Spain | Dual Pricing - Wholesale and Retail Markets for Pharmaceuticals
- 21/03/2017
- Articles
On 21 March 2017 the “Comisión Nacional de Los Mercados y la Competencia”, the Spanish Competition Authority (“CNMC”), opened an investigation into allegedly collusive behaviour among a number of pharmaceutical companies, including Eli Lilly, Janssen-Cilag, Merck Sharp & Dohme, Novartis, Pfizer and Sanofi-Aventis (see attached press release). The parties are accused of having established a system of dual pricing for the distribution of pharmaceutical products in Spain.
This is a new development in a protracted legal battle over Spain’s dual pricing system for pharmaceutical products. In a judgment of 4 March 2016, Spain’s Supreme Court passed judgment on aspects of this system for the second time. As it had already done in December 2014, the Supreme Court ruled that special pricing legislation in Spain which compels pharmaceutical firms to reduce a state sanctioned price for products reimbursed by the Spanish social security system should not prevent the CNMC from applying the competition rules to private conduct in this area.
Specifically, the Supreme Court told the CNMC to determine whether a dual pricing clause contained in the general conditions of sale which a number of pharmaceutical suppliers apply in their dealings with distributors is compatible with competition law. In this case, it would seem that the CNMC will have to decide whether or not the clause seeks to limit parallel trade and thus amounts to a restriction by object of Article 101 of the Treaty on the Functioning of the European Union and of the equivalent provision under Spanish law. In addition, the separate question arises whether there is a concerted practice among the suppliers that apply the clause at issue. In opening its investigation, the CNMC ostensibly seeks to comply with the directions of the Supreme Court.
The move follows an earlier decision of the CNMC to launch a probe of the wholesale and retail markets for pharmaceuticals in Spain (see attached press release). On 17 March 2017, the CNMC indicated that it had detected possible barriers to competition in the market. First, according to the CNMC, patent owners may adopt strategies that restrict or delay the market entry of generic medicines. These strategies may be facilitated by rules that are not proportional with the legitimate objectives which these rules were designed to pursue. Second, the CNMC also maintains that the system which determines prices and wholesale margins should be carefully reviewed. Again, rules that were adopted in the general interest may not have been properly calibrated and may therefore have undesirable consequences.
The CNMC will also study alternative pricing mechanisms, such as centralised purchasing and auction systems.
