Pharmaceutical regulatory law

Regulatory framework and authorities

Which legislation sets out the regulatory framework for the marketing, authorisation and pricing of pharmaceutical products, including generic drugs? Which bodies are entrusted with enforcing these rules?

The Human Medicines Regulations 2012 (SI 2012/1916) implements Directive 2001/83/EC and Regulation (EC) No. 726/2004 and regulates the marketing and authorisation (and also manufacturing, distribution and packaging) of medicinal products in the UK.

The Medicines and Healthcare products Regulatory Agency (MHRA), an executive agency of the Department of Health (DoH), has responsibility for the regulation of medicinal products in the UK. The MHRA considers applications for marketing authorisations submitted through the national, mutual recognition or decentralised procedures. In contrast, any application for a marketing authorisation submitted under the centralised procedure falls within the remit of the European Medicines Agency.

The Secretary of State has powers to control the prices of medicinal products under the National Health Service Act 2006 (the 2006 Act). Any such measure must comply with the requirements of the EU Transparency Directive 89/105/EEC.

Pricing of medicines falls primarily within the competence of the DoH. There is no formal requirement for reimbursement approval in the UK, although access to medicines is in practice controlled by commissioning policies issued by the National Health Service (NHS) England, for example, and by guidance produced by the National Institute for Health and Care Excellence (NICE) and similar bodies.


Are drug prices subject to regulatory control?

The prices of branded health service medicines supplied for use in the UK (whether for use in the outpatient or inpatient sectors) are controlled through the Pharmaceutical Price Regulation Scheme (PPRS) or the parallel Statutory Scheme.

The PPRS is a voluntary scheme agreed between the DoH and the Association of the British Pharmaceutical Industry (ABPI) under section 261 of the 2006 Act and is renegotiated approximately every five years. The PPRS essentially limits member companies’ profits through their NHS businesses and requires member companies to underwrite NHS expenditure on PPRS products by rebating excess expenditure through PPRS payments, calculated as a percentage of sales. Small companies with annual NHS sales income of less than £5 million are exempt from the requirement to make PPRS payments. Products granted a new active substance marketing authorisation may be priced at the discretion of the manufacturer. The prices of other products must be approved by the DoH at launch. The scheme permits price neutral modulation across a member company’s product portfolio, subject to notification to the DoH, but any other price increase requires explicit approval and must be justified.

All companies who supply branded health service medicines and do not elect to participate in the PPRS automatically become members of the Statutory Scheme, made under sections 263 and 264 of the 2006 Act and currently set out in the Health Service Branded Medicines (Control of Prices and Supply of Information) (No. 2) Regulations 2008 (as amended). The Statutory Scheme is only applicable to prescription-only medicines and imposes a mandatory 15 per cent reduction in the maximum price the branded medicine was on sale to the health service on 1 December 2013. The maximum price, which may be charged in respect of any new product, must be agreed by the DoH, as must any proposed price increase. Small companies, with annual NHS sales income of less than £5 million, are exempt from the price reduction requirement.

There is a voluntary scheme (Scheme M) applicable to manufacturers of unbranded generic medicines, which simply requires that the prices of products within the scheme are set no higher than the price of the corresponding originator product at patent expiry. There is no corresponding statutory scheme applicable to manufacturers of unbranded health service medicines who do not join Scheme M, and the DoH generally relies on the effects of competition to control prices. Where competition is not effective, the Secretary of State may intervene under section 262 of the 2006 Act to control the price of the relevant product.


Is there specific legislation on the distribution of pharmaceutical products?

The distribution or wholesale dealing of medicinal products in the UK is governed by the Human Medicines Regulations 2012. The Human Medicines Regulations define wholesale dealing as selling, supplying, procuring, holding or exporting a medicinal product to a person who receives it for the purpose of onward sale or supply, or for the administration of the product to human beings, in the course of a business carried on by that person. A wholesale distribution authorisation issued by the MHRA is required for all such activities. In addition, an authorisation is required for the importation of medicinal products from outside the European Economic Area (EEA), and companies based in the UK that independently negotiate the selling or buying of licensed medicinal products on behalf of another company must register with the MHRA as a broker.

Intersection with competition law

Which aspects of this legislation are most directly relevant to the application of competition law to the pharmaceutical sector?

The areas where most issues appear to arise are those:

  • relating to the pricing of medicines, including excessive pricing, the offer of certain types of discount or rebate arrangements by dominant companies, and anticompetitive agreements;
  • arrangements for the distribution, import and supply of medicines, such as restrictions in numbers of wholesalers and direct-to-pharmacy models, parallel trade and the imposition of quotas; and
  • agreements to prevent or delay generic entry.

Competition legislation and regulation


Which legislation sets out competition law?

The majority of statutory competition law is contained in the Competition Act 1998 (CA98) and the Enterprise Act 2002 (EA02).

CA98 sets out two fundamental prohibitions:

  • restrictive agreements: Chapter I (section 2) prohibits any agreement, concerted practice or decision by associations of undertakings that has the object or effect of preventing, restricting or distorting competition and which may affect trade in the UK; and
  • abuses of dominance: Chapter II (section 18) prohibits unilateral conduct, which amounts to an abuse of a dominant market position that may have an effect on trade within the UK.

If the conduct subject to the Chapter I or Chapter II prohibition also affects trade between EU member states, it may also be prohibited by articles 101 or 102 of the Treaty on the Functioning of the European Union (TFEU), which contains corresponding provisions for the EU.

Merger control

EA02 also contains UK merger control laws (sections 22 to 130). The UK competition authority, the Competition and Markets Authority (CMA), has jurisdiction over any merger or acquisition where the target has a UK turnover exceeding £70 million, or the transaction leads to the creation or strengthening of a 25 per cent share of supply for sale of goods or services in the UK or a part of the UK. The share of supply threshold is not dependent on the definition of relevant product markets, and is therefore interpreted more broadly than market shares. Acquisitions involving any overlapping activities should therefore be reviewed with caution against the 25 per cent threshold. There are de minimis exemptions for smaller transactions, but these tend to be limited.

The UK’s merger control regime is voluntary and non-suspensory, although the CMA has the power to start an investigation of its own volition and to impose ‘hold separate’ orders for the duration of the investigation, preventing the parties from integrating their respective businesses.

Sector enquiries

The CMA also has powers to conduct market studies and investigations (sections 130A to 184 of EA02) where markets are deemed not to operate effectively.

Competition authorities

Which authorities investigate and decide on pharmaceutical mergers and the anticompetitive nature of conduct or agreements in the pharmaceutical sector?

The CMA is the UK authority that investigates and decides on UK cases. CMA decisions can be appealed to the Competition Appeal Tribunal (CAT).

Mergers that meet the EU turnover thresholds will be subject to the EU Commission’s exclusive jurisdiction; those that do not, will be subject to the CMA’s jurisdiction.

