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    • 29/07/2021
    • Articles

    Analysis – New Excessive Pricing Cases in the UK and NL – Major Developments or More of the Same?

    Over the past two weeks, the competition authorities for the UK (“CMA”) and the Netherlands (“ACM”) have imposed significant fines for unlawful excessive pricing of medicines, accelerating the recent trend in Europe of pharmaceutical companies facing prosecution and sanctions for significant price increases. Background On 15 July 2021, the UK CMA imposed fines of £155 million on Accord-UK (previously Auden Mckenzie / Actavis) for price increases of more than 10,000% on hydrocortisone tablets after they were de-branded and fell outside the UK NHS price regulations. The CMA also imposed additional fines of £111.5 million for cartel agreements entered into when other parties threatened to enter the market. On 20 July 2021, the NL ACM imposed fines of approximately €20 million on Leadiant Biosciences for charging higher prices on chenodeoxycholic acid (CDCA) after it successfully received orphan medicine status and regulatory exclusivity. On 29 July 2021, the UK CMA imposed fines of over £100 million on Advanz and its private equity owners (HgCapital and Cinven) for price increases of more than 6000% on liothyronine tablets. New Developments or More of the Same? NEW – Prosecution of excessive pricing during regulatory exclusivity. While past excessive pricing cases, as well as the two new cases in the UK, all involve products for which any patent or regulatory exclusivity had expired, the case in the Netherlands concerns the pricing of a product for which Leadiant held valid regulatory exclusivity under the orphan drugs regulations. While the Dutch competition authority took pains to emphasize that any innovation by Leadiant was minimal (as CDCA was previously available for many years), this case nevertheless represents an additional step by competition authorities, demonstrating that they are also willing to prosecute strategies involving large price increases and limited innovation. NEW - Highest ever fines. The fines issued in these cases are the highest fines ever imposed on pharmaceutical companies by the UK and Dutch competition authorities, indicating that the authorities in these countries consider such excessive pricing to be as serious an infringement as cartel conduct. NEW – Specific requirements when negotiating prices. The Dutch decision includes the legal standard the ACM expects to be met by dominant pharmaceutical companies when negotiating prices. Specifically, such companies have a responsibility of “active engagement” and to negotiate “effectively and seriously” with health insurers and other relevant public authorities, and ultimately “not to charge and collect an excessive price”. NEW - 1800% and 250% price increases allowed? In the case in the Netherlands, the price of CDCA increased from €46 to €14,000. However, only Leadiant’s last price increase (of 350% in 2017) was held to be an infringement, while Leadiant’s prior price increases of 1800% in 2009 and 250% in 2014 were not sanctioned. Potential explanations are that Leadiant was not dominant before receiving exclusivity in 2017 or that Leadiant’s prior price increases were justified by the costs it incurred to gain regulatory approval. SAME - Compliance with regulations is not an infringement, but it is also not a valid defense. The ACM does not allege that Leadiant unlawfully obtained an orphan designation for CDCA, or that the necessary price increase to cover the costs for the registration is unlawful. However, the ACM also does not appear to accept that Leadiant’s compliance with the orphan regulations and the associated “reward” of regulatory exclusivity empower Leadiant to freely set its prices in its discretion, and does not justify the last 350% price increase implemented in 2017. SAME – Comparisons with prices in other countries is also not a valid defense. Consistent with the approach of the European Commission and Italy in the Aspen case, the ACM did not appear to accept Leadiant’s argument that the list price set it the Netherlands is “the lowest in the EU” as a defense against a finding of excessive pricing. NEW – Authorities not deterred by losses in prior cases. The UK CMA’s prior high-profile case against Pfizer and Flynn for excessive pricing of phenytoin sodium capsules was annulled on appeal. Despite this high profile rebuke – with the CMA being criticised for, among other things, misapplying the legal test for excessive pricing and failing to properly evaluate evidence adduced by the parties – the CMA and ACM appear undeterred in the pursuit of cases involving significant price increases on medicines.

