30 August 2018
Some months back, we reported on an initiative by the Dutch Council for Public Health and Society which considered measures for containing high drug prices. Of particular note were the proposals for compulsory licensing, and the application of the new measures to orphan drugs as well as to more mainstream products (orphan drugs are those which are applicable to rare diseases affecting less than 0.05% of the population). Now a newly formed Dutch foundation for “pharmaceutical accountability” (the Stichting Farma ter Verantwoording, or SFV) has announced that it has presented a dossier to the Dutch competition authority requesting that it take action against Leadiant Pharmaceuticals in relation to the price of chenodeoxycholic acid (CDCA) which is used for a metabolic disease affecting around 60 people in the Netherlands (report in English here). The focus of the complaint is on the difference between the current price of CDCA (€140 per capsule), and the price of the same drug which was formerly used in the treatment of gallstones (c. €0.28 per capsule). According to the SFV’s report, the orphan designation was secured in Leadiant only last year, following a two-year period when the drug was not on the market. The orphan designation means that Leadiant will have market exclusivity for a 10-year period. However, unlike some orphan drugs, CDCA was not a new product, but was used off-label for the disease in question for a number of years before withdrawal.
This complaint highlights the competing policies of effective protection and incentivisation of drug development, including for small patient populations, and that of cost containment for health budgets. Assuming the Dutch Competition Authority agrees to investigate, it will have to grapple with questions as to the appropriate return on an orphan product (bearing in mind the limited patient population which presumably means that fixed costs of producing the drug will have to be allocated at a much higher rate than for non-orphan drugs), and the question of whether the drug’s previous use for treatment of gallstones is comparable to its current use under the orphan designation. There is no doubt that the prior off label use was more cost effective for treating Dutch patients, but on the other hand the orphan designation should assure the continued availability of the drug in circumstances where it was otherwise withdrawn from the market, and will have involved additional testing to ensure that appropriateness of the treatment.
Whether these policy tensions are questions that are appropriately answered through the application of competition law is a wider question that will no doubt continue to stimulate discussion and dissent.
14 August 2018
Last week, Concordia International released a management report in which it announced the names of six drugs currently under investigation by the Competition and Markets Authority (“CMA”). This relates to an investigation into Concordia’s UK activities, which is the third launched by the CMA into Concordia’s business since April 2016, and forms part of a wider inquiry into the UK pharmaceutical sector.
The investigation was launched in October 2017, and we now know that it involves the following products:
- Carbimazole, used to treat hyperthyroidism;
- Nitrofurantoin, an antibiotic;
- Prochlorperazine, used to treat nausea and psychosis;
- Dicycloverine, a gastrointestinal muscle spasm relaxant;
- Trazodone, an antidepressant; and
- Nefopam, an analgesic.
According to Concordia, the CMA has confirmed that it will be continuing its investigation into Nitrofurantoin and Prochlorperazine. It is currently assessing whether to continue its investigation into Trazodone, Nefopam and Dicycloverine. This investigation is still at an early stage, unlike a couple of others.
The other current investigations involving Concordia are an abuse of dominance case about alleged excessive pricing of Concordia’s ‘essential’ thyroid drug, Liothyronine, and a case involving a possible ‘pay-for-delay’ agreement between Concordia and Actavis for hydrocortisone tablets (we previously discussed this here). Both cases have progressed to an advanced stage, with statements of objections having been issued by the CMA, but progress appears to have been delayed, perhaps because of the CAT’s June judgment in the Pfizer/Flynn case, which overturned the CMA’s controversial excessive pricing decision (covered here). This latest announcement re-emphasises the CMA’s continued interest in the pharmaceutical sector and its eagerness to weed out anticompetitive practices in this industry, including the more novel, sector-specific forms of abuse and collusion such as ‘pay-for-delay’ strategies. It will be interesting to see whether the CMA follows a similar approach in these cases to that taken in other recent pharmaceutical cases, such as Pfizer/Flynn and the Paroxetine (GSK) case (discussed here). We will be keeping a close eye on any developments over the coming months…
6 August 2018
We reported a few months ago on the House of Lords Communications Select Committee's report on advertising in the digital age.
The Committee’s report set out the challenges currently facing the UK’s advertising industry in light of factors such as Brexit and the ever-expanding digital economy. Notably, the Committee called on the CMA and other regulatory bodies to adopt robust standards for online advertising and made several recommendations to the Government of ways to help ensure that digital advertising “is working fairly for businesses and consumers”.
Following on from that report, the Government has now published its response.
What was the Government's response?
The following aspects will be of interest to competition lawyers:
- The Government acknowledged that the regulatory challenges posed by the online advertising industry are extensive. The Government encourages continued self-regulation of online advertising, but may consider legislating in this area. A White Paper that focuses on online harms will be published later this year, which may shed light on any planned legislation relating to online advertising.
- In relation to the lack of transparency in the digital media advertising market, the Government stated that it is keen to gather more evidence on the business models in this market. This will hopefully form part of the Digital Charter's work programme and will be included in the Carincross review into the sustainability of the press (expected early 2019). However, it noted that because the CMA is an independent authority, the Government‘s powers to direct the CMA to undertake an investigation or study are extremely limited.
- Despite receiving an increase in funding, it remains unlikely that the CMA will have sufficient resources to fund a wide-ranging market study into digital advertising. This is because the additional £23.6 million funds allocated to the CMA by the Treasury will be going towards preparation for Brexit. Market studies are cost intensive for the regulator, and many have speculated that they may be a likely casualty of the CMA’s increased enforcement responsibilities.
- The Government is to conduct an overall consumer markets review, to be completed by April 2019. As part of this review, the Government will consider how best to ensure the UK's competition framework is effective in responding to challenges presented by digital services.
The response to the Committee’s report indicates that the Government acknowledges the need to gather more evidence and to develop better tools in order to be able to deal with potentially complex competition issues arising in digital ad markets. It also notes the overall preference for self-regulation (which should allow markets to self-correct), rather than introducing a rigid regulatory framework. However, with the CMA about to take on the burden of cases that would normally be dealt with by the European Commission, it remains to be seen whether the UK will be able to adapt quickly to the particular challenges posed by rapidly evolving digital markets.