In relation to investigations of anticompetitive conduct, the CMA has jurisdiction to investigate conduct that breaches either UK or EU competition rules. The EU Commission retains the ability to investigate breaches of EU law. Typically, the EU Commission and the CMA will discuss in advance which authority is best placed to investigate conduct that potentially breaches both sets of rules.


What remedies can competition authorities impose for anticompetitive conduct or agreements by pharmaceutical companies?

The CMA may impose fines of up to 10 per cent of an undertaking’s annual worldwide group turnover for infringements of the rules on restrictive agreements and abuses of dominance. When calculating the level of fine, the CMA considers a number of factors, including the seriousness and duration of the infringement, turnover in the relevant market and any mitigating or aggravating factors.

In recent years, the CMA has increased its focus on potential wrongful conduct in the pharmaceutical sector, in support of a coordinated effort at a European level and with other competition authorities. Among the largest fines the CMA has imposed on pharmaceutical companies are the following:

  • Paroxetine (case CE/9531-11 (2016)): fines totalling £44.99 million were imposed on GlaxoSmithKline (GSK) and certain generics companies for reverse payment settlement agreements in respect of paroxetine. The CMA’s decision is subject to an ongoing appeal to the CAT;
  • Phenytoin sodium capsules (case CE/9742-13 (2016)): fines totalling £89.4 million were imposed on Pfizer, the supplier of phenytoin sodium capsules, and Flynn Pharma in relation to excessive pricing at both the manufacturer and distributor levels. The CMA’s decision is also subject to an ongoing appeal to the CAT; and
  • Gaviscon (case CE/8931/08 (2011)): fines totalling £10.2 million were imposed on Reckitt Benckiser for abuse of a dominant position in the market for alginate and antacid heartburn medicines, as a result of deliberately delisting its Gaviscon Original Liquid product so as to divert doctors away from generics and towards its patent-protected sister product, Gaviscon Advance Liquid, when writing prescriptions (known as ‘product hopping’). The fine was reduced from £12 million following the company’s decision to participate in an early resolution agreement.

In addition to the power to impose fines, section 188 of EA02 sets out a criminal cartel offence for individuals involved in price-fixing, limiting supply of production, market sharing or bid-rigging. If found guilty of such an offence, offenders may be subject to up to five years’ imprisonment or an unlimited fine, or both. The threshold required to be liable for a criminal cartel offence has been lowered by the Enterprise and Regulatory Reform Act 2013, as the requirement that the individual has acted ‘dishonestly’ has been removed. This has significantly widened the applicability of the offence, but, at the time of writing, the CMA has not yet prosecuted any individuals for these offences in circumstances involving the pharmaceutical sector.

Additionally, any company director found to have breached Chapter I or II of CA98 (or the equivalent TFEU articles) may be disqualified from serving as a director for a maximum of 15 years. At the time of writing, the CMA has only used this power in one case, unrelated to the pharmaceutical sector.

If the CMA is not already investigating the cartel or does not otherwise have sufficient information to establish the existence of a cartel, the first cartel member to provide the CMA with substantial evidence will receive immunity from fines, immunity from criminal prosecution for any of its cooperating (current or former) employees or directors and protection from director disqualification proceedings for all of its cooperating directors. A company may also receive a reduction of the penalty that would otherwise have been imposed in return for cooperating and bringing additional evidence of a cartel to the CMA’s attention.

Private actions and remedies

Can private parties obtain competition-related remedies if they suffer harm from anticompetitive conduct or agreements by pharmaceutical companies? What form would such remedies typically take and how can they be obtained?

Private parties can seek damages for losses suffered as a result of competition law infringements either through private antitrust damages claims or by means of collective actions. Private antitrust damages claims can follow on from an infringement decision from either the CMA or the EU Commission or be self-standing (ie, without an underlying infringement decision). Remedies typically involve claims for damages for harm suffered but also injunctions, particularly in the area of abuse of dominance.

Claimants now typically have a choice of bringing any action (stand-alone or follow-on) either in the High Court before a single judge or in the specialist CAT with a specialist competition judge supported by two additional members (typically economists, accountants, lawyers or business persons).

The UK also has an embryonic class action regime (EA02 and the Consumer Rights Act 2015), which allows an authorised representative to bring collective actions on behalf of the claimant class. Any damages awarded as a result of the claim will be apportioned between the claimants. There are two types of collective actions:

  • opt-in actions (ie, those claims that are brought on behalf of every class member who specifically signs up to the action); and
  • opt-out actions (ie, brought on behalf of every class member, except any members who actively opt out by notifying the representative that their claim should not be included in the collective proceedings).

There are a number of past and ongoing damages claims in the pharmaceutical space:

  • in 2011, the DoH and over 150 primary care trusts claimed for alleged losses of £220 million relating to Servier’s conduct with respect to perindopril, as a result of the Commission announcing its investigation into suspected breaches of articles 101 and 102 TFEU. This was started as a stand-alone claim and is still ongoing;
  • in 2013, Teva, Norton and UK health authorities brought separate claims seeking a total of £89 million against Reckitt Benckiser for damages as a result of the Office of Fair Trading’s (OFT) decision in Gaviscon (2011). These actions settled in 2014; and
  • in the 2000s, other private antitrust damages cases included the Department of Health (and others) v Ranbaxy, Goldshield, Norton Healthcare Limited and Generics UK (which settled for £4.5 million, £4 million, £13.5 million and £12 million, respectively) and also Healthcare at Home v Genzyme (which also settled out of court).

There have also been largely unsuccessful attempts by some pharmacies to use the dominance regime to force some pharmaceutical companies to supply them with particular pharmaceuticals. In Chemistree Homecare Ltd v AbbVie Ltd (2013) (EWCA Civ 1338), Chemistree (a home care provider, supplying NHS trusts) alleged that Abbvie was abusing its dominant position by failing to supply it with the requested quantity of Kaletra, an HIV medicine. Faced with supply shortages and an increasing demand from Chemistree for Kaletra, Abbvie had established that just 15 per cent of Chemistree’s requirements were destined to service UK prescriptions, with the remainder destined for servicing wholesale supply and EU prescriptions. AbbVie then only agreed to supply Chemistree with the amount needed to provide UK home care services on the basis that it did not sell for wholesale use and had a separate supply chain process for the rest of the EU. The Court of Appeal held that Chemistree had no realistic prospect of successfully establishing that AbbVie was dominant. It was an error to consider Kaletra as its own market purely on the basis that it was a patented medicine. Moreover, a dispensing pharmacist had no choice but to meet the prescription - there were a number of alternative therapies that should have been included in the market definition.

Sector inquiries

May the antitrust authority conduct sector-wide inquiries? If so, have such inquiries ever been conducted into the pharmaceutical sector and, if so, what was the main outcome?