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    • 29/07/2021
    • Articles

    UK CMA continues crack down on excessive pricing of medicines

    On 29 July 2021, the UK Competition and Markets Authority (“CMA”) imposed fines totalling more than £101 million on Advanz Pharma and previous owners, Cinven and HgCapital, for charging excessive and unfair prices for liothyronine tablets – a treatment for hypothyroidism (see Press Release). In line with most recent excessive pricing cases, this new decision concerns a drastic increase in the price of a genericised medicine that could not be justified by increased costs, investments or innovation. During its investigation, the CMA uncovered Advanz’s strategy of identifying genericised medicines subject to no (or limited) competition and substantial barriers to new entry. After acquiring the rights to such medicines, Advanz would “de-brand” the medicines in order to avoid applicable price regulations. Using this strategy, Advanz Pharma was able to increase the price of liothyronine tablets by more than 6,000% between 2009 and 2017. As a result, NHS spending on liothyronine tablets increased from approximately £2.3 million in 2009 to above £30 million in 2016. Liothyronine tablets were ultimately placed on the NHS “drop list”, leaving patients with the option of either ceasing use of the treatment or having to purchase the treatment at their own expense. This new decision by the CMA follows hot on the heels of its £260 million fine on Auden Mckenzie and Actavis (now Accord-UK) for charging excessive prices and concluding anticompetitive market sharing agreements in relation to the supply of hydrocortisone tablets (for further information see our previous updates: (1) CMA fines hydrocortisone tablet suppliers over GBP 260 million; and (2) Analysis – New Excessive Pricing Cases in the UK and NL – Major Developments or More of the Same?).

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    • 23/07/2021
    • Newsletters

    VBB on Belgian Business Law, Volume 2021, No. 6

    The June 2021 issue of our Belgian Business Law newsletter reporting on the latest developments in a range of areas, including competition, data protection, intellectual property and labour law.

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    • 23/07/2021
    • Articles

    CMA fines hydrocortisone tablet suppliers over GBP 260 million

    On 15 July 2021, the UK Competition and Markets Authority (“CMA”) imposed fines of more than GBP 260 million on the hydrocortisone tablet suppliers, Auden Mckenzie and Actavis (now named Accord-UK) for charging excessive and unfair prices and for paying potential rivals to remain out of the market (see Press Release). CMA Chief Executive, Andrea Coscelli, referred to the CMA’s findings as “without doubt some of the most serious abuses […] uncovered in recent years.” Excessive and Unfair Pricing The CMA found that Auden Mckenzie and Actavis charged excessive and unfair prices for 10mg and 20mg hydrocortisone tablets between 2008 and 2018 (Actavis took over Auden Mckenzie’s hydrocortisone tablet business in 2015 and is therefore liable for its conduct before that date). The CMA found that the parties had increased the price of the tablets by more than 10,000% compared to the price that had been charged for the original branded version of the tablets. More specifically, in April 2008, the price of a single pack of 10mg tablets was 70p and a pack of 20mg tablets was GBP 1.07; by March 2016, the prices had risen to GBP 88 and GBP 102.74, respectively. In supplying a de-branded version of the hydrocortisone tablets, the parties were able to exploit the fact that it is only the original, branded version of a drug which is subject to price regulation. In theory, the prices of de-branded medicines should be kept in check by the onset of competition between competing generic suppliers. However, in this instance – and to some extent due to the conduct of the parties (see Market Sharing below) - such competition did not, in fact, materialise. This created the space for the parties to drastically hike the price of their products. The total fine imposed by the CMA for the charging of excessive and unfair prices was GBP 155 million. Market Sharing The CMA also found that Auden Mckenzie concluded anticompetitive market sharing agreements with Waymade and AMCo (now known as Advanz Pharma). Pursuant to these agreements, Auden Mckenzie made monthly payments to Waymade and AMCo in return for their commitment to refrain from introducing their own generic hydrocortisone tablets to market. In total, over the duration of the agreement, AMCo received GBP 21 million and Waymade received GBP 1.8 million. The CMA fined Auden McKenzie/Accord-UK and Allergan (as its former parent company) a further GBP 66 million for its part in the market sharing agreement. AMCo/Advanz Pharma and its former parent, Cinven, were fined a total of GBP 43 million, and Waymade was fined GBP 2.5 million.

