Competition Policy for Pharmaceuticals and Health Care: An Economic Perspective
London, England
23 February 2010
Hosted By: NERA Economic Consulting
The pharmaceuticals and health care sectors have long been a fertile ground for antitrust debate around the world. Given the political and commercial importance of health care provision and financing, these debates show little signs of abating. The EU sector inquiry into pharmaceuticals, recent abuse of dominance findings at EU level and in various Member States, increasing legislative and regulatory concern about reverse payment settlements, and the introduction of the Co-operation and Competition Panel (CCP) in the British National Health Service (NHS) all point to a trend of increasing and more aggressive scrutiny and enforcement.
Drawing on NERA's experience around the world and across the health sector and pharma industry, Director Dr. Mark Williams provided an economic overview of the primary issues and themes that inform and motivate these debates.
On the basis of key pharmaceuticals cases (such as AstraZeneca, Bayer Adalat, Schering-Plough, GlaxoSmithKline, and Napp), Dr. Williams discussed the merits of market definition by ATC therapeutic application, the constraint from substitution to generics, the efficiency effects of parallel trade restrictions, the competition implications of supplementary protection certificates (SPCs), the different motives for reverse payment settlement and pay-for-delay agreements, the interaction of competition policy with patents and intellectual property rights, and the interface between price-cost tests (e.g. for analyzing predatory pricing) and transfer pricing rules.
The seminar also covered the retail provision of pharmaceuticals and health care. Many pharmacy markets in Europe are characterized by entry restrictions and price regulation for prescription medicines, and Dr. Williams showed how this interaction can give rise to surprising implications. He also discussed the appropriate geographic market for hospitals, the potential effects of health insurance on consumer behaviour, and whether the distinction between profit-maximizing and not-for-profit hospitals has a bearing on the economic antitrust analysis.
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