The CMA has powers to conduct sector-wide investigations under sections 130A to 184 of EA02. There are two types of inquiry: a relatively short (phase I) market study and a more detailed (phase II) market investigation.

Market studies are used by the CMA to observe patterns of consumer and business behaviour and determine whether markets are working well. Following the opening of a market study, the CMA may:

  • find that there are no competition issues in the market (ie, issuing a ‘clean bill of health’);
  • take actions to improve the quality and accessibility of information to consumers;
  • make recommendations to the government to change regulations or public policy;
  • take competition or consumer enforcement actions; and
  • make market investigation references (if the CMA considers a more detailed examination of the market is necessary), or accept an ‘undertaking in lieu of reference’.

Market investigations are detailed examinations conducted by the CMA itself into whether any feature or features of the market have an adverse effect on competition. The CMA has wide discretionary powers to impose remedies that address any such adverse effects, including both structural remedies (such as divestment of a business or assets, or requiring the licencing of know-how or intellectual property) and behavioural remedies (such as the imposition of a price cap or requiring companies to display prices and terms and conditions of sale more prominently).

CMA market investigations differ from their EU sector inquiry counterparts as the CMA may impose significant remedies where the market is not operating competitively, without a need to establish a breach of competition law on the part of a particular undertaking (eg, where one single firm is particularly dominant owing to high barriers to entry in the market, but there is nothing to suggest this firm has abused its dominance). In July 2017, the CMA announced changes to the way it conducts market investigations aimed at streamlining the process (by, for example, assessing potential remedies at earlier stages in the investigation and reducing the number of formal publication and consultation stages).

In 2015, in response to growing concerns about medicine shortages, the CMA opened an investigation into the supply of medicines, seeking information on the extent to which there are shortages of medicines in the UK and explored a range of potential causes such as:

  • distribution arrangements including the ‘direct-to-pharmacy’ distribution model;
  • the exportation of medicines and the impact of exchange rate fluctuations;
  • inflexible quotas introduced by manufacturers;
  • difficulties in sourcing the required raw materials;
  • problems with the manufacturing process; and
  • regulatory interventions in the country of manufacture.

The study was terminated on grounds of administrative priorities. Moreover, as there was evidence that a significant proportion of any existing shortages could be attributed to causes originating in the UK, the CMA did not consider it was the best placed authority to investigate.

Between 2012 and 2016, the CMA investigated the market for privately funded healthcare services. The CMA found an adverse effect on competition in the market in central London and that HCA Healthcare’s prices were higher than would be expected in a well-functioning market. Remedies put in place included the formation of the Private Healthcare Information Network and limits on benefits and incentive schemes provided to referring clinicians by private hospital operators.

In November 2017, the CMA published the final report of a market investigation into the care homes market. Following the identification of a number of issues in the market (in particular, the lack of sufficient funding), the CMA recommended, among others solutions, enhanced planning at local level, oversight of local authorities commissioning practices and greater assurances at a national level about future funding.

NGO involvement

To what extent do non-government groups play a role in the application of competition rules to the pharmaceutical sector?

The CMA encourages individuals and NGOs to submit complaints. In addition, Citizens Advice Bureau and Which? are currently ‘designated consumer bodies’ that are able to make ‘super-complaints’ under section 11 of EA02. Super-complaints impose an obligation on the CMA to investigate the complaint as a matter of urgency and may result in the CMA:

  • taking enforcement action under competition or consumer law;
  • agreeing voluntary changes with the industry;
  • launching a market study or making a market investigation reference, or both; or
  • recommending action by the government, a regulatory body or other organisation.

Review of mergers

Sector-specific considerations

Are the sector-specific features of the pharmaceutical industry taken into account when mergers between two pharmaceutical companies are being reviewed?

The CMA uses no pharmaceutical sector-specific guidance. However, the CMA will refer to well-established EU Commission precedents in relation to issues such as market definition in the pharmaceutical sector. Every merger will ultimately be decided on its merits and the particular circumstances and facts of the case.

Market definition

How are product and geographic markets typically defined in the pharmaceutical sector?

The CMA and its predecessors have generally followed the Commission’s approach to product market definition for pharmaceuticals, which has tended to rely on the European Pharmaceutical Marketing Research Association’s anatomical therapeutic chemical (ATC) classification system. The EU Commission uses the third ATC level (ATC3), which specifies therapeutic indication (meaning a drug’s intended use) as a starting point for defining the relevant product market.

However, the Commission has also acknowledged a range of other factors, aside from ATC classification, that should be considered when analysing the demand substitutability of pharmaceutical products, such as whether the medicine is intended for human use, dosage strengths, pharmaceutical form, whether the drug is prescription-only or can be purchased over-the-counter (OTC), route of administration, as well as drug-specific factors that influence physicians’ choice of treatment (eg, safety and efficacy, treatment burden and stage of disease).

Recently, there has been an increasing trend towards very narrow product market definitions for pharmaceutical products based on the fourth ATC level (mode of action) or even the fifth ATC level (the specific molecule) (ATC4 and ATC5, respectively).

The EU Commission has often deviated from the ATC classification definition when assessing the product market for pharmaceutical products for the treatment of cancer. For example, in Novartis/GlaxoSmithKline Oncology Business (case COMP M 7275 (2015)), as well as in previous decisions, the Commission regards the type of cancer for which a pharmaceutical product is to be used as the product market definition of oncology products, rather than any of the ATC classification levels.

In Teva/Allergan (case COMP M 7746 (2016)), the EU Commission decided that for generics, the molecular level was the most appropriate product market definition. The Commission ultimately left open the question of whether the product market needed to be further sub-divided by pharmaceutical form and prescription or OTC.

In LEO Pharma/Astellas Pharma Inc (case ME/6581-15 (2016)), the CMA defined the relevant market for dermatological pharmaceutical products using three alternative frames of reference. The merger was first assessed at ATC3 level; second, the CMA considered products of a similar composition (which, in this case, were dermatological products containing hydrocortisone) but in different ATC3 categories; and third, the CMA considered the supply of products prescribed for the same therapeutic indication (again in different ATC3 categories).

The geographic market for pharmaceutical products has generally been defined as national in scope, except for pipeline products, where it is often EEA-wide and sometimes global. The CMA followed Commission precedent for defining the market as national in LEO Pharma/Astellas Pharma Inc.

Addressing competition concerns

Is it possible to invoke before the authorities the strengthening of the local or regional research and development activities or efficiency-based arguments to address antitrust concerns?

The CMA will consider any arguments put forward by the parties, invoking factors that may prevent or significantly reduce any harmful impact of a merger. Parties can argue that any negative impact of the merger is outweighed by one of the following consequences:

  • the merger will create greater efficiencies and make the merged business a more effective market competitor (such as increased research and development (R&D) activities);
  • entry or expansion into the market by either a new business or an existing business, respectively, will increase competition in the market; or
  • customers have countervailing buyer power, which gives them enough negotiating strength to prevent the merged entity from dramatically increasing its prices.

