Competition enforcement in pharma: insights from the EC’s update report

Published: 27-Feb-2024

The European Commission (EC) has published a report providing an overview of the enforcement of EU antitrust and merger rules in the pharmaceutical sector between 2018 and 2022(1)

In this post, Vincenzo Volpe (pictured), an associate in the Ropes & Gray antitrust team, sets out his key takeaways from the report.

Competition enforcement in the pharmaceutical sector remains a high priority for the Commission and National Competition Authorities (NCAs).

The agencies’ focus on this industry is motivated by two key factors.

  • Innovation in pharmaceuticals has an important societal value, as highlighted by the COVID-19 pandemic. Continued research and development (R&D) efforts are crucial to developing new or improved treatments for patients and addressing unmet need.

  • High-priced pharmaceuticals constitute a significant burden on national health systems in Europe. Pharmaceuticals represented up to approximately 35% of healthcare expenditure on average across EU countries in 2020 (including the hospital and pharmacy channels). 

Competition enforcement in pharma: insights from the EC’s update report

Generic entry is key to maintaining low prices. According to the report, generic prices are, on average, 50% lower than originators … and generic entry causes the price of innovator medicines to drop by 40% on average.  

Transactions involving medicines that are innovative, treat rare diseases and/or address an unmet medical need are likely to attract scrutiny.

In line with the broader objectives of the “pharmaceutical package” adopted by the EC in April 2023, we expect the EC and NCAs to scrutinise transactions in the pharmaceutical sector and to closely assess

  • the acquirer’s incentives to discontinue, delay or redirect competing pipeline programme(s) to increase the profits of the merged entity
  • whether the existence of competing R&D programmes would divert profitable future sales from each other in the absence of the merger
  • whether a merger may reduce the parties’ incentives to engage in parallel R&D efforts.2

The report stresses that, having done its analysis, the EC will consider both clinical and preclinical R&D as potential sources of competitive pressure for existing medicines, as well as for others in development. 

A significant proportion of notified healthcare mergers are either blocked, subject to (structural) remedies or withdrawn.

The EC’s report indicates that, in the period between 2018–2022, 17% of all pharmaceutical transactions notified to the EC raised competition concerns and were either subject to remedies or abandoned.

By comparison, the total intervention rate across all sectors during the same period was only 5%. 

The EC reiterated its preference for structural remedies in the report, as illustrated in recent mergers requiring the divestment of marketed drugs (GSK/Pfizer Consumer Healthcare Business, Mylan/Upjohn) and pipeline drugs (AbbVie/Allergan, Takeda/Shire). 

The report also confirms that the EC will continue to actively monitor pharma transactions to identify concentrations that fall below the EU thresholds but merit review by the EC (through Article 22 requests for information, for example). 

The EC and NCAs will continue to enforce against a broad range of anticompetitive behaviours in the pharmaceutical sector.

According to the report, the EC and NCAs together adopted 26 “intervention” decisions relating to antitrust misconduct in the pharmaceutical sector (17 finding an infringement and 9 accepting binding commitments) between 2018 and 2022.3

Notably, at the national level, most decisions were adopted by competition authorities in the UK (until the end of the Brexit transition period), Romania, Belgium and Spain. However, the highest fines (totalling €444 million) were imposed by the French FCA in a single case (Avastin-Lucentis).

Half of the antitrust investigations during the relevant period were brought under abuse of dominance laws, followed by restrictive horizontal agreements such as pay-for-delay (8%), cartels (31%) and vertical agreements (11%).

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The latter comprising restrictions on the promotion and sale of products from competing manufacturers. According to the report, there are 30 antitrust cases currently under investigation in the pharmaceutical sector. 



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