Effective competition contributes to keeping pharmaceutical innovations affordable.

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.