When assessing such arguments, the CMA must be satisfied, on the basis of compelling evidence, that the efficiencies are timely, likely and sufficient to prevent a substantial lessening of competition (SLC) from arising and that the efficiencies must be merger-specific, meaning they must be a direct consequence of the merger. Efficiency-based arguments are generally unlikely to be accepted by the CMA, where there is evidence of an SLC.

Horizontal mergers

Under which circumstances will a horizontal merger of companies currently active in the same product and geographical market be considered problematic?

Problematic mergers are those that, following the CMA’s review, have resulted in, or may be expected to result in, an SLC within a market or markets in the UK for the relevant goods or services.

Horizontal mergers might lead to an SLC because of either the removal of an important rivalry between two competing firms, thus enabling the merged entity to increase its prices (unilateral effects) or by facilitating coordination between two or more firms (coordinated effects). Unilateral effects are likely in a market where the merging businesses’ products are close substitutes, whereas coordination post-merger will likely occur in oligopolistic markets.

Vertical mergers are generally less likely to give rise to an SLC, but could be problematic if the merger entity is likely to restrict downstream competitors’ access to a key input or restricts upstream competitors from a key ‘route to market’.

The CMA broadly follows the market share filters that the Commission applies when assessing pharmaceutical mergers to generally identify non-problematic overlaps:

  • the combined share is over 35 per cent but with an increment in share of less than 1 per cent; or
  • the combined market share is below 35 per cent.

For example, in LEO Pharma/Astellas Pharma Inc, the CMA carried out an assessment of whether the merger would give rise to an SLC in the supply of dermatological products containing hydrocortisone as the target had market shares above 40 per cent, whereas Leo Pharma had market shares above 5 per cent.

Similarly, vertical links between manufacturers of an active pharmaceutical ingredient (API) and the finished product would generally be treated as problematic where:

  • an API share of over 30 per cent is combined with a finished product share of over 5 per cent; or
  • a finished product share of over 25 per cent is combined with an API share of over 5 per cent.

Product overlap

When is an overlap with respect to products that are being developed likely to be problematic? How is potential competition assessed?

The CMA will be influenced by the EU Horizontal Merger Guidelines, which state that for a merger with a potential competitor to have significant anticompetitive effects, the following two conditions must be fulfilled:

  • the potential competitor must already exert a significant constraining influence or there must be a significant likelihood that it would grow into an effective competitive force; and
  • there must not be a sufficient number of other potential competitors that could maintain sufficient competitive pressure after the merger.

In Novartis/GlaxoSmithKline Oncology Business, the Commission assessed the potential constraint likely to be exerted by pipeline products on existing product markets and possible future markets, and concluded that this should be assessed by reference to the characteristics and intended therapeutic use of those pipeline products. In this case, the Commission noted the intrinsic uncertainty of analysing products that do not yet exist and suggested the product market definition could be left open when considering R&D activities, but ultimately defined the market as pipeline targeted therapies for the treatment of advanced melanoma globally or at least EEA-wide.

The CMA has followed a similar approach. For example, in Actavis UK Limited/Auden McKenzie Holdings Ltd (case ME/6513/15 (2015)), the CMA took into account the parties’ pipeline products and analysed the various stages of product development, the number of other parties holding marketing authorisations for such products, the length of time it takes to develop a drug and obtain necessary regulatory approvals and the outcome of clinical trials and stability tests.

Subject to a few exceptions, such as Actavis UK Limited/Auden McKenzie Holdings Ltd, the CMA have generally found that the geographic market for pipeline products is at least as wide as the EEA, if not global, owing to the international nature of R&D efforts.

In the pharmaceutical sector, there seems to be an increasing tendency to define generic companies as potential competitors even if entry could infringe the originator’s intellectual property rights. So far, this approach has been adopted in the context of antitrust investigations at the Commission level, but a similar approach may be expected in mergers. For example, in Lundbeck v Commission (case T-472/13 (2016)), the General Court found that the possibility of generic entry, including by launching ‘at risk’ of infringing Lundbeck’s patent, was sufficient for the generic companies to be regarded as potential competitors, as the generic companies had taken steps and made investments to enter the market in competition with Lundbeck, including by obtaining the API, applying for a marketing authorisation and actively seeking customers for their products. Moreover, the fact that Lundbeck had entered into settlement agreements with the generic companies indicated that it perceived those undertakings as potential competitors. The General Court thus noted that competition could occur several years before the expiry of the compound patent when generic producers who want to launch a product begin developments leading to a product that obtains a marketing authorisation. Effectively, this means that a generic that is up to eight years from market entry could be considered a potential competitor (and this is similar to the position under the 2014 Technology Transfer Block Exemption Regulation (TTBER), which states that undertakings may be treated as potential competitors, regardless of any intellectual property rights, if the parties have made ‘advanced plans to enter the market’).


Which remedies will typically be required to resolve any issues that have been identified?

The guidelines on merger remedies state that when considering remedial action, the CMA shall ‘in particular, have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the SLC and any adverse effects resulting from it’.

Following its phase I investigation, the CMA has two choices: refer the merger for a phase II investigation or accept undertakings in lieu of a reference. The CMA will only accept undertakings in lieu where the undertakings are sufficiently clear cut and certain to address a clearly identified competition problem.

If a merger is referred to phase II, the CMA may decide to impose either structural or behavioural remedies. Structural remedies are those that cause a permanent change in the structure of the market concerned, such as the sale of one of the overlapping businesses. Behavioural remedies are those that regulate the terms on which the merged entity carries on business, such as the prices it may charge.

Structural remedies tend to be preferred by the CMA. In the Celesio/Sainsbury’s Pharmacy Business (2016) merger, the parties initially offered behavioural remedies, which were rejected. The CMA found that only a divestiture package would be effective in addressing the SLC and the parties eventually offered structural remedies. In the Reckitt Benckiser/K-Y (2015) merger, however, a behavioural remedy in the form of brand licensing arrangements was accepted.

Patents and licences

Would the acquisition of one or more patents or licences be subject to merger reporting requirements? If so, when would that be the case?

The UK regime defines a merger situation as two or more enterprises ceasing to be distinct. Generally speaking, the transfer of intellectual property rights like patents or licences on their own will not result in two enterprises ceasing to be distinct. However, where patents or licences are sold together with customers, suppliers or other contracts, this might be investigated as a merger, particularly if a turnover that will transfer with the intellectual property rights can be explicitly identified.

Anticompetitive agreements

Assessment framework

What is the general framework for assessing whether an agreement or practice can be considered anticompetitive?

The prohibition set out in section 2(1) of CA98 (see question 5) aims to prevent restrictive agreements including price-fixing, resale price maintenance, bid-rigging and the exchange of sensitive information.

