European Commission investigates potential excessive pricing of life-saving cancer medicines

EU

On 15 May 2017, the European Commission opened a formal investigation into the pricing of medicines.[1] The Commission is investigating whether Aspen Pharma has been imposing excessive pricing that constitutes an abuse of dominant position in violation of European antitrust regulation.[2] The five medicines subject to the investigation are used for treating cancer. The drugs, now off-patent, were acquired by the company after their patents had expired.

The formal investigation initiated by the Commission follows an Italian inquiry in September 2016. The Italian Competition Authority held that the increase in the prices of four different drugs was excessive and found that those practices were contrary to European competition law. It imposed a fine and the appeal is currently pending.

Drugs with patents are highly regulated and Member States are free to set prices for these drugs and grant reimbursement. Generic off-patent drugs can also be subject to price regulation or Member States can choose to encourage market competition, leading to lower prices for drugs. When the patent of a drug expires, the prices generally drop significantly.

Other investigations also initiated by the Commission concern pharmaceutical companies, holders of a patent, that made deals with other pharmaceutical companies in order to postpone the placing on the market of their generic products, the so-called pay-for-delay cases.[3] It seems that the Commission has now taken a new path, targeting directly the price of the drugs.

However, the difficulty remains as to how to decide a price is excessive. Excessive pricing is the most difficult abusive conduct to establish. For off-patent drugs, the price can be compared with their generic drugs or alternatives on the market. However, for patent drugs, it will be very complicated to determine the “correct” price, as the Commission has to take into consideration the undertaking’s costs which represent in the pharmaceutical sector millions or even billions invested in research and development. The issue at stake thus requires striking a delicate balance between the battle against excessive prices of life-saving drugs and encouraging innovation in the pharmaceutical sector.

[1] European Commission, press release, “Antitrust: Commission opens formal investigation into Aspen Pharma's pricing practices for cancer medicines”, Brussels, 15 May 2017, http://europa.eu/rapid/press-release_IP-17-1323_en.htm.

[2] Article 102 of the Treaty of the Functioning of the European Union, implemented by Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty.

[3] See for example ECJ, Lundbeck v. Commission, 8 September 2016, T‑472/13.