Dominance in the pharmaceutical sector - An EU/UK perspective

Chatham House Rule applied to this workshop. As such, the recording and transcript won’t be published. A synthesis is available below.

James Killick (Partner, White & Case) welcomed the audience and introduced the panellists before specifying the topic of the conference. Mr. Killick focused on market definition. He commented on the Servier decision and the judgment of the General Court dated 12 December 2018 (currently under appeal before the Court of Justice of the European Union). Based on the analysis that a drug going off patent usually impacts the price of that drug but not the price of drugs of a same class, the European Commission reached the conclusion that the relevant market was limited to the molecule perindopril, to the exclusion of the fifteen other ACE inhibitors in the same therapeutic class. The General Court disagreed with the Commission’s factual findings and conclusions, with respect to therapeutic substitutability, patient inertia, doctors’ practices and marketing efforts. It found that the Commission erred by giving excessive importance to price in its analysis, noting that perindopril could be subject to competitive pressure governed by other factors other than price. Physicians do not usually make drug prescriptions on the basis of price, but rather on therapeutic differences and patients’ profiles. The Court thus concluded that the econometric analysis alone was insufficient as it does not encompass other, qualitative factors. James Killick noted that relying on price only results in finding every pharmaceutical company dominant on each market for the molecule they hold a patent for, and thus obliterates the relevance of the competition assessment. Mr. Killick then gave a critical presentation on the idea that market definition should be contextual. The consequence of this is that market definition may differ depending on whether it is used for the purpose of antitrust and merger control, and it may also differ depending on the type of practice that is being investigated (e.g. competition with generics or with originators or practices involving health authorities). Mr. Killick also noted that this also means that market definition varies with time (e.g. during the exclusivity period or after that the product goes off-patent) and that the contextual definition of markets may result in finding that multiple markets for a same molecule coexist. This happened in Servier: during the period of the infringement (during which the molecule was found the market for the dominance case), the market was found to be the therapeutic class in merger cases. Mr. Killick concluded by criticising the implications of conceptual market definition and suggesting that it would be best to have a single, consistent market for the purpose of the competition assessment.