Agreements that are excluded from the section 2(1) prohibition are set out in section 3 of CA98 (eg, mergers, services of general economic interest and agreements or contracts entered into in order to comply with a legal requirement). In addition, section 9 of CA98 provides an efficiency defence for those agreements that improve production or distribution or promote technical or economic progress, while allowing consumers a fair share of the resulting benefits and do not impose any unnecessary restrictions on competition or allow the parties to the agreement the opportunity to eliminate competition. In addition, section 10 of CA98 exempts from the Chapter I prohibition any agreement that either would be exempt from the prohibition in article 101 TFEU under an EU block exemption regulation, or is a type of agreement that would fall within the scope of an EU block exemption regulation, if it affected trade between member states. The EU block exemption regulations that apply to agreements include Regulation No. 330/2010 on vertical agreements, Regulation No. 316/2014 on technology transfer agreements, Regulation No. 1217/2010 on R&D agreements and Regulation No. 1218/2010 on specialisation agreements. There are also a number of sector-specific block exemption regulations dealing with the automotive, insurance and liner shipping sectors.

Technology licensing agreements

To what extent are technology licensing agreements considered anticompetitive?

There is no specific UK legislation directly regulating technology licensing agreements, and so the TTBER, as well as the Technology Transfer Guidelines, constitute the relevant legislative framework to assess technology licensing agreements. The TTBER provides for a ‘safe harbour’ in relation to licensing agreements between companies that have limited market power (ie, a share below 20 per cent (if the parties are competitors) or 30 per cent (if the parties are not competitors) of the respective market), provided that these agreements do not contain ‘hard-core’ restrictions of competition (eg, price restrictions, output limitation, market or customer allocation, etc).

Co-promotion and co-marketing agreements

To what extent are co-promotion and co-marketing agreements considered anticompetitive?

Co-promotion agreements are agreements whereby a company that has developed a product agrees with another company that they will promote that product under a common brand and marketing strategy. Co-marketing agreements are instead agreements whereby two companies undertake separate but simultaneous marketing and selling of the same product under different brand names. These types of commercialisation agreement are commonly used by pharmaceutical companies wishing to penetrate new markets while sharing the risk of doing so with another company.

Neither co-promotion nor co-marketing agreements are considered, per se, to be anticompetitive. However, when entering into such agreements, pharmaceutical companies should be mindful of the EU Commission’s Guidelines on Horizontal Co-operation Agreements and existing case law, which the CMA will take into account when investigating such agreements. For example, in 2013, the Commission fined Johnson & Johnson and Novartis €16.3 million over their agreement to co-promote fentanyl, concluding that the agreement had been entered into as an inducement for Sandoz, Novartis’ Dutch subsidiary, to drop its independent efforts to enter the market, thereby delaying the entry of a cheaper generic medicine for 17 months and keeping prices artificially high in the Netherlands.

Other agreements

What other forms of agreement with a competitor are likely to be an issue? Can these issues be resolved by appropriate confidentiality provisions?

Agreements involving the exchange of competitively sensitive information between competitors generally give rise to competition risk. Undertakings should therefore ensure that any exchange only relates to historic, aggregated data, that there is a legitimate business reason justifying the exchange and that appropriate confidentiality provisions are put in place. The CMA will tend to consider exchanges that make data equally accessible to all interested parties on non-discriminatory terms as less likely to constitute an infringement than exclusive exchanges.

In relation to cooperation agreements, it is important to note that not all forms of cooperation between competitors will be considered as an infringement of competition law. Importantly for the pharmaceutical sector, some R&D agreements may fall under the scope of the Commission Regulation (EU) No. 1217/2010 (R&D Block Exemption Regulation), which is in place until 31 December 2022 and which forms the basis for the CMA’s own assessment of such agreements.

Other forms of agreement that might give rise to competition issues include:

  • joint venture agreements (whereby companies pool their resources for the purpose of accomplishing a specific common task, such as joint development of a new product or a new business activity);
  • joint purchasing agreements (whereby two or more companies agree to jointly purchase all or some of their product requirements); and
  • joint selling agreements (whereby companies agree to jointly determine the commercial aspects of the sale of a product).

One of the main risks of entering into these types of agreements is the exchange of competitively sensitive information in relation to, for example, commercial strategy, price and other commercial conditions applied to customers or suppliers. Before entering into such agreements, undertakings should ensure that there is a legitimate commercial reason for doing so and, most importantly, that appropriate ‘information barriers’ and confidentiality obligations are set up.

Issues with vertical agreements

Which aspects of vertical agreements are most likely to raise antitrust concerns?

Distribution and supply agreements (often combined with exclusivity or other restrictive provisions) are examples of vertical agreements that are quite commonly entered into in the pharmaceutical sector. While vertical agreements are also subject to the Chapter I prohibition in CA98, they are generally less likely to give rise to competition concerns unless the supplier or buyer (or both) has a high degree of market power.

Vertical agreements will benefit from the safe harbour provided under the EU Vertical Agreement Block Exemption (Regulation No. 330/2010), as long as:

  • the market shares of both the supplier and the buyer are below 30 per cent of the market in which the goods or services covered by the agreement are bought and sold; and
  • the agreement does not contain hard-core restrictions, such as resale price maintenance or territory or customer allocation.

Outside of the safe harbour, companies must self-assess the compliance of their vertical agreements with competition law on the basis of the guidelines issued by the Commission (and those adopted by the CMA). Although no prior clearance can be obtained from the CMA, the CMA is able to offer a non-binding short-form opinion as guidance for parties, but this option is rarely used in practice (see question 9 and guidance issued following the closure of the investigation into the supply of medicines, or case closure guidance issued with respect to Paroxetine).

Patent dispute settlements

To what extent can the settlement of a patent dispute expose the parties concerned to liability for an antitrust violation?

The General Court’s decision in H Lundbeck A/S and Lundbeck Ltd v European Commission (2016) confirms that patent dispute settlement agreements are restrictions of competition by object (ie, by being harmful to competition without the need to prove the existence of anticompetitive effects), where:

  • they are made between actual or potential competitors;
  • they contain a ‘value transfer’ from the patent holder to the patent challenger; and
  • this ‘value transfer’ is in return for restrictions on the challenger company’s entry on the market (usually in the form of a non-compete or no-challenge clause).

The CMA followed this broad approach in its Paroxetine decision involving GSK and a number of generics companies.

Joint communications and lobbying

To what extent can joint communications or lobbying actions be anticompetitive?

In general terms, legitimate trade association and lobbying work may result in a competition law infringement if anticompetitive conduct is adopted by the collective entity or a group of undertakings. For example, collective boycotts against undertakings showing reluctance to comply with collusive agreements have often been fined at EU level. Anticompetitive collective action might also take the form of collective threats to recalcitrant competitors or measures to ‘convince’ companies to cooperate.

