Also in 2019, the costs of expensive medicines are high on the (political) agenda in European Member States, including the Netherlands. In late November 2018, OECD organised a meeting on excessive prices at the interface of competition law and regulated sectors, such as the pharmaceutical industry. The Dutch OECD contribution can be found here. The demand that governments and competition authorities in the Netherlands and abroad take action against the pharmaceutical industry will grow louder in 2019.
In 2019, the European Commission (the “Commission”) will continue its policy of controlling excessive prices of medicines by prohibiting the abuse of a dominant position under Article 102 TFEU. A recent inquiry by the Commission suggests that active enforcement of the competition rules leads to more affordable medicines, a broader choice for consumers and a more innovative market. It is also apparent from the inquiry that the Commission is closely monitoring the battle between the producers of blockbuster medicines and the producers of biosimilars. The Commission’s focus on the pharmaceutical industry is not new. It is also investigating the pricing of certain cancer medicines by Aspen Pharma. The Commission has also put the ball in the national competition authorities’ court. The Danish competition authority has already found that CD Pharma abused its dominant position by significantly increasing the price of a labour-inducing drug. In France, enforcement measures have been taken against Novartis on the grounds of alleged anti‑competitive conduct. But not all actions taken by national competition authorities are (immediately) successful. In the United Kingdom, the Competition and Markets Authority (“CMA”) imposed record fines on Pfizer and Flynn. In the court’s opinion, however, the CMA had insufficiently demonstrated that those cases involved abuse of a dominant position. The CMA subsequently filed an appeal against the overturning of the fines it had imposed on Pfizer and Flynn. Excessive prices of medicines will remain on the competition authorities’ radar in 2019. At the same time pharmaceutical companies are likely to continue to litigate against fines imposed by competition authorities. Practice has shown that such litigation can be worthwhile.
It is apparent from the 2018 Medicines in Specialist Healthcare Monitor of the Dutch Healthcare Authority (“NZa”) that expenditure on expensive medicines in the Netherlands is increasing more rapidly than other healthcare expenditure. Frequent applications are made to the Netherlands Authority for Consumers & Markets (“ACM”) to take action in this field. The track record of ACM and previously of the NMa (Netherlands Competition Authority) in the field of the abuse of a dominant position in the medicines sector is poor. This does not mean that ACM does not feel pressured to take action. In 2019, as in 2018, the prices of medicines will be one of ACM’s four spearheads, see also this article. In 2018 Chris Fonteijn, ACM’s chairman at the time, and several of his colleagues wrote in their private capacities that competition law also applies to patented medicines. In mid-2018, ACM started an investigation into rheumatism medicines. ACM also received an enforcement request from Stichting Farma ter Verantwoording regarding abuse of a dominant position by Leadiant. In 2019, ACM will furthermore evaluate the 2016 Joint Procurement of Medicines Guideline.
The question is whether Martijn Snoep, ACM’s current chairman, will devote as much personal attention to the spearhead of his predecessor Fonteijn. It is clear, however, that he aims to make room for new investigations by ACM. The NRC newspaper reported: “ACM’s investigations take too long, in Snoep’s opinion. The watchdog’s investigations often take years. I am convinced that we can shorten them and decide on their merits sooner. And we should do, because time spent on one case cannot be spent on another.” But it remains to be seen whether ACM has the necessary means to take action in all cases. As Snoep stated in the NRC: “A government should think twice before eliminating the competition. The prices of medicines for rare diseases are a case in point. A statutory monopoly was created for such medicines. We’re now suffering the consequences and complaining that those prices are excessive. But those two things are obviously related. Competition is a public interest that must be safeguarded”.
Some political parties believe that ACM lacks the means of taking action against the market power of medicine producers. In 2018 they presented the Big Pharma unhealthy guidance note, suggesting measures for affordable and available medicines and requesting tightening of the Competition Act. Minister Bruins has stated in response to the guidance note that he assumes that ACM already has sufficient powers to control abuse of a dominant position in the pharmaceutical industry. Only the future will tell whether that is the case.
More disputes in 2019
It is remarkable that Minister Bruins is urging pharmacists in various manners themselves to produce expensive medicines. Together with Minister Wiebes (Economic Affairs), he sent the Dutch House of Representatives a letter on the entry into force of the pharmacists’ exemption in the Patents Act. That exemption allows pharmacists in individual cases themselves to produce patented (expensive) medicines. The VriendenLoterij has furthermore announced that it will donate EUR 5 million to the Amsterdam UMC hospital to produce expensive medicines for patients. This does not mean that the production of expensive medicines by pharmacists is always successful. Conflicts will arise also in 2019 between pharmaceutical companies that produce expensive medicines and parties that decide themselves to produce those medicines. In 2018, the AMC hospital in Amsterdam was involved in such a legal action. In 2019, the same will most likely apply to a pharmacist in The Hague. Pharmaceutical companies will also have to deal with healthcare insurers that wish to save on the costs of medicines and no longer shy away from legal proceedings. Menzis, for instance, has instituted proceedings against AstraZeneca in which it is claiming damages of more than EUR 4 million, on the grounds that AstraZeneca improperly extended the patent on the Seroquel medicine, allegedly leading to excessive prices being paid for it. Medicine producers are also not sitting by idly. In late February, for instance, Vertex wanted to challenge the method used in the Netherlands to determine the price of Orkambi, a cystic fibrosis medicine, in a lawsuit. Vertex has withdrawn the case for unknown reasons.
Medical devices, duty of care and new legislation
The NZa’s Medical Devices Monitor is expected in the first quarter of 2019. In that Monitor, NZa will most likely shed light on the current condition of the Dutch medical devices market. That was reason for Nefemed, the trade association of producers of medical devices and medical technology, to sound the alarm at the end of 2018. In Nefemed’s opinion, the procurement policy of healthcare insurers is too heavily focused on purchasing medical devices at the lowest possible price. Nefemed is concerned about the consequences of that policy for the availability, freedom of choice and quality of medical devices in the Netherlands. Nefemed warned care insurers and Minister Bruins, among others, that the insurers’ current approach may be disastrous for patients who are dependent on a medical device. It is possible that the NZa will be requested in 2019 to investigate whether healthcare insurers are fulfilling the duty of care that applies to all healthcare insurers under Section 11 of the Care Insurers Act in the procurement of medical devices.
New legislation will be introduced in the field of medical devices in 2019. The Medical Devices Regulation (Regulation (EU) 2017/745, the “Regulation”) must be implemented by May 2020 at the latest. In the Netherlands, a new Medical Devices Act and the accompanying Medical Devices Decree are being drawn up. When the Regulation is implemented, medical devices will be classified in the same manner throughout the European Union. This should lead to an open (or more open) internal market for medical devices. The Dutch government has identified the consequences of the Regulation for the manufacturers of medical devices here.