Last month the CMA published its evaluation of the OFT’s 2011 decision concerning Reckitt Benckiser’s withdrawal of Gaviscon prescription packs (which we wrote about, in the context of follow-on actions, here).
Such evaluations assess the validity of previous decisions and their impact, but are also a window into to the ‘mind’ of the CMA and can indicate what the CMA may investigate in the future.
The OFT’s original investigation considered whether Reckitt had abused a dominant position by hindering generic entry in competition to its prescription drug Gaviscon Liquid, an alginate-based compound used to treat acid reflux.
Shortly before expiry of the patent covering Gaviscon Liquid, Reckitt launched a new formulation, Gaviscon Advance, which was protected by a further patent. At around the same time, Reckitt withdrew Gaviscon Liquid from the database of prescription NHS drugs. Had the product not been withdrawn, the OFT concluded that it would have been easier for doctors to prescribe generic versions of Gaviscon Liquid. Instead, most patients were transferred onto the new Gaviscon Advance product for which there was no generic alternative, and which therefore resulted in higher costs for the NHS. Consequently, the OFT concluded that Reckitt Benckiser had abused a dominant position.
A focus of the recent CMA review was whether the OFT would have achieved greater impact had the investigation been concluded earlier. The CMA’s conclusion was that any intervention would have had to take place very shortly after the withdrawal if it were to have had any greater impact. Such an outcome would be difficult to achieve in practice, since competition investigations are usually complaints-based rather than the result of continuous monitoring. Vast resources would be required to monitor the country’s economy in this way – such an approach would be disproportionate to any gain.
So much for the CMA’s introspection. Of particular interest to companies active in the pharmaceutical sector is the fact that the CMA places an increasing emphasis on intelligence-led enforcement. While the CMA’s main targets are cartels, the evaluation of the Reckitt decision suggests that “there could be merit in taking a more proactive approach to monitoring drug markets when originator drugs go off patent”. This would be of concern to the innovative pharmaceutical industry. Coupled with the recent reduction in the standard for interim measures to be imposed by the CMA, this is an area where increased vigilance may be needed.
While the CMA is pondering how to react to drugs going off-patent, Parliament is considering the same topic. The Off-Patents Drugs Bill is due to continue its second reading in the Commons later this week (due on 4 December 2015). If the Bill were to pass, the Secretary of State for Health would be required to take steps to secure licences for off-patent drugs in relation to new indications. NICE would then conduct a technology appraisal. If NICE recommends the drug for the new indication, the relevant health bodies would provide funding to ensure the drug is available for patients.
However, the chances are that the bill won’t make it to the statute books. It’s the second time that MPs have tried to pass the Bill in little over a year – its second reading was adjourned last month, and the Bill was abandoned in the last parliamentary term due to lack of support. Perhaps part of the problem is that little thought appears to have been given to the interaction between legislation of this kind and other patent protection which may be available for new indications. Indeed, for many drugs, the expiry of the main chemical compound patent does not mean that there is no longer any relevant patent protection. It is unclear how this bill would apply if there are already second medical use patents in play, or other forms of continuing protection. Nevertheless, the bill’s promotion by a number of medical charities demonstrates the continued and understandable desire for cost-effective new medicines.