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    • 20/07/2021
    • Articles

    Dutch Competition Authority Imposes Fine of Almost EUR 20,000,000 on Medicine Supplier Leadiant on Account of Excessive Pricing

    The Dutch competition authority, Autoriteit Consument & Markt (ACM), announced on Tuesday that it imposed a fine of EUR 19,569,500 on Leadiant which was found guilty of an abuse of dominant position by charging excessive prices for chenodeoxycholic acid Leadiant (“CDCA”), a medicine indicated for the treatment of patients afflicted with cerebrotendinous xanthomatosis, a rare metabolic disorder (“CTX”)(see, attached press release and summary of decision in Dutch and English versions). In December 2014, Leadiant secured orphan medicine status for CDCA after it had succeeded in demonstrating the significant benefit of CDCA over existing treatments of CTX. Over time, Leadiant had managed to obtain a list price for CDCA of EUR 14,000 for a pack of 100 capsules (or EUR 153,300 per patient per year), a price far higher than that of an old medicine with the same active substance indicated for the treatment of cholesterol gallstones (EUR 46 for a similar pack). ACM considered Leadiant’s price for CDCA to be excessive because it was, according to ACM, both “exorbitantly high and unfair”. ACM’s finding that the price for CDCA was exorbitantly high followed from an analysis of Leadiant’s costs, investments and revenues associated with the product as well as the risk that the product could fail. ACM reached the conclusion that the “CDCA project was characterised by low costs in comparison with the revenues, low risks, and a very high return”. ACM specified that it had considered the “reasonable” rate of return of 15%. ACM’s finding that the price for CDCA was also unfair came in spite of the orphan medicine designation of CDCA. According to ACM, Leadiant did not innovate and CDCA did not present any therapeutic added value over other CDCA-based medicines. Even on the safety and efficacy front, the contribution of CDCA had been minimal as the active substance had been prescribed and administered for decades. Leadiant maintained that it had always been open to price discussions, but for ACM there were no indications that Leadiant had ever been willing to entertain the possibility of a non-excessive price. According to ACM, Leadiant had failed to “negotiate effectively or seriously with health insurers and the ministry [of health, welfare and sport]”. Leadiant has come under competition scrutiny in several countries, including Belgium, Italy and Spain, but ACM was the first to fine it (see, Van Bael & Bellis Life Sciences News and Insights of 11 February 2019, 9 April 2019, 9 September 2019, 17 September 2019, 16 October 2019, 29 June 2020, 3 November 2020, and 22 December 2020). The decision against Leadiant also marks the first time ACM issued a fine to tackle excessive medicine pricing.

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    • 08/07/2021
    • Articles

    International Horizon Scanning Initiative Takes New Step Towards Database of Emerging Pharmaceuticals and High Impact Medicine Reports

    On 30 June 2021, the International Horizon Scanning Initiative (IHSI) signed a 4 year agreement with ECRI to develop a database of emerging pharmaceuticals and establish the foundations for the creation of “High Impact Reports” which offer an analysis of potentially high-impact upcoming medical treatments (https://ihsi-health.org). ECRI is a non-profit independent healthcare organisation which focuses on patient safety, evidence-based medicine, and technology decision support (https://www.ecri.org). IHSI was established on 29 October 2019 to identify innovative medicines before they reach the market and inform decision-making on treatment and budgets in the 8 participating countries (see, Van Bael & Bellis Life Sciences News and Insights of 29 0ctober 2019 which erroneously mentions 9 member countries – Luxemburg did not join).

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    • 07/07/2021
    • Articles

    Belgium - Report of Health Care Knowledge Centre Questions Added Value of Innovative Oncology Medicines

