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?

Law No. 95/2006 on health reform, as amended and supplemented (Law No. 95/2006), implements Directive 2001/83/EC on the Community code relating to medicinal products for human use (the Code for Human Medicines Directive). Secondary legislation was enacted mainly by the Ministry of Health (MoH) to implement the provisions of Law No. 95/2006 on such matters as:

  • the authorisation of medicinal products: MoH Order No. 895/2006 on approving the regulation on marketing authorisation and supervision of medicines for human use;
  • the pricing of medicinal products: MoH Order No. 368/2017 on approving the norms for calculating the price of medicines for human use; and
  • the reimbursement of medicinal products:
  • MoH Order No. 861/2014 regarding the approval of the criteria for health technology assessment, of the documentation to be submitted by applicants, of the methodological instruments used in the assessment process and of the assessment methodology for the inclusion, exclusion of indications or non-inclusion of medicinal products on the list of non-proprietary names corresponding to medicines of benefit to patients with or without personal contribution; and
  • Government Decision No. 720/2008 for approving the list of non-proprietary names corresponding to medicines that the patients benefit from, with or without personal contribution, based on prescription in the social healthcare security system.

The main regulatory authorities are:

  • the MoH;
  • the National Agency for Medicine and Medical Devices: a central regulatory authority with legal personality, subordinated to the MoH; and
  • the National Health Insurance House: an independent public authority with legal personality, responsible for ensuring the coordinated and unitary functioning of the social healthcare insurance system in Romania.

Pricing

Are drug prices subject to regulatory control?

The prices of medicines for human use that are subject to medical prescription must be approved by the MoH. Prices of medicines released without medical prescription over-the-counter (OTC) are established freely. Prices of OTC medicines that are prescribed and released based on medical prescription and that are included in the list of reimbursed international non-proprietary names (INNs) are approved by the MoH.

The producer price has to be lower than or equal to the lowest price of the same medicinal product within a list of 12 European countries (Austria, Belgium, Bulgaria, the Czech Republic, Germany, Greece, Hungary, Italy, Lithuania, Poland, Slovakia and Spain).

Specific computation rules exist as regards the price for generic or biosimilar products, as well as for innovative medicines that no longer benefit from patent protection.

The maximum wholesale and retail prices are calculated on the basis of an algorithm that depends on the level of the approved producer price. The maximum wholesale margin is 30 Romanian lei. The maximum retail margin is 35 Romanian lei.

Prices are revised on an annual basis.

Distribution

Is there specific legislation on the distribution of pharmaceutical products?

To sell any type of medicinal products, an entity must be duly authorised as a wholesale distributor or as a pharmacy.

Intersection with competition law

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

Several aspects of the above legislation are relevant to the application of competition law to the pharmaceutical sector, including: strict regulations concerning the promotion of medicines, regulations applicable to pricing and reimbursement, and public service obligations.

For example, article 799(6) of Law No. 95/2006 provides that the marketing authorisation holder or its representative takes all necessary measures so that the medicines that are reimbursed from public funds are commercialised through at least three wholesale distributors.

In addition, given the specifics of the pharmaceutical sectors a series of particular factors are taken into account when defining the relevant market, such as therapeutic indications, the Anatomical Therapeutic Classification (ATC) system, price regulation, demand and offer.

 

Competition legislation and regulation

Legislation

Which legislation sets out competition law?

The legal framework is set out by Competition Law No. 2/1996 (the Competition Law) and Law No. 11/1991 on fighting unfair competition, as well as the implementing regulations and instructions of the Romanian Competition Council (RCC).

Competition authorities

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

There is no specific authority in charge of applying competition law in the pharmaceutical sector. Competition law is applied to this sector by the RCC, which is also competent for all business sectors.

Remedies

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

The RCC may impose behavioural remedies either as an interim measure or as a sanction imposed in its decision on the merits.

Pursuant to article 50 of the Competition Law, in urgent cases, where there is a risk of serious and irreparable damage to competition, and a cursory evaluation of the facts reveals the existence of an anticompetitive behaviour that is expressly prohibited by law and that needs to be stopped without delay, the RCC may order interim measures. The assessment has usually been done at the request of complainants.

