Pharmaceutical pricing key priority for Dutch Competition Authority in 2018-2019

Pricing of medicinal products continues to be a hot topic in the Netherlands, not only in political debate or from a regulatory and reimbursement perspective, but also from a competition law perspective.

On 13 February 2018, the Dutch Competition Authority (Netherlands Authority for Consumers & Markets, ACM) announced its four key priorities for 2018-2019. One of the four key priorities is the pricing of prescription medicinal products.

When looking into pharmaceutical pricing, the Netherlands Authority for Consumers & markets will cooperate with competition authorities in other countries and with the Dutch Healthcare Authority (NZa).

The Netherlands Authority for Consumers & Markets stressed in their announcement that competition in the pharmaceutical industry stimulates innovation and will maintain affordability of prescription medicinal products. At the same time, the Netherlands Authority for Consumers & Markets acknowledges that it will keep an eye on maintaining incentives for innovation.


Call to share thoughts

As part of the announcement of the key priorities, the Netherlands Authority for Consumers & Markets has called on all interested parties to share their thoughts and ideas about the key priorities. In this regard a publicly available online forum is established. The online forum will be open for responses until 26 February 2018.


Guidelines on collective procurement of prescription medicines

In its recent announcement of priorities, the Netherlands Authority for Consumers & Markets notes that it makes hospitals and health insurance companies aware that they may join forces when purchasing medicinal products.

In recent years, the subject of pharmaceutical pricing has already attracted attention from the Netherlands Authority for Consumers & Markets. This has – for example – been demonstrated by the publication of the Guidelines on the collective procurement of prescription medicines in June 2016. The guidelines contain statements about the permissibility of setting up purchasing associations and joint negotiations for hospitals or health insurers, in relation to collective procurement of prescription medicines for medical specialist care. The Netherlands Authority for Consumers & Markets has expressed the view that it expects only limited potential negative effects for competition and innovation as a result of collective procurement.


Background on competition law compliance for pharmaceutical pricing

Pharmaceutical companies are advised to take into account EU and national competition rules when setting up their pricing. Competition law prohibits pharmaceutical companies to engage in price-fixing or collude on any price-related issues. Moreover, it requires pharmaceutical companies to make sure that product prices are not excessive, or below cost. In the latter cases, intervention from competition authorities will be likely if the pharmaceutical company has a dominant position on the relevant market (which is typically defined based on the ATC3 or ATC4 level, even though ATC5/molecule level has also been considered).

The fact that the pharmaceutical sector is a regulated sector does not represent an obstacle for intervention by a competition authority. By the same token, pharmaceutical companies will not be able to play as defense that national regulations are encouraging them to engage in anticompetitive pricing conduct. Competition authorities have been intervening against unfair prices when there are high barriers to entry (for example because of a recently expired patent) and when they believe that the price increase is unjustified by an innovative effort or change in costs. In 2016, a pharmaceutical manufacturer and its distributor were fined approximately €95m and approximately €6m, respectively, for excessive and unfair prices in the UK. Also in 2016 another pharmaceutical manufacturer was fined €5m for similar conduct in Italy. The European Commission has also opened an investigation into pricing of certain cancer medicines across Europe, and so have other EU Member States’ competition authorities.


Below-cost pricing

As for below-cost prices, authorities have been intervening especially when there is evidence showing that a dominant company engages in predatory conduct by deliberately incurring losses in the short term so as to exclude one or more of its actual or potential competitors. In 2014, the Netherlands Authority for Consumers & Markets opened an investigation into a pharmaceutical company selling its product below cost to hospitals in order to increase prescriptions and sales in the community (e.g. in pharmacies) at higher prices.


Conditional rebates

For conditional rebates, the red-flag would be for discounts that, on condition that a volume threshold is reached, offer a customer lower prices on units below as well as above that threshold (retroactive or roll-back discounts). For example, in 2015 the UK Competition Authority announced that it had issued a warning letter to a pharmaceutical company concerning a suspected loyalty-inducing discount scheme, and offered some practical guidance on the matter.



The Netherlands Authority for Consumers & Markets will keep a close eye on pharmaceutical pricing in 2018-2019. Whenever a pharmaceutical company is setting its pricing, it should be alerted to competition law risks, especially when it is in a dominant position in a plausible market or segment.

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