In 2009, six recruitment agencies were fined over £7.9 million (after appeal) by the OFT for price fixing and for collectively boycotting another company (Parc UK) in the supply of candidates to the construction industry. Parc had entered the market in 2003 with a new business model whereby it would act as an intermediary between construction companies and recruitment agencies. Instead of competing with Parc, the six recruitment agencies agreed to boycott Parc and also fix the fee rates they would charge to intermediaries, such as Parc, and certain other construction companies.

Public communications

To what extent may public communications constitute an infringement?

Generally speaking, public announcements, in contrast to the exchange of sensitive information between competitors, are not likely to cause antitrust issues unless they are used to publicly signal future market behaviour. A recent EU Commission investigation into price signalling by container liner shipping companies suggests that public communications could become more of a focus for authorities where they concern likely future behaviour, in particular pricing intentions.

In 2016, the UK authorities prevented cement suppliers from sending their customers generic price announcement letters and imposed restrictions on the disclosure and publication of cement production and sales volume data.

Exchange of information

Are anticompetitive exchanges of information more likely to occur in the pharmaceutical sector given the increased transparency imposed by measures such as disclosure of relationships with HCPs, clinical trials, etc?

There are various measures undertaken by the industry and the competent regulatory authorities to increase transparency. One of these is the public disclosure by pharmaceutical companies of the transfers of value made to HCPs and healthcare organisations imposed under the ABPI Code of Practice. While these disclosures are not required by law, they are mandatory for ABPI member companies and widely considered to constitute good industry practice. This measure provides competitors with a better insight into the extent that other companies in their field are supporting HCPs and healthcare organisations, including specific amounts paid to specific individuals and organisations.

There are also obligations imposed on the industry to disclose clinical trial data. In line with the EU legal requirements under the Transparency Regulation (Regulation No. 1049/2001), UK pharmaceutical companies’ clinical and non-clinical data is subject to disclosure unless certain narrowly applied exceptions apply. There are also increased transparency requirements in the Clinical Trial Regulation (No. 536/2014), which is expected to come into application in 2019, including the public registration of information concerning new clinical trials. All the above-described practices increase market transparency and, as such, are potential candidates for scrutiny by the CMA under Chapter I of CA98 and article 101 TFEU.

Finally, note that the manner in which the pricing and reimbursement procedures operate in the UK and, in particular, the health technology appraisals (HTA) conducted by NICE, may raise important competition concerns. Under the current HTA procedures, companies submit evidence to NICE, including economic evidence to show a good cost-benefit ratio for their products. Although such information is not publicly available, there are circumstances in which competitors submitting applications for follow-on products may have access to some of the reference product information to be able to prepare their own economic evidence, which, in certain circumstances, could have a similar anticompetitive effect to an anticompetitive exchange of information.

Anticompetitive unilateral conduct

Abuse of dominance

In what circumstances is conduct considered to be anticompetitive if carried out by a firm with monopoly or market power?

The UK’s legislative wording and administrative practice is closely aligned with that of the EU Commission under article 102 TFEU. Some of the examples are set out directly in section 18 CA98 and include:

  • limiting production, market or technical development (eg, refusal to supply, quota restrictions in the context of stock management schemes or ‘pay-for-delay’);
  • applying dissimilar conditions to equivalent transactions (eg, unjustified discrimination on price or contractual terms);
  • tying the supply of a product or service to the mandatory purchase of an unrelated product or service; and
  • imposing unfair purchase or selling prices or other unfair trading conditions (eg, predatory pricing, unfair discounts or rebates, free stock offers or excessive pricing).

It is this final category of behaviour that has been the primary focus of the CMA in recent investigations. The cases of Phenytoin sodium capsules against Pfizer and Flynn Pharma, Hydrocortisone tablets against Actavis UK and Liothyronine tablets against Concordia concern excessive pricing, whereas unfair discounting is the focus of Remicade against MSD. There are three further ongoing cases against unnamed companies involving allegations of competition law breaches, where the specific nature of the conduct has not been revealed (see ‘Update and trends’).

Other types of infringement such as vexatious litigation, the provision of misleading information to regulatory authorities, product denigration or other strategies designed to foreclose competitors could be relevant in the UK (see questions 31 and 33).

De minimis thresholds

Is there any de minimis threshold for a conduct to be found abusive?

There is no de minimis threshold for the finding of abuse. Factors such as market coverage and duration of the alleged abuse are relevant, however, for assessing the severity and likelihood of anticompetitive effects (in line with EU case law, such as Post-Danmark II (case C-23/14 (2015)). The CMA may also take such factors into account when considering whether an investigation continues to be an administrative priority.

In order to avoid over-burdening small and medium-sized enterprises, section 40 of CA98 provides for an immunity from financial penalties (but not liability) for conduct of ‘minor significance’, where the party’s annual turnover does not exceed £50 million. Section 40 has only been applied in two cases (Cardiff Bus (case CE/5281/04 (2008) and J J Burgess & Sons Limited (case 1044/2/1/04 [2005] CAT25)), both of which concerned very local markets, so is unlikely to be of practical significance in the context of the pharmaceutical industry.

In the pharma sector, it is more likely that an attempt by the claimant to draw the market too narrowly and thus fail to uphold a finding of the defendant’s dominance would result in the claim being struck out by the court (see Chemistree Homecare Ltd v Abbvie Ltd, mentioned in question 8).

Establishing dominance

When is a party likely to be considered dominant or jointly dominant?

The CMA will be guided by the presumption established by the Court of Justice of the European Union (CJEU) case law that market shares over 50 per cent are indicative of dominance, but will also consider other relevant market factors (eg, capacity of existing or potential competitors or barriers to entry) to support a finding of dominance at lower-share levels. It is only in exceptional cases, however, that dominance will arise below 40 per cent.


Can a patent holder be dominant simply on account of the patent that it holds?

Market exclusivity as a result of patent protection does not automatically confer dominance. Factors that will be taken into account include availability and substitutability of alternative products. For example, in the Paroxetine case, GSK’s patents in relation to paroxetine were considered a barrier to entry for potential competitors, which was an element in the overall assessment of dominance. Where a patent holder is dominant, it is important to remember that dominance itself is not problematic but it limits some of the behaviour of the dominant company.

Patent grant and enforcement

When would life-cycle management strategies expose a patent owner to antitrust liability?

Companies are, in principle, free to innovate around products (eg, by replacing older formulations or compositions or introducing features that benefit patients and clinicians) and replace products based on older technology with new commercial propositions.

However, life-cycle management can also form part of an anticompetitive foreclosure strategy involving a concerted effort to delay or restrict generic competition, as generic versions cannot be automatically substituted for the reformulated second-generation product. Some warning signs include cases where:

  • the claimed ‘innovation’ is minor and non-substantive;
  • the old product is delisted and replaced with a newer but more expensive product;
  • a commercial strategy that encourages switching from the original to the follow-on product prior to generic entry is pursued;
  • the follow-on product is introduced shortly before patent expiry of the first-generation product and generic entry; or
  • there is interference with medical authorities surrounding the registration of the second-generation product (eg, selective deregistration strategies in AstraZeneca (2012)).