Infringement decisions can impose either behavioural remedies or structural measures.

According to article 46(1) of the Competition Law, structural remedies can only be imposed when there is no behavioural remedy that would be equally effective or when an equally effective behavioural remedy would be more onerous for the undertaking concerned than a corrective structural measure. To date, the RCC has never imposed structural remedies for anticompetitive conduct or agreements by pharmaceutical companies.

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?

In Romania, private enforcement has played a modest role until now with only one such case being finally ruled. The case does not relate to the pharmaceutical sector but to the postal services sector.

In its 2010 decision, the RCC considered that Posta Romana granted discriminatory rebates disfavouring Mailers Serv SRL compared to one of its competitors. In the follow-on action, Mailers Serv SRL claimed damages for the difference in the tariffs (compared to the tariffs applied to the company to which Posta Romana applied more favourable terms). The Court of Appeal awarded damages to Mailer Serv SRL, which included both actual damages and loss of profits, consisting of the tariff differences not granted by Posta Romana to Mailer Serv SRL in the period from 2005 to 2009, in line with the RCC’s decision. The total damages awarded by the court amounted to approximately €900,000.

It is expected that the amendment of the legislation implementing the new EU Directive on antitrust damages actions will help private actions brought by affected parties before national courts to become an important complement to public enforcement.

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?

In 2008, the RCC commenced a sector inquiry on the Romanian market for the wholesale of pharmaceutical products, in order to identify potential market dysfunctionalities triggering competition concerns. In the report published in 2011, the RCC issued guidance on matters relating in particular to medicine distribution and market entry, the organisation of public tenders by public hospitals, the need for objective awarding criteria during public tenders, generics’ alleged weak penetration of the Romanian market and the poor accessibility to reimbursement lists for new innovative medicines.

In 2013, the RCC started a new sector inquiry into the Romanian pharmaceuticals market. The final report was published on 31 March 2017, the main topics being related to distribution models such as direct to pharmacy (DtP) and reduced wholesaler models, generic penetration and promotion practices.

NGO involvement

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

There are no specific provisions in this respect. Non-governmental organisations play the same role as any other entity in relation to RCC.

Non-government groups that are aware of anticompetitive practices within the pharmaceutical sector may decide to bring such practices to the attention of the RCC, by making use of the anonymous whistle-blower platform, a tool made available by the RCC to help the authority uncover competition law infringements.

 

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?

Specific sector features are generally taken into account in the definition of the relevant markets (see question 12). However, there are no special rules applicable to mergers in the pharmaceutical industry. The general merger rules apply.

Market definition

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

Product market

In light of its past clearance decisions in the field (for example, the RCC’s Decision Nos. 9/2008 Labormed/Advent; 66/2009 Ozone/Advent; 24/2014 Biofarm/Banat - Crisana Financial Investment Company and 40/2015 Alvogen/CVC Fund), the RCC followed the European Commission’s practice according to which medicines may be subdivided into therapeutic classes by reference to the ATC, devised by the European Pharmaceutical Marketing Research Association (EphMRA) and maintained by EphMRA and Intercontinental Medical Statistics.

The ATC system is a hierarchical and coded four-level system that classifies medicinal products according to their indication, therapeutic use, composition and mode of action. In the first and broadest level (ATC1), medicinal products are divided into the 16 anatomical main groups. The second level (ATC2) is either a pharmacological or therapeutic group. The third level (ATC3) further groups medicinal products by their specific therapeutic indications, namely, their intended use (eg, S1K - artificial tears and ocular lubricants). Finally, the ATC4 level is the most detailed one (not available for all ATC3) and refers for instance to the mode of action (eg, the distinction of some ATC3 classes into topical and systemic depending on their way of action) or any other subdivision of the group.

Previously, the RCC established that pharmaceutical products can be divided into: innovative medicines - protected by patents; generic pharmaceutical products - generic copies of the innovative medicines, both classes consisting of medicines that are subject to medical prescription (Rx); and pharmaceutical products that are issued without a medical prescription (OTC).

