The European Commission has recently published a report summarising its enforcement activities and those of national competition authorities (NCAs) in the pharmaceutical sector between 2018 and 2022. The report provides an insight into the types of anti-competitive conduct that are being pursued by the Commission and the NCAs, and the Commission’s approach to assessing mergers and remedies in pharmaceutical markets.

Enforcement activity

The report finds that, during the period 2018 to 2022, NCAs and the Commission adopted 26 infringement or commitment decisions in pharmaceutical markets, and in the same period at least 40 cases were closed following investigation. The Commission also reports that the competition authorities are currently investigating more than 30 cases.

Half of the 26 infringement or commitments decisions found abuses of dominant positions. The remainder established anti-competitive agreements: outright cartels (31%); other horizontal agreements such as pay-for-delay agreements (8%); and vertical agreements (11%). 

These figures can be contrasted with the following breakdown of cases during the preceding period 2009 – 2017: Abuse of a dominant positions (45%); outright cartels (17%); other horizontal agreements such as pay-for-delay agreements (31%); and vertical agreements (17%). This suggests that pay-for-delay agreements may have recently been less of a focus for competition authorities in contrast to abuses of dominance; hard-core cartel; and vertical agreements cases.

The report also discusses types of anticompetitive conduct that have recently been the subject of competition investigations in the pharmaceutical sector, for example patent misuse and vexatious litigation, disparagement and unfair pricing. The law for these types of abuse is developing quite rapidly and firms should be mindful of their competition law compliance in these areas.

Merger control activity

The Commission also confirms that during the period 2018 to 2022 it analysed more than 30 mergers in the pharmaceutical sector, of which five raised substantive concerns due to: 

• price increases; 
• the potential for depriving patients of medicinal products; and 
• the potential for diminishing innovation.

The Commission finds that this “intervention rate” of 17% (meaning the proportion of merger prohibitions, merger approvals that are subject to remedies, and withdrawals of merger notifications during phase 2, out of the number of mergers notified to the Commission) in pharmaceutical markets is significantly higher than the total intervention rate across all sectors of 5%. However, the Commission also recognises that the competition issues in these cases were concentrated on a small number of medicines compared to the overall size of the companies’ portfolio. As a result, the merging parties were able to offer remedies that resolved the Commission’s concerns in four of the five cases. 

Market dynamics in the pharmaceutical sector

The Commission also summarises its position on market characteristics in the sector. Of particular interest is the Commission’s explanation of how its traditional approach to assessing the market dynamics between originator and generic drugs needs to be adapted when considering the competitive dynamics between original biological medicines and biosimilars. This will be of interest to firms active in this space and keen to understand how the Commission is likely to assess the competitive dynamics between biological medicines and biosimilars in future cases.