As noted in question 7, in Gaviscon, Reckitt Benckiser was fined by the OFT for delisting older formulations of Gaviscon, which were no longer patent-protected, from the prescription channel. The OFT drew on evidence from internal documents, which showed that the primary intention of the strategy was to ensure doctors were unable to write open prescriptions that could be filled with a generic alternative.

To what extent can an application for the grant or enforcement of a patent expose the patent owner to liability for an antitrust violation?

In itself, it is not an abuse of dominance to assert or apply for recognition of IP rights. However, there have been a number of cases in the pharmaceutical sector where, on the specific facts, such conduct was investigated (and sanctioned) at EU level. For example, providing misleading information in applications for supplementary protection certificates (AstraZeneca v Commission, case C-457/10 P (2012)) and enforcing a patent in the knowledge it lacks merit, was found to be an abuse of dominance (the EU Commission Decision in Perindopril (Servier), case AT 39612 C (2014)), where evidence suggested the conduct was pursued with the primary aim of foreclosing competitors. Similarly, in Boehringer (case AT 39246 (2011)), the EU Commission’s investigation (ultimately settled) concerned making patent filings for new pharmaceutical treatments without scientific merit, for the sole purpose of foreclosing competitors. These examples remain the exception rather than the rule, however, and assessment in such cases is always highly fact-dependent.


Can communications or recommendations aimed at the public or HCPs trigger antitrust liability?

Communications by a dominant company to the public and HCPs are not typical candidates for antitrust breaches. However, comparisons with competitor products that are misleading, false, incomplete or not based on sound evidence, can be considered an abuse of dominance (eg, in the context of systematic marketing campaigning designed to denigrate and discourage the prescription of generic (or biosimilar) alternatives by casting doubts on their efficacy and safety).

The French Competition Authority (FCA) is particularly active in such cases (see the France chapter of this book). In Decision No. 13-D-11 (Sanofi-Aventis (2013)), the FCA found that the information provided by Sanofi to medical professionals stressing the differences that existed between its own products and generics and recommending that their product ‘not to be substituted’ was based on unsubstantiated assertions, not objective considerations. In Decision No. 13-D-21 (Schering-Plough (2013)), the FCA held that Schering unlawfully engaged in encouraging the stockpiling of its product by emphasising the psychiatric instability of users and exaggerating the apparent risks of substance abuse and ‘trafficking’ of generics. More recently, in Decision No. 17-D-25 of December 2017, Janssen-Cilag was fined for unjustified interventions with the medical authority in France, which unlawfully questioned the quality of generic medicines (despite a robust finding of bioequivalence) and raised unjustified patient safety concerns, as well as for a targeted marketing campaign that relayed those same concerns to doctors and pharmacists.

At EU level, in January 2018, the CJEU ruled that an agreement between two companies to communicate information about adverse reactions to the use of a product could lead to a restriction of competition ‘by object’ (F Hoffmann-La Roche and Others, case C-179/16 (2018)), where this information turns out to be misleading (see question 35).

The CMA has not publicly revealed that it is investigating any cases involving abusive communications in the pharmaceutical industry. In Gaviscon, the then OFT closed one aspect of the investigation that involved an alleged campaign to delay generic entry on the basis of administrative priorities and proceeded only with the aspect of the case involving product withdrawal.

Authorised generics

May a patent holder market or license its drug as an authorised generic, or allow a third party to do so, before the expiry of the patent protection on the drug concerned, to gain a head start on the competition?

An originator launching its own ‘authorised’ generics or entering into agreements to do so jointly with third parties is relatively common in the pharmaceutical industry. It is generally a valid commercial strategy that, while initially leading to cannibalisation of sales, is intended to better control revenue drain from the branded version of the medicine, once generic competition enters the market.

The EU Commission has indicated in the Final Report on the pharmaceutical sector inquiry, that agreements for the launch of ‘authorised’ generics may be the subject of future regulatory investigations although none have yet materialised. Competition law risks are most acute if the agreement can be characterised as a pay-for-delay arrangement with actual or potential competitors (ie, if it involves a value transfer and a restriction on generic entry from the third party).

Restrictions on off-label use

Can actions taken by a patent holder to limit off-label use trigger antitrust liability?

Earlier in 2018, the CJEU decided in F Hoffmann-La Roche and Others, that medicines used for therapeutic indications not covered by the marketing authorisation can form part of the same relevant market as medicines designated for that indication. This means that agreements or unilateral actions that seek to limit off-label use could trigger antitrust liability where these restrict or distort competition.


When does pricing conduct raise antitrust risks? Can high prices be abusive?

A high price can be abusive if it bears no reasonable relation to the economic value of the product. The legal test stems from EU case law (United Brands v Commission, case C-27/76 (1978)) and requires that the price-cost difference is in fact excessive, and that the price charged is unfair (either in itself or compared to competing products).

As noted in question 27, alleged excessive pricing has been the primary focus of the CMA in recently completed and currently ongoing cases. Phenytoin sodium capsules, in particular, provides valuable insights into the CMA’s methodology in applying the legal test. As to the first limb of the test, the CMA adopted a benchmark above which the price would be deemed to be excessive - 6 per cent above return on sales. As to the second limb, the CMA concluded the prices charged by Pfizer and Flynn were unfair in themselves in that:

  • the phenytoin sodium capsules were an old product, with no new R&D and so the ‘economic value’ of the medicine was limited;
  • there was a large disparity between the prices charged and the cost measures (the excess being up to 705 per cent); and
  • the price increases were eight to 27 times higher than before, which went far beyond what was necessary to generate a profit.

Low prices, whether achieved through a flat price or discounts or rebates, can also give rise to antitrust risk. For example, free stock offers by a dominant pharmaceutical company will be presumed to constitute an excessively low or predatory price (ie, a price below fully loaded costs) unless there is supporting evidence that competitors will not be foreclosed (eg, if the offer is merely introductory).

While predatory pricing in the pharmaceutical industry has not been investigated by the CMA since 2001 (Napp Pharmaceutical Holdings Ltd v Director General of Fair Trading, case 1001/1/1/01 [2001] CAT 1), the CMA has increased its focus on abusive discounts or rebates, with two new cases opened since 2014.

Indeed, the CMA released specific guidance on discounts after closing a case against an unnamed pharmaceutical company on administrative priority grounds, in which it confirmed that:

  • higher competition law risk is posed by volume-based retroactive schemes (ie, those that apply the discount to the total volume purchased), particularly where the customer’s overall expenditure with the supplier falls as the volume rises (negative incremental schemes);
  • there is an added complexity in pharmaceutical markets, namely the presence of non-contestable patients (those who can only be treated with a specific product) and contestable patients (those who have several alternatives); and
  • the potential foreclosure of competitors is likely to be greater in circumstances where only the dominant company has incontestable patients, and the retroactive scheme is conditional on the customer purchasing units covering the contestable part of patient demand, as a competitor would have to compensate the customer for the loss of discount on non-contestable volumes that only the dominant company can service, potentially requiring very deep discounts from the competing supplier.

