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Excessive pricing practices in the pharmaceutical sector – NCAs’ scrutiny continues

Last week, the Belgian and Italian consumer associations Test Aankoop/Test Achats and Altroconsumo filed complaints with their respective national competition authorities, alleging that the pharmaceutical group Biogen is abusing its dominant position by charging excessively high prices for the medicine Spinraza, which it has the exclusive right to market as an orphan drug until 2029. Indeed, Spinraza is the only medicine available on the market to treat ‘spinal muscular atrophy’ (SMA), a rare disease mainly affecting new-borns, which leads to progressive muscle degeneration.

In their complaints, the consumer associations challenge the significant gap between the prices charged for Spinraza and the costs incurred by Biogen in its development. According to Test Aankoop/Test Achats, the price for the treatment in Belgium of one patient suffering from SMA amounts to approx. EUR 530,000 in the first year and drops to approx. EUR 265,000 in the following years (such treatment being needed for the duration of the patient’s life). In Italy, Altroconsumo claims that the national healthcare system spends between EUR 210,000 and EUR 280,000, plus VAT, per patient (depending on the dose).

The consumer associations contend that such high prices cannot be justified by large R&D costs and/or the fact that such costs can be recouped only from a limited number of patients. A spokesperson for Test Aankoop/Test Achats noted, in this context, that a study of Biogen’s financial statements revealed that its revenues from Spinraza sales reached USD 2.61 billion over two years, for an initial investment of ‘merely’ USD 648 million.  In addition, the fundamental research to develop this new molecule was often conducted by universities, and, thus, largely financed with public funds.

Reacting to the complaints, Biogen contested the claim that its pricing of Spinraza is excessive and in breach of competition law. The company reiterated that, in Europe, prices for medicines are generally negotiated between pharmaceutical companies and governmental agencies, taking into consideration, amongst other things, the therapeutic value and the improvements in the quality of life brought about by the relevant medicine. Its market exclusivity for Spinraza also applies only in relation to similar pharmaceutical products, Biogen explained, and does not prevent drugs with a different formulation or mechanism of action from entering the market. Lastly, Biogen emphasised that it continues to innovate and relies on the proceeds of its sales of existing medicines to invest in the ongoing research and clinical trials for new medicines that can treat severe neurological conditions, such as Alzheimer, ALS and Parkinson.

The recent complaints against Biogen’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. More information on the recent spate of antitrust cases involving excessive pricing allegations can be found here: on the OECD roundtable discussion; on the EC’s position; and on the complaints in Belgium and the Netherlands. Notably, the European Commission is currently also evaluating the functioning of the Regulation on orphan medicinal products, in order to assess whether it is fit for purpose, and will look at the impact of the incentives for research, development and marketing of orphan drugs, such as the ten-year market exclusivity. More information about that review can be found here.