Antitrust law and merger control
Effective competition contributes to keeping pharmaceutical innovations affordable.
UM – 02/2024
Besides state regulation, market competition
is the most important instrument for ensuring supply of medicines to citizens
at affordable prices. Active enforcement of European antitrust and merger
control rules helps to keep markets moving and ensure that people in Europe
have access to affordable and innovative medicines. This is the conclusion of a report
published by the European Commission on 26 January 2024. The report looks
at the years between 2018 and 2022. It is the second of its kind and the result
of cooperation between the European Commission and the competition authorities
of the EU Member States in the European Competition Network (ECN). Compared to
the previous report, the number of antitrust decisions rose from an average of
three to five per year during the period under review.
Preventing anti-competitive practices
On the one hand, the report refers to the
application of antitrust regulations on anticompetitive agreements and
practices. These include measures against behavioural patterns that prevent or
delay the market entry of generics, as well as measures against price level
abuse of medicinal products due to a market-dominating position
("unreasonable prices"), bid rigging in hospital tenders,
market-sharing agreements between pharmacies, restrictions on parallel imports
that exploit price differences of medicines in the European Union (EU), and
much more. Around 100 cases involving medicinal products were investigated. The
competition authorities issued antitrust decisions in 28 cases, while 30 cases
are still pending.
Maintaining competitive pressure through merger control
On the other, 30 mergers in the
pharmaceutical sector were under review in order to prevent abuse of a
market-dominating position. The greater market power of merged companies can
lead to nullification of competitive pressure, resulting in higher prices and
disadvantages for patients and healthcare systems. Concerns were raised in five
cases. Of these, four mergers were approved after the companies signalled their willingness to adjust their plans.
Competition monitoring is an ongoing task
The bottom line of the report is: the
monitoring and clarification of the interpretation of competition and antitrust
law by the competition authorities is necessary to support price and innovation
competition, ensure the functioning of the pharmaceutical markets and improve
access to affordable and innovative medicines.
State regulation remains indispensable
What the report fails to address: state
regulation is just as important for fair pharmaceutical prices. In Germany,
regulatory instruments such as the reference price regulation, the import quota or the possibility of concluding discount agreements allows for tens of billions of euros to be cut from pharmaceutical expenditure every year. And this without compromising supply.