The medical prescriptions, adverse effects, legislative framework, distribution and marketing tend to differ for these categories of medicines. For instance, OTC pharmaceutical products can be promoted to the general public, while the advertising of pharmaceutical products subject to medical prescription is limited in most of the member states. In addition, in the majority of cases, the consumers choose the OTC pharmaceutical products themselves and the acquisitions are not reimbursed. The pharmaceutical products issued on medical prescription are prescribed by a doctor, and the acquisition price might be reimbursed by the public health system partially or totally.

In its assessments of economic concentrations, the RCC has generally used the ATC3 classification as a starting point for defining the relevant markets for pharmaceutical products.

The most recent merger clearance decision issued by the RCC (Decision No. 32/2017) concerns the acquisition by Recordati SpA of certain assets and rights belonging to AstraZeneca AB in connection with the sale of Betaloc and Betaloc ZOK in Romania. Given that the merger was notified under the simplified procedure, the decision does not contain details as regards the relevant markets, the RCC stating that the merger does not raise significant obstacles to competition on the Romanian market or on a significant part of it, especially by creating or consolidating a dominant position.

Geographic market

The relevant geographic market was defined in the practice of the RCC as the territory of Romania.

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?

In analysing a concentration and its impact on competition in the relevant market, the RCC considers several factors such as the market position of the parties, the parties’ economic and financial power, the market structure, alternatives available at suppliers’ and customers’ disposal and existing barriers to entry. Under the legislation, the RCC must also consider the evolution of technical and economic progress resulting from the analysed transaction, provided that this is to the benefit of consumers and does not represent a barrier to competition.

Increases in efficiencies resulting from the transaction can therefore be used as an argument to counter any competition concerns, provided that the efficiencies benefit consumers.

Horizontal mergers

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

The Merger Regulation establishes that the assessment test for an economic concentration is the Significant Impediment to Effective Competition (SIEC) test: assessing whether an economic concentration significantly impedes effective competition on the Romanian market or on a substantial part of it, particularly following the creation or strengthening of a dominant position.

The RCC will take into account various criteria for assessing the merger, such as:

  • the relevant market structure;
  • actual or potential competition;
  • the parties’ market position and their economic and financial strength;
  • alternatives available to suppliers and users, their access to supply sources and markets;
  • legal or factual barriers to entry;
  • the trends of offer and demand for the goods in the relevant market;
  • the interests of intermediaries and end consumers; and
  • any evolution of technical and economic progress, to the extent that it benefits consumers and it is not an obstacle to competition.

Product overlap

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

There is no merger clearance decision of the RCC that deals with pipeline products that are being developed by one of the companies involved in the merger.

As mentioned in question 14, the RCC will assess whether an economic concentration significantly impedes effective competition on the Romanian market or on a substantial part of it, particularly following the creation or strengthening of a dominant position (SIEC test). The overlap of products was raised in one merger within the pharmaceutical sector - Decision No. 66/2009 Ozone/Advent (the RCC also looked at the relevant markets where there was an overlap between the parties at ATC4 level). However, considering the low barriers to entry and the competitive pressure exercised by the other companies in the market, it was considered that the transaction would not lead to the creation or consolidation of a dominant position on the relevant market.

One can estimate that if presented with a case concerning overlap of pipelines, the RCC will follow the same principles established by the European Commission in its case law (eg, No. COMP/M 7275, Novartis/GSK Oncology Business or No. COMP/M 7559, Pfizer/Hospira).

Remedies

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

The parties to a notified transaction can offer remedies, either structural or behavioural, for removing the competition concerns. Structural remedies are preferred because they are simpler and easier to implement.

The RCC can accept remedies including:

  • divestments;
  • termination of ties with competitors;
  • access to infrastructure, networks or important technologies; and
  • amendments of long-term exclusivity agreements.

Remedies have not been applied so far in case of mergers in the pharmaceutical sector.

There are certain RCC decisions regarding mergers in the dialysis services sector where divestments as well as behavioural remedies have been offered as remedy in order to obtain clearance of the operation (eg, decisions from 2011 regarding the acquisition by Fresenius of Renamed and Nefromed).

