The European Commission (EC) has produced a report, a decade in the making, which aimed to address fears that market entry delays to generic and biosimilar medicines were driving up health care costs.
After 10 years, the EC released its findings on the employing measures to increase competition in the market after investigating more than 100 cases of unlawful, anti-competitive practices. Of these cases, 29 decisions were found against the companies and fines totalling over €1bn ($1.15bn) were levied.
Driving down pricing
The report concluded that the importance of pursuing such cases must remain a ‘high priority’ for the commission to ensure that ‘fair prices’ for medicines are achieved.
Analysis included in the report observed that generic products’ introduction to the market, which provided effective competition, reduced prices by an average of 50%.
The growing biologics market represents an area where competition is becoming increasingly important. The report notes, “Biological medicines are among the most expensive therapies and their uptake is steadily increasing, with global annual sales worth billions of euros.”
The competition provided by biosimilars to originator products was referenced as being significant in generating savings for health care systems.
One case that EC can point toward is the introduction of biosimilars to Humira (adalimumab), which in the UK alone could lead to annual savings of £300m (€341m).
At the time, Simon Stevens, chief executive of NHS England, said that “harnessing the power of competition” made the savings possible.
Regarding the EC’s ability to encourage competition from biosimilars, it observed that merger control is one effective means of ensuring that biosimilars reach the market and in sufficient number to reduce prices.
As an example, it provided the case of Pfizer’s acquisition of Hospira in 2015, which the EC approved but only on specific antitrust conditions.
The takeover by Pfizer would have added to two biosimilars for Johnson & Johnson’s Remicade (infliximab) to its portfolio. This could have had a limiting impact on biosimilar competition for the originator product.
The EC’s report outlined how a solution was found by requiring Pfizer to divest its biosimilar to a suitable buyer. It was eventually picked up Novartis, which later successfully brought the drug to European markets.
Companies can try to negate the effects of competition by engaging in ‘anti-competitive’ behaviour, at which point the EC can apply Regulation No 1/20037, leveraging Article 102 of the Treaty on the Functioning of the European Union that prohibits restricting competition.
The EC holds the power to carry out unannounced inspections and searches of a company’s premises if it is suspected of violating antitrust law.
During the decade in which the report was compiled, the EC found 29 decisions against pharmaceutical companies. The result was that in 21 cases, fines of more €1bn were issued against companies.
Despite the action being taken against those companies violating competition laws, the EC suggested, “Authorities must remain vigilant and pro-active in investigating potentially anti-competitive situations, including where new practices used by companies or new trends in the industry are concerned, such as the growing relevance of biosimilars.”
With the biologics manufacturing market alone expected to reach $87.6bn in the next ten years, there are significant financial considerations to suggest that authorities and originator developers will be kept busy in to the future.
The EC noted that competition law has ‘limits’ and that all stakeholders will need to address the ‘societal challenge’ of safeguarding affordable and innovative medicines.