Over the last few years the pharmaceutical industry in Italy has attracted increasingly intensive antitrust scrutiny. Last month the Italian Competitive Conspiracy (ICA) concluded an important sector inquiry on vaccines for human use, just after the conclusion of two other high profile antitrust investigations in this industry.

This sector inquiry focused in particular on "essential" vaccines, those classified as mandatory or recommended by national vaccines plans. This is a 20 billion euro market globally, with an average annual spending of 300 million euro in Italy alone. The ICA has identified several shortcomings relating both to the structure of the industry in general and the specific features of the Italian market.

Highly concentrated market. The first critical issue flagged by the ICA is the high level of supply concentration, with four companies accounting for over 80% of the global market in value. For some vaccines taken in isolation, the number of suppliers is even smaller.

One reason for the concentration of supply mentioned by the ICA is the essential nature of these vaccines, which the Italian Healthcare System is required to purchase, combined with the lack of clear information on the available vaccines and benchmarking of their therapeutical equivalence. In this respect, the ICA advocated for regulators to adopt clearer and more transparent criteria when choosing the essential vaccines.

High degree of patent-related protection. The second critical factor leading to market concentration among a few suppliers is the relatively recent development of innovative vaccines, which still enjoy a high degree of patent protection (as opposed to conventional vaccines for which the patents have expired), thus commanding premium prices. The ICA noted that the high degree of patent protection granted to innovative vaccines derives from the considerable number of additional components to the active substance in the new drugs. In addition, the ICA found that it is technically difficult to produce generic versions of vaccines, as opposed to other traditional patented drugs for which generic versions are usually easily available.

The ICA recommends that pharmaceuticals regulators promote competition by easing market entry by generic vaccines or other substitute products, through simplified authorization procedures similar to the bioequivalence pathways that are available to generics of other traditional patented drugs.

Product competition, pharmacological equivalence and product differentiation. The third critical factor reported by the ICA is the widespread level of product differentiation: even when different vaccines exist for the same disease, effective product competition still may not develop. Two vaccines designed to prevent the same disease may not be considered interchangeable because of their different serotype coverage (i.e. the number of strains/serotypes of the disease that they act upon). Regulators play an important role in this process, given that pharmacological equivalence of the vaccines (very limited, compared to other drugs) is paramount in establishing product substitutability from an antitrust standpoint.

To this end, the ICA recommended that the regulators adopt a more scientifically-driven evaluation of possible preventive/therapeutic equivalence among vaccines, as a tool to improve competition between substitutable products. Although there is no explicit criticism of any specific regulators' decision in this instance, one may infer the ICA suspects the regulators of sometimes being captured by the regulated industry and validating what may be an artificial product differentiation.

Pricing policy and market information. The last shortcoming highlighted by the ICA concerns the tiered pricing adopted by vaccine manufacturers to determine the retail prices of vaccines. Such prices are calculated based on the GDP of each tier group of countries in which the customers are located. This price discrimination, widespread among manufacturers, is not considered anticompetitive per se; in fact the ICA accepts that price discrimination has the benefit of making vaccines available to different group of customers according to their purchasing power and provides the industry with the necessary financial resources to carry out R&D investments.

However, the ICA found a level of opacity concerning the criteria applied in tiered pricing strategies. In particular, the ICA found that price-related information is highly confidential, preventing buyers from carrying out a comparative cost/benefits analysis, the most important aspect of any procurement process (the majority of the clients being public bodies). In the ICA's view, this information asymmetry has contributed to a progressive consolidation of significant market power in the hands of a few vaccine manufacturers.

In the light of such findings, the ICA recommended that supply agreements of vaccines that contain stringent confidentiality clauses on the price strategies should be closely scrutinised.


Although the European Commission has previously considered vaccine markets in the context of merger control review, this is the first time that an EU competition law authority has conducted such a comprehensive review of the vaccine market in Europe. The ICA sector inquiry shows concern among enforcers in the EU about manufacturers that differentiate drugs and pricing policies for vaccines for human use, where a few suppliers enjoy significant market power, and competition from generics or bio-similar drugs is limited. Against this background, it should be expected that this market may continue to be scrutinized by the ICA and other competition authorities in the EU, in the context of ad hoc antitrust investigations.