 

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 acquisition of control over assets alone would require a filing if the assets to be acquired constitute a business with a market presence, to which a market turnover can be clearly attributed.

A transaction confined to intangible assets such as patents may also be considered to be a concentration if those assets constitute a business with a market turnover. In any case, the transfer of licences for brands, patents or copyrights, without additional assets, can only fulfil these criteria if the licences are exclusive at least in a certain territory and the transfer of such licences will transfer the turnover-generating activity. As regards non-exclusive licences, they may not be construed on their own as a business to which a market turnover is attached.

Anticompetitive agreements

Assessment framework

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

The current Romanian legislative framework is fully aligned with EU legislation. Under this legislation any express or tacit agreements between undertakings or associations of undertakings, any decisions by associations of undertakings and any concerted practices that have as their object or may have as their effect the restriction, prevention or distortion of competition on the Romanian market or on a part of it, are prohibited (article 5 of the Competition Law). This especially includes agreements aimed at:

  • fixing, directly or indirectly, the selling or purchase prices, as well as any other trading conditions;
  • limiting or controlling production, selling, technological development or investments;
  • sharing markets or sources of supply;
  • applying dissimilar conditions to equivalent transactions with other trading parties, therefore placing them at a competitive disadvantage; and
  • making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations that, by their nature or according to commercial use, have no connection with the subject of the contracts.

Technology licensing agreements

To what extent are technology licensing agreements considered anticompetitive?

Romanian competition legislation does not contain provisions applicable to technology licensing agreements. Such agreements are assessed in accordance with the rules laid down in EC Regulation No. 772/2004 on technology transfer.

Licensing agreements would consequently not be deemed as anticompetitive, subject to the conditions and the thresholds for market shares set out by the Regulation being met and provided that the agreements do not contain hardcore restrictions as listed by the Regulation.

Co-promotion and co-marketing agreements

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

Romanian legislation does not contain specific provisions applicable to co-promotion and co-marketing agreements. It is expected that the review of such agreements will follow the case law of the European Commission and European courts.

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 between competitors to cease deliveries

An investigation was opened by the RCC in October 2008 following a decision by pharmaceuticals distributors to cease the delivery of medicines to pharmacies and hospitals during February to October 2008, owing to the refusal of the Ministry of Public Health to determine the price of pharmaceuticals by taking into account the changes in the exchange rate.

The investigation concerned the possible infringement of article 5 of the Competition Law and article 101 of the Treaty on the Functioning of the European Union (TFEU) by members of the Association of Pharmaceuticals Distributors and Importers and the Association of Pharmaceutical Distributors in Romania. Under very specific conditions (ie, related to the regulatory framework in the pharmaceutical sector), in 2012 the RCC closed the case without applying fines.

However, the RCC warned the representatives of the two associations that competing operators must conduct their activities independently and issued guidelines as regards lobbying and petitioning activities.

Bid rigging

Bid rigging was also subject to the RCC’s scrutiny in two cases finalised with sanctions in 2008:

  • the RCC has fined three pharmaceutical distributors (Fresenius Medical Care, Alsifcom Intermed, Opremi Medfarm) for bid rigging in the context of a national tender organised in 2003 by the MoH and the National Health Insurance House for dialysis products and equipment. The RCC fined each of the three undertakings 6 per cent of their 2007 turnover; and
  • following an investigation initiated in July 2005 that lasted almost three years, in 2008 the RCC fined one pharmaceutical producer and three distributors (Eli Lilly Export, A&A Medical, Mediplus Exim and Relad Pharma) for participation in a market-sharing cartel on the insulin market and bid rigging between April 2003 and May 2005, imposing fines totalling €22.7 million (83.6 million Romanian lei). At the same time, the RCC ascertained the breach of the law by the Ministry of Public Health. A reduction of the fine was obtained in court by A&A Medical, Mediplus Exim and Relad Pharma, based on, among other points, the allegation that the MoH had imposed conditions that allowed manufacturers to choose which distributors will participate in the tender.

Issues with vertical agreements

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

The RCC will investigate vertical agreements between pharmaceutical companies in accordance with the framework set out by the Commission’s Vertical Block Exemption Regulation and the related guidelines and case law.