    On 5 July 2021, KCE, the Belgian Health Care Knowledge Centre, published a report discussing the benefits and costs of innovative oncology medicines in Belgium between 2004 and 2017 (the Report – A summary of the Report can be found here). KCE tried to determine whether a selection of innovative oncological medicines that entered the market in the relevant period offered added value for the Belgian patient population and whether the resulting cost reflected an efficient use of the available resources. KCE studied 40 oncology medicines used for the treatment of 12 cancer indications, 9 of which were limited to metastatic cancer. The effect of treatment on survival and the budgetary impact were analysed on the basis of observational data taken from the Belgian Cancer Registry, reimbursement data generated from the Inter-Mutualistic Agency (IMA) and patient survival data obtained from the Crossroads Bank for Social Security. The data analysis was complemented with a review of relevant literature. The study outcome was somewhat surprising in that for only half of the indications some improvement in survival was observed. Moreover, almost all indications gave rise to large increases in gross medicine expenditure. On this basis, the Report questioned the effectiveness and cost-benefit ratio of the indications that were responsible for a strong increase in expenditure without a clear improvement in survival. The Report also described the effects of the studied medicines on quality of life as uncertain. It attributed the lack of evidence to the supposedly substandard measurement and reporting of quality of life in clinical trials for cancer medication. The Report’s negative findings, combined with the KCE’s well-known aversion for Managed Entry Agreements and confidential price arrangements which the Report again highlights, created fertile ground for the pharmaceutical sector’s critics both inside and outside the healthcare sector. While the Report should be looked at closely and is likely to inform policies to improve the measurement of the performance of reimbursed cancer medication (with the implication that medicines which fail to deliver will be removed more quickly from the list of reimbursed medicine), the Report exhibits some significant weaknesses which suggest that overly pessimistic conclusions are unwarranted. For example, the Report is based in large part on outdated and incomplete data. The study period started in another oncological era, 17 years ago, and fails to take account of innovations of the last four years in a rapidly evolving field of research. In addition, for 9 out of 12 cancer types studied, only patients in stage IV at the time of diagnosis (suffering from metastatic cancer) were considered. Accordingly, the Report does not tally with the significant recent successes registered in Belgium in the fight against cancer. To illustrate, in the last two decades, the overall survival rate for breast cancer five years after treatment has increased from 85% to 91%. Similarly, the number of lung cancer patients still alive one year after diagnosis is ten times higher now compared to the figure for 1995. For metastatic skin cancer, the number of patients still alive five years after diagnosis has also increased tenfold, from 5 to 50%. These results are due in large part to new medication.

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    • 30/06/2021
    • Articles

    European Commission Starts Implementing EU Strategy for Covid-19 Therapeutics

    On 29 June 2021 the European Commission (the Commission) unveiled a portfolio of five candidate therapeutics for the treatment of COVID-19 patients (see, attached Commission press releases). The announcement forms a first step in the roll-out of the Commission’s EU strategy for Covid-19 therapeutics (the Strategy) (see, Van Bael & Bellis Life Sciences News and Insights of 7 May 2021). Four of these therapeutics are antiviral monoclonal antibodies which are all under rolling review by the European Medicines Agency (EMA): • a combination of bamlanivimab and etesevimab (Eli Lilly); • a combination of casirivimab and imdevimab (Regeneron Pharmaceuticals, Inc. and F. Hoffmann-La Roche, Ltd); • regdanivimab (Celltrion); and • sotrovimab (GlaxoSmithKline and Vir Biotechnology, Inc.). The fifth medicine under review is the immunosuppressant baricitinib (Eli Lilly) which reduces the activity of the immune system and for which a new indication directed at the treatment of COVID-19 patients is under consideration. The Commission plans to draw up a wider portfolio of potential COVID-19 therapeutics by October 2021, building on the work of the newly established expert group on COVID-19 variants which works under the aegis of the Health Emergency Preparedness and Response Authority (HERA). As indicated in the Strategy, the Commission hopes to have at least three new therapeutics authorised by October 2021 and possibly two more by the end of 2021. For its part, EMA will start additional rolling reviews of promising therapeutics by the end of 2021. The new portfolio of products may benefit from regulatory flexibility which involves, in addition to rolling reviews, conditional marketing authorisations and flexible labelling and packaging requirements. Other aspects of the Strategy which the Commission has already implemented include a joint procurement procedure for casirivimab and imdevimab; and an industry matchmaking event that will take place on 12 and 13 July 2021 to create production capacity for authorised therapeutics.

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    • 21/06/2021
    • Newsletters

    VBB on Belgian Business Law, Volume 2021, No. 5

    The May 2021 issue of our Belgian Business Law newsletter reporting on the latest developments in a range of areas, including competition, data protection, intellectual property and labour law.

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