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Italy fines Leadiant EUR3.5 million for charging excessive prices for an orphan drug

On 31 May 2022, the Italian Competition Authority (ICA) published its decision sanctioning the pharmaceutical company Leadiant EUR3.5 million for charging excessive prices for the sale of an orphan drug.

The ICA found that Leadiant abused its dominant position in the market for drugs containing chenodeoxycholic acid (CDCA). CDCA is the active ingredient in drugs used for treating the rare metabolic disorder cerebrotendinous xanthomatosis (CTX). In qualifying the infringement as very serious, the ICA took account of the life-saving nature of the drug and its cost to the Italian National Health Service (INHS), which it noted had limited resources.

According to the ICA’s decision, Leadiant has charged the INHS excessive prices for the sale of its CDCA-containing orphan drug since June 2017. The initial price was around EUR15,500 per package. Although this was reduced to EUR7,000 in December 2019 following the opening of the ICA’s investigation, the ICA found that the new price remained excessive. 

Significantly, the ICA fined Leadiant even though, as required by the national regulatory regime, the company had agreed the price with the Italian Medicines Agency.

Pharmaceutical companies should take note that a price deemed acceptable by a regulatory body, such as a national medicines agency, will not necessarily be viewed in the same way by the relevant competition authority. This will especially be the case if the price is the result of an inequality of bargaining power. In this respect, the ICA notes that the following factual elements had a bearing on the negotiations: the orphan drug had already been in use in Italy for more than two years and patients were reliant on it; the negotiations had been ongoing for some time and it was becoming more likely that no agreement would be reached; and there was no alternative therapy in Italy.

Some sources report that Leadiant intends to appeal the ICA’s decision.

The ICA has not been the only national competition authority in the EU to investigate Leadiant for similar conduct. In July 2021, the Dutch Competition Authority issued its first penalty for excessive pricing by fining Leadiant EUR20m for charging excessive prices for its CDCA-containing orphan drug. The Spanish Competition Authority is also investigating Leadiant for the same alleged abuse.

While, historically, excessive pricing cases have been rare in Europe, in recent years there has been increased willingness by competition authorities to pursue such cases in the pharmaceutical sector. In the UK, the Competition and Markets Authority imposed GBP260m in fines on several drug makers for excessive pricing and pay for delay agreements. The ICA itself fined Aspen EUR5.2m for excessive pricing behaviour back in 2016. At EU level, the European Commission (EC) closed its excessive pricing investigation into Aspen last year, accepting commitments for the first time in a pharmaceutical antitrust case. Aspen agreed, in particular, to reduce the price of the relevant drugs by an average of 73%. When the EC adopted the Aspen decision, EC Competition Commissioner Vestager stressed that it should serve as a warning to the sector: “Today’s decision gives a strong signal to other dominant pharmaceutical companies not to engage in abusive pricing practices to exploit our health systems”. We may well see other cases at both the EU and national level as antitrust authorities seek to prioritise consumer welfare and to assist national health services coming under increasing financial pressure in the wake of the Covid-19 pandemic.