation included dawn raids of company offices and resulted in the Commission concluding that pharmaceutical companies were using a "toolbox” of instruments and measures to react to rival 'generic' market entry and potentially delay that entry.
The practices identified by the Commission included pharmaceuticals' own patenting activities, the raising of disputes between originators and generic drug manufacturers, patent settlements and other agreements between originator and generic companies, as well as marketing and promotional activities and the use of second generation products.
In addition, it noted that originators had tried to influence national regulators' decisions on marketing authorisation, as well as the price and reimbursement of generic products.
Pearman said that the language used by the Commission had been heavily criticised by the pharmaceuticals industry at the time of its report, but that "several years later the consequences of the Commission’s investigation are still being felt".
"Ultimately, most of these practices have now come under the spotlight of competition authorities across the globe, leading to significant fines and a number of precedent setting cases," Pearman said. "Pharmaceutical companies no longer have certainty as to the legitimacy of commercial practices which are prevalent across the industry and often deemed essential to innovation."
Pearman said that a number of the cases that competition authorities have brought were on the basis that such agreements were anti-competitive by "object", terminology which essentially removes the need for the authority to demonstrate that the agreement did in fact lead to anti-competitive effects on the relevant market. She said that regulators might find it more difficult to bring those cases in future following a ruling in September by the Court of Justice of the EU (CJEU) as the CJEU set out guidance on determining whether agreements restrict competition 'by object'.
However, the expert said that competition regulators' interest in pharmaceutical industry practices is unlikely to diminish in the near future.
"Given the potential for significant costs savings, and also for damages, that these cases may secure for struggling national health services, there are likely to be more private challenges by health authorities and investigations by competition authorities," Pearman said.