Dutch competition authority extends excessive pricing inquiry to consider possible supply restrictions on orphan ingredients
16 May 2019
Last week, the Dutch Authority for Consumers and Markets (ACM) announced that it is investigating whether the Italian pharmaceutical company Leadiant Biosciences restricted the supply of an important raw material for a patented orphan drug, by entering into exclusive agreements with an unnamed supplier. Such supply restrictions for raw materials could, according to the ACM, limit pharmacists’ ability to develop their own drugs capable of treating the rare metabolic disorder cerebrotendinous xanthomatosis, whereas EU rules permit them to produce ‘magistral preparations’ when no or only limited alternatives are available on the market. Already in February of this year, the ACM explained in a press release that it is determined to ensure that pharmaceutical companies and raw material suppliers do not create any unjustified barriers to such magistral preparations, for example, by restricting access to raw materials or imposing unreasonable trading conditions.
The current investigation forms part of the ACM’s larger probe into Leadiant’s alleged excessive pricing behaviour for chenodeoxycholic acid (CDCA) products, as reported on earlier. Similarly, in April of this year, the Belgian Competition Authority (BCA) announced that it had opened a formal investigation into Leadiant’s pricing practices, following a complaint by consumer association Test Aankoop/Test Achats that the pharmaceutical company had abused its dominant position by significantly raising the prices of its CDCA medicine ‘without an objective and acceptable explanation’.
These recent enforcement actions against Leadiant’s pricing behaviour are consistent with a renewed interest in alleged excessive pricing practices in pharmaceutical markets by competition authorities in a few Member States and at EU level. Concerns about the rising price of medicinal products are not exclusive to the EU: the Trump administration in the United States has declared that the reduction of prescription prices is a policy priority, with some States considering the introduction of upper payment limits on drugs that state regulators deem unreasonably expensive and the US House Health subcommittee recently initiating an inquiry as to whether pharmacy benefit managers (so called PBMs) - who act as middlemen between drug manufacturers and health insurers - are unnecessary parts of the supply chain and keep drug prices high by internalising the discounts they negotiate; in Canada, industry lobbying organisations are reported to have offered concessions in order to avoid political intervention; and, in Japan, regulatory authorities are looking into introducing a ‘cost-effectiveness test’ as a means of capping prices.
Click here to read our previous posts on the increased scrutiny in the EU of alleged excessive pricing practices under competition law:
- Competition authorities debate the circumstances in which intervention against alleged excessive pricing practice in the pharmaceutical sector may be justified
- Belgian consumer association announces potential complaint for abuse of dominance based on excessive pricing allegations
- Coordination amongst member states on medicines’ prices supported by the European Commission