Competition Law Development in Pharma Sector

CIO Review Europe | Tuesday, February 16, 2021

Analyzing the impact of competition law in the pharma sector and list of developments that have pragmatic implications on the pharma companies

FREMONT CA: The competition law specialists in the pharma sector in Brussels, the United Kingdom, Germany, South Africa, and China examined a number of recent competition law developments that have impacted the industry. The sector has long focused on the European Commission's enforcement efforts. According to a former EU Commissioner, the industry is fundamental to the lives of European citizens. The Commission has restated its goal of ensuring innovation and competition in the sector in recent months. Tougher and broader jurisdiction in mergers and acquisitions (M & M&A), the Illumina/GRAIL scandal, pay-for-delay agreements, vertical limits, and patent lifecycle plans are expected to be major events in 2022.

The National Security and Investment Act went into effect on January 4, 2022, establishing a new foreign direct investment (FDI) framework with autonomous powers for FDI review in the United Kingdom. As a transaction involves national security implications, the new regime replaces the Enterprise Act 2002's current public interest merger regime rules. The UK Competition and Markets Authority issued record fines of £260 million for excessive pricing and pay-for-delay arrangements in the supply of hydrocortisone tablets in July 2021 and £100 million for excessive pricing of liothyronine tablets in July 2022.

The German Bundeskartellamt and its Austrian counterpart amended their joint guidelines on applying their respective transaction value thresholds for necessary merger notifications at the end of 2021. The transaction value test is especially important in pharma M&A since it can detect purchases of companies that have yet to generate significant revenue. Essentially, the German authority emphasizes that if the target's German turnover remains below €17.5 million and this appropriately reflects its competitive potential, the nexus test will not be satisfied.

In relation to breast cancer medicine Herceptin / Herclon, the Competition Commission has taken an innovative approach to excessive pricing. The Commission has filed a case with the Tribunal alleging that Roche overcharged for Trastuzumab, a breast cancer therapy medicine, in violation of the Competition Act. Between 2011 and 2019, the Commission estimated that approximately 10,000 HER2+

individuals were unable to get Trastuzumab treatment due to excessive pricing.

China has risen to become the world's largest supplier of active pharmaceutical ingredients (APIs) by volume, although exports of completed pharmaceutical products are relatively minor. According to enforcement statistics, the pharmaceutical industry accounts for 40 percent of anticompetitive conduct-related enforcement in China, with APIs a hot topic. Given that APIs have been

designated as a top enforcement priority for China in 2022, they expect the current aggressive enforcement of competition legislation in connection to APIs to continue.

See Also : Pharma Outsourcing Companies

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