The restriction of parallel trade has been an important focus of the RCC. In 2011, a series of RCC investigations on the medicines distribution market led to significant fines for Bayer, Baxter, Belupo and Sintofarm and their distributors, for concluding distribution agreements containing clauses restricting distributors’ resale outside the Romanian market and thus prohibiting parallel exports.

Patent dispute settlements

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

A patent dispute was examined by the RCC, following a complaint lodged by Actavis against Novartis in 2009 for abuse of dominant position and infringement of article 5 of the Competition Law (the equivalent of article 85 TFEU).

In February 2009, Novartis had initiated an administrative complaint for the annulment of the marketing authorisations obtained by two generic companies - Actavis and Belupo, claiming the illegality of their marketing authorisations on grounds of patent infringement.

Subsequently, Novartis sent a letter to Actavis with the proposal to withdraw the case, provided that Actavis observed certain conditions such as abstaining from manufacturing, selling or importing in view of selling any products for which Actavis obtained the marketing authorisations and not applying for a price decision from the MoH with more than 90 days prior to the expiration of Novartis’ patent. Actavis refused to settle and filed a complaint in front of the RCC.

A medicine can be sold in Romania only after the producer applies for and obtains a marketing authorisation and a price decision from the competent authorities. Generic companies apply for these two administrative approvals before the expiry date of the corresponding patent.

While the marketing authorisation should not impact on the exercise of the exclusive rights by the patent holder, the price decision obtained by the generic company before the patent expiry date may trigger the decrease of the equivalent innovative reimbursement price.

In its final decision (Decision No. 3/2010), the RCC decided that an agreement between the originator company and the generic producer, whereby the latter undertakes not to apply for a price decision until 90 days prior to the patents’ expiry date, does not amount to sufficient grounds for the opening of an investigation, given that 90 days is the maximum time necessary for getting a price decision from the MoH and therefore the agreement as such would not be capable of delaying generic entry.

It should be mentioned that the current pricing legislation provides that the approval of producer prices for generic medicines of innovative medicines that are still patent protected does not imply the right to trade the generic medicine.

Joint communications and lobbying

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

The RCC looked into petitioning activities in the pharmaceutical sector in an investigation finalised in 2012 (see question 21 for details). Although no fines were applied, the competition authority recommended that the companies involved pay attention to discussions within associations of undertakings, so that they strictly serve the intended purpose and are not used as a framework for coordinating the market activities of competitors.

Subsequently, in 2013, the RCC issued a guide describing best practice recommendations on petitioning (lobbying) activities.

The best practice recommendations set out the RCC’s approach with respect to the activities performed jointly by undertakings or associations of undertakings (such as business associations) in order to defend their interests before the public authorities.

The undertakings’ right to jointly defend their common interest is recognised and permitted, but needs to be exercised in accordance with the competition rules.

However, collective protests organised by several undertakings against decisions taken by a public authority must not affect other undertakings or consumers and must be limited and proportionate to the measure leading to the protest.

As the exchange of information is common in case of collective petitioning, it is very important that the exchange of strategic information is avoided and, if there are no alternatives, information is exchanged through a third party and presented in an aggregated format.

Public communications

To what extent may public communications constitute an infringement?

Romanian legislation does not contain specific provisions in this respect. Thus, the review of such actions will follow European legislation and practice. There are several ongoing cartel investigations that concern public communications by competing companies (eg, in the financial sector).

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?

The RCC has not dealt so far with cases of exchanges of information in the pharmaceutical sector. The disclosure obligation for transparency purposes is provided under Law No. 95/2006 and the information is made public on an annual basis by the National Agency for Medicine and Medical Devices on its website. Publication of data regarding payments made in clinical trials was considered under a draft order of the MoH, but, owing to competition law reasons, was not pursued by the authority.

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 alleged abuse cases investigated by the RCC concern a large array of potentially problematic practices, including margin squeeze, refusal to supply, access to an essential facility, and discriminatory or unfair tariffs.

