Life Sciences and Healthcare

Potential infringement of EU Competition Law in the field of pharmaceuticals due to collusive conduct aimed at influencing the use of a medicinal product

Published on 25th Oct 2017

Within the framework of a preliminary ruling referred to the Court of Justice of the European Union (“ECJ”) by the Italian Council of State, the Advocate General considered that the collusive agreement between two pharmaceutical companies to disclose information about the alleged lesser security of a certain medicinal product in comparison with another, without scientific evidence, constitutes a restriction of competition by object within the meaning of Article 101(1) of the Treaty on the Functioning of the European Union (“TFEU”).

The ECJ shall determine whether or not the conducts, for which Autorità Garante della Concorrenza e del Mercato (AGCM – its acronym in Italian) fined F. Hoffmann-La Roche and Novartis with more than EUR 180 million, constitute an infringement by object of Article 101(1) TFEU.

Regarding the context, Hoffman-La Roche granted a license to Novartis to market the medicinal product Lucentis (ophthalmological), which shared its clinical development with the medicinal product Avastin (oncological). Lucentis was marketed after the latter and was more expensive. Medical practitioners, in this case in Italy, began to prescribe the off-label use of Avastin for the treatment of ophthalmological diseases since both products derive from the same active substance.

Under this factual framework and because of the losses on the sale of Lucentis, both undertakings agreed to carry out a media campaign. According to the AGCM, this campaign was designed to achieve an artificial differentiation between Avastin and Lucentis by manipulating the perception of the risks associated with the use of Avastin in the field of ophthalmology in order to constrain the demand in favour of Lucentis (ten times more expensive). This agreement was implemented by ‘the production and dissemination´ of information which could give rise to public concern regarding the safety of the intravitreal use of Avastin. However, the value of the scientific evidence which suggested the contrary was underestimated.

Now, at the request of the Italian Council of State – a body to which the two pharmaceutical companies appealed the AGCM’s decision -, the ECJ must answer, among other questions raised, whether the statements made by both companies can be considered as a restriction of competition by object within the meaning of Article 101(1) TFEU.

First, it must be recalled what is meant by restrictions of competition by object, which have been defined by the case-law as agreements or concerted practices which, in themselves, imply a “sufficient degree of harm” to competition, to render the examination of their effects on the market superfluous.

On the basis of the above-mentioned definition, the Advocate General concluded before the ECJ that, in order to determine whether such conducts could fall within the scope of the prohibition set forth in Article 101(1) TFEU, it must be determined whether the statements concerning the alleged lesser safety of one medicinal product in comparison to the other are false or misleading.

The pharmaceutical companies involved defended themselves justly, stating that the disclosure of these claims relating to the lesser safety and/or efficacy of one medicinal product in regard to the other is necessary to protect public health and prevent medical practitioners from continuing to prescribe off-label the medicinal product (allegedly less safe).

However, both the AGCM and the Advocate General conclude that, in order to protect public health, what they should have done from the beginning is to comply with their pharmacovigilance obligations, i.e. to communicate to the competent body in Italy the disadvantages of the product, as well as ensuring that the information that is disclosed to the public ‘is presented objectively and is not misleading’ and can be scientifically contrasted.

Notwithstanding that it is for the national court to decide on the merits of the case, the Advocate General has understood that, in the event that those statements were not false and that it was sufficiently proven that their purpose was to ensure transparency of information concerning the safety of the medicinal products in order to protect public health, such conducts would not constitute a restriction of competition within the meaning of Article 101(1) TFEU.  Additionally, they would probably fall within the scope of Article 101(3) TFEU and would therefore be exempt from the prohibition set forth in the first paragraph.

It is an issue to be decided by the Italian Council of State and so the Advocate General does not adopt a position on whether the information disclosed by the pharmaceutical companies involved has sufficient scientific basis for not being considered misleading.  However, the Advocate General did in fact consider, and this is the outstanding novelty, that the conduct of undertakings in the present case, purporting to exclude one medicinal product (Avastin) from the relevant market and steering demand towards to the other medicinal product (Lucentis) by means of ‘misleading’ statements in order to obtain a profit, may be regarded as a collusive conduct which seeks to  distort competition, and hence constitute an infringement by object within the meaning of Article 101(1) TFEU.

It will be necessary to wait for the ruling of the ECJ with regard to the questions raised, as well as the decision of the Italian court, in order to know whether their findings coincide with those of the Advocate General and those of the AGCM or, otherwise, whether the ECJ adds new aspects to examine in Case C-179/16, which may be decisive in the conduct to be followed in the future by undertakings, and especially those in the pharmaceutical sector.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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