Competition law and the pharma sector: access to (expensive) medicines on the European and national agenda

The trend in recent years, with both European and national regulators closely monitoring the practices of pharmaceutical companies, will continue in 2022. Competition authorities are increasingly cracking down on pharmaceutical companies and other parties that operate in the pharma sector if they abuse their dominant position or consult with each other on the conditions they impose on customers. The latest developments are outlined in this blog.

Coalition agreement: tackling of expensive medicines

The Dutch government is trying to prevent pharmaceutical companies from charging excessive prices. The new Rutte IV government has therefore recorded its intention to keep the pharmaceutical sector in check in its coalition agreement: “We are increasing our grip on the increasing costs of expensive medicines and medical aids, and wish to ensure that they are sold at a fair price. We are committed to transparency in price structure and price negotiations, partly through European cooperation.”

In the Outline Letter to the Lower House from the Ministry of Health, Welfare and Sport (“the “Ministry"), the various ministers involved and the State Secretary have set out in more detail how they intend to achieve that objective recorded in the coalition agreement. In the near future (the Order in Council is expected in the second quarter of 2023), all medicines involving an expected annual expenditure in excess of EUR 10 million will be subject to negotiation with the Minister. In the past, such negotiations applied only to intramural medicines involving a total expected expenditure of more than EUR 40 million, or EUR 50,000 per patient per year and a total expected expenditure of more than EUR 10 million per year. As a result of this policy change, Zorginstituut Nederland (the National Healthcare Institute), which decides whether such medicines are covered by basic health insurance, will be assessing a large number of medicines. The Outline Letter to the Lower House does not state how the government intends to implement the proposed broader European cooperation.

European Commission investigation into Teva continues

In our earlier blog, we reported on the investigation by the European Commission (the “Commission”) into possible abuse of a dominant position by Teva. Teva is a pharmaceutical company that produces Copaxone, a medicine for patients suffering from multiple sclerosis. According to the Commission, Teva may have artificially extended the market exclusivity of Copaxone (pay-for-delay). The Commission is investigating whether this approach amounts to abuse of a dominant position. The Commission's investigation of Teva is ongoing.

Pfizer to discontinue its Enbrel steering pricing structure following ACM investigation

After previously taking a position on the actions of pharmaceutical companies Leadiant and AbbVie, the Netherlands Authority for Consumers and Markets (“ACM”) is now taking a further step. ACM suits its actions to its words when it comes to prioritising enforcement in response to signals that point towards anti-competitive practices in the pharma sector. ACM has conducted an investigation into Pfizer, for instance, regarding Enbrel, a medicine prescribed for rheumatism and psoriasis. Pfizer's patent on the active ingredient etanercept of Enbrel expired in 2015. That expiry made it possible for other manufacturers to produce a similar drug. Two “biosimilars” were indeed placed on the market.

In the autumn of 2021, ACM investigated certain discount structures that Pfizer used to prevent these biosimilars from gaining a foothold. Pfizer stipulated in contracts with hospitals that it would significantly reduce the discount applied to future volumes if the quantities purchased dropped by more than a certain percentage. In a manner similar to the AbbVie case, ACM found that Pfizer was thereby creating a barrier for hospitals to switch to other drugs, since there are always certain clients who are unable or unwilling to switch to a biosimilar. ACM concluded that for that group of patients the price of Enbrel could increase fourfold if hospitals switched to biosimilars for other patients. Although Pfizer disagrees with ACM’s assessment, it has confirmed that it will no longer include such clauses in its contracts. In light of that undertaking, ACM has refrained from any further investigation into possible abuse of a dominant position.

Belgian Competition Authority fines wholesaler

The Belgian Competition Authority (“BMA”) is also cracking down on the medicines market. In February 2022, it imposed a EUR 29.8 million fine on pharmaceutical wholesaler Pharma Belgium-Belmedis (“PBB”) for its involvement in two cartel agreements. First, PBB had entered into prohibited price-fixing and other agreements with rival pharmaceutical wholesaler Febelco, among others. Secondly, the wholesalers had agreed on commercial conditions regarding the sale/advance sale of influenza vaccines to pharmacists. BMA will continue its investigation into the involvement of pharmaceutical wholesaler CERP, which, unlike PBB and Febelco, refused to settle with the BMA.

NZa tightens its position on add-on medicines

The Dutch Healthcare Authority (“NZa”) is also focusing on expensive medicines. The NZa recently stated its position on the working method of the Add-on Drugs Assessment Committee (“CieBAG”). CieBAG is a committee of the Association of Dutch Health Insurers (“ZN”). Within the CieBAG, health insurers jointly discuss which intramural and other medicines are eligible for add-on status, which of them are state of the art and practice, and which are therefore eligible for reimbursement under the basic health insurance. That is obviously important to patients who benefit from a specific medicine, expensive or other. Add-on medicines are certain medicines that are charged to a health insurer separately from the treatment (diagnosis treatment combination or DTC). This applies, for instance, to medicines with high or greatly varying costs. The CieBAG rules on the category of medicines below the “assessment-phase medicines”. These medicines are assessed only by the National Healthcare Institute. At that time they are still under assessment (and not yet included in the basic health insurance package) and the Minister can negotiate on their prices.

In its recent assessment, the NZa found that the CieBAG’s procedure does not conflict with the duty of care (Article 11 of the Health Insurance Act). The duty of care means that health insurers must ensure that insured persons have timely and nearby access to the care they require. The signal to which the NZa responded in its ruling is that the CieBAG is violating the duty of care by (wrongly) blocking access to certain medicines. The NZa rejected that argument. Unlike the signal suggests, the assessment by the CieBAG is made in a transparent manner. According to the NZa, health insurers assess medicines within the CieBAG at a general rather than an individual level. If an individual insured wishes to have a specific medicine reimbursed that is not or not yet included in the “G Standard”( medicines database), he or she may request an individual assessment from the health insurer (an authorisation request). The NZa advises health insurers to set a maximum turnaround time for authorisation requests from individual insured persons.

The NZa has suggested three improvements regarding the functioning of the CieBAG:

  1. The entitlement to intramural medicines is also referred to as an “open system”. The NZa considers that term confusing, because from a legal perspective medicines must always comply with the state of the art and practice. Marketing authorisation alone is insufficient.

  1. The NZa argues that the possibility for an insured person to have the health insurer determine on an individual basis whether he or she is entitled to reimbursement is not specifically mentioned in the ZN forms. The NZa calls on health insurers to clarify this.

  1. The assessment by the CieBAG is made without the involvement of the National Healthcare Institute or VWS. The NZa calls on health insurers to identify what instruments, staff and means they need to fulfil their role properly.

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