Sector-specific issues

To what extent can the specific features of the pharmaceutical sector provide an objective justification for conduct that would otherwise infringe antitrust rules?

The characteristics of the sector can be invoked as an objective justification for anticompetitive conduct. However, the CMA is unlikely to be easily convinced by such arguments. The CMA’s predecessor has rejected the position argued in Napp Pharmaceutical Holdings Ltd that PPRS-regulated prices were incapable of being excessive.

The CMA will take into account, during the course of the investigation, features of the pharmaceutical sector that create unique conditions of competition, including:

  • the fact that, as the Court of Appeal said, the choice of medicine in the UK is decided by a ‘multi-headed beast comprising the patient, the prescriber and the budget holder, who is the ultimate payer’ (Chemistree Homecare Ltd v Abbvie Ltd);
  • the need to distinguish between the lawful exclusion of competitors in reliance on IP rights (including extension mechanisms such as supplementary protection certificates and paediatric extensions), which are of critical importance to incentivise future innovation in pharmaceuticals, and anticompetitive foreclosure strategies;
  • the fact that pharmaceutical pipelines are dependent on progress through strictly regulated clinical trial stages and that for each blockbuster product there are many failed projects and sunk investment costs; and
  • pricing and reimbursement is the responsibility of individual member states and the markets for commercialised pharmaceutical products are national.

Has national enforcement activity in relation to life-cycle management and settlement agreements with generics increased following the EU Sector Inquiry?

UK enforcement activity against pharmaceutical companies has significantly increased since the Pharmaceuticals Sector Inquiry, particularly, since the CMA was created in 2014 (see ‘Update and trends’).

In Gaviscon, the CMA investigated and fined Reckitt Benckiser for the life-cycle management strategy that resulted in the delisting of Gaviscon Liquid. As well as the Paroxetine case on patent settlement agreements, the CMA recently issued a statement of objections to Actavis and Concordia alleging an agreement rewarding Concordia (a potential competitor) for not entering the market independently. In addition, four new cases opened in October 2017 relate to anticompetitive agreements and conduct involving generic products. The CMA has also confirmed in its annual plan that pharmaceuticals continues to be one of its focus sectors.

* The authors would like to thank Bithia Large for her assistance in writing this chapter.

Update and trends

Current trends and developments

Are there in your jurisdiction any emerging trends or hot topics regarding antitrust regulation and enforcement in the pharmaceutical sector?

Over the past few years, the CMA has paid an increased amount of attention to the pharmaceutical sector. At present, 10 of the CMA’s 21 ongoing CA98 cases are in the pharmaceutical sector. In October 2017 alone, the CMA announced four investigations into pharmaceutical companies for alleged anticompetitive agreements or conduct. Moreover, the CMA specifically picked out the pharmaceutical sector in their draft annual plan for 2018-2019, stating that ‘work tackling breaches of competition law in the supply of pharmaceuticals to the NHS is directed at ensuring trust in businesses that supply essential public services’. The CMA also noted in the draft annual plan the following:

As [the] recent and continuing work in the multi-billion-pound UK pharmaceutical sector shows, [they] are willing to pursue big cases through which [they] have the potential to deliver significant benefit for consumers, taxpayers and the economy generally, and where necessary or appropriate to set important precedents for the future.

Altogether, the CMA’s interest in competition issues in the pharmaceutical sector shows no signs of slowing down in 2018.

The CMA’s ongoing CA98 cases that relate to the pharmaceutical sector include the following.

New investigations

Four investigations into anticompetitive conduct or agreements in the pharmaceutical sector were opened in October 2017. The CMA has not yet come to a conclusion on whether there is sufficient evidence in any of these cases to prove an infringement of competition law. Investigations are expected to continue until April 2018. The CMA has not publicised the parties to the cases, but both Aspen and Concordia have announced they are under investigation. Aspen have said that the investigation relates to anticompetitive conduct in the supply of two drugs, fludrocortisone acetate and dexamethasone.

Liothyronine tablets

In November 2017, the CMA issued a statement of objections alleging that Concordia has breached UK and EU competition law by charging excessive and unfair prices in relation to the supply of liothyronine tablets in the UK. In the investigation, Andrea Coscelli, Chief Executive of the CMA, said that ‘pharmaceutical companies which abuse their position and overcharge for drugs are forcing the NHS - and the UK taxpayer - to pay over the odds for important medical treatments’.

Hydrocortisone tablets

The CMA is investigating alleged excessive and unfair prices with respect to hydrocortisone (a corticosteroid) tablets under Chapter II of the CA98 and article 102 TFEU. On 16 December 2016, the CMA issued a statement of objections, and another was issued in August 2017 to new addressees. The investigation is ongoing and consideration of the parties’ written and oral representations on the statement of objections was expected to conclude in November 2017. There have been no further updates on this case since then.


In May 2017, the CMA issued a statement of objections alleging that Merck Sharp & Dohme has breached UK and EU competition law by implementing a discount scheme in relation to the supply of Remicade to the NHS.

Phenytoin sodium capsules

This case has an unusual set of facts. Pfizer transferred its marketing authorisations to Flynn, while continuing to manufacture the capsules and supplying them exclusively to Flynn. Flynn subsequently genericised the drug, meaning it was no longer subject to price regulation. Following these changes, NHS expenditure on phenytoin sodium capsules increased from approximately £2 million a year in 2012 to approximately £50 million in 2013. In December 2016, the CMA issued an infringement decision against both parties, finding that they had both imposed excessive prices and directed both companies to reduce their prices. Both parties have lodged appeals against the decision with the CAT. The substantive hearing took place over 13 days between 30 October 2017 and 24 November 2017. Judgment is still pending. Flynn also made an interim application to suspend the CMA’s direction to reduce prices, but the application was dismissed.

Hydrocortisone tablets II

In March 2017, the CMA issued a statement of objections alleging that Concordia and Actavis UK have breached UK and EU competition law by entering into anticompetitive agreements in relation to the supply of hydrocortisone tablets in the UK. In doing so, the CMA also alleges that Actavis UK abused its dominant position by inducing Concordia not to enter the UK market independently. Written and oral representation on the statement of objections took place between April and May 2017, and there have been no further status updates since then.


Fines totalling £44.99 million were imposed on GSK (the supplier of the branded anti-depressant, paroxetine), Generics (UK) Limited and Alpharma Limited under Chapters I and II of CA98 and article 101 TFEU. The parties appealed the CMA’s decision to the CAT in 2016; the judgment is still pending.