By way of example, the following practices in the pharmaceutical sector have been analysed as alleged forms of abuse of dominance:

  • higher wholesale prices than the prices offered in tender procedures for the supply of medicines to hospitals and abusive practice that allegedly led to the exclusion of a generic from the market: an investigation was opened against Roche Romania SRL in December 2017;
  • direct distribution to pharmacies in parallel with traditional distribution via wholesalers: an investigation was opened against Novartis Romania SRL in June 2016;
  • refusal to supply without an objective justification: an investigation was opened against GlaxoSmithKline Romania SRL in December 2013: commitments were proposed and published for market test in September 2015; and
  • refusal to supply without an objective justification: Roche Romania SRL was subject to an investigation following a complaint filed by Relad International SRL. The RCC dismissed the complaint and closed the investigation in May 2013 without sanctioning Roche based on the fact that the distributor’s orders were considered excessive. Additionally, the RCC compared the approach taken towards Relad with the approach towards other distributors to check if any discrimination occurred. Even though the RCC did not specifically analyse quota management systems, the reasoning of the decision mirrors the reasoning of the Court of Justice of the European Union (CJEU) in the GSK Greece case (ie, joined cases C-468/06 to C-478/06), which involved a quota management system implemented by GSK Greece.

De minimis thresholds

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

There is no such provision in the legislation.

Establishing dominance

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

Market share is a key factor to assessment of dominance. Under Romanian law, a relative presumption applies that one or more companies are in a dominant position if their market share exceeds 40 per cent during the relevant period.

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

Substitutability of the product to which the patent applies will be the factor based on which the relevant market will be defined.

Although the mere holding of exclusive IP rights is not an abuse of a dominant position, the exercise of such rights can, under some circumstances, be held to be contrary to article 6 of the Competition Law and article 102 TFEU.

Patent grant and enforcement

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

Life-cycle strategies may be deemed anticompetitive if they result in restricting other companies, especially generic producers.

Even if other competition authorities have conducted cases on this type of behaviour (such as the Office of Fair Trading in the case of Reckitt Benckiser or the European Commission in the AstraZeneca Losec or Servier Perindropril cases), there is no case law of the RCC on such conduct. The recent investigation opened against Roche described in question 23 is the first case where the RCC will analyse life-cycle management strategies.

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

There is no case law in Romania on such conduct. However, the mere application for the grant of a patent should not give rise to an antitrust violation. As regards the enforcement of a patent, see details regarding the Actavis/Novartis case in question 23.

Communications

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

The preliminary ruling issued by the CJEU on 23 January 2018 states that article 101(1) TFEU must be interpreted as meaning that an arrangement put in place between two undertakings marketing two competing products, which concerns the dissemination, in a context of scientific uncertainty, to the European Medicines Agency, HCPs and the general public, of misleading information relating to adverse reactions resulting from the use of one of those medicinal products for the treatment of diseases not covered by the marketing authorisation of that product, with a view to reducing the competitive pressure resulting from such use on the use of the other product, constitutes a restriction of competition ‘by object’ for the purposes of that provision.

In the sector inquiry report issued in 2017, the RCC identified as potential areas of concern with an impact on competition in the market and on generic penetration: the influence exercised by manufacturers on prescribing doctors to recommend a specific brand name to patients (even if the prescription only includes the INN); and the referral of patients to specific pharmacies by the prescribing doctor.

In addition, depending on the type of communication, a pharmaceutical company can be exposed to: infringements of unfair competition law rules, in the form of denigration; and infringements of antitrust regulations, in the form of abuse of dominance if the communication is aimed at stopping the generic substitution - in line with French case law (eg, the Sanofi Plavix case or the Schering Plough Subatex case).

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?

There is no direct prohibition that prevents a patent holder from marketing its medicine as an authorised generic before the expiry of the patent protection.

This type of agreement may trigger competition law risks in cases where the originator is dominant and the decision forms part of a dominant firm’s broader strategy to eliminate competitive threats, or where the parties to such early entry agreements are competitors.

For instance, the European Commission mentioned in its sector inquiry report from 2009 that it may examine early entry agreements (agreements concluded with generic companies before the originator company’s product lost exclusivity), which may be used to anticipate generic competition or to react to the presence of a generic company.

Restrictions on off-label use

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

There is currently no case at the level of the RCC similar to the Novartis/Roche case in Italy - see also the preliminary ruling issued by the CJEU on 23 January 2018 related to this case.

Abusive practices that allegedly lead to the exclusion of a generic from the market led to a new investigation opened against Roche in December 2017. Also see the Actavis/Novartis case described in question 23 with regard to the settlement of a patent dispute.

Pricing

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

There are several forms of pricing conduct, such as discriminatory, excessive or predatory prices, which may trigger antitrust risks in cases of dominant companies.

Higher wholesale prices than the prices offered in tender procedures for the supply of medicines to hospitals triggered a new investigation against Roche in December 2017.

There is currently no case of the RCC dealing with excessive pricing in the pharmaceutical sector (such as the Aspen case dealt with by the European Commission, the Pfizer/Flynn case in the UK, etc).

Owing to the fact that prices of Rx medicines are regulated, pricing above the regulated price could trigger allegations of excessive pricing.

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?

In the 2013 RCC decision in the Roche/Relad case, the RCC took a very analytical approach regarding the facts and relied on a complex economic assessment in order to understand if the orders placed by the wholesaler could indeed be considered as abnormal (eg, by reference to the evolution of the market or to the historical relationship between the respective wholesaler and Roche). In its sector inquiry report published in 2017, the RCC analysed various types of changes to distribution systems, such as reduced wholesaler model and DtP, stating that:

  • DtP by manufacturers could raise problems in terms of competition only to those products for which manufacturers hold a dominant position. The RCC conducted an analysis of efficiency achieved by the DtP system implemented by GSK for three medicines, as well as of the restricted distribution system implemented by Pfizer for three medicines. Taken into account were the evolution of the payment terms, trading conditions, the discounts received and granted and the availability of the relevant medicines, both before and after implementation of new distribution systems, both at wholesale and retail levels;
  • with regard to the supply chain of drugs, the following factors should prevail:
  • availability of medicines on the market and compliance by both manufacturers and distributors, with an obligation to public service;
  • availability of medicines for all categories of pharmacies that want to market them, both chain and independent, both in urban and in rural areas;
  • transfer to the patient of a portion of the benefits achieved by companies operating along the supply chain; and
  • in case of lack of medicine in a pharmacy, orders to be delivered in the shortest possible time, in order not to force the patient to make additional efforts to find the drug;
  • whatever the chosen distribution system, if the manufacturer is in a dominant position, the advantages at the pharmacy or hospital and patient level must be at least equal to those previously recorded and must be measurable at all levels: quality, level of services, financial benefits and availability, in order to avoid the risk of regarding the distribution system change as an abuse of a dominant position. Efficiencies gained and their transfer along the chain must exist at every level of the chain; and
  • in the case of restricted distribution, the RCC considers that the criteria for selecting distributors should be objective. In addition to criteria relating to the creditworthiness of distributors and guarantees offered, other conditions can also be set, such as those ensuring the maintenance of a certain level of services or certain advantages to be transferred to the retail level.

Generally, specific features of the sector are unlikely to objectively justify anticompetitive behaviour.

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

There has been only one investigation of the RCC so far on this type of behaviour: see the Actavis/Novartis case described in question 23 with regard to the settlement of a patent dispute.

In addition, there is currently one pending investigation of the RCC open against Roche, for a potential abuse of dominance regarding practices that allegedly led to the exclusion of a generic to Roche oncology medicine Tarceva from the market.

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?

The RCC has a specific focus on the pharmaceutical sector - the second sector inquiry was finalised in 2017. It is expected that the RCC will continue to oversee the sector and the implementation of the recommendations it has put forward in the report concerning public service obligation, measures to increase generic penetration, promotion practices, changes to distribution systems, and pricing regulations. In addition, the current investigations of the RCC against GSK and Novartis, once finalised, are expected to provide details regarding the concerns of the RCC related to DtP models for dominant products.

The RCC follows the European trends in this sector, which can be also seen in the recent investigation against Roche for behaviours allegedly aimed at